2016
COMMERCE
Course: 104
(Entrepreneurship Development)
Full Marks: 80
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. (a) Explain the literacy description of the words ‘entrepreneur’ and ‘entrepreneurship’.
-> Entrepreneur
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Entrepreneur play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to market. Entrepreneur who proves to be successful in taking on the risks of a start-up are rewarded with profits, fame, and continued growth opportunities. Those who fail suffer losses and became less prevalent in the markets. So, an entrepreneur is:
- A beginner in the market, who has something new to offer to society and starts right from scratch to establish and run the enterprise.
- An innovator, who has a thought-provoking idea or concept in his/her mind, that has the capability to lead the marketplace.
- A developer, who develops a business model, to give shape to the idea.
- A leader, who provides guidance and support to his/her men, to work in a specific direction or change the same so as to achieve the target.
- An incharge who is accountable and responsible for the success or failure of the venture, for the decision made by him/her.
- A promoter, who takes all the relevant steps to turn the dream into reality.
- A forecaster , who foresees, future opportunities and threats which can affect the venture, possibility or negatively.
- A risk-taker, who has the ability to anticipate the risk in the future moves, and take the risk, if they are beneficial to the enterprise.
TYPES OF ENTREPRENEUR
Based on the types of business:
1) Trading Entrepreneur– As the name itself suggests, the trading entrepreneur undertakes the trading activities. They procure the finished products from the manufacturers and sell these to the customers directly or through the retailer. These serve as the middlemen as wholesalers, dealers, and retailers between the manufacturers and customers.
2) Manufacturing Entrepreneur– The manufacturing entrepreneurs manufacture products. They identify the needs of the customers and, then, explore the resources and technology to be used to manufacture the products to satisfy the customers’ needs. In other words, the manufacturing entrepreneurs convert raw materials into finished products.
3) Agricultural Entrepreneur– The entrepreneurs who undertake agricultural pursuits are called agricultural entrepreneurs. They cover a wide spectrum of agricultural activities like cultivation, marketing of agricultural produce, irrigation, mechanization, and technology.
Based on the use of technology:
1) Technical Entrepreneur– The entrepreneur who establish and run science and technology-based industries are called ‘technical entrepreneur.’ These are the entrepreneurs who make use of science and technology in their enterprises. Expectedly, they use new and innovative methods of production in their enterprises.
2) Non-Technical Entrepreneur– Based on the use of technology, the entrepreneurs who are not technical entrepreneurs are non-technical entrepreneurs. They are concerned with the use of alternative and imitative methods of marketing and distribution strategies to make their business survive thrive in the competitive market.
Based on ownership:
1) Private Entrepreneur– A private entrepreneur is one who is an individual sets up a business enterprise. He/she it’s the sole owner of the enterprise and bears the entire risk involved in it.
2) State Entrepreneur– When the trading or industrial venture is undertaken by the state or the government, it is called ‘state entrepreneur.’
3) Joint Entrepreneur– When a private entrepreneur and the government jointly run a business enterprise, it is called ‘joint entrepreneurs.’
Based on Gender:
1) Men Entrepreneurs– When business enterprises are owned, controlled, and managed by men, these are called ‘men entrepreneurs.’
2) Women Entrepreneurs– Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women having a minimum financial interest of 51 per cent of employment generated in the enterprises to women.
Based on the Size of enterprise:
1) Small-Scale Entrepreneur– An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called ‘small-scale entrepreneur.’
2) Medium-Scale Entrepreneur: The entrepreneur who has made investment in plant and machinery above 1.00 crore but below Rs. 5.00 crore is called ‘medium-scale entrepreneur.’
3) Large-Scale Entrepreneurs: The entrepreneur who has made investment in plant and machinery more than Rs 5.00 crore is called ‘large-scale entrepreneur.’
CHARACTERISTICS OF ENTERPRENEUR
1. Self-Motivation- One of the most important traits of entrepreneurs is self-motivation. When you want to succeed, you need to be able to push yourself. you aren’t answerable to anyone else as an entrepreneur, and that sometimes means that it’s hard to get moving without anyone to make you. You need to be dedicated to your plan and keep moving forward- even if you aren’t receiving an immediate paycheck.
2. Understand what you offer – As an entrepreneur, you need to know what you offer, and how it fits into the market. Whether its product or a service, you need to know where you fit in. This also includes knowing whether you are high end, middle of the road or bargain. Being able to position yourself and then adjust as needed is an important part of entrepreneurship.
3. Take Risks- Successful entrepreneurs know that sometimes it’s important to take risks. Playing it safe almost never leads to success as a business owner. It’s not about taking just any risk, though. Understanding calculated risks that are more likely to pay off is an important part of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.
4. Know How to Network- Knowing how to network is an important part of entrepreneurship. Sometimes who you know is an important part of success. Being able to connect with others and recognize partnership opportunities can take you a long way as a business owner. Figure out where to go for networking opportunities and make it a point to learn how to be effective.
5. Basic Money Management Skills and Knowledge – We often think of successful entrepreneurs as “ big pictures” people who don’t worry so much about managing the day to day. And it’s true that you might have an accountant or other team members to help you manage the business. However, if you want to be successful, you still have basic money management skills and knowledge. Understand how money works so that you know where you stand, and so that you run your business on sound principles.
6. Flexibility – To a certain degree, you need to be flexible as an entrepreneur. Be willing to change as needed. Stay on top of your industry and be ready to adopt changes in processes and product as they are needed. Sometimes, you also need flexibility in your thinking. This is an essential part of problem-solving. You want to be able find unique and effective solutions to issues.
7. Passion- Finally, successful entrepreneurs are passionate. They feel deeply about their product or service or mission. Passion is what will help you find motivation when you are discouraged and it will drive you forward. Passion is fuel for successful entrepreneurship. There are many serial entrepreneurs that create successful businesses, sell them, and then create something else.
Entrepreneurship
The process of launching, developing and running a business venture along with its financial risks is called entrepreneurship. In simple terms, it is willingness to launch a new business venture. It is very important for the economic development of the expanding global marketplace. A person who undertakes entrepreneurship is called an entrepreneur.
Entrepreneurship has been described as the “capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit.” While definitions of entrepreneurship typically focus on the launching and running of businesses, due to high risks involved in launching a start-up, a significant proportion of start-up businesses have to close due to “lack of funding, bad business decision, an economic crisis, lack of market demand, or a combination of all of these.”
TYPES OF ENTREPRENUERSHIP
1) Administrative Entrepreneurship- The entrepreneurial activity under this category is centred around administrative techniques and functions. It gives a new option to handle prevailing or future situations in a more effective way that provides advantages and a competitive edge. Total quality management, job redesigning, new techniques of doing things, participative management or management by consensus are a few of the examples of administrative entrepreneurship that increase overall organizational efficiency and that makes the firm successful and sustainable in the competitive market environment.
2) Opportunistic Entrepreneurship– It is the best characteristics of entrepreneurship. Environmental changes always offer new opportunities. But everybody is not equally capable of identifying and to utilize that opportunity on time. The entrepreneurship that identifies exploits and executes that opportunity in the first hand regarded as opportunistic entrepreneurship.
3) Acquisitive Entrepreneurship– The entrepreneurship that learns from other competencies is acquisitive entrepreneurship. It acquires something new of value front, the competitive environment or achieves the competitor’s technical capacities. It keeps entrepreneurship sustainable in a competitive environment. The failure never restraints them from acquisition but motivates them further to discover such a thing with a new visitor.
4) Imitative Entrepreneurship– The entrepreneurship that imitates a good or service operating in the market under a franchise agreement is the imitative entrepreneurship. It is the medium that spread technology over the world. It adopts an existing technology with minor modifications appropriate to the local condition.
5) Private Entrepreneurship– The entrepreneurship that is initiated under the private sector is private entrepreneurship. The government gives various support services through private and public concerns that encourage private initiative in taking entrepreneurial ventures. A mutual relationship between private and public sectors would make economic development speedy and balanced.
6) Public Entrepreneurship– The entrepreneurship that is undertaken by the government through its various development agencies is public entrepreneurship. All countries, developed or underdeveloped, take a public initiative in venture ideas to fulfil the initial deficiency of private entrepreneurs.
7) Individual Entrepreneurship– The entrepreneurship that is undertaken by an individual or a family with the personal initiative is individual entrepreneurship.
8) Mass Entrepreneurship– This type of entrepreneurship emerges in an economy where a favourable climate of motivation and encouragement exists for developing a wide range of entrepreneurship among general mass is mass entrepreneurship. It increases small and medium enterprises in a country.
CHARACTERISTICS OF ENTERPRENEURSHIP
- Process: Entrepreneurship is a systematic, purposeful, creative and continuous process, which an entrepreneur undertakes to run the business smoothly.
- Innovation: Innovation is the key feature of the entrepreneurship, which creates a difference in the market place. Indeed, it helps the enterprise to introduce the product quickly, as there is hardly any company which selling the product in the market.
- Development of Network: Developing strong connections with the parties such as suppliers, distributors, banks, debtors, creditors and many more, which are directly or indirectly related with the business process, to have a good worth, in the market.
- Profit potential: Profit is something that keeps the organization going; in fact, it acts as a motivation for the entrepreneurs, to do better than before. So, before taking any decision regarding the enterprise, priority is given to the profit potential, i.e. while taking any step further, the entrepreneur identifies whether it is profitable or not.
- Forecasting of Market Trends and future possibilities: The entrepreneur has to keep a close watch on the market trends and future demands so that the enterprise could continuously work to improve the products or service offered, and grow further.
(b) Define entrepreneurs in small firms.
-> Entrepreneurs are people who owns and control their own enterprises. They are almost always focused upon the well-being, survival and development of their enterprises. Their everyday activities are centred on doing business and simply running their enterprise.
If entrepreneurs are seen outside the premises of their enterprise, it is likely to be for a reason that concerns or impacts upon the enterprise. Thus, most typically, they will be seen with customers or potential customers. If they are seen at an ‘event’, it is likely that they are there in order to assess the threat or opportunity presented by the event. Even, they are likely to take up such an invitation only if they see some potential gain as a result of attending. Small firms usually deal with known and established products and services and this small firms owners tend to deal with known risks. Limited growth with continued profitability is what hoped for in most small firms.
Myths about Entrepreneurs:
- Entrepreneurs take uncalculated and unknown risks without any plans- This myth is partially true; entrepreneurs do take uncalculated and unknown risks, but they keep resources, and plan as much as they can for dealing with the unknown.
- Entrepreneurs complete extensive research before taking the first step- Unless an existing business is setting up a new business line on a new concept, entrepreneurs start with very limited or no research. However, they do have good awareness about the potential of their offering, which gives them the confidence to assume the risk.
- Entrepreneurs venture out only after gaining significant experience in the industry- Most entrepreneurs are young, inexperienced individuals who follow their passion.
Entrepreneurs are in business to make money; they strive to achieve security through having enough money to do business and to make profit. Allied to this motivation is a constant constraint and therefore concern surrounding lack of cash and cash flow.
If such a notice is accepted, then it is interesting to compare this primary ‘in-practice’ motivation with some of the literature characteristics and motivations supposedly possessed by entrepreneurs. For example:
Innovative/creative- In practice, entrepreneurs will display these characteristics only if they have a need for new source of money. They will often take on new work in the hope of success and if this is forthcoming, then all is well; if not, then innovation stops.
Opportunistic- In practice, entrepreneurs will display this characteristic in similar circumstances to the above, but only until a barrier occurs and risk is involved.
Risk-Taker- In practice, again, entrepreneurs will display this characteristic in similar circumstances to the above but will take risks only until money is threatened.
Change oriented- In practice, entrepreneurs display this characteristic only because the business is likely to be small, and, as it will always have to grow, change in unavoidable.
It can be argued that, when it comes to understanding good marketing practice by entrepreneurs, much more sensitivity to the unique characteristics of the entrepreneurs is required. Characteristics in which small firms are uniquely different can be summarized as negative attitudes to marketing: the perception of marketing as a cost; distribution and selling treated as uncontrollable problems; and, possibly more significant, the belief that each case is so specific that it cannot be treated with general rules.
A definition of small-firm marketing characteristics would typically acknowledge limited resources, lack of specialist expertise for the small- firm owner to seek a strategy for growth that is sensitive to his or her unique characteristics and circumstances is apparent.
2.(a) Compare and contrast the views of Schumpeter, Walker and Drucker on entrepreneurship.
-> Schumpeter’s Theory:
The innovative theory is one of the most famous theories of entrepreneurship used all around the world. The theory was advanced by one famous scholar, Schumpeter , in 1991.
Schumpeter believes that creativity or innovation is the key factor in any entrepreneur’s field of specialization. He argued that knowledge can only go a long way in helping an entrepreneur to become successful. He believed development as consisting of a process which involved reformation on various equipment’s of productions, outputs, marketing and industrial organizations.
However, Schumpeter viewed innovation along with knowledge as the main catalysts of successful entrepreneurship. He believed that creativity was necessary if an entrepreneur was to accumulate a lot of profits in a heavily competitive market.
The concept of innovation and its corollary development embraces five functions:
1. Introduction of a new good
2. Introduction of a new method of production
3. Opening of a new market
4. Conquest of a new source of supply of raw materials and
5. Carrying out of a new organization of any industry
Schumpeter represents a synthesis of different notions of entrepreneurship. His concept of innovation included elements of risk taking , superintendence and co-ordination.
According to Schumpeter
· Development is not an automatic process; bur must be deliberately and actively promoted by some agency within the system. Schumpeter called the agent who initiates the above as entrepreneur
· He is the agent who provides economic leadership that changes the initial conditions of the economy and causes discontinuous dynamic changes
· By nature he is neither technician, nor a financier but he is considered an innovator
- Entrepreneurship is not a profession or a permanent occupation and therefore, it cannot formulate a social class like capitalist
· Psychological, entrepreneurs are not solely motivated by profit
Features of Schumpeter Theory:-
· High degree of risk and uncertainty in Schumpeterian World
- Highly motivated and talented individual
· Profit is merely an part of objectives of entrepreneurs
· Progress under capitalism is much slower than actually it is
- It is leadership rather than ownership which matters.
· Schumpeter’s concept of entrepreneurship is both wide and narrow. It is wide in the sense that it includes not only the independent businessmen but also company directors and manager who actually carry out innovative functions. It is narrow to the extent than individuals who merely operate an established business without performing innovative functions are excluded.
· Schumpeter’s innovating entrepreneur represents the most vigorous type of enterprise. But this type of entrepreneurs is a rare species in developing countries. The type of entrepreneur who exploits possibilities as they present themselves within a limited time horizon and mostly on a small scale can only produce limited time horizon and mostly on a small scale can only produce limited results. Society must produce innovators with a long time horizon and who are capable of achieving substantial transformations.
Walker’s Theory:
Walker has considered an entrepreneur as an organizer and co-ordinator of the various factors of production. According to him the true entrepreneur is one who is endowed with above average ability for organization and co-ordination. He is a pioneer and a captain of industry. However, in practice, entrepreneurs possess different degrees or organizational skill and co-ordinating capacity. The supply of true entrepreneurs is limited. The more competent entrepreneurs earn superior rewards in terms of profit.
Drucker’s Theory:
According to Peter Drucker, an “entrepreneur is one who always searches for change, responds to it, and exploits it as an opportunity”. Entrepreneurs innovate and innovation is a specific instrument of entrepreneurship. It creates resources because there is no such thing as a ‘resource’ until man finds man finds a use for something and endows it with economic value.
J.B. Say defined entrepreneurship as improving the yield of resource. Drucker defines it an increasing the value and satisfaction obtained from resources by the consumer. Successful entrepreneurs create new value or increase the values of what already exists. The covert a material into a resources or combine existing resources in a new or more productive configuration. Entrepreneurship is based on purposeful and systematic innovation. “Systematic innovation consists in the purposeful and organized search for changes and in the systematic analysis of the opportunities such changes might offer for economic or social innovation”.
The test of the innovation lies not in its scientific content but in the market place. While many writers treat entrepreneurship as mysterious or flush of genius. Drucker treats it a practice or discipline that has a knowledge base. It is a purposeful task that can be organized and learnt. The focus should be not on psychology or character traits of entrepreneurs but on their actions and behaviour. According to Drucker, entrepreneurship is not confined to big business and economic institutions. It is also equally important to small business and non-economic institutions. Drucker considers entrepreneurship behaviour rather than personality trait as people with diverse personalities and temperaments have performed well in entrepreneurial challenges. The foundation of entrepreneurship lies in concept and theory rather than in intuition. An entrepreneur need not necessarily be a capitalist or an owner. A banker who mobilizes others’ money and allocates it in areas of higher yield is very much an entrepreneur though he is not the owner of the money.
(b) Highlight the ‘Theory of Transaction Cost’ with the help of an example.
-> The transaction cost approach to the theory of the firm was created by Ronald Coase. Transaction cost refers to the cost of providing for some good or service through the market rather than having it provided from within the firm. Ronald Coase describes in his article “The problem of Social Cost” the transaction costs he is concerned with:
In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on.
More succinctly transaction costs are:
· Search and information costs
· Bargaining and decision costs
· Policing and enforcement costs
Ronald Coase contends that without taking into account transaction costs it is impossible to understand properly the working of the economic system and have a sound basis for establishing economic policy.
The Nature of the Firm (1937) by Ronald Coase:
Ronald Coase observes that market prices govern the relationship between firms but within a firm decision are made on a basis different from maximizing profit subject market prices. Within the firm decisions are made on through entrepreneurial coordination. There are a great variety of arrangements in producing goods. In agriculture often most of the labour force works on a day-to-day basis. In other industries the labour force may be permanent, tied to the firm with long-term contracts. Repair services in some firms may be supplied by an internal organization; in others it is provided by specialized firms from outside. A firm is a system of long-term contracts that emerge when short-term contracts are unsatisfactory.
The unsuitability of short term contracts arises from the costs collecting information and the costs negotiating contracts. This leads to long term contracts in which the remuneration is specified for the contracted in return for obeying, within limits, the direction of the entrepreneur.
Coase notes that the economic theory of the production level of a plant in the short run and long run are well worked out, but the theory of the size of the firm is not well developed. This is clear in the matter of acquisition of companies by other companies.
Ronald Coase gives the origin of the Nature of the Firm as a course in the organization of the business unit which he taught in 1932. He noted that there are inconveniences of market transaction, but it transactions are not governed by the price system there has to be an organization. The object of a business organization is to reproduce the conditions of a competitive market for the factors of production within the firm at a lower cost than the actual market. But if an organization exists to reduce costs then why are there any market transactions at all? Coase gave two reasons:
· The costs of organizing additional transactions rise with scale and are equated with the costs of additional market transactions;
· The organization of bigger firms may not reproduce the effects of market conditions.
Ronald Coase best describes the relationship between internal and external transaction costs and activity of firms: Every company will expand as long as the company’s activities can be performed cheaper within the company. For example, if there is a risk of environment uncertainty, external transaction costs will increase. Consequently, a company will be more eager to keep its economic activity internal. There will be fewer contracts with suppliers and less external meetings and supervision.
Oliver Williamson adds that a transaction costs occurs “when a good or a service is transferred across a technologically separable interface.” He also states that critical dimensions for transactions are 1) uncertainty,2) frequency and 3) degree of durability. This reflects the initial idea proposed by Coase. In addition to certainty, manager needs to know the potential future outcomes of a decision. The easiest way to understand this theory is to create an example. Imagine that you want to outsource marketing activity to another company. You need to make a decision. Normally you would base your decision based solely on calculations. However, according to Coase, a good manager needs to take into account bureaucratic costs of your company. When the transaction costs of monitoring another company are lower than the bureaucratic costs of your company, you will decide to outsource the activity to the environment.
Transaction Cost Economics :
Economists Ronald Coase and Oliver Williamson are credited for introducing and popularizing the concept of Transaction Cost Economics (TCE). The TCE theory explains the need for companies in a market. If markets operated in a perfect world, companies would not be needed, as market forces would provide the coordination and incentives needed for production activities.
However, in a real market, companies exist with hierarchies and exercise authority that allocates resources efficiently. Markets, on the other hand, use their bargaining power to allocate resources. The TCE theory states that a hierarchy can allocate resources more effectively, or efficiently, than a market due to imperfect information and bounded rationally.
3(a) How would you identify and evaluate business opportunities?
-> An entrepreneur would like to evaluate the opportunities for his products, both goods and services, in the market. He needs to take into account various factors based on which he evaluates opportunities and how such factors are likely to influence those evaluations. He should critically access his business ideas to their effectiveness. According to experts, opportunity evaluation is meant to access future opportunities and identify wealth creating resources that can be controlled and utilised by the entrepreneur. The entrepreneur may possess what appears to be an excellent idea, but whether it can be turned into a profitable opportunity has to be explored. The difference between an idea and an opportunity is whether the entrepreneur can turn it into a product/service and take it to market, whether it will attract customers’ attention and bring profits to the entrepreneur. Before pursuing an idea into a commercial opportunity, the entrepreneur must analyze it critically by bringing up all possible questions. He should try to expand his idea, brainstorm and develop it considerably. He should not just follow established rules but question and examine his assumptions and test them. He should innovate and come up with unconventional ideas.
To evaluate opportunities, the entrepreneur has to assess a number of factors. He should ascertain if his product/service is likely to provide a solution to a problem, which the customer is, whether the product/service can bring financial rewards, if there are any barriers to its entry into the market, competition and quality of competition, the cost involved in launching the product/service in the market, marketing strategy, time needed to break even, expected market share and investment opportunities, among other things. The major factor that need to be considered before evaluating an opportunity are the time the entrepreneur is willing to spend on a project, the preliminary investment, the working capital, the daily activities, its cash flow and profitability.
Opportunity evaluation carried out by management experts demonstrated that such activity is future focused, indicating that the entrepreneur evaluates each opportunity as a resource and weighs the wealth that resource can create if it were utilized. Entrepreneurs find opportunities more interesting if such opportunities match their existing skills, knowledge and capabilities. However, they may get equally strongly attracted to opportunities even if they are inconsistent with their abilities if they perceive them to be rare and profitable with least competition. When they face such conditions, entrepreneurs develop the willingness to learn something new and move beyond their existing sphere of activity.
In the final analysis, the entrepreneur must evaluate an opportunity based on the risks and rewards involved in it. He should also assess if the market is ready for the product/service. He should also ensure that his team is the right one for the assignment and the members are knowledgeable in matters related to the business. Ultimately, he has to make sure that business concept matches the objectives of the team to ensure the success of the business opportunity.
Four ways to identify more business opportunities:-
- Listen to your potential clients and past leads- when you’re targeting potential customers listen to their needs, wants, challenges and frustrations with your industry. Have they used similar products and services before? What did they like and dislike? What are their objections to your products or services?
This will help you to find opportunities to develop more tailored products and services hone your target market and identify and overcome common objections.
- Listen to your customers- When you’re talking to your customers listen to what they are saying about your industry, products and services. What are their frequently asked questions? Experiences? Frustrations? Feedback and complaints?
This valuable customers information will help you identify key business opportunities to expand and develop your current products and services.
- Look at your competitors- Do a little competitive analysis to see what other start-ups are doing, and more importantly, not doing? Where are they falling down? What are they doing right? What makes customers go to them over you?
Analysing your competitors will help you identify key business opportunities to expand your market reach and develop your products and services.
- Look at industry trends and insights- Subscribe to industry publications, join relevant associations, set Google alerts for key industry terms and news and follow other industry experts on social media.
Absorb yourself in your industry and continually educate yourself on the latest techniques and trends.
(b) Explain the role of SIDBI on entrepreneurship development.
-> SIDBI was made responsible for administering Small Industries Development Fund and National Equity Fund that were administered by IDBI before. SIDBI is the Primary Financial Institution for promoting, developing and financing MSME (Micro, Small and Medium Enterprise) sector.
Besides focussing on the development of the Micro, Small and Medium Enterprise sector, SIDBI also promotes cleaner production and energy efficiency. SIDBI helps MSMEs in acquiring the funds they require to grow, market, develop and commercialize their technologies and innovative products. The bank provides several schemes and also offers financial services and products for meeting the individual’s requirement of various businesses.
SIDBI provides direct, indirect and micro finance facilities.
Direct Finance : In the form of Term Loan Assistance, Working Capital Assistance, Support against Receivables, Foreign Currency Loan, Scheme of Energy Saving for MSME sector, equity support etc.
Indirect Finance : The Indirect assistance in the form of Refinance is provided to Primary Lending Institutions (PLIs), comprising banks, State Level Financial Institutions, etc. having a wide network of branches all over the country. The main objective of Refinance Scheme is to increase the resource position of PLIs which would ultimately facilitate the flow of credit to MSME sector.
Micro Finance : SIDBI provides micro finance i.e. credit to small entrepreneurs and businessmen for establish their business.
Role of SIDBI:-
1. SIDBI refinances loans extended by the primary lending institutions to small scale industrial units, and also provides resources support to them.
2. SIDBI discounts and rediscounts bills arising from sale of machinery to or manufactured by industrial units in the small scale sector.
3. To expand the channels for marketing the products of Small Scale Industries (SSI) sector in domestic and international markets.
4. It provides services like leasing, factoring etc. to industrial concerns in the small scale sector.
5. To promote employment oriented industries especially in semi-urban areas to create more employment opportunities and thereby checking migration of people to urban areas.
6. To initiate steps for technological up-gradation and modernisation of existing units.
7. SIDBI facilitates timely flow of credit for both term loans and working capital to SSI in collaboration with commercial banks.
8. SIDBI Co-Promotes state level venture funds in association with respective state government.
9. It grants direct assistance and refinance loans extended by primary lending institutions for financing exports of products manufactured by small scale units.
4(a) Detailed out a EDP module for an assumed target group.
-> Entrepreneurship Development Programme (EDP) is a programme which helps in developing the entrepreneurial abilities. The skills that are required to run a business successfully is developed among the people through this programme. It has become one of the major instruments for the promotion and development of entrepreneurship in India during the last three to four decades. This programme is perfect for them. This programme consists of a structured training process to develop an individual as an entrepreneur. It helps the person to acquire skills and necessary capabilities to play the role of an entrepreneur effectively.
The potential target group refers to the group of persons for whom the EDP is designed and undertaken each and every target group has its own needs, requirements and aspirations.
The programme designed for one group may be useless for other groups. Therefore, the target Group to be trained and developed must be clearly defined before the EDP is designed and started. The following types of target group may be considered before starting and EDP.
1. Technical and other qualified persons:
This group includes the persons having technical knowledge of a particular course. The persons may be degree or diploma holders in science, ITI, engineering and technology.
The government and semi-government agencies operate special EDP and scheme of assistance for this group. The EDP for this group is designed to enable and help them to set-up their own manufacturing units.
The enterprises selected for this purpose are directly related to their technical qualification and experience.
2. Ex-Servicemen:
Ex-servicemen are the persons who are retired from army, navy and air-force. These persons have acquired many useful skills and experience during their service period. They are highly disciplined, hard working, enterprising and innovative. They can also become successful entrepreneurs after proper entrepreneurial training.
The Government of India offer special incentives and facilities in order to rehabilitate them. Many ex-servicemen are operating their manufacturing training and service enterprises successfully in two countries.
3. Business executives:
After getting sufficient business experience, some business executives want to start their independent business enterprises.
They have innovative ideas and may not be satisfied with their present economic and social entrepreneurs after getting entrepreneurial training.
4. Women entrepreneurs:
The Government of India is encouraging women to participate in business activities. Women are entering into business world in large numbers.
Several government and non-government agencies are specially, organizing entrepreneurial training programmes for women.
5. S.C. and S.T., entrepreneurs:
Government of India is committed to uplift the scheduled caste (S.C.) and scheduled tribe (S.T.). Various government and non-government agencies give preference to S.C. and S.T. entrepreneurs to attend EDP.
Special arrangements are made to provide them concessional loans to set up their enterprises.
The characteristics or qualities which make the entrepreneurs successful are known as entrepreneurial competencies. The possession of certain knowledge, skill, trait and quality called entrepreneurial competencies help the entrepreneurs to perform entrepreneurial activities successfully.
In other words, the qualities, traits and characteristics possessed by an entrepreneur which result in superior performance are called the entrepreneurial competencies and are developed through entrepreneurial development programme.
(b) What are the various strategies and approaches for EDPs?
-> Entrepreneurship Development Programme (EDP) is a programme which helps in developing the entrepreneurial abilities. The skills that are required to run a business successfully is developed among the people through this programme. It has become one of the major instruments for the promotion and development of entrepreneurship in India during the last three to four decades. This programme is perfect for them. This programme consists of a structured training process to develop an individual as an entrepreneur. It helps the person to acquire skills and necessary capabilities to play the role of an entrepreneur effectively.
The potential target group refers to the group of persons for whom the EDP is designed and undertaken each and every target group has its own needs, requirements and aspirations.
The programme designed for one group may be useless for other groups. Therefore, the target Group to be trained and developed must be clearly defined before the EDP is designed and started. The following types of target group may be considered before starting and EDP.
1. Technical and other qualified persons:
This group includes the persons having technical knowledge of a particular course. The persons may be degree or diploma holders in science, ITI, engineering and technology.
The government and semi-government agencies operate special EDP and scheme of assistance for this group. The EDP for this group is designed to enable and help them to set-up their own manufacturing units.
The enterprises selected for this purpose are directly related to their technical qualification and experience.
2. Ex-Servicemen:
Ex-servicemen are the persons who are retired from army, navy and air-force. These persons have acquired many useful skills and experience during their service period. They are highly disciplined, hard working, enterprising and innovative. They can also become successful entrepreneurs after proper entrepreneurial training.
The Government of India offer special incentives and facilities in order to rehabilitate them. Many ex-servicemen are operating their manufacturing training and service enterprises successfully in two countries.
3. Business executives:
After getting sufficient business experience, some business executives want to start their independent business enterprises.
They have innovative ideas and may not be satisfied with their present economic and social entrepreneurs after getting entrepreneurial training.
4. Women entrepreneurs:
The Government of India is encouraging women to participate in business activities. Women are entering into business world in large numbers.
Several government and non-government agencies are specially, organizing entrepreneurial training programmes for women.
5. S.C. and S.T., entrepreneurs:
Government of India is committed to uplift the scheduled caste (S.C.) and scheduled tribe (S.T.). Various government and non-government agencies give preference to S.C. and S.T. entrepreneurs to attend EDP.
Special arrangements are made to provide them concessional loans to set up their enterprises.
The characteristics or qualities which make the entrepreneurs successful are known as entrepreneurial competencies. The possession of certain knowledge, skill, trait and quality called entrepreneurial competencies help the entrepreneurs to perform entrepreneurial activities successfully.
In other words, the qualities, traits and characteristics possessed by an entrepreneur which result in superior performance are called the entrepreneurial competencies and are developed through entrepreneurial development programme.
He following strategies and approaches are therefore, suggested to be followed for organizing EDPs future:-
EDP objective
Objectives of each type EDP, depending on the target group and its locations as well as the nature of activity to be focused upon, should be decided in the beginning itself. In other words, expectations from an EDP must be outlined at the outset itself. Such expectations would be with regard to raising the motivation level of trained, developing their entrepreneurial skills, personality traits, knowledge and preparedness for the promotion and management of enterprise etc.
Training needs assignment
Keeping in view the objectives of an EDPs the target group and the gaps observed between the expected and existing level f entrepreneurial motivation, skills, traits knowledge, and preparedness stc., the training needs and intensity should be assessed while the expected levels could be the concerned team of organizing that EDP.
Contents and module of an EDP
Based on the training needs, the entrepreneurship development team should identify the topics and activities to be covered and taken up and list them out in the form of contents of an EDPs. Also, the learning objectives of each topic and activity should be stated clearly. Formulation of EDPs module shall involve sequencing of the topics and activities to be taken up during the training period and the extent of time required to be devoted to each of the topics. The module should comprise the activities to be performed during the post-training as well.
Training Techniques
Once the content and module of an EDP have been worked out, the next step should be to identify and select the training techniques to be applied. These techniques could be class- room learning, on-the- learning, on- the job learning, lectures, panel, discussion, one to one counselling, group exercises and discussion, case analysis, video shows, motivation/ business/ management games, stimulation and group assignment etc. The identification and selection of training needs, contents as well as he target group.
Training Aids
Based on the content and training techniques to be applied, the training aids, like course materials, work books, scoring sheets and stationary etc. Should identify and developed. Depending on the training techniques, learning tools, like audio visual aids, black/ white board, flip charts instruments, models, simulators, computer manuals scoring sheets etc. Should be identified, acquired or developed. Also, evaluation criteria and evaluation as well as feedback tools for getting participants assessment of training etc should be developed.
Training faculty
One of the most important tasks to be performed in the course of the preparation for an EDP is the identification of the suitable training faculty keeping in view he contents and the target groups. It may be noted that training faculty plays a significant role in making an EDP effective and interesting. Therefore, one must keep in mind, that the chosen training faculty must have the necessary expertise and up-to-date knowledge of the topic(s) be handle and also must able to communicate and interact with the trainees in the same language as understood by them. As such the ED team must have a set of alternatives faculty as well whole services could be availed of as and when required.
Launching of an EDP
In the course of planning, executive and concluding an EDP, the ED team should try to involve the representatives of financial and support agencies as well as responsible social personalities of that are to the maximum extent possible. It would be better if the interaction sessions with the representatives of the concerned financial institutions and promotional agencies as well as local public personalities are arranged, in the beginning itself, to explain the scope and objectives of an EDP due to the organised. This would help build a conducive environment for seeking not only financial and promotional support for the creation of enterprise by the trainees but also sensitize the social environment for extending moral and material support to the potential entrepreneurs.
Post- training activities
Mere completion of the training programme would not be sufficient, and it would be necessary that the post- training follows – ups and monitoring of the training potential entrepreneurs continue or an extended period last 2 years. It may be stated that though such activities are being performed even now, the intensity and effectiveness of such post-training activities are up to the expectation.
It may be pertinent o observed here that most of the time and resources of an EDP are at present devoted to the training component of the purposes of which is developing the entrepreneurial capabilities would on its own lead to the creation of an enterprise however, it must be pointed out that the launching and resourcing of an enterprise. It is high time that an EDP sponsoring organisation as well as ED organisation and adequate attention to the expect.
Post training assessment
Assessing the impact and effectiveness of an EDP during the post-training phase should be an essential part of the whole exercise. It may be desirable to undertake such assessment exercise. It may be desirable to undertake such assessment exercise towards the end of third year from the completion of an EDP and it takes a lot of time or a potential entrepreneur to create an enterprise and sustain it in the initial stage. The scope of such an exercise should not remain confined to the effectiveness of EDP in terms of enterprise creation only but also take into account the impact created by an EDP on the trainees as well as their immediate social environment i.e. family and friends etc.
Growth programmes
During the 3rd and 4th year after the completion of an EDP a series of enterprise growth, programmes and organised to further strength the management skills f the training entrepreneurs who have already set up their enterprises and have been running them successfully or otherwise. In this way a link between the trained entrepreneurs and ED organisation would continue for a longer duration and also improved the health of the enterprise created by them and facility expansion, diversification and modernisation of the enterprises to a certain extent.
5(a) What is entrepreneurship development vis-à-vis economic development in North-East?
-> The north-east India’s economy is generally characterised by low per capita income, low capital formation, inadequate infrastructure facility, geographical isolation and communication bottleneck, inadequate exploitation of natural resources like mineral resources, hydro power potential, forest, etc., low progress in industrial field, lack of private and foreign direct investment and high unemployment rate among the relative high literate people.
Not even one of the NE states has a higher per capita income than the national average. This is interesting because in 1997-98 Nagaland had a higher per capita income than national average and in 1996-97, both Mizoram and Nagaland had higher per capita incomes than the national average.
The population growth in the NER is largely responsible for this low per capita income. CARG in NSDP shows that Manipur, Meghalaya, Mizoram, and Tripura have been doing better than national growth rate. Interestingly, Assam thee so called most developed state in the North-East, has the lowest per capita income and lowest in NSDP.
(b) What are entrepreneurship development vis-à-vis social issues in North-East?
-> Training and Research done by brought out a number of social and
institutional issues that need to be addressed to have better impact of the
efforts to promote entrepreneurship. Socio cultural environment and values
have an important bearing in the emergence of entrepreneurship in any
society. While the individual may like to take up and opinion career the
family may not like to encourage him/her to take up such a career. It is a
fact that majority of parents want their children to take up salaried
employment. Preference for salaried employment is not peculiar to the
states of the Northeast. This can be found in other states also. But
preferences for salaried jobs in northeast are very high. There are of
course, youth taking up entrepreneurial career against the wishes of the
parents. But their number is very small.
It is also social cultural environment that has been hindrance in the
growth of entrepreneurship in the region. It is social status that comes
most while making a choice in career. It is a fact that salaried jobs enjoy
better social status in the society, besides enjoying security of jobs,
assured income, less hour of work and lesser degree of responsibilities.
The Northeast is not an expected to this phenomenon. However, preference
for self employment has gone to such an extent that unemployment youth are
prepared to pay for a job that to utilise that amount of money for self
employment and all these are due to social environment. They feel that
would get job because of their proximity to public man.
The value orientation to work and leisure, initiation talking
innovativeness etc. Are some other aspects that are influenced by social
environment? To become an entrepreneur a person must be hard working. But
in the north east leisure orientation is more than the work orientation.
Preference for leisure than or work is a role rather than an exceptions.
This is reflected in the growing tendency or observing bandh. A change in
this orientation is necessary to bring about change for growth of
entrepreneurship in the North east.
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