III BBA- VI SEMESTER- MAJOR:ENTREPRENEURIAL DEVELOPMENT

UNIT - I

`The word entrepreneur originates from the French word, entreprendre, which means "to
undertake." In a business context, it means to start a business.
Definition
Someone who exercises initiative by organizing a venture to take benefit of
an opportunity and, as the decision maker, decides what, how, and how much of a good
or service will be produced.
An entrepreneur supplies risk capital as a risk taker, and monitors and controls the business
activities. The entrepreneur is usually a sole proprietor, a partner, or the one who owns
the majority of shares in an incorporated venture.
According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not
necessarily motivated by profit but regard it as a standard for measuring achievement
or success.

Qualities or Traits of an Entrepreneur

(1) Initiative
(2) Personality
(3) Technical competence
(4) Good Judgement and intelligence
(5) Leadership
(6) Courage
(7) Self-confidence
(8) Honesty and sincerity
(9) Compatibility
(10) Confidence in employees
(11) Ability to delegate authority
(12) Ability to criticize and readiness to accept criticism.
(13) Aggressiveness
(14) Decision-making ability .
(15) Mental calibre
(16) Foresightedness
(17) Imagination
(18) Perseverance
(19) Patience
(20) Sense of Justice
(21) Resourcefulness
(22) Scientific mind
(23) Ingenuity
(24) Organisational ability
(25) Politically conservative
(26) Ability to coordinate activities
(27) Hopeful
(28) Skill in inter-personal relations
(29) Willingness to learn
(30) Worried
(31) Self-sacrifice
(32) Sense of Justice
(33) Integrity
(34) Loyalty
(35) Considerate.

Functions of an Entrepreneur
The functions of an entrepreneur is classified into five broad categories:
1. Risk-bearing function,
2. Organisational function,
3. Innovative function,
4. Managerial function, and
5. Decision making function.
1. Risk-bearing function:
The functions of an entrepreneur as risk bearer is specific in nature. The entrepreneur
assumes all possible risks of business which emerges due to the possibility of changes in the
tastes of consumers, modern techniques of production and new inventions. Such risks are not
insurable and incalculable. In simple terms such risks are known as uncertainty concerning a
loss.
The entrepreneur, according to Kinght, "is the economic functionary who undertakes
such responsibility of uncertainty which by its very nature cannot be insured nor capitalised
nor salaried too."
Richard Cantillon conceived of an entrepreneur as a bearer of non-insurable risk
because he described an entrepreneur as a person who buys things at a certain price and sells
them at an uncertain price.
Thus, risk bearing or uncertainty bearing still remains the most important function of
an entrepreneur which he tries to minimise by his initiative, skill and good judgement. J.B.
Say and other have stressed risk taking as the specific function of the entrepreneur.
2. Organisational Function:
Entrepreneur as an organiser and his organising function is described by J.B. Say as a
function whereby the entrepreneur brings together various factors of production, ensures
continuing management and renders risk-bearing functions as well. His definition associates
entrepreneur with the functions of coordination, organisation and supervision.
According to him, an entrepreneur is one who combines the land of one, the labour of
another and the capital of yet another and thus produces a product. By selling the product in
the market, he pays interest on capital, rent on land and wages to labourers and what remains
is his/her profit. In this way, he describes an entrepreneur as an organiser who alone
determines the lines of business to expand and capital to employ more judiciously. He is the
ultimate judge in the conduct of the business.
Marshall also advocated the significance of organisation among the services of special class
of business undertakers.
3. Innovative Function:
The basic function an entrepreneur performs is to innovate new products, services,
ideas and informations for the enterprise. As an innovator, the entrepreneur foresees the
potentially profitable opportunity and tries to exploit it. He is always involved in the process
of doing new things. According to Peter Drucker, "Innovation is the means by which the
entrepreneur either creates new wealth producing resources or endows existing resources
with enhanced potential for creating wealth". Whenever a new idea occurs entrepreneurial
efforts are essential to convert the idea into practical application.
J.A. Schumpeter considered economic development as a descrete dynamic change
brought by entrepreneurs by instituting new combinations of production, i.e. innovation.
According to him innovation may occur in any one of the following five forms.
The introduction of a new product in the market with which the customers are not get
familiar with.Introduction of a new method of production technology which is not yet tested
by experience in the branch of manufacture concerned.
The opening of a new market into which the specific product has not previously
entered. The discovery of a new source of supply of raw material, irrespective of whether this
source already exists or has first to be created. The carrying out of the new form of
oranisation of any industry by creating of a monopoly position or the breaking up of it.
4. Managerial Function:
Entrepreneur also performs a variety of managerial function like determination of
business objectives, formulation of production plans, product analysis and market research,
organisation of sales procurring machine and material, recruitment of men and undertaking,
of business operations. He also undertakes the basic managerial functions of planning,
organising, co-ordinating, staffing, directing, motivating and controlling in the enterprise. He
provides a logical and scientific basis to the above functions for the smooth operation of the
enterprise thereby avoids chaos in the field of production, marketing, purchasing, recruiting
and selection, etc. In large establishments, these managerial functions of the entrepreneur are
delegated to the paid managers for more effective and efficient execution.
5. Decision Making Function:
The most vital function an entrepreneur discharges refers to decision making in
various fields of the business enterprise. He is the decision maker of all activities of the
enterprise. A. H. Cole described an entrepreneur as a decision maker and attributed the
following functions to him. He determines the business objectives suitable for the enterprise.
He develops an organization and creates an atmosphere for maintaining a cordial relationship
with subordinates and all employees of the organization. He decides in securing adequate
financial resources for the organisation and maintains good relations with the existing and
potential investors and financiers. He decides in introducing advanced modern technology in
the enterprise to cope up with changing scenario of manufacturing process. He decides the
development of a market for his product, develops new product or modify the existing
product in accordance with the changing consumer's fashion, taste and preference. He also
decides to maintain good relations with the public authorities as well as with the society at
large for improving the firms image before others.
Entrepreneurship
Definition
The capacity and willingness to develop, organize and manage a business
venture along with any of its risks in order to make a profit. The most obvious example of
entrepreneurship is the starting of new businesses.
In economics, entrepreneurship combined with land, labor, natural
resources and capital can produce profit. Entrepreneurial spirit is characterized
by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an
ever changing and increasingly competitive global marketplace.

The Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most important
input in the economic development of a country. The entrepreneur acts as a trigger head to give
spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in
the development of industrial sector of a country but also in the development of farm and service
sector. The major roles played by an entrepreneur in the economic development of an economy is
discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They
employ their own as well as borrowed resources for setting up their enterprises. Such type of
entrepreneurial activities lead to value addition and creation of wealth, which is very essential for
the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a
chronic problem of underdeveloped nations. With the setting up.of more and more units by
entrepreneurs, both on small and large-scale numerous job opportunities are created for others.
As time passes, these enterprises grow, providing direct and indirect employment opportunities
to many more. In this way, entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards economic development of
the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less
developed and backward areas. The growth of industries and business in these areas lead to a
large number of public benefits like road transport, health, education, entertainment, etc. Setting
up of more industries lead to more development of backward regions and thereby promotes
balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial
development normally lead to concentration of economic power in the hands of a few individuals
which results in the growth of monopolies. In order to redress this problem a large number of
entrepreneurs need to be developed, which will help reduce the concentration of economic power
amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country
to more people and geographic areas, thus giving benefit to larger sections of the society.
Entrepreneurial activities also generate more activities and give a multiplier effect in the
economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the people in a country, is a sign of
economic growth.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of living of
the people by adopting latest innovations in the production of wide variety of goods and services
in large scale that too at a lower cost. This enables the people to avail better quality goods at
lower prices which results in the improvement of their standard of living.
(7) Promotes Country's Export Trade:
Entrepreneurs help in promoting a country's export-trade, which is an important
ingredient of economic development. They produce goods and services in large scale for the
purpose earning huge amount of foreign exchange from export in order to combat the import
dues requirement. Hence import substitution and export promotion ensure economic
independence and development.
(8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximise profits by
innovation. When an enterprise is established in accordance with the changing technology, it
induces backward and forward linkages which stimulate the process of economic development in
the country.
(9) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an
enterprise is established, the process of industrialisation is set in motion. This unit will generate
demand for various types of units required by it and there will be so many other units which
require the output of this unit. This leads to overall development of an area due to increase in
demand and setting up of more and more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of enthusiasm and conveying an
impetus for overall development of the area.
Distinction between entrepreneur and intrapreneur
The difference between entrepreneur and intrapreneur are stated below:
 An entrepreneur is an independent person who starts his venture and bears full risk of
his failure and enjoys the fruit of his success whereas intrapreneur is partially
independent and is sponsored by the corporation in which he is working. He is also
not liable to bear the losses in case of his failure.
 An entrepreneur raises the finance from various sources and also guarantees their
return whereas an intrapreneur does not own responsibility to raise the capital or to
return it.
 An entrepreneur has no relation with any organisation whereas an intrapreneur
operates within the organisation where he is working.
 UNIT – II

Entrepreneurial Environment
Entrepreneurial Environment Sum total of external factors within which an enterprise
operates. Entrepreneurs do not emerge at their own.
Characteristics of Environment:
1. Dynamic
2. Uncontrollable and External
3. Affect the business in varying degrees
4. Poses threats and offers opportunities
Factors Affecting Entrepreneurship :
Factors Affecting Entrepreneurship Factors Economic Factors Social Factors
Psychological Factors Facilitating Factors Competitive Factors

Economic Factors :
Economic Factors Financial Assistance from Institutional Sources Accomodation in
Industrial Estate Attitude of the Government Encouragement from Large Business
Machinery on Hire-Purchase Labour Conditions Raw Materials Size and Composition of
Market

Social Factors :
Social Factors Family Background Social Status Religion Social Mobility Social
Marginality

Psychological Factors :
Psychological Factors Need Achievement Withdrawal of Status Respect

Competitive Factors :
Competitive Factors Porter’s 5Forces Model Potential Entrants Rivalry Among
Existing Firms Substitutes Suppliers Buyers

Facilitating Factors :
Facilitating Factors Experience and Training Arrangement of Finance Occupational
and Geographical Mobility

Locational Mobility of Entrepreneurs :

Locational Mobility of Entrepreneurs Represents the drive and initiative to move to
other places in search of better opportunities. If entrepreneurial class is limited, there will be
strong regional imbalances in industrial development. Key factors influencing:1. Resources2.
Experience3. Education4. Language5. Culture6. Nature of Enterprise
 Need for entrepreneurial motivation
 People certainly don’t work for money alone
 Money is required not for its own sake, but the sake of the needs of the person
fulfillment
 McClelland may be regarded as the father of the study of entrepreneurial motivation
Factors motivating the entrepreneurs:
Internal factor:
 Desire to do something new
 Education background
 Business experience in same or related line
External factor :
 Government assistance and support
 Availability of raw material and labour
 Encouragement from big business houses
 Promising demand for the product
 Profit margins
Need for achievement (N-Ach) refers to an individual's desire for significant
accomplishment, mastering of skills, control, or high standards. The term was first used
by Henry Murray[1] and associated with a range of actions. These include: "intense,
prolonged and repeated efforts to accomplish something difficult. To work with singleness of
purpose towards a high and distant goal. To have the determination to win". The concept of
N-Ach was subsequently popularised by the psychologist David McClelland.[2]
This personality trait is characterized by an enduring and consistent concern with setting and
meeting high standards of achievement. This need is influenced by internal drive for action
(intrinsic motivation), and the pressure exerted by the expectations of others (extrinsic
motivation). Measured with the Thematic Apperception Test (TAT), need for achievement
motivates an individual to succeed in competition, and to excel in activities important to him
or her.[3]
Need for Achievement is related to the difficulty of tasks people choose to undertake.
Those with low N-Ach may choose very easy tasks, in order to minimise risk of failure, or
highly difficult tasks, such that a failure would not be embarrassing. Those with high N-Ach
tend to choose moderately difficult tasks, feeling that they are challenging, but within reach.
People high in N-Ach are characterised by a tendency to seek challenges and a high degree of
independence. Their most satisfying reward is the recognition of their achievements. Sources
of high N-Ach include:
1. Parents who encouraged independence in childhood
2. Praise and rewards for success
3. Association of achievement with positive feelings
4. Association of achievement with one's own competence and effort, not luck
5. A desire to be effective or challenged
6. Intrapersonal Strength
7. Desirability
8. Feasibility
 Barriers in entrepreneurship development
There are barriers that hinder the development of entrepreneurship, namely: myths,
culture, and education system. The number of people choose to become an entrepreneur in a
country is always relatively small. But it is they that play very important role in driving
business to grow and economic development. Thanks to their contributions, millions of jobs
have been created by the establishment of factories, service businesses, and numerous small
and medium enterprises (SME’s). This, in turn, reduces the poverty rate.
Entrepreneurs also develop new markets by using creative ideas; try relentlesly to discover
new sources of materials in developing their business; combine production factors such as
natural resources, human resources, financial capital, skills, and knowledge to create various
products and services; and introduce new technologies, new industries, and new products.
The abovementioned activities contribute to the advancement of civilization and the quality
of life.
However, there are barriers that hinder the development of entrepreneurship, namely:
myths, culture, and education system. Many people still believe in some myths related to the
entrepreneur profession. Among the widespread myths are first, to become a successful
entrepreneur, one must come from a family that is successful in an entrepreneurial business.
In reality, many entrepreneurs come from non-entrepreneurial families. Second, an aspiring
entrepreneurship must have a strong capital base. Capital is important, but it is not the most
important factor in achieving success in an entrepreneurial business. Most important things
are ideas and creativity. Third, prior to starting an entrepreneural business, one must have
work experience.
Starting a new entrepreneural business does not depend on formal work experience.
Fourth, business is a dirty environment filled with intrigues. For this particular point, the
problem is left to each individual. There are still a lot of entrepreneurs who maintain high
business ethics. On the other hand, we find many people who are not entrepreneurs but
commit abusive practices and actions that harm others.
The fact that there are entrepreneurs engaged in disreputable actions is not a reason to
hold prejudice against all entrepreneurs. And fifth, life as an entrepreneur is not serene. In
fact, life as an entrepreneur is confortable and easy. When asked the reason for opening their
own business, an entrepreneur would surely give answers such as autonomy, control, and
freedom. They will say that the jobs they do are pleasurable.
They have the chance to utilize their strength and apply the talent and interest they
have every day. They will ask other people to do their jobs they do not like or the jobs that
they are not too capable of performing, Next is cultural barrier. Many people still do not
consider being an entrepreneur an honorable profession. People feel more respectable by
being an employee with clean appearance and steady income every month, which for some is
regarded as a measure of one’s success.
To some people, being an entrepreneur is associated with a relatively small and
unstable income, unstable working hours, and takes up more time and energy; things that are
indeed experienced by many entrepreneurs when they start their businesses.
This is contrary to the custom many in our society have: wanting to gain results and
success instantly. Most of us also do not regard failure as part of learning process. Another
barrier is that the education system does not encourage much entrepereneurial spirit, although
nowdays more and more educational institutions are introducing principles and concepts of
entrepreneurship.
In our education system, emphasis are always focused on the importance of technical
skills and good academic achievements so that later, upon graduation, it will be easy to get a
job, and not to become an entrepreneur. To promote and develop the entrepreneurial culture,
collective efforts from various parties such as business sectors, government, and education
institutions are required.
One way is by encouraging many activities that are espicially devoted to introduce
business opportunities to the society. The central and regional governments need to be
involved, However, along the implementation of regional autonomy, the role of regional
governments is becoming more important because every region and location has its own
uniqueness that can be capitalized as business opportunities.
Developing entrepreneurial spirit among students, from the elementary school up to
the university, will shape positive views, aspirations, attitudes, and behaviors towards
entrepreneurship. Education from the early age must be directed at building characteristics
that support the development of the entrepreneurial spirit such as self-confidence, risk-taking,
persistence, energetic, and persuasiveness.
As part of entrpreneurship education, extensive publication around entrepreneurs’
success story must be done, be it through televisions, radios, magazines, newapapers or the
internet. Publicity can also be done by giving awards to successful entrepreneurs, espicially
the ones at a relatively young age, which, once again, should be published extensively, all
with the purpose of attracting the interest of younger generation so that they do not feel
hesitant in choosing the life of an entrepreneur.
The government should also develop a favorable business climate such as an
attractive taxation system, efficient and clean bureaucracy, transparency and trustworthiness,
safety and security, a more flexible labor market, adequate infrastructure, efficient goods
market, and easier acces to financial institutions. Without a favorable business climate,
people will feel reluctant to start their own business.
Indonesia needs a lot of entrepreneurs because they can make a great contribution to the
economy. Therefore, efforts should be made to overcome the barriers so that
entrepreneurship can be fostered.
 UNIT- III
Entrepreneurship Development Programmes: Meaning, Need and
Objectives of EDP
Meaning:
As the term itself denotes, EDP is a programme meant to develop entrepreneurial
abilities among the people. In other words, it refers to inculcation, development, and
polishing of entrepreneurial skills into a person needed to establish and successfully run his /
her enterprise. Thus, the concept of entrepreneurship development programme involves
equipping a person with the required skills and knowledge needed for starting and running
the enterprise.
Let us also consider a few important definitions of EDPs given by institutions and
experts:
Small Industries Extension and Training Institute (SIET 1974), now National Institute
of Small Industry Extension Training (NISIET), Hyderabad defined EDP as “an attempt to
develop a person as entrepreneur through structural training.
The main purpose of such entrepreneurship development programme is to widen the base of
entrepreneurship by development achievement motivation and entrepreneurial skills among
the less privileged sections of the society.”
According to N. P. Singh (1985), “Entrepreneurship Development Programme is
designed to help an individual in strengthening his entrepreneurial motive and in acquiring
skills and capabilities necessary for playing his entrepreneurial role effectively. It is
necessary to promote this understanding of motives and their impact on entrepreneurial
values and behaviour for this purpose.” Now, we can easily define EDP as a planned effort to
identify, inculcate, develop, and polish the capabilities and skills as the prerequisites of a
person to become and behave as an entrepreneur.
Need for EDPs:
That, entrepreneurs possess certain competencies or traits. These competencies or
traits are the underlying characteristics of the entrepreneurs which result in superior
performance and which distinguish successful entrepreneurs from the unsuccessful ones.
Then, the important question arises is: where do these traits come from? Or, whether these
traits are in born in the entrepreneurs or can be induced and developed? In other words,
whether the entrepreneurs are born or made? Behavioural scientists have tried to seek
answers to these questions.
A well-known behavioural scientist David C. McClelland (1961) at Harvard
University made an interesting investigation-cum-experiment into why certain societies
displayed great creative powers at particular periods of their history? What was the cause of
these creative bursts of energy? He found that ‘the need for achievement (n’ ach factor)’ was
the answer to this question. It was the need for achievement that motivates people to work
hard. According to him, money- making was incidental. It was only a measure of
achievement, not its motivation.
In order to answer the next question whether this need for achievement could be
induced, he conducted a five-year experimental study in Kakinada, i.e. one of the prosperous
districts of Andhra Pradesh in India in collaboration with Small Industries Extension and
Training Institute (SIET), Hyderabad.
This experiment is popularly known as ‘Kakinada Experiment’. Under this experiment,
young persons were selected and put through a three-month training programme and
motivated to see fresh goals.
One of the significant conclusions of the experiment was that the traditional beliefs
did not seem to inhibit an entrepreneur and that the suitable training can provide the
necessary motivation to the entrepreneurs (McClelland & Winter 1969). The achievement
motivation had a positive impact on the performance of entrepreneurs.
In fact, the ‘Kakinada Experiment’ could be treated as a precursor to the present day EDP
inputs on behavioural aspects. In a sense, ‘Kakinada Experiment’ is considered as the seed
for the Entrepreneurship Development Programmes (EDPs) in India.
The fact remains that it was the ‘Kakinada Experiment’ that made people appreciate the need
for and importance of the entrepreneurial training, now popularly known as ‘EDPs’, to
induce motivation and competence among the young prospective entrepreneurs.
Based on this, it was the Gujarat Industrial Investment Corporation (GIIC) which, for the first
time, started a three-month training programmes on entrepreneurship development.
Impressed by the results of GIIC’s this training programme, the Government of India
embarked, in 1971, on a massive programme on entrepreneurship development. Since then,
there is no looking back in this front. By now, there are some 686 all-India and State level
institutions engaged in conducting EDPs in hundreds imparting training to the candidates in
thousands.
Till now, 12 State Governments have established state-level Centre for
Entrepreneurship Development (CED) or Institute of Entrepreneurship Development (lED) to
develop entrepreneurship by conducting EDPs. Today, the EDP in India has proliferated to
such a magnitude that it has emerged as a national movement. It is worth mentioning that
India operates the oldest and largest programmes for entrepreneurship development in any
developing country.
The impact of India’s EDP movement is borne by the fact that the Indian model of
entrepreneurship development is being adopted by some of the developing countries of Asia
and Africa. Programmes similar to India’s EDPs are conducted in other countries also, for
example, ‘Junior Achievement Programme’ based on the principle of ‘catch them young’ in
USA and ‘Young Enterprises’ in the U. K.
The major objectives of the Entrepreneurship Development Programmes (EDPs) are
to:

a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.
b. Analyse environmental set up relating to small industry and small business.
c. Select the product.
d. Formulate proposal for the product.
e. Understand the process and procedure involved in setting up a small enterprise.
f. Know the sources of help and support available for starting a small scale industry.
g. Acquire the necessary managerial skills required to run a small-scale industry.
h. Know the pros and cons in becoming an entrepreneur.
i. Appreciate the needed entrepreneurial discipline.
j. Besides, some of the other important objectives of the EDPs are to:
 k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and
strive for their realization.
l. Prepare him / her to accept the uncertainty in running a business.
m. Enable him / her to take decisions.
n. Enable to communicate clearly and effectively.
o. Develop a broad vision about the business.
p. Make him subscribe to the industrial democracy.
q. Develop passion for integrity and honesty.
r. Make him learn compliance with law.
Phases of EDP
EDP is primarily designed to induce motivation and competence among young
prospective entrepreneurs. So the cause and curriculum of Entrepreneurship Development
programme will be so designed that it will induce motivation and competency. The course
curriculum of EDP should be designed to cover the following aspects:
 It will give general introduction to entrepreneurship.
 It will afford motivational training.
 It will increase managerial skill of the entrepreneur,
 It makes entrepreneur to have expert knowledge on various support systems and procedure.
 It will give fundamental idea on project feasibility study.
 It will encourage plant visit to afford practical knowledge to entrepreneurs.
After deciding on course contents and curriculum on EDP, the next important task is to decide
various phases of EDP. There are three different phases of EDP like:
 Pre-training phase
 Training phase
 Follow-up phase
1. Pre-training phase:
Pre-training phase consists of all activities and preparation to launch training
programme. Pre-training phase of EDP consists of the following activities :
 Selection of entrepreneurs for the training protgramme.
 Arrangements of infrastructure are for the programme like selection of place of training.
 Deciding guest faculty for the programme from education industry and banks.
 Taking necessary steps for inauguration of programme.
 Formation of selection committee to select trainees from the programme.
 Making provision with regard to publicity and campaigning for the programme.
2. Training Phase:
The primary objective of training programme is to develop motivation and skill or
competency amongst the potential entrepreneurs. Care should be taken to impart both
theoretical and practical knowledge to various trainees. The training phase of EDP will be so
designed that it will answer the following questions:
(a) Whether the attitude of the entrepreneur has been tuned towards the proposed project or no.
(b) Whether the trainee has been motivated to accept entrepreneurship as a career.
(c) How the trainee behaves like an entrepreneur.
(d) Whether the trainee has sufficient knowledge on resources and technology or not.
(e) What kind of entrepreneurial traits he lacks and what steps should be taken to set it.
3. Follow-up Phase:
Follow up phase of EDP has been termed as post-training phase. The ultimate objective is
to develop competent entrepreneurs.
So that they can start their project. Post-training phase is a review phase of training programme.
It consists of reviewing of work in the following manner:
 Review of pre-training work
 Review of actual training programme
 Review of post training programme so that cost effectiveness of the present programme can be
evaluated.
Course Contents and Curriculum of Entrepreneurship Development
Programmes
Once the selection procedure for entrepreneur is over, the selected persons have to be
equipped with managerial and technical skills to start their enterprises. In such
entrepreneurship development programmes, there are participants with a variety of back
grounds and qualities. Therefore, a package of training inputs is provided during the
programme which is usually of six week’s duration. It consists of the following six inputs.
 General Introduction to Entrepreneurship:
The participants are exposed to a general knowledge of entrepreneurship such as
factors affecting small-scale industries, the role of entrepreneurs in economic development,
entrepreneurial behaviour and the facilities available for establishing small-scale enterprises.
 Achievement Motivation Training (AMT):
The purpose of AMT is to develop the attitude towards risk-taking, initiative and
other such behavioural or psychological traits. A motivation development programme creates
self-awareness and self-confidence among the participants and enables them to think
positively and realistically. Without achievement motivation training, an EDP becomes an
ordinary executive development programme. Motivation training initiates to strive for
excellence, to take calculated risk, to use feed back for improvement, sense of efficiency etc.
 Support System and Procedures:
The participants have to be exposed to agencies like the local banks and other
financial institutions, industrial service corporations and other institutions dealing with
supply of raw-materials, equipments etc. The programme on support system needs to include
the procedures for approaching them, applying and obtaining assistance from them and
availing of the services provided by them. A linkage between the training institute and
support system agencies can be established by participation of these agencies in sponsoring
and financing EDPs.
 Market Survey and Plant Visit:
In order to familiarise the participants with real life situations in small business, plant
visits are also arranged. Such visits help the participants to know more about an
entrepreneur’s behaviour, personality, thoughts and aspirations. Moreover, the participants
should be given opportunity to conduct market surveys for their respective projects. This
would help to expose the participant to the market avenues available and could be followed
by sessions on methods of dealing in the markets.
 Managerial Skill:
Since a small entrepreneur can not employ management experts to manage his
enterprise, he needs to be imparted basic and essential managerial skills in the functional
areas like finance, production and marketing knowledge of managerial skills enables an
entrepreneur to run his enterprise smoothly and successfully.
 Project Preparation and Feasibility Study:
A good period of time needs to be devoted to the actual preparation of projects. The
active involvement in this task would provide them necessary understanding and also ensure
their personal commitment. During the course of EDP, various guidance sessions are helpful
for enabling the trainees to identify appropriate business opportunities. Information and
counseling on various business opportunities is provided though the team experts and by spot
survey. Necessary experience is provided in market survey, project preparation, sources of
finance etc. Undue emphasis on any dimension should be avoided as it may lead to distortion
in both the process and content of the programme.

EDP institutions in India and their functions:

District Industries Centres are functioning in all the 30 districts of the State.
The District Industries Centres are headed by General Managers who are
supported by functional Managers and technical Officers. The General
Managers are helping the entrepreneurs with necessary escort services for the
new business and guidance for the existing units to grow. All the schemes of the
Department, specially MSMED Act 2006, Single Window, Subsidies etc. are
implemented through the DICs.

Administrative Setup

 Headed by General Managers and supported by functional Managers and

technical field Officers.
 Assist the entrepreneurs with necessary escort services for the new
business and guidance for the existing units to grow.
 Identify new opportunities in the districts to keep pace with the changing
dynamics of Small Scale Industries.

Functions of the District Industries Centre are

 MSMED Act 2006

 Prime Minister's Employment Generation Programme (PMEGP)
 Single Window Clearance Committee
 Export Guidance Cell
 Market Development Assistance to Micro and Small Enterprises for
participation in National / International Trade Fairs
 Nucleus Cell
 Incentives
 Industrial Infrastructure Upgradation Scheme (IIUS)
 Industrial Infrastructure Development Scheme (IID)
 Small Industries Cluster Development Programme (SICDP)
SISI - Small Industries Service Institutes
Small Industries Services Institute. (SISI) Madras, provides a comprehensive range of
services to the small sale industrial sector in Tamil Nadu in terms of technical assistance,
Economic information services, provision of workshop facilities, training and other general
consultancy services. The activities of SISI Madras cover the whole of Tamilnadu and the
Union Territory of Pondicherry. It has two branch SISIs at Coimbatore and Tuticorin and one
Extension Centre at Pondicherry. In addition to the above, there is a Central Footwear
Training Centre at Madras and one electric Motor Testing Laboratory at Coimbatore
functioning under the jurisdiction of SISI Madras.

Workshop Facilities/Testing/Jobs Conducted/Revenue Earned

SISI and its branches, including Extension Centre and Foot wear Training Centre are having
Common facility workshops attached to them for providing common facility and training to
SISI units and their workers respectively. Workshops undertook 792 jobs. Total revenue
receipts in respect of SISI Madras and its subordinate offices for the year 1998-99 is Rs.
10,77,259/- as against Rs. 10.21 lakhs in 1991-92.

(i) Entrepreneurship Development Programmes

SISI Madras and its subordinate offices conducted 33 Entrepreneurship Development

programmes at various places in Tamilnadu and UT of Pondicherry in 1998-99, 1006 persons
were trained in these courses.

(ii) MDP Courses

10 MDP Training Courses were conducted covering various topics like Marketing,
Marketing Management and Market Research, Salesmanship, Hotel Management &
Catering, Quality control, Marketing service and Demand Analysis, Financial Management,
etc. 194 candidates were trained.

(iii) Others 7 motivation campaigns were conducted at different places of Tamil Nadu in
1998-99 in which 725 persons participated.

Ancillary Development/Marketing & Exports

In the area of ancillary development in Tamil Nadu, the Institute conducted Vendor
Development Programme during the year 1996-97, 125 units were NSIC under the Govt.
Stores Purchases Programme in 1996-97.Officers of the SISI participated 7 Plant Level
Committee meeting in 1996-97.124 units were registered under SCX during this year and
124 units were assisted by SCXs.
Economic Investigation

State profiles for the Union Territory of Pondicherry and Tamil Nadu were prepared Techno
Economic surveys of four districts in Tamilnadu were carried out to highlight the potential
for new SSI units during the year 1995-96. A detailed Market Survey Report was also
prepared. 4 District Industrial Potential Surveys were conducted for the district
Kanyakumari, Thanjavur, Nilgiris, Yanam region of UNION TERRITORY. Apart from this
26 project profile were prepared and 26 were updated during the year 1995-96.

Assistance to DICs
SISI assists the District Industries Centres in Tamil Nadu in the following activities:

 Selection of candidates under SEEUY scheme by serving as a member in the Task

Force Committee meetings convened at various districts.
 Participating in the Entrepreneurship Development Programmes and Industrial
Motivation campaigns conducted in the districts by the DICs.
 Dissemination of economic and technical information in the various DIC meetings for
the benefit of potential entrepreneurs.
 Assistance to DIC officials in capacity assessments and SSI units participation in
Central Govt. Stores Purchase Programme.
 Conducting Buyer-Seller meets in collaboration with DICs for the development of
ancillaries.
 Supply of project profiles and other techno-economic information to the DICs in
addition to other ad hoc information from time to time.
 Conducting census-cum-sample survey alongwith DIC in respect of registered units
in each district.

Assistance to SC/ST/Women/Weaker Sections

In all the EDPs, skill development programmes, and training programme for SEEUY
beneficiaries, etc. conducted by SISI, preference is given to SC/ST/Women and other weaker
sections for participating in the programme. The Institute has been conducting EDPs of one
week, one month an two months duration, exclusively for women entrepreneurs for setting
up small scale units in areas like simple chemicals, food processing and Readymade
garments. As a follow-up measure, the applications of successful entrepreneurs belonging g
to the above categories are being pursued with the banks/financial institutions for getting
financial assistance.

Quality Control : SISI, Madras has conducted an one day Awareness Programme on Waste
Minimisation at Erode in association with DIC Erode and DRDA. A five day ISO 9000
Awareness-cum-Educational Programme was conducted. 18 participants have attended the
Programme.
Technical Consultancy Organizations
Technical Consultancy Organisations (TCOs) were created for facilitating technical
consultancy for industrial projects. These organisations were established by the All India
Financial Institutions (IDBI, ICICI, IFCI, etc) in collaboration the state level financial /
development organisations and commercial banks. There are in all 18 state-level TCOs
across India.

Over the years, the TCOs have transformed from being consultancy firm handling
project reports, market surveys, etc. to multi-functional, multi-disciplinary organisations
offering a wide range of services to the industrial and infrastructure sector. Some TCOs such
as KITCO have diversified to offer consultancy services for implementation of projects under
one roof from “Concept to Commissioning”.

Some of the activities of TCOs can be summed up as below:

 Development of Industry Clusters

 Conducting Industry Potential Surveys /Techno-Economic Viability (TEV) studies
 Infrastructure Planning
 Energy and Environment Research and Management
 NPA Resolution
 Vocational Training
 Technology Facilitation / Preparation of Project Profiles
 Conducting Entrepreneurship Development Programs
 Carrying out Market Research for specific products
 Offering Merchant Banking Services
 Offering Consultancy for Export-oriented Enterprises
 UNIT –IV
Project management
A project is a collection of activities and events with a definable beginning and
definable goals. Project is the foundation of every enterprise and the success or failure of
a business enterprise depends upon the project.

PROJECT IDENTIFICATION

Project identification is the process of identifying various business opportunities for

starting an enterprise.
An entrepreneur has to collect data, compare it and analyze the date for selecting the
suitable business opportunities.
Every project involves input, output, social cost and benefit. Project identification
begins with generation of business ideas.
BUSINESS IDEA GENERATION TECHNIQUES
 There are many well-known techniques and methodologies for generating ideas.
Some of the popular techniques are discussed below.
 Focus group:
In this method, a group consisting of 8-14 members may be selected.
A moderator leads the group of people through an open in-depth discussion on a
new product area.
The group of individuals share and discussion ideas and opinions in a structured
and a formal way .
A new product idea may be developed through discussion among the members.
Brainstorming
o A group of participants may be selected.
o Usually, a very broad problem statement starts the brainstorming process.
o Participants are encouraged to share every idea that enters their mind.
o Criticism and negative comments are prohibited
o It is an unstructured process where all ideas generated whether they are logical
or not using this approach, all possible solutions to a problem may be obtained
within a limited time through spontaneous participation the participants.

Reverse brainstorming
Under this method, an entrepreneur focuses on the negative sides of every idea that has
been generated through brainstorming.

Problem Inventory Analysis

under this method, the individuals are provided with a list of
problems for a product category . the participants are asked to identify and discuss on
problems. The participants generally focus on existing problem in a particular product
category. This helps to come up with new ideas. For example, a complete list of problem
covering taste, weight, color, packaging. Size, flavor, cost may be developed. Participants
or individuals con be invited to associate products with each problem. Based of the
results from problem inventory analysis, new ideas may be generated

PROJECT SELECTION
Project selection starts from where project identification ends. An entrepreneur can
use SWOT analysis to analyze the project ideas or business opportunities.

OPPORTUNITY ANALYSIS
 The process whereby an opportunity is identified is known as opportunity
analysis.
 A person can use SWOT analysis as a business tool to analyze business
opportunities.
 A project can be selected with the help of swot analysis.
 SWOT simply stands for: strengths, weaknesses, opportunities, and threats.
 Generally, the environmental factors internal to the firm can be classified as
strength and weaknesses.
SWOT ANALYSIS

STRENGTHS
The strength of an entrepreneur may comprise of the following:

 Business location
 product exclusivity
 patents
 distribution channel
 access to raw material

WEAKNESSES

 High cost of production

 Product or service similar to competitors

 Scarce raw material

 Lack of managerial skills

 Limited human resources and staff

OPPORTUNITIES

 Relaxed government regulation

 Development of new technology

 Growing trend and customer base

 Removal of trade barriers

 Ready made demand for the product

THREATS

 New substitute products emerging

 Price competition

 Economic pressure

 Shift in consumer taste

 New regulations

PROJECT FORMULATION

Project formulation is the systematic development project idea for the

eventual purpose of arriving at an investment decision. project formulation is a step
by step process for investigating and developing business idea. it involves the works
of several experts. a well formulated project can get financial assistance from the
banks

CONTENTS OF A PROJECT REPORT

 A project report is a document which provides details on the overall picture of the
proposed business

 It is a written document relating to any investment. It contains data on the basis of

which the project has been appraised and found feasible .

Following are the contents of a project report

General information

A project report must provide information about the details of the industry to
which the project belongs to which the project belongs to . It must information about
the past experience, present status, problems and future prospects of the industry. It
must give information about the product to be manufactured

Executive summary

 A project report must state the objectives of the business and methods through which
the business can attain success.

Organization summary
 The project report should indicate the organization structure and pattern
proposed for the unit. It must state whether the ownership is based on sole
proprietorship, partnership or joint stock company.

Project Description

 Location of the site

 Raw material requirements
 Target of production
 Area required for the work shed
 Power requirements
 Fuel requirements
 Employment requirements of skilled and unskilled labour
 Technology selected for the project
 Production process

Marketing plan

 Type of customers

 Target markets.

 Nature of market

 Market segmentation

 Sales objective

Capital structure and operating cost

 The project report must describe the capital requirements of the project. It must state
the source of finance, it must also indicate the extent of owners funds and borrowed
funds.

Management plan the project report should state the following

1) business experience of the promoters of the business

2)Details about the management team

3)Duties and responsibilities of team members

4)Methods managing the business

5)Programmes and policies of the management

 Financial aspects

In order to judge the profitability of the business a projected profit and loss
account and balance sheet must be presented in the project report. It must show the
estimated sales revenue, cost of production, gross profit and net profit likely to be
earned by the proposed unit.

Technical aspects

 It provides information about the technology and technical aspects of a project.

PROJECT IMPLEMENTATION

Every proposed business unit must draw a time table for the project . It must
indicate the time within the activities involved in establishing the enterprise can be
completed

PROJECT APPRAISAL

 The main objective of the appraisal of a project is the measure the reliability and
viability of project.

 Project appraisals are carried out to assess whether the investment will be profitable.

 Project appraisal helps to find out whether the project is worth to be invested and is
financially viable

Criterion in the project appraisal

 Technical feasibility

 Economic feasibility

 Financial feasibility

 Managerial feasibility

Technical feasibility

Technical feasibility is conducted to find out whether the proposed business is

feasibility from technical point of view.

It is the process of identifying the raw materials, plant and machinery and
technical know how available for the product. Technical feasibility shows all the
technical areas of business, it consists of

 Identifying the technical specification of the product

 Inputs required for manufacturing the product

 Technical skills

 Manufacturing process

 Product design

 The availability of raw material

 Quality control measures

 Power supply

 Availability of water

 Communication network.

For example,

 Purified drinking

 Water business

Economic feasibility

 Economic feasibility is conducted to find out whether the project is sound from the
economical point of view

 Identifying the demand for the product

 Analyzing the competitors

 Estimating the cost, volume and profit relationship

 Market share of the product

 Product life cycle scope of the product

 Scope of the product based on swot analysis

Example,

The entrepreneur must estimate the profit of the business based on the cost involved
in cleaning per liter of water
 Financial feasibility

Find out financial cost and returns are properly estimated and project is financially
viable.

 Estimating the total cost of investment

 Forecasting the return on investment
 Estimating the gross profit and net profit
 Analyzing the pay back period
 Break even analysis
 Analyzing the pay back period

Example,

 The estimate future cash future cash inflows and outflows of the business.

 The number of water cans that can be sold by the entrepreneur must be estimated to
find out the financial viability of the project.

Managerial feasibility

It is conducted to determine whether the management and employees possess the

required skill for managing the business

 Competence of the top level management

 Technical competence

 Ability to tackle problems

 Experience of the staff

Example

 The entrepreneur must have the knowledge in running water can business.

 he must have experienced staff to purify water and ensure water cans distributed on
time to capture the market
 UNIT- V

INCENTIVES & SUBSIDIES

 The term “incentive” generally means encouraging productivity . It is a motivational

force, which encourages an entrepreneur to take a right decision and act upon it.

 Broadly incentives include concessions, subsidies and bounties. incentives may be

financial or non-financial

Subsidy

Subsidy is a financial assistance or sum of money provided by a government, to an

industry for public welfare or interest. It is any financial aid grant or contribution.

Bounty

The term “bounty” denotes a bonus or financial aid given to an industry to help it to
compete with other unit established in country or in a foreign market”

Incentives to small scale industries in India

An incentive is a motivational factor which induces a person to work hard or to do his
work more efficiently.

Many incentives are provided both by the Central and State Governments to promote
the growth of small-scale industries and also to protect them from the onslaught of the
large-scale sector. Among the various incentives given to small-scale industries the
following deserve special mention:

Reservation:
To protect the small-scale industries from the competition posed by large-scale
industries, the Government has reserved the production of certain items exclusively for the
small-scale sector. The number of items exclusively reserved for the small-scale sector has
been considerably increased during the Five Year Plan Periods and now stands at 822.

Preference in Government purchases:

The Government as well as Government organisations shows preference in procuring
their requirements from the small-scale sector. For instance, the Director General of Supplies
and Disposals purchases 400 items exclusively from the small-scale sector. The National
Small-Scale Industries Corporation assists the SSI units in obtaining a greater share of
Government and defence purchases.

Price preference:
The SSI units are given price preference up to a maximum of 15 per cent in respect of
certain items purchased both from small-scale and large-scale units.

Supply of raw materials:

In order to ensure regular supply of raw materials, imported components and
equipment’s, the Government gives priority allocation to the small-scale sector as compared
to the large-scale sector. Further, the Government has liberalised the import policy and
streamlined the distribution of scarce raw materials.

Excise duty:
In respect of SSI units excise duty concessions are granted to both registered and
unregistered units on a graded scale depending upon their production value. Full exemption
is granted up to a production value of Rs.30 lakhs in a year and 75 % of normal duty is levied
for production value exceeding Rs.30 lakhs but not exceeding Rs.75 lakhs. If the production
value exceeds Rs.75 lakhs, normal rate of duty will be levied

RBI’s credit guarantee scheme:

In 1960, the RBI introduced a Credit Guarantee Scheme for small-scale industries. As
per the Scheme, the RBI takes upon itself the role of a guarantee organisation for the
advances which are left unpaid, including interest overdue and recoverable charges. This
scheme covers not only working capital but also advances provided for the creation of fixed
capital.

Financial assistance:
Small-scale industries are brought under the priority sector. As a result, financial
assistance is provided to SSI units at concessional terms by commercial banks and other
financial institutions. With a view to providing more financial assistance to the small-scale
sector, several schemes have been introduced in the recent past the Small Industries
Development Fund (SIDF) in 1986, National Equity Fund (NEF) in 1987 and the Single
Window Scheme (SWS) in 1988.

Technical consultancy services:

The Small Industries Development Organisation, through its network of service and
branch institutes, provides technical consultancy services to SSI units. In order to provide the
necessary technical input to rural industries, a Council for Advancement of Rural
Technology was set up in October, 1982.

The Technical Consultancy Organisation renders consultancy services to SSI units at

a subsidised rate. Many financial institutions are also providing subsidies to SSI units for
availing of consultancy services. For instance, small entrepreneurs proposing to set up rural,
cottage, tiny or small-scale units, can get consultancy services at a low cost from the
Technical Consultancy Organisations approved by the All-India and State-level financial
institutions.

They have to pay only 20% of the fees charged by a technical consultancy
organisation. The entire balance of 80% or Rs.5, 000 whichever is lower is subsidised by the
Industrial Finance Corporation of India.

Transport subsidy:
The Transport Subsidy Scheme, 1971 envisages grant of a transport subsidy to small-
scale units in selected areas to the extent of 75 % of the transport cost of raw materials which
are brought into and finished goods which are taken out of the selected areas.
Training facilities:
The Entrepreneurship Development Institute of India, financial institutions,
commercial banks, technical consultancy organisations, and NSIC provide training to
existing and potential entrepreneurs.

Marketing assistance:
The National Small Industries Corporation (NSIC), the Small Industries Development
Organisation (SIDO) and the various Export Promotion Councils help SSI units in marketing
their products in the domestic as well as foreign markets. The SIDO conducts training
programmes on export marketing and organises meetings and seminars on export promotion.

District Industries Centres (DICs):

The 1977 Industrial Policy Statement introduced the concept of DICs. Accordingly a
DIC is set up in each district. The DIC provides and arranges a package of assistance and
facilities for credit guidance, supply of raw materials, marketing etc..

INDUSTRIAL ESTATES

TAMILNADU SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD

(SIDCO)

The Tamil Nadu Small Industries Development Corporation Limited (SIDCO)

wasestablished on 16.3.1970 by the Government of Tamil Nadu with the main objective of
assistingand promoting the interests of Micro, Small and Medium Enterprises in the State.

Activities of SIDCO

1) Formation and maintenance of Industrial Estates

2) Raw Materials Distribution

3) Assistance in Marketing through Marketing Assistance Scheme.

4) Formation of Clusters and Common Facility Centres

Establishment of Industrial Estates:

Suitable lands are identified taking into consideration the various factors such
aslocation, availability of power and water, transport facilities etc., for the formation
of newIndustrial Estates.

The lands are either acquired if they are private patta lands or alienated if they
are Government lands.

Basic infrastructure facilities such as roads, streetlights, water supply system,

stormwater drainage, sewage system etc., are provided in the lands taken over and
new industrial estates are formed.

Government of Tamilnadu have established 35 Industrial Estates initially

throughDirectorate of Industries and Commerce and the administrative control of
these industrialestates were transferred to SIDCO on agency terms in 1974.

SIDCO has developed 59 Industrial Estates on its own since its establishment
in 1970and totally 94 industrial estates (Annexure- IV) are functioning under the
control of SIDCO at present.