ENTREPRENEUR

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UNIT - 5
ENTREPRENEUR
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Introduction Think New, differently , Do
everything in a new different way Todays
Mantra of Success . Come Out Of Shell . Eliminate
Conventional Thinking A sort of R D.
challenge Try finding alternative fuel.

• Ideas drive Economies, no wonder that
  Innovation Entrepreneurship are often seen as
  inseparable.
• Science Technology Students have to be
  Motivated Trained to Think Out Of The Box so
  that an Entrepreneurial Culture is Built. The
  Ones feasible Ways of doing Business are no
  longer Guarantees for Future Economic Success,
  hence, the Govts around the World have started
  to realize that Entrepreneurship Innovation
  need to be encouraged in order to sustain
  progress improve a Countrys Economy.

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• Entrepreneurs are responsible for
  Industrial Development the fruits of
  Industrial Development are greater Employment
  Opportunities to the Unemployed, Increase in
  Income Levels of People, Improvement in Standard
  of Living, Increased Revenue to the Government in
  the form of Direct Indirect Taxes Balanced
  Regional Development.
• India needs Entrepreneurs for Two Reasons
  
• 1) To Capitalize on New
  Opportunities to Create Wealth.
• 2) To Create Wealth New Jobs.

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Definitions on Entrepreneur

• 1) Peter F. Drucker defines
  Entrepreneur as One Who Always searches for
  Change, Responds to it Exploits it as an
  Opportunity. Innovation is the Specific Tool of
  Entrepreneurs, the Means by which, they Exploit
  Change as an Opportunity for Different Business
  or Service.
• 2) Encyclopedia Britannica defines an
  Entrepreneur as an Individual who bears the Risk
  of Operating a Business in the Face Of
  Uncertainty about the Future Conditions.

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• 3) International Labor Organization (ILO)
  This defines Entrepreneurs as People who have
  the Ability to See Evaluate the Business
  Opportunities together with the necessary
  Resources to take Advantage of them to
  initiate Appropriate Action to ensure Success.
• 4) Dr. Poornima M. Charantimath,
  Professor, Management Studies, KLS Institute of
  Management Education Research (IMER), Belgaum
  says The World Entrepreneur is derived from a
  Sanskrit Word called Antaraprerana ! (Urge from
  within or Internal Urge).

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• 5) Francis A. Walker observes that the
  True Entrepreneur is one who is endowed with more
  than Average Capacities in the Risk of
  Organizing Coordinating the Various other
  factors of Production. He is a Pioneer Captain
  of Industry.
• 6) E. E. Haggen defines Entrepreneur is
  an Economic Man who tries to Maximize his profits
  by Innovations. Innovations involve Problem
  Solving the Entrepreneur gets satisfaction from
  using his Capabilities in Attacking Problems.

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• Conclusions Definitions of an
  Entrepreneur are divided into 3 Streams
• 1) The Ones describing Roles of an
  Entrepreneur.
• 2) The Other describing Characteristics
• 3) Ones Focusing on Success Factors.
• Summarizing, the Entrepreneur can be
  described as a Person (a) Who carries out a Role
  in the Economic World by creating Added Value
  who bears the Risk Responsibility. (b) One
  with a Combination of Specific Personal
  Characteristics (Creative, Innovative, Dynamic
  etc.)
• Two Conditions seem to be Vital in
  Order to become an Entrepreneur The Will to
  Succeed, Achieve etc., and Opportunities for
  Creating Value, Innovation etc.

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Evolution of the Concept of Entrepreneurship

• He is a Person who creates Enterprise. The
  Process Creation is called as Entrepreneurship.
• This evolved from the French Word
  Entreprende in the 12th Century. In the early
  16th Century, it was applied to those who were
  engaged in Military Expeditions. In the 17th
  Century, it was extended to cover Civil Engg
  Services. In the 18th Century, Richard Centillon
  described Entrepreneur as One Who Bears Risk by
  buying at Certain Prices selling at Uncertain
  Prices which is closer to the Terms as Applied
  Today.

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• In 1848, the famous John Stuart Mill
  described Entrepreneurship as the founding of a
  Private Enterprise. This encompassed Risk Takers,
  the Decision Makers, the Individuals who desire
  Wealth by Managing Limited Resources to create
  New Business Ventures.
• Joseph Schumpeter (1934) stated
  Entrepreneur as one who applies Innovation
  within the Context of the Business to satisfy
  Unfulfilled Market Demand.
• Peter F Drucker perceived
  Entrepreneurship as the Creation of a New
  Organization, regardless of its ability to
  Sustain itself, let alone make a Profit.
• Evolution of the Concept of
  Entrepreneur is considered over nearly Four
  Centuries Old, the Characteristics of
  Entrepreneurs being Risk Taking Innovation,
  Organization Creation, Creating Value, Profit or
  Non Profit Growth, Uniqueness the Owner
  Manager.

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• These Views about Entrepreneur can be
  classified into 3 Groups viz., Risk Bearer,
  Organizer Innovator. These Views have been
  discussed below
• 1) Entrepreneur as a Risk Bearer
• Richard Cantillon, French
  Economist was the first to introduce the term
  Entrepreneur his Unique Risk Taking Function
  in Economics in the early 18th Century.
  Entrepreneur is One Who Buys Factors of
  Production at Certain Prices in Order to Combine
  them into a Product with a View to Sell it at an
  Uncertain Price. He illustrated a Farmer who pays
  out Contractual Incomes which are certain to the
  Landlords Laborers sell them (the Produce) at
  an Uncertain Price.
• So also the Merchants who
  make Certain Payments in expectation of uncertain
  receipts. Thus, they too are Risk Bearing
  agents of Production.

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• Thus, we can say that Entrepreneurs
  are a Specialized Group of People who bear
  Uncertainty. Uncertainty is defined as a Risk
  which cannot be insured against cannot be
  Calculated. Thus, Entrepreneur is a Economic
  Functionary who undertakes such a Responsibility
  of Uncertainty which by its very nature cannot be
  Insured, nor Capitalized nor Salaried too.

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• 2) Entrepreneur as an Organizer
• Entrepreneur is associated with
  the functions of Coordination, Organization
  Supervision. He is a Person who combines the Land
  of One, labor of the Other, the Capital of Yet
  Another thus produces a Product.
• By Selling a Product in the
  Market, he Pays Interest on Capital, Rent on
  Land, Wages to Laborers What Remains is his
  Profit. According to Jean - Baptist Say, in the
  Course of Undertaking a Number of Complex
  Operations like Obstacles to be surmounted,
  Anxieties to be Suppressed, Misfortunes to be
  Overcome, Expedients to be devised, Three more
  Implicit Factors are deemed to be essential which
  are as given below

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• 1) Moral Qualities for Work Judgement,
  Perseverance a Knowledge about the Business
  World.
• 2) Command Over Sufficient Capital.
• 3) Uncertainty of Profits.
• 3) Entrepreneur as an Innovator
• Innovation can be perceived
  simply as the Transformation of Creative Ideas
  into useful Applications by combining Resources
  in New or Unusual Ways to provide Value to
  Society for Improved Products, Technology, or
  Services.

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• By adding Innovative features to a
  Product or Service, Setting up a Business based
  on these additional features to compete in the
  Existing Market, New Entrants may be able to gain
  a Competitive Edge over the Existing Market
  Players.
• Another Study stated that
  Entrepreneur is One Who Applies Innovation
  within the Context of Business to Satisfy
  Unfulfilled Market Demand. Entrepreneur is an
  Innovator who implements changes within Markets
  thro carrying out of the New Combinations which
  can take Several Ways as follows

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• 1) The finding of a New Market.
• 2) The finding of a New Source of
  Materials Supply.
• 3) The introduction of a New Product or a
  New Standard of Quality.
• 4) The introduction of a New Best
  Method of Production.
• 5) The Opening of a New Kind of
  Business in an Industry.

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• Eg Jeff Bezos, the Founder of
  Amazon, the Very Successful Book Store. He was
  one of the first to Sell Books on a Large Scale
  using an On Line Store also patented the One -
  Click System for Online Buying.
• Though Selling Books is not an
  Innovation in itself, Jeff Bezos was Innovative
  in the Use of the Internet then as a Viable
  Marketing Sales Channel for Selling Books.
• To summarize, the Concept of
  Entrepreneur is closely associated with the 3
  Basic Factors Risk Bearing, Organizing
  Innovating. Thus, an Entrepreneur can be defined
  as a Person who Tries to Create Something New,
  Organizes Production in the Process Undertakes
  Risks Handles Economic Uncertainty involved in
  his/her Enterprise.

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Functions of an Entrepreneur

• An Entrepreneur performs all the
  Functions necessary, right from generating the
  Idea for his proposed Enterprise where there is a
  Need, Opportunity exists up to establishing his
  Enterprise Subsequently Running it Successfully
  Earn Profits.
• The Functions are listed below in a
  Sequential Manner

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• 1) Generation of Business Ideas
  Choosing the Best Suitable Idea after Necessary
  Scanning. Many Entrepreneurs keep an Eye for
  Opportunity start by finding a need quickly
  satisfying it. This is the most important
  function of an Entrepreneur, as subsequent
  success or failure of his enterprise depends on
  his decision at this stage. Therefore the
  Entrepreneur has to exercise great care before
  deciding to choose a particular Business Idea for
  his proposed Enterprise.

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• 2) Determination of Business Objectives
  i.e., What he wants to achieve in his proposed
  Business Enterprise.
• 3) Product Analysis MR to make sure
  that there is a Good Market Potential for the
  proposed Product / Service.
• 4) Determination of form of Ownership /
  Organization. i.e., Proprietorship / Partnership
  / Private Limited Company.
• 5) Completion of Promotional
  Formalities , they are

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• Identifying a Location.
• Looking for a Suitable Land / Building in
  the Proposed Location.
• Obtaining Provisional Registration (PRC)
  from District Industries Centre of the District
  in which the proposed Business is to be
  established.
• Preparation of Plant Layout Building Plan,
  if reqd to be constructed.
• Taking effective steps for reqd
  infrastructural facilities like Power, Water,
  Communication Facilities etc.
• Preparing a Detailed Project Report or
  Business Plan.

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• 6) Making necessary arrangements for
  Finance to implement the Project by approaching
  State Financial Corporation for Long Term Loan
  Banks for Working Capital Loan.
• In addition, Entrepreneur has to
  arrange his Own Financial Resources as Equity or
  Margin Money for the Project. This can be 25 to
  30 of the Cost of the Project.
• 7) Undertaking Building Construction, if
  Ready Shed is not taken.
• 8) Plant Machinery Ordering,
  Procuring, Installation.
• 9) Getting Electrical Power Connection
  Other Utilities.
• 10) Arranging for Various Raw Materials
  Consumables.
• 11) Arranging Key Managerial /
  Supervisory Persons.
• 12) Recruiting reqd Manpower viz.,
  Skilled, Semi - Skilled Helpers (Un Skilled).

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• 13) Undertaking Trial Productions,
  Overcoming Initial Teething Problems
  Stabilizing the Production Operations.
• 14) Commencing the Commercial Business
  Operations.
• 15) Marketing the Products.
• 16) Taking Feedback from the Market for
  Customer Satisfaction, because Customer is the
  King. Effective Remedial Steps to be taken if
  there are Customer Complaints on Quality,
  Performance, Delivery Schedule etc.

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• 17) After Stabilizing the Commercial
  Business Operations, Provisional Registration
  Certificate (PRC) issued by District Industries
  Centre has got to be converted into Permanent
  Registration Certificate (PMT) by filing the
  necessary reqd Application.
• 18) All other Statutory Licenses /
  Registrations as per the Govt Regulations have to
  be obtained during Implementation after
  Successful Commencement of Commercial Production.
• 19) Approaching the District Industries
  Centre for Grant of Concessions / Incentives as
  per the Govt Industrial Policy Regulations. For
  this, the Entrepreneur has to fill up the
  Necessary Forms Submit the same to the District
  Industries Centre with all the reqd Documents.

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• 20) Entrepreneur has to always keep an
  Eye on the Market Conditions be prepared to
  innovate to face the Competition because Market
  Conditions are Fast Changing, Customer Needs are
  Changing. Success today is No Guarantee of
  Success Tomorrow.
• 21) Entrepreneur should never be Happy
  about his Achievement. He must always try for
  Growth Expansion of his Business Activities. He
  should Plan at least 20 to 25 growth over his
  previous years performance, because stagnation in
  Business leads to sickness slow death of his
  enterprise.

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• 22) Finally, a Very Important Function of
  an Entrepreneur is dealing with People because
  Business is People. An Entrepreneur has to
  maintain a Very Cordial Healthy Relationship
  with his Managers, Supervisors, Workmen,
  Customers, Materials, Suppliers, Vendors,
  Bankers, Financial Institutions, Govt Officials
  all those who are connected Directly or
  Indirectly with his Business Enterprise.
• Now we can summarize that, the
  Functions of an Entrepreneur have to incorporate
  Coordination of the Business Management of the
  Enterprise, Risk Taking, Controlling the
  Enterprise, Innovation for Change, Motivation
  Other Related Activities. In reality, an
  Entrepreneur has to carry out a Combination of
  these in keeping with Time Environment. He has
  to consider New Ideas, Demands Exploit the
  Opportunities thereby contribute to the
  Technical Economic Progress . He is thus the
  Nucleus of High Growth of the Enterprise. The
  Entrepreneurial Functions are depicted
  Schematically as Shown below

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Types of Entrepreneur

• There are Different Types of
  Entrepreneurs so also the Important
  Classifications of Entrepreneurs. Some of the
  Important Classifications of Entrepreneurs
  Different Types of Entrepreneur in each
  Classification are enumerated below
• I) Classification of Entrepreneurs
  based on Functional Characteristics
• a) Innovative Entrepreneur.
• b) Imitative or Adoptive
  Entrepreneur.
• c) Fabian Entrepreneur.
• d) Drone Entrepreneur.

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• II) Classification of Entrepreneurs on the
  Development Angle
• a) Prime Mover.
• b) Manager.
• c) Minor Innovator.
• d) Satellite.
• e) Local Trading.
• III) Classification of Entrepreneurs based
  on Types of Business
• a) Manufacturing.
• b) Wholesaling.
• c) Retailing.
• d) Service.

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• IV) Classification of Entrepreneurs as per
  the Behavioral Scientists
• a) Solo Operators.
• b) Active Partners.
• c) Inventors.
• d) Challengers.
• e) Buyers.
• f) Life Timers.

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• I) a) Innovative Entrepreneurs Such an
  Entrepreneur introduces New Goods / Products /
  Services or New Methods of Production or
  discovers New Markets or Reorganizes his
  Enterprise. Entrepreneurs in this Group are
  Characterized by an aggressive collection of
  information for trying out Novel Combination of
  Factors. Such Entrepreneurs do well when a
  certain level of development is already achieved
  they look forward to improve upon the Past.
• b) Imitative or Adoptive
  Entrepreneurs
• Such Entrepreneurs do not Innovate
  themselves, but Imitate or Copy Techniques
  Technology innovated by other Innovative
  Entrepreneurs. They are Characterized by their
  readiness to adopt Successful Innovations by
  other Entrepreneurs. They are particularly
  suitable for Under Developed Regions as Adoption
  saves Costs of Trial Error.

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• c) Fabian Entrepreneur
• They display great caution
  skepticism in experimenting with any change in
  their Enterprise. They adopt changes only when
  there is an imminent threat to the very Survival
  of their Enterprise.
• d) Drone Entrepreneur
• These Entrepreneurs are
  characterized by a Die Hard Conservative
  Attitude. They do not easily seize opportunities
  to make changes in their production techniques or
  the Technology employed, even at the Cost of Low
  Returns on their Investments compared to other
  similar enterprises. Such entrepreneurs may even
  incur Huge Losses but they will not be ready to
  make Changes in their existing production
  techniques.

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• II) a) Prime Mover This Entrepreneur
  sets into Motion a Powerful Sequence of
  Development, Expansion Diversification of
  Business.
• b) Manager Such an Entrepreneur
  does not initiate Expansion is content just
  Staying in Business.
• c) Minor Innovator
• He contributes to Economic
  Progress by finding better use for Existing
  Resources.
• d) Satellite The Entrepreneur
  assumes a Suppliers Role slowly moves towards
  a Productive Enterprise.

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• e) Local Trading Such an Entrepreneur
  limits his enterprise to the Local Market.
• III) a) Manufacturing Entrepreneur is
  involved in Production of Value Added Goods by
  using Various Inputs Raw Materials,
  Consumables, Labor, Power Other utilities.
  Goods can be a Variety of Products like Castings,
  Forgings, Soaps, Detergents, Various chemicals,
  Textiles, Plastic Components, Footwear, School
  Bags, Electronic Electrical Items, Computer
  Related Products etc. etc.,

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• b) Wholesaling An Entrepreneur with
  such a Business sells Products to the Middle Men
  or Retailers.
• c) Retailing An Entrepreneur with
  such a Business sells Products directly to the
  Consumers or End Users.
• d) Service An Entrepreneur in this
  Business sells Services not the Products.

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• IV) a) Solo Operators Such
  Entrepreneurs usually Work Alone if needed at
  all, employ a few employees to assist. Most of
  the Entrepreneurs begin their Entrepreneurial
  Career in this fashion.
• b) Active Partners These
  Entrepreneurs start their enterprise in
  Partnership. All the Partners actively
  participate in the Operation of the Enterprise.
  Entrepreneurs who only contribute funds to the
  enterprise but do not actively involve in
  Business Activity are called simply Partners.

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• c) Inventors Such Entrepreneurs with
  their Competence Inventive Nature, Invent New
  Products. Their Basic Interest lies in Research
  Innovative Activities.
• d) Challengers Such Entrepreneurs
  plunge into Business because of the Challenges it
  Presents. When One Challenge is satisfied, they
  will be on the lookout for New Challenges.
• e) Buyers Such Entrepreneurs do not
  wish to bear much Risk. Hence, in order to reduce
  Risk involved in establishing a New Enterprise,
  they wish to buy an Ongoing One.
• f) Life Timers Such Entrepreneurs take
  Business as an Integral Part of their Life.
  Usually, the Family Enterprise Businesses which
  call for Personal Skills fall in this Category of
  Entrepreneurs.

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Intrapreneur - An Emerging Class.

• These New Breed of Entrepreneurs are
  emerging from Big Companies.
• In this Case the Entrepreneurial Spirit of
  Small Companies is transferred to Big Companies.
• Such Entrepreneurs of Big Companies are
  called as Intrapreneurs, an Emerging Class of
  Entrepreneurs.
• Intrapreneurship is a Method of
  Stimulating then Capitalizing on Individuals in
  an Organization who think that something can be
  done differently better.

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• There are strong similarities between
  Intrapreneurs Entrepreneurs as strongly
  contrasted with the Characteristics of
  traditional Managers.
• In Large Organizations, the Senior Level
  Executives are encouraged to develop New Ideas
  then convert their innovative ideas into New
  Products thro Research Development Activities
  within the Frame Work of the Organization.
• This Concept of Intrapreneurship is gaining
  Great Popularity in Developed Countries like the
  USA. In fact, Increasing Number of Intrapreneurs
  are leaving their Jobs in Big Organizations are
  starting their Own Enterprises.
• Many of such Intrapreneurs have become very
  successful in their newly established enterprises
  in fact are competing with their Parent
  Organizations are even posing as a Business
  Threat to them.

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Differences between Entrepreneurs Intrapreneurs

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Concept of Entrepreneurship its Evolution

• According to Peter F Drucker,
  Entrepreneurship is neither a Science nor an
  Art, it is a Practice.
• It has a Knowledge Basis. Knowledge in
  Entrepreneurship is a Means to an End, Indeed
  what constitutes Knowledge in Practice is largely
  defined by the Ends, that is by Practice.
• There are Several Definitions of
  Entrepreneurship, important ones being some of
  the Following

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• 1) It is a Purposeful Activity of an
  Individual or a Group of Associated Individuals,
  undertaken to initiate, Maintain or increase
  Profit by Production or Distribution of Economic
  Goods Services.
• 2) It is an attempt to Create Value thro
  Recognition of Business Opportunity, the
  Management of Risk Appropriate to Opportunity
  thro the Communicative Management Skills to
  mobilize Human, Financial Material Resources
  necessary to bring a Project to fruition.

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• 3) Entrepreneurship is the ability to
  create build a Vision from practically nothing.
  It is a Dynamic Process of Creating Incremental
  Wealth.
• 4) According to One Study, the
  Definition is Entrepreneurship is based on
  Purposeful Systematic Innovation. It includes
  not only the independent businessman but also
  company direction managers who actually carry
  out innovative functions.

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Summary

• Entrepreneurship can exist in Different
  Kinds of Business, on all levels of Company size
  in different functions.
• In all above definitions,
  Entrepreneurship refers to the activities
  performed by an Entrepreneur in establishing an
  Enterprise. We can therefore say that
  Entrepreneurship is the Act of being an
  Entrepreneur. It is a Process involving various
  Activities to be undertaken to establish an
  Enterprise.

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• The Two Basic Elements involved in
  Entrepreneurship are Innovation Risk
  Bearing.
• These Two Factors are Given Below
• 1) Innovation This refers to coming out
  with a New Product or Process or doing something
  differently. This is a Basic Characteristic of
  Every Entrepreneur. There are a Few Innovations
  New Products developed as given in the Egs below
  

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• Egs 1) Bisleri introduced Packaged
  Drinking Water, every one was wondering whether
  this Business Idea would ever succeed. Now you
  can see several other Entrepreneurs have copied
  this idea have set up Enterprises to
  manufacture Packaged Drinking Water. In fact,
  many of them have been successful too. The reason
  being, People are Health Conscious are ready to
  pay Extra Money for sake of their Health. Hence,
  a Good Market has developed for this Product.

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• 2) Introduction of Taj Mahal Tea Bags
  (Dip Tea) for use by Travelling Public, by
  various Big Manufacturers of Tea Powder.
• 3) Various Ready to Cook Packaged Food
  Items introduced by MTR Ltd., Bangalore to
  cater to the needs of Working Couples in Bigger
  Cities Metros other Consumers.
• 4) The Rs 1.00 Lakh Nano Car released
  by Tata Motors recently to meet the needs of 4
  Wheelers for the Middle Class people in the
  Country who cannot afford Expensive Vehicles
  who wish to switch to 4 Wheelers from 2 Wheelers.

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• From the above Egs, We can infer that
  the Entrepreneurs need to innovate continuously
  to come out with Newer products to meet the
  Changing Demands of the Customers.
• 2) Risk Bearing
• Any Business Proposition has an element
  of Risk, the Reason being very obvious that, an
  Enterprise may Earn Profits or Incur Losses
  because of Various Factors beyond the Control of
  the Entrepreneur like Increasing Competition,
  Labor Unrest. He needs to be Courageous to face
  the Risk Challenges involved in running the
  Enterprise. His ability to Sustain Risk
  ultimately helps him to be a Successful
  Entrepreneur, against All Odds.

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The Terms Entrepreneur
Entrepreneurship are often used Interchangeably
but they are Conceptually Different. Relationship
between these Two Terms are given below
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As seen from the above Relationship,
Entrepreneurship is concerned with Performance
Coordination of the Entrepreneurial Functions.
This also means that Entrepreneur precedes
Entrepreneurship. To give clarity to the concept
of Entrepreneurship, the same is represented in
Fig., below
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Development of Entrepreneurship

• Introduction
• Down the Years, many Myths have been
  created about Entrepreneurship. Some of the
  Important Myths are
• 1) Entrepreneurs are Born, not made.
• 2) All you need is Money to be an
  Entrepreneur.
• 3) All you need is Luck to be an
  Entrepreneur etc.

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• Such Myths do not hold good any more
  at present, as Emperical (Experimental Study)
  have shown that Entrepreneurs are made can be
  developed thro a Process of Entrepreneurship
  Development, Training Activities.
• Development of Entrepreneurship is a
  Key to achieve overall Economic Development thro
  an increased level of Industrialization. This is
  a Process in which Persons are injected with
  Motivational Drives of Achievement insight to
  tackle Uncertain Risky Situations especially in
  Business Undertakings.
• The Process of Entrepreneurial
  Development focuses on Training, Education, Re
  Orientation Creation of Conducive healthy
  Environment for the Growth of the Enterprises.

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EDP

• This is designed to help a person in
  strengthening fulfilling his Entrepreneurial
  Motive in acquiring reqd skills capabilities
  to become a successful Entrepreneur.
• Towards this end, it is necessary to
  promote his understanding of Motives
  Motivational Pattern, their Impact on Behavior
  Entrepreneurial Value. A Program which seeks to
  do that can be called an Entrepreneurial
  Development Programme (EDP).

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• EDP is primarily meant for developing
  those First Generation Entrepreneurs who on their
  Own cannot become Successful Entrepreneurs, it
  covers 3 Major Variables
• i) Location ii) Target Group iii)
  Enterprise (Entrepreneurial Activities).
• In fact, any one of the above three
  variables can be used as a Starting Point for
  initiating implementing an EDP. The remaining
  Two then will follow by making the proper
  synthesis with the first.

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• Eg 1 If the Object is to develop
  Backward North Karnataka Regions, then the
  Potential Target Group feasible Entrepreneurial
  Ventures must follow.
• Eg 2 If the Objective is to Promote IT
  based Enterprises, suitable Target Group
  Location must Match.
• EDP by itself mainly aims at
  achieving Specific Objectives of the Programmes
  therefore cannot create any Magical Result. It is
  a Continuous Process of Training Motivating
  then to set up Profitable Enterprises in Large
  Nos.

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Entrepreneurial Development Models

• The Models suggested for the
  Development of Entrepreneurship fall into the
  Following Categories
• 1) Psychological Models.
• 2) Sociological Models.
• 3) Integrated Models.

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1) Psychological Models

• Many Researchers, while Identifying
  Determinants of Entrepreneurship, have given more
  importance to Achievement Motives.
• Change in Motivation is seen
  primarily as a Result of Ideological Arousal of
  the Latent Need for Achievement among Youths.
• Hence Achievement Orientation has
  been identified as the Key Variable in the
  Development of Entrepreneurship therefore, Mc
  Clelland suggests Motivation Training Programme
  as the Policy Measure, which will make
  Entrepreneurs really willing eager to exploit
  the New Opportunities Provided.

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• Another Model suggested by John Kunkel
  (1965) for Entrepreneurship Development is a
  Behaviorist Model. According to him,
  Entrepreneurial Behavior is a Function of the
  surrounding Social Structure both Past Present
  can really be influenced by manipulating
  Economic Social Incentives. Thus, John Kunkels
  Model is based on the Experimental Psychology,
  which identifies Sociological Variables as the
  Determinants of Entrepreneurship Development.

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2) Sociological Models

• Frank W. Youngs Theory of
  Entrepreneurship is a Theory of Change based upon
  Incorporation of Relative Sub Groups in the
  Society.
• The Relativeness of a Sub Group which
  has a Low Status in a Larger Society will lead to
  Entrepreneurial Behavior if the Group has better
  Institutional Resources than others in the
  Society at the same level.
• Youngs Model of Entrepreneurship
  suggests that the Creation of Supporting
  Institutions in Society as the Determinant of
  Entrepreneurship.

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3) Integrated Models

• T.V Rao (1975) identifies the following
  factors as the Determinants of Entrepreneurship
• a) Need for motive is the Dynamic
  which, for the Prospective Entrepreneur, has the
  greatest possibility of achieving the Goals if
  one performs those activities.
• b) Long Term involvement is the
  Goal either at thinking level or at activity
  level in Entrepreneurial Activity that is viewed
  as a Target to be fulfilled.
• c) Personal, Social, Material
  Resources which are related to entry success in
  the area of Entrepreneurial Activity.
• d) Socio - Political System to be
  perceived as suitable for establishment
  development of his enterprise.

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• All the above factors together, with
  their Optimal Presence lead to the entry point of
  Entrepreneurship. This in turn leads to
  acquisition of Material Resources Commencement
  of Business.
• B.S Venkata Rao (1975) suggested
  the following Five Stages for the Promotion of
  Small Entrepreneurs.
• 1) Stimulation The Stage includes
  the Creation of an Industrial Environment, Policy
  Statement emphasizing the Role of Small
  Enterprises in Economic Development, giving Wide
  Publicity to Industrial Development Programmes
  Announcing Special Schemes Promotion of Support
  Organizations. This Stage is necessary to
  stimulate interest of the Backward Regions in
  Industrial Activity to create awareness.

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• 2) Identification This stage is
  necessary to identify the prospective
  entrepreneurs such as Rural Artisans, Skilled
  Factory Workers, Technocrats Graduates in
  Business Administration Management.
• 3) Development This Stage would
  include Organization of Motivation Managerial
  Training Workshops along with Identification of
  Prospective Projects, Locations for settling up
  these Enterprises giving Technological Inputs.

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• 4) Promotion This Stage includes Govt
  Policy Initiatives for promoting Small
  Entrepreneurs.
• 5) Follow Up This Stage includes
  Reviewing the Policies Programmes of the Govt
  Seeking Follow Up with a View to making them
  more effective.

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• Appropriate Design for Entrepreneurial
• Development Programme
• They can be developed thro
  appropriately designed Entrepreneurship
  Development Programmes based on 3 Entrepreneurial
  Development Models, Viz Psychological Models,
  Sociological Models, Integrated Models.
• These Programmes broadly envisage 3
  Tiered Approach Developing Achievement
  Motivation Sharpening of Entrepreneurial Traits
  Behavior, Project Planning Development
  Guidance on Industrial Opportunities, Incentives
  Facilities Rules Regulations Developing
  Managerial Operational Capabilities. Various
  Techniques have been evolved to achieve these
  Objectives keeping in View the Target Groups
  or the Target Areas.

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• Methodology for Selection of the
  Prospective Entrepreneurs the support services
  after the Training have a profound effect on the
  Success of the Entrepreneurial Development
  Programme.
• Stages in Entrepreneurial Development
  Process (EDP)
• Entrepreneurial Potential
• All of us have Entrepreneurial
  Potential. Degree might differ. It is just a
  matter of Developing that Potential.
• The 3 Main Stages of EDP are as
  follows
• 1) Pre Training Identification,
  Selection Initial Motivation of Potential
  Entrepreneurs.

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• 2) Training of Potential Entrepreneurs
  
• 3) Post Training Support Follow
  Up Services.
• Any successful EDP Strategy has to be
  comprehensive should avoid any exclusive or
  lopsided preference for one or the other stage.
• Stage 1 Pre Training
• Three important aspects of work at
  the first stage of an EDP are
• 1) Selecting Potential Entrepreneurs.

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• 2) Target Groups.
• 3) Validation for Selection.
• i) Selecting Potential Entrepreneurs
• The Entrepreneur Identification
  Selection Mechanism which precedes training is
  based on the following Key Assumptions
• a) Not everybody can become an
  Entrepreneur must have traits.
• b) Such traits are identifiable
  measurable thro some psychological behavioral
  tests supported by social indices.
• c) People possessing these traits or
  showing evidence of these traits (Entrepreneurial
  Aptitude) can be developed to acquire necessary
  dimensions of Entrepreneurship.

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• This has led to a 3 Step Selection
  Process which begins with preliminary screening
  of those responding to the intensive promotional
  effort undertaken in the location by the Trainer
  Motivator.
• A specially devised form which
  screens out those who are only casually
  interested in the Programme is used for this
  purpose. It is followed by an assessment of
  Candidates Entrepreneurial Trait level by
  applying Behavioral Science Techniques. The
  process ends with individual interviews for over
  all assessment about candidates suitability to
  undertake Manufacturing Activity or Business,
  together with an understanding of his specific
  needs for Training.

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• The Entrepreneurial Traits assessed in
  the Course of Behavioral Tests include
• a) The Need to Achieve This can be seen
  in an Individuals desire to compete with some
  standard of excellence success in performance.
• b) Risk Taking Entrepreneurs are found
  to have an inclination to take Calculated,
  Moderate, Intelligent Risks. They tend to avoid
  Extremes of both Easy Risky Situations.
• c) Positive Self Concept Includes Self
  Confidence as well as Self-Efficacy (Success)
  a Positive Image of Ones Abilities
  Achievements.

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• d) Initiative Independence
• Such people not only show initiative
  but also Independence in their Day to Day
  Behavior. They like to act on their own rather
  than Follow Directions.
• e) Problem Solving A tendency to
  approach problems in order to solve them.
• f) Hopeful about Future Despite
  Dissatisfaction with Present Working Conditions.
• g) An Interest in Environment Scanning
  To Seek Answers to present Questions.
• h) Urge for Goal Setting Time Bound
  Planning
• With Desire to fulfill Time Bound
  Plans.

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• In the Selection Process, Persons
  Possessing a Minimum (developable) level of
  Entrepreneurial Traits (Normally decided by a Cut
  Off Point in the Scores) are selected.
• However, there are No Conditions of
  Minimum Education Length of Experience,
  Occupational Background or Income.
• Despite Good Training, Liberal
  Finance other supportive assistance, it is
  found that not everyone or anyone can be
  successful in Industry. To Avoid Wastage of
  Scarce Resources for Optimal utilization of
  Limited Training Development Facilities,
  Inclination on Quality rather than on Quantity
  (Number) is deemed Critical at the first stage in
  the Strategy.

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• ii) Target Groups
• The Large Target Groups are
  
• Technical Non Technical Employees
  in Industry, Trade Commerce such as, Mechanics,
  Machine Operators, Supervisors, Salesmen, Store
  Keepers, Middle Level Management, Small Traders,
  Fresh Graduates from Technical Non Technical
  Colleges, College Dropouts, Artisans Craftsmen,
  Govt Employees, Teachers, Ex Servicemen, Women,
  Tribals Under Privileged Castes.

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• The Profiles of New Entrepreneurs
  reveal a Diverse Mix of Characteristics in terms
  of Education (7th Standard to Post Graduation) ,
  age (18 to 45), Occupation Family Background
  (From Unemployed to Doctors Chartered Accounts
  or from Agricultural Workers to Technicians)
  Financial Position (Mostly Income of Rs 500 to Rs
  3000 per Month).
• This Diversity results from a Key
  Belief underlying the Programmes foundation
  that Latent Entrepreneurial Spirit is lying
  dormant in a wide variety of men women that a
  desire to be on their own to improve their
  Economic lot is humane well spread. Many,
  however, lack self confidence fail to come out
  of their shells.
• Their enterprise is not fully
  developed or nurtured the motivation to take
  Risk is not strong enough, despite frustrations
  of their current Economic Position, Employment or
  Occupation. Some need Opportunity Counseling
  (What Business to take up), while others, the
  Information or Know how for setting up an
  Industrial Enterprise. These needs are to be met
  by a Comprehensive Entrepreneurship Development
  Programme (EDP) by filling the Gaps in the
  Information, Motivation Skill Base. When
  Where this Task has been performed effectively,
  many New Entrepreneurs have been developed with
  Competence to Set Up Operate tiny or Small
  Manufacturing or Industrial Service Enterprises
  Successfully.

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• iii) Validation of Selection Process
• Preliminary findings of Studies
  (Gujarath Experience) on the Validation of the
  Selection Process for EDP reveal as under
• i) The proportion of those
  starting New Ventures from amongst the rejected
  Applicants are quite low (17) as compared to the
  Group of Candidates Selected (44).
• ii) The Number of Persons involved
  in Entrepreneurial Movement (i.e., those
  starting a Commercial or Industrial Enterprise
  from a previous occupation as an Employee or
  Unemployed) was much less (13) among those
  rejected by behavioral science tests than those
  rejected by the alternative aid of Interviews
  alone (26).

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• Stage II Training
• Training occupies a Central Place
  in the entire EDP Strategy, but we have to
  careful about Identification Selection of
  Potential Entrepreneurs so that training efforts
  are not wasted.
• Moreover, we have again to be
  equally careful to see that there is no further
  wastage for want of reqd support guidance after
  the Main Training if the Objective viz., Setting
  up of New Ventures is to be realized.

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77
Training Inputs

• Let us briefly discuss the same
  basically divide them into Three Basic Categories
  
• i) Achievement Motivation.
• ii) Business Opportunity Guidance
• iii) Business Management.

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• i) Achievement Motivation
• For the development of selected
  trainees into Well Rounded Competitive
  Entrepreneurs, the programme provides training
  inputs as follows
• An Intensive Training Programme thro
  a Five Day Programme (40 - 50 Hrs) is given to
  develop Entrepreneurial Traits such as, need to
  Achieve, Risk Taking, Initiative etc.
• The Motivation Inputs serve to
• a) Increase the Persons need for
  Achievement.
• b) Help Participants define their
  Goals realistically work towards their
  achievements
• c) Heighten their Self Awareness.
• The above is called as
  Achievement Motivation Training (AMT). It is a
  Crucial Dose of Behavioral, Psychological Input.

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• ii) Business Opportunity and Project
  Selection
• While Opportunity Project
  Selection is initiated engaged in the initial
  stage itself, a more intensive treatment is
  reserved for Phase II. Guidance sessions are
  held on selecting an appropriate industrial
  opportunity for each trainee consistent with his
  experience, competence financial resources.
• Perceiving a profitable
  opportunity for commercial exploitation is an
  essential quality of an Entrepreneur.
• By providing information
  counseling on various feasible industrial
  opportunities in the area thro a Team of Experts
  (Successful Industrialists, Leading Traders,
  Merchants, Technical Experts from Industry,
  Financial Institutions consultancy
  organizations) by Spot Surveys, each Trainee
  Entrepreneur gets tied up with a Business
  Opportunity which turns to his goal.
• Inadequate Knowledge of an
  Opportunity or absence of a Clear Project
  Proposal, therefore, need not be a Handicap in
  aspiring to be an Owner Entrepreneur. In fact,
  the Training Culminates in the Completion of a
  Project Report prepared by each Trainee. Finally,
  it also constitutes a way in which the finance
  for the Project is raised thereby links up
  completion of training with the support of
  Financial Institutions for Implementation.

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• iii) Business Management
• The Small Scale Entrepreneur
  has to be a Good Manager also since he cannot
  afford Specialists to look after Multiple
  Business Decisions of Sales, Finance, Purchase,
  Personnel etc.
• Though Rounded Managerial
  Experience is essential for better performance,
  the New (Trainee) Entrepreneur emerging from the
  Ranks of Employees Fresh Graduates usually
  possess familiarity with or experience in only
  one area, Viz., Production or Sales or
  Supervision. The Overall Managerial Understanding
  is therefore developed thro the Business
  Sessions.
• The Syllabus can be evolved in
  Consultation with Operating Entrepreneurs,
  practicing trade industry experts past
  trainees, leaving it to the trainer to make
  modifications to suit the Target Group Local
  Conditions. This enables the Participants to look
  at an Enterprise in its totality introduces
  them to the elements of Planning, Budgeting
  Control as aids to Good Management.

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• Faculty
• Normally, no full time faculty is
  used for the Training Programme except the
  Trainer or Project Leader supported by Project
  Formulation Expert.
• Most of the Business Inputs are
  given thro Management/Professional Practitioners,
  Business Industry Executives, Experts of State
  Industrial Agencies, Bankers, Technical
  Consultancy Organizations etc.
• A Full Time Project Leader In
  Charge of the Training Centre is the Back Bone of
  EDP. He acts as a Friend, Philosopher, Guide
  Personnel Counselor taking care of the Needs of
  the Trainees. He Organizes Administers the
  Programmes is responsible for the entire
  training process.

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Stage III Post Training

• Each Group of Entrepreneurs in an
  Entrepreneurship Programme is looked after by the
  Entrepreneur Trainer Motivator. He is
  responsible for Organizing Post Training
  Support also. This involves
• a) Follow up on Loan Application for
  Finance.
• b) Facilitating Infrastructure such as
  Land, Factory Shed, Power etc finally,
• c) Trouble Shooting.
• His Counseling, Resourcefulness
  Liaison Skills come handy in expediting Project
  Application.
• Occasional Visits by the Trainer
  for Trouble Shooting may well help. Whenever an
  Entrepreneur needs help, he needs to be
  encouraged to approach the Trainer.

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Role of Entrepreneurs in Economic Development

• The Importance of Entrepreneurial
  Resource as a Crucial Input in the Process of
  Economic development has now been widely
  recognized by eminent scholars, economists
  policy makers.
• With Growing Emphasis on the Role of
  Small Scale Medium Scale Enterprises in view of
  their contributions to employment generation,
  regional development overall economic growth, a
  wide range of schemes programs aimed at
  accelerating the tempo of new activities in the
  decentralized sector has been devised in many
  developing countries.
• India is a Developing Economy aiming at
  Decentralized Industrial Structure to overcome
  Regional Imbalances in levels of Economic
  Development. Small Scale Entrepreneurs in such
  Industrial Structure play a very vital role to
  achieve Balanced Regional Development. It is a
  well established fact that Small Scale
  Enterprises provide immediate Large Scale
  Employment ensuring a more equitable distribution
  of National Income, Generate Large Scale Indirect
  Employment opportunities in support organizations
  around the Industrial Clusters / Estates, Improve
  Living Standards of People also most important,
  facilitate an effective resource mobilization of
  capital skills which might otherwise remain
  idle.

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• Role of Entrepreneurs in Economic
  Development (A Summary )
• Entrepreneurship promotes effective Capital
  formation by mobilizing the idle savings of the
  Public.
• It provides Large Scale Direct Indirect
  Employment to the Unemployed Youth in the Country
  thereby helps the Govt to overcome Socio
  Economic Problems.
• Improves Standard of Living.
• Promotes Balanced Regional Development.
• Helps reduce the Concentration of Wealth
  Economic Power in the hands of a few people.
• It stimulates equitable distribution of
  Material Resources, Wealth, Income even
  political power in the interest of the Country.
• Encourages effective Resource Mobilization
  of Capital Skill which might otherwise remain
  unutilized idle.
• Helps in Harnessing Vast Natural Material
  Resources of the Country for Economic Growth.
• Promotes Backward Forward linkages which
  in turn, stimulates the process of Economic
  Development in the Country.
• Contributes substantially in Countrys Export
  Trade thereby helps the Country to earn Vital
  Foreign Exchange.
• Helps the Country in Overall Development
  improving its Status in the World.

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Entrepreneurship in India

• Entrepreneurship is regarded as
  closely associated with the Economic History of
  India. This is traced way back to even as early
  as Rig Veda, when Metal Handicrafts manufacturing
  cottage small enterprises existed in the
  Country.
• It has passed thro several Ups
  Downs. The important ones include the Decline of
  Indian Handicrafts Industry towards the end of
  the 18th Century, entry of the East India Company
  of the Britishers in Indias Business
  Activities. The Swadeshi Campaign for Indian
  Manufactured Goods, the First World War,
  Emergence of the Indian Managing Agency Systems
  by promoting Joint Stock Companies, the Second
  World War, Partition of Undivided India
  undertaking planned development of
  Entrepreneurship in the Country by Govt of India
  after Independence in 1947.
• For the purpose of encouraging
  Entrepreneurship, the Govt of India brought out
  the First Industrial Policy Resolutions in 1948
  which was subsequently revised from Time to Time.
  The Govt of India in order to promote , assist
  develop industries in the National Interest has
  taken the following Three Important Resolutions
  in the Industrial Resolutions

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• i) To maintain a proper distribution of
  economic power between Private Public Sector.
• ii) To encourage Rapid Industrialization
  by moving the concept of Entrepreneurship from
  existing centers to other cities, towns rural
  areas.
• iii) To disseminate the Entrepreneurship
  acumen concentrated in a few dominant communities
  to a large number of Industrially Potential
  People of varied Social Background.

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• To achieve these Objectives the Govt
  accorded emphasis on the Development of Small
  Scale Industries in the Country. Since the 3rd
  Five Year Plan, the Govt announced various
  Incentives Concessions in the form of Capital,
  Technical Know How, Reservation of Certain Items
  for Exclusive Manufacture in Small Scale Sector
  Tax Concessions, Provision of Infrastructural
  Facilities like Developed Land, Sheds, Roads,
  Communication etc for Promotion of Enterprises
  in the Country etc.
• This has helped in Speedy Economic
  Development in all the States in the Country to
  a great extent has minimized regional imbalances.
  
• National Common Minimum Programme
  (NCMP) describes Small Scale Enterprises as the
  Most Employment Intensive Segment. At the
  beginning of the 10th Plan, (2002 2003), the
  Segment provided gainful employment to 24.9
  Million People in the Rural Urban Areas of the
  Country thro 10.5 Million Units, engaged in
  Manufacturing providing a Wide Range of Goods
  Services. If the Units in Khadi Village
  Industries are also taken into account, the
  Employment would rise to 332 Million. Thus this
  is rightly called as the segment which provides
  employment next only to Agriculture. The
  Contribution of Small Enterprises Segment to the
  Economic Development of the Country is very
  significant. Nearly 39 of the Gross
  Manufacturing Output 34 of the Exports of
  India arise from these Enterprises.

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• Yet a large number of
  Entrepreneurs are facing lots of Challenges. In
  order to assist them to fully harness their
  potential by availing of the increasing
  opportunities generated by Trade Liberalization,
  it is necessary to not only build an enabling
  Policy Environment but also supplement the former
  with a specific set of measures to address the
  continuing challenges.
• Therefore Ministry of Micro, Small
  Medium Enterprises, Govt of India has announced
  a package for Promoting such enterprises in Feb
  07 to provide full support in the Areas of
  Credit, Technological Up gradation, Marketing
  Infrastructural Up gradation in Major Industrial
  Infrastructure etc.

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Entrepreneurship Its Barriers.

• The Slow pace of Growth of
  Entrepreneurship is mainly due to existence of a
  tangible set of Barriers prohibiting the Process
  of Entry into, Continuity in an eventful exit
  from a Business Venture of a Would be
  Entrepreneur if it is a function of forces that
  one may view as Barriers limiting Full Fledged
  Business Performance. These may be Entry
  Barriers, Survival Barriers, Exit Barriers.
• Entry Barriers are those forces
  limiting access to identified business
  opportunities capitalization of these
  Opportunities. Survival Barriers are constraints
  on the conditions essential for the Small
  Business Entity. Exit Barriers are constraints
  limiting the termination of Small Industrial
  Ventures that have outlived their Business
  Viability or the Growth of such ventures to a
  different size category.

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Entry Barriers

• Following is the Presentation of
  the Study on Entry Barriers to Entrepreneurship
  as perceived by Youth sponsored by NEDB,
  Ministry of SSI, Govt of India, Study was
  conducted in 2002, by Dr. Sunil Shukla, Dr.
  Dinesh Awasthi , Entrepreneurship Development
  Institute of India, Ahmedabad.
• Following are its findings

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What keeps Youths away from Entrepreneurship ?

• 1) No interest in Business / Distinct
  Preference for Service
• Reasons
• Job Offers secured income access to
  Power.
• Satisfaction with Current Job.
• Lack of Achievement Motivation.

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• 2) Desire to wait for some more time
• Reasons
• To gain experience.
• To arrange for financial resources.
• To try for a Good Job First.
• 3) Lack of Confidence in Business
• Reasons
• Lack of Knowledge of the Business
  opportunity.
• Lack of Ability to take Risk.
• Lack of Managerial Skill.
• Lack of Knowledge of Procedure
  Formalities to establish Business.

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• 4) Disapproval of Family / Friends
• Reasons
• No Risk bearing Capacity of the Family.
• No affiliation to Business Community.
• Family Pressure to earn money thro Job.
• Reconsidering Business Career
• 58.3 of those 80.8 who had no
  Business Plans were ready for Entrepreneurship,
  if helped for

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• Finance.
• Project Idea
• Training for Business Management.
• Critical Needs of those Planning for
  Entrepreneurship
• Timely adequate Finance.
• Knowledge Skill Training.
• Encouragement by Family.

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Major Recommendations for Overcoming
Entry Barriers

• 1. The First requirement is to change the
  mindset.
• 2. Entrepreneurship to be introduced in
  Education (It is heartening to note that VTU,
  Belgaum, has introduced Management
  Entrepreneurship as a Core Subject for V / VI
  Semester Engg. Students of all branches from the
  academic year 2008 2009.)
• 3. Need for Resource Material
  Handbooks.
• 4. Entrepreneurship Business
  Development Cell (EBDC) to be established on
  Campuses.
• 5. Faculty Development Programmes on
  Entrepreneurship Development.
• 6. Counseling Guidance Cells for VRS
  Employees.
• 7. Fellowship / leave with Half Pay for
  Young Employees having feasible business plans.
• 8. Special Incentives, Hassle free
  credit to be given to increase female
  participation in business.
• 9. Industry Academic Linkage to be
  strengthened.

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EBDC on Campuses

• NEDB to set up EBDCs on Campuses.
• Functions
• Organize Entrepreneurship Awareness Camps
  (EACs) , Workshops Entrepreneurship
  Development Programmes (EDPs).
• Sensitize the Environment develop
  Network.
• Conduct Potential Surveys to develop a
  Basket of Viable Business Opportunities.
• Act as a Focal Point for Information
  Dissemination on Opportunities, Market,
  Technologies etc.
• Conduct need based Research Studies.
• Organize performance improvement growth
  programs for entrepreneurs to strengthen local
  entrepreneurial base.
• Any other activity necessary for
  inculcating entrepreneurship in Stud