National Institute of Technical Teachers‘ Training & Research, Chandigarh

Time Schedule for Two Weeks DST Sponsored Faculty Development Programme (FDP)
on
INNOVATION, YOUTH AND SOCIAL ENTREPRENEURSHIP’
w.e.f. 18 – 29 January, 2016
Venue : ETV Studio, NITTTR Chandigarh [Oplan No. ID - 88] ICT-76
Session I Session II Session III Session IV
Day & Date
0930 – 1100 hrs. 1115 – 1245 hrs. 1330 – 1500 hrs. 1515 – 1630 hrs.
Monday Inauguration Innovations in Science and Need and Philosophy of Youth Entrepreneurship
18.01.2016 Programme Objectives Technology Entrepreneurship
( Director/SKD/AS ) (Prof. MP Poonia) L (Prof. SK Dhameja) (Dr. Sanjeev Chaddha)
Entrepreneurship in
Entrepreneurial Support Curriculum Development Finance for Non-Finance
Tuesday Education, Emerging Trends
System at National Level for Promoting Persons
19.01.2016 and Role of DST in
Entrepreneurship
Promoting Entrepreneurship U
(Prof. SK Dhameja) ( Prof. PK Singla) (Dr. Yashpal Taneja)
(Expert from DST)
Understanding blocks in Schemes of assistance by Entrepreneurial Support
Wednesday Motivation for starting N
becoming Entrepreneurs SIDBI for Entrepreneurs System at State and District
20.01.2016 business Level
(Dr. RR Singh) (Dr. RR Singh) ( Expert) (Prof. SK Dhameja)
Intellectual Property Rights Consideration for Product Leadership Skills for Management of Human
Thursday C
for Entrepreneurs Selection Entrepreneurs Resources
21.01.2016
(Dr. Diljot)
(Er. Amardev Singh) ( Dr. JS Saini) (Mr. Arun Kapoor)
.... (Contd.)
Social Entrepreneurship : A Recent Innovations in H Social Entrepreneurship as an
Friday Recent Innovations in
Conceptual Framework Technology and its Emerging Field
22.01.2016 Technology and its
Impacts
Impacts
(Ms. Shivani) ( Dr. B.R. Gurjar) (Ms. Shivani)
( Dr. B.R. Gurjar)
Saturday Field visit to IT Park, Chandigarh
23.01.2016
Contd…… 2
 -2-

Session I Session II B Session III Session IV

Day & Date
0930 – 1100 hrs. 1115 – 1245 hrs. 1330 – 1500 hrs. 1515 – 1630 hrs.

Opportunities in Green Effective HR Achievement Motivation Schemes of NABARD for

Monday Management Practices R Training
Business Entrepreneurs
25.01.2016 in Business
(Er. Amardev Singh) ( Dr. Sanjay Kaushik) (Prof. SK Dhameja) ( Mr. A.K. Pasrija)

Tuesday E
Holiday Republic day
26.01.2016
Wednesday Innovation – The way for Future Field Visit
27.01.2016
(Prof. U.S. Racherla)
Thursday Management of Technology Technology Strategy of A Business Plan Formulation Appraisal of Business Plan
28.01.2016 and Innovation Multinational Companies
(Dr. Piyush Verma) (Dr. Piyush Verma) (Prof. JS Saini) (Dr. Sanjeev Chaddha)
Need and Importance of Management of Small
Friday Discussion and feedback Valedictory Function
Effective Business and Medium Enterprises
29.01.2016 K
Communication
(Prof. SK Dhameja) (Prof. SKD/AS) ( Director/SKD/AS )
(Mrs. Sudhiti Jindal)
Resource Persons
Prof. MP Poonia, Director, NITTTR Chandigarh Ms. Shivani, Assistant Professor, LPU Jalandhar
Prof. SK Dhameja, Professor & Head, and Programme Coordinator Dr. BR Gurjar, Professor, IIT Roorkee
Dr. Sanjeev Chaddha, Professor, MGSIPA, Punjab Mr. Arun Kapoor, Consultant, Concord Assoc. Chandigarh
Prof. PK Singla, Associate Professor, NITTTR Chd. Dr. Sanjay Kaushik, Professor, UBS, Panjab Univ., Chd.
Dr. Yashpal Taneja, Assistant Professor, GGDSD College, Chd. Mr. AK Pasrija, NABARD, Chandigarh
Dr. RR Singh, Director, NIESBUD, Noida, New Delhi Prof. US Racherla, Professor, IIT Kanpur
Dr. JS Saini, Professor and Dean, NITTTR Chd. Dr. Piyush Verma, Associate Professor, Thapar University, Patiala
Dr. Diljot, Assistant Professor, MGSIPA, Punjab Mrs. Suditi Jindal, Consultant, Chandigarh
Er. Amardev Singh, Assistant Professor, NITTTR Chandigarh
 INTRODUCING ENTREPRENEURSHIP IN CURRICULUM
K. Parthasarathy
Center for Adult, Continuing Education and Extension
Bharathidasan University, Tiruchirappalli-620 024
E-mail: drkpsbard@yahoo.com

Introducing Entrepreneurship in Curriculum

―The education system should highlight the importance of entrepreneurship and

prepare students right from college education to get oriented towards setting up of
enterprises. Diversity of skills and perseverance in work makes an entrepreneur. In
addition, college syllabi even for arts, science and commerce courses should
include topics and practical‘s where such entrepreneurship is possible‖.
His Excellency Dr. A.P.J. Abdul Kalam, Late President of India

Introduction

The youth of India are a vital and vibrant segment of the country. The youth population of
the country is expected to increase to 356 million very soon. They are basic investments
for the future and will shape the society of India.

Unemployment and channalisation of youth have become serious concerns of society. It is

time that their preferences for vocations took priority. These, in turn, need to be built into
the curriculum. The future of any developing country depends on the lines on which the
youth are moulded. The importance of youth in India is self-evident. The Indian youth
population is not only large in number but is also vigorous and active, open and
responsive to new ideas and changes. About 30 percent of the population in India is in the
age group of 15-35years. For this reason, the youth in India represent an extraordinarily
important group. India is still predominantly agricultural; more than 70 per cent of the
youth population in the age group of15-35 years lives in rural areas and is mostly engaged
in agriculture. The problem of unemployment cannot be resolved unless the educated
rural youth are trained and involved in entrepreneurship-oriented vocations. In this
context, the Government of India lays special emphasis on vocational education. Earlier,
the previous governments wanted at least 10 per cent of higher secondary school
students to be enrolled for vocational courses. But even that target has not been
achieved.

CONCEPT OF ENTREPRENEURSHIP

Entrepreneurship as a complex set of abilities that are normally connected with the
business sector and not so much with educational organizations. Forced by the ongoing
changes in all areas of societies, schools are in a situation to change themselves into the
direction of organizations that can answer not only on the long-term needs of young
people, but also getting flexible to cope with actual needs of education and training of
individuals, institutions and companies.
Entrepreneurship is a practice: it requires that one act; it is not an abstract or purely
theoretical process. Acting entrepreneurially, of course, may involve a wide range of
activities and contexts: It may involve operating major corporations and public agencies
with greater flexibility, innovation and responsiveness; it may involve the generation and
implementation of economic development plans to encourage the growth of new
businesses within specific geographical areas; it may involve the acquisition of skills,
knowledge and attitudes to support the development of individual career paths. And, in
perhaps the most commonly used sense; it may involve the process of recognizing
opportunities and starting and operating a growth oriented business venture. But
entrepreneurship is also a process, an orientation, and a way of working and relating to
the world. Acting and thinking entrepreneurially, in whatever context requires the
development of concepts, including the areas of traditional management education,
business creation processes, opportunity creation and recognition; skills and behaviors
such as presentation skills, interpersonal skills, team building and team working skills, and
the ability to construct a business plan; mentalities, including creative thinking, developing
a vision, embracing change, using opportunistic thinking and living proactively.

Entrepreneurship brings together the ability to identify promising opportunities for career
or business development with the skills, knowledge and motivation to realize these
opportunities. It is a set of enabling skills and knowledge partnered with a determined and
confident mindset. Entrepreneurship is the future. The skills and competencies associated
with entrepreneurship are essential in the competitive business world. In addition to the
ability to bring together the necessary skills to recognize and realize an opportunity,
entrepreneurs must have the enthusiasm, the ambition, and the confidence to carry such
a project forward. Learning about the personal experience of the entrepreneurs of
business who have seized opportunities and created significant enterprises in industry,
science or medicine, is an effective way to develop entrepreneurial ambition and
confidence.

NEEDFOR ENTREPRENEURSHIP IN THE CURRICULUM

Most schools in many countries are public organizations, founded and run by the state
and its institutions, working on the basis of a more or less fixed curriculum, being
responsible for pupils of a defined area or of defined professions with teachers as civil
servants. Development of school curriculum is a dynamic process responsive to the
society and reflecting the needs and aspiration of its learners. Fast changing society
deserves changes in educational curriculum particularly to establish relevance to
emerging socio-economic environment; to ensure equity of opportunity and participation
and finally promoting concern for excellence. In this context the course on
entrepreneurship aims at instilling and stimulating human urge for excellence by realizing
individual potential for generating and putting to use the inputs, relevant to social
prosperity and thereby ensure decent means of living for every individual.

An entrepreneur is a person who organizes and manages a business undertaking and

assumes a risk for the sake of profit. Operating a business takes a certain skills. Few
people have all the skills needed to run a business, but they can compensate for their
weaknesses by hiring staff or consultants and by becoming more knowledgeable through
education or training
Teaching entrepreneurship to students must be introduced in order to motivate that
entrepreneurship is also a career opportunity available to the students. Teaching
entrepreneurship to students demands additional responsibilities on the part of the
teachers. Entrepreneurship is more 'person-oriented' and 'behaviour-oriented'. It aims at
identifying and developing potential students lead and prepare them to take up
entrepreneurial careers. Unlike other courses/subjects, it is not only 'information' or‘
knowledge' based but it is a combination of skills, attitudes, competencies and knowledge.
Therefore, it focuses more on 'learning' and 'development' rather than only teaching.
Entrepreneurship, if taught as a subject like any other subject, would again become
'academic' for which student's attitude will be the same, i.e., to get marks and pass
examination. Hence, the curriculum planning of entrepreneurship should be carefully
thought and developed involving the leading entrepreneurship development institutions /
organizations.

The course may be designed from the following inputs.

• Creativity and innovation
• Entrepreneurial values and awareness
• Road blocks or hurdles to entrepreneurship development in India
• Entrepreneurial competencies
• Entrepreneurial motivation
• Entrepreneurial opportunities and its selection
• Enterprise management, and
• Schemes and facilities available to new entrepreneurs.

The future of any developing country depends on the lines on which the youth are
moulded. The importance of youth in India is self-evident. The Indian youth population is
not only large in number but is also vigorous and active, open and responsive to new
ideas and changes. Unemployment amongst educated rural youth has been one of the
burning problems faced by the country in recent years. Wastage of manpower causes
poverty, backwardness and ultimately results in migration to urban areas. Today‘s
educated youth is interested in white and blue-collar jobs after completing or leaving
school and college education. The problem of unemployment is omnipresent in India for
the youth. This is more serious among rural youth, be they tribal or non-tribal. The
problem of unemployment cannot be resolved unless the educated rural youth are trained
and involved in entrepreneurship –oriented vocations. In this context, the government of
India lays special emphasis on vocational education. Earlier, the previous government
wanted at least 10percent of higher secondary school students to be enrolled for
vocational courses. But even that target has not been achieved. It is high time we took a
look at the preferential choice of educated tribal and non-tribal rural youth regarding
entrepreneurship –oriented vocations, so that these could be incorporated in the school
curriculum, thereby helping these youth in getting employment opportunities after
completing their education. The youth of India are a vital and vibrant segment of the
country. The youth population of the country is expected to increase to356 million very
soon. They are basic investments for the future and will shape the society of India.
Unemployment and channelization of youth have become serious concerns of society. It is
time that their preferences for vocations took priority. These, in turn, need to be built into
the curriculum.

Although entrepreneurship has always been an option in our career transition

programmes, preparation for entrepreneurial endeavors is now offered as a stand –alone
programme, which is a reflection of the fact that half of the population is expected to
become self-employed by the end of the century. The new competitive landscape has led
to the emergence of entrepreneurship in a big way, with the myth that entrepreneurs are
only born, gradually fading away. Entrepreneurs with the right competencies and high
need for achievement are the forces that initiate economic development of a country.
They are also a means of gainful employment for the masses. Although entrepreneurial
talents exist in all societies, its emergence depends upon right training interventions and
counseling. Moreover, entrepreneurship being a viable career alternative, training in this
area is acquiring paramount importance across the globe. As a result of the impact of a
structured programme on entrepreneurship development, the students imbibe
entrepreneurial knowledge, skills, attitude and receptivity to business opportunities. They
then emerge as successful entrepreneurs with the right mindset, orientation and aptitude.
The need of the day is to inculcate the spirit of entrepreneurship into the psyche of the
present generation through teaching, training and research.

EMERGING MODEL OF ENTREPRENEURSHIP DEVELOPMENT AT

BHARATHIDASAN UNIVERSITY

Conceptualization

The Bharathidasan University during the short span of its existence since 1982 has
emerged as one of the most reputed Centres of higher education in the country. The
university has 30 departments / Centres/ schools of studies and research in the
disciplines ranging from fundamental sciences, arts and languages to engineering and
technology, remote sensing, geo-sciences, biotechnology, non-linear dynamics,
management, educational technology, yoga and media training. The Bharathidasan
University has established the Institute for Entrepreneurship and Career Development
(IECD) with a view to fill the serious gap in our educational system, viz. lack of
opportunities for promoting entrepreneurship among the students. Most of our
conventional programmes at the undergraduate and postgraduate levels in the university
system turn out graduates and postgraduates who are neither inclined nor equipped to
establish and run enterprise of their own involving managerial and organizational skills.
The IECD has a unique concept and organization in more than one sense. The course
would lead to short-term certificate, diploma, post-diploma, PG diploma, PG diploma of
varied duration; of course, subject to fulfillment of the requisite credit hours of skill
learning. So also, the faculty /trainers would be drawn from both the academics and the
professionals in the relevant field. The goal of IECD is to make it a vibrant nursery –bed
for shaping nurturing successful entrepreneurs both in form and content. Entrepreneurs
turned out of IECD would go with appropriate entrepreneurial attitudes and values
(achievement motivation), besides the skills, attitudes and expertise in their hands.
Another major innovation of the programme structure of the IECD in Bharathidasan
University is that the university undertakes to facilitate the vertical mobility of the IECD
trainees to catch up with the formal higher education, by providing for appropriate lateral
entry provisions. Similarly the regular graduates and post-graduates in the university and
its affiliated colleges would be facilitated to undergo any of these certificate/ diploma
programmes of IECD concurrently, along with their regular programmes of study.

Mission
The mission of IECD is that the educated should become skilled and be self-employed
rather than serving under serving under someone; be job creators, rather then jobseekers;
be innovators rather than meek and bid imitators; and be the problem solvers rather than
answer-givers in classrooms and examinations halls.

Specific Operational Objectives

• To organize entrepreneurship and career development programmes/courses and
entrepreneurship sensitization camps for the various target groups.
• To develop and deliver a course on ―entrepreneurship development‖ to all the UG
students of the university under part-IV extension.
• To conduct training programmes in the field of entrepreneurship and career
development for trainers drawn from schools, colleges, polytechniques and other
institutions like SHGs, PRIs, NYKs, etc., so that they can, in turn, inculcate
entrepreneurship among others in the schools
/colleges.
• To develop skills in successfully initiating, expanding, diversifying and managing a
business enterprise with focus on understanding real life business situations and
business practices.
• To develop a competent entrepreneur of tomorrow through an accelerated course
marked by intensive personal counseling, nurturing achievement motivation,
inculcating self-confidence. Goal-setting, planning, information seeking, problem
solving and planned risk taking; bringing out the latent entrepreneurial potential in
order to be successful innovators.
• To equip college students with requisite skills, knowledge and competencies for
effective initiation of entrepreneurship development camps in their campuses.
• To train in the art and nuances of identifying and analyzing the constraints and
barriers to entrepreneurship development and devise appropriate strategies.
• To design, initiate and promote innovative programmes in entrepreneurship, micro
credit women empowerment and social development with special emphasis on
need based conditions.
• To create a pool of data-base on rich successful strategies and experiences of
socio-economic development and share it for its effective replication and
adaptability at different level.
• To train skilled personnel at self-employed technician level in the fields of
industrial, medical and domestic electronics and process instrumentation by
organizing short term and long term courses according to the needs of the
clientele.
• To provide career guidance and counseling services to the current students as
well as the passed out students.
• To help in consultation with a self-employment specialists to prepare a credible
self-employment plan for those who are interested in self-employment.
• To organize seminars/conferences/training workshops etc., related to
entrepreneurship and career development at different levels.
• To create networking with relevant bodies/ agencies at different levels for the
promotion of entrepreneurship and career development.
• To provide consultancy services to public and private sectors and other institutions
in the field of entrepreneurship development.
Target Groups

IECD will concentrate, among others, on the socio-economically backward and

educationally disadvantaged groups of city/ rural / tribal population such as men, women,
youth, employed and unemployed youth; priority will be given to
SC/ST/MBC/BC/Women/Girls hailing from rural and tribal areas and also the physically
handicapped. Skill oriented training programmes for illiterates /neo-literates /school drop-
outs, 8thpassed or failed and all other interested persons.

Programmes/ Courses

IECD provides skill oriented training programmes for illiterates/ neo-literates/ school drop-
outs, 8thpassed or failed and all other interested persons in various disciplines including
arts, science, commerce, culture etc. It offers short-term training programmes ranging
from the duration of one week to 3-4 weeks to 2-3 months, Certificate Programmes for +2
and above qualified learners for the duration of 6 months, Diploma Programmes for +2
and above qualified learners for the duration of 12months and PG Diploma Programmes
for UG and above degree qualified learners for the duration of 12 months. The various
skill oriented courses introduced by IECD in multidisciplinary subjects are
Entrepreneurship Development, Herbal Medicine, Performing Folk Arts, Literary Arts and
Biotechnology, Electrician Technician, UPS and Inverter Manufacture, Computer Aided
Textile Designing, Bakery Products, Fast Foods, Data Entry Operators, Beauty Culture
and Health Care, Personality Development, Nursing Assistant, Herbal Farming, Fire
Safety Engineering, GIS Management, Marketing Management, Multimedia, Rain Water
Harvesting, Interior Decoration, Visual Communication, Journalism and Mass
Communication, Public Relations, Industrial Bio-technology etc.,
Conclusion
Entrepreneurship is fast emerging as a premier field of study in school, colleges and
universities the world over. Although entrepreneurs have existed and enriched life on the
planet right through the ages, it is only recently that research in the field has kindled
interest for a systematic study of the entrepreneurial processes and qualities. Forces of
globalization and knowledge engineering have engendered a radical transformation in
occupational stereotypes. The impact of this phenomenon has been most strongly felt in
education compelling a close scrutiny of epistemological issues against the changing
dynamics of wealth formation. The course in Entrepreneurship and the growing popularity
of the course augurs well for our nation. The students who have opted for this subject will
acquire motivation, skills and knowledge to become successful entrepreneurs in the
future. Another important objective is to bring about a change in the mind set of students:
that it is always not necessary to seek employment after completing their studies; they can
themselves create employment. Such a change will produce a vibrant and motivated
youth population who will strive to achieve their potential and who will pursue the path of
excellence. Seeing all these above, this is clear a course in entrepreneurship is must for
the students, youths and all categories of people and it should be incorporated in the
curriculum of different stages at different levels.
 REFERENCES

Dangi, K.L and Intodia, S.L. (2004)-Entrepreneurship-A Way to Employment Generation

among Tribal and Non-tribal Educated Rural Youth of Southern
Rajasthanhttp://www.ncert.nic.in/journal/journalnew/iechap3.htm

Eugene Sadler-Smith, Yve Hampson, Ian chasten and Beryl Badger-Managerial

Behaviour, Entrepreneurial Style and Small Firm Performance, Journal of Small Business
Management-2003, 41 (1), pp 47-67.

Parthasarathy, K., Anadamoorthy, V. and Harikumar, V., (Ed), (2003), “Literacy and
Development‖ (Vol-I),State Resource Centre for Non-Formal, Adult and
Continuing Education (SRC), Chennai and Centre for Adult, Continuing Education and
Extension, Bharathidasan university,Tiruchirappalli

Parthasarathy, K., Anadamoorthy, V. and Harikumar, V., (Ed), (2004),Research on

Literacy – Literacy and Development –Vol-II, State Resource Centre for Non-Formal,
Adult and Continuing Education (SRC), Chennai.

Parthasarathy. K. and John Agnes Genevee.S.(2004), ―Micro-finance and Self-Help

groups – An Innovative Approach‖, presented at International Seminar on Emerging
Trends in Global Business, Challenges and Opportunities for Developing Countries,
organized by Ponnaiyah Ramajayam Institute, Thanjavur on 6th & 7th February 2004.
Ramachandran, K.,Pandey, I M., Rajesh Nair, Dinesh Awasthi, Kausha lMehta, Vishnu
Varshney and Rakesh Rewari (2004)- Entrepreneurship and Venture Capital-www.isb.edu

Sarma, D. V. S.(2002)-Entrepreneurship DevelopmentforEngineeringGraduates-

www.technopreneur.net

Bharathidasan University (2004), IECD Brochure, Institute for Entrepreneurship and

Career Development (IECD), Bharathidasan University, Tiruchirappalli –
620 024 www.ediindia.org-(2004).
PROMOTION OF ENTREPRENEURIAL CULTURE IN PROFESSIONAL COLLEGES:
APPRENTICESHIP AN OPTION?

K. G. Chandrika
Department of Business of Management, Osmania University, Hyderabad
kgchandrika@rediffmail.com

1. INTRODUCTION

Entrepreneurs in today‘s society can be called as Innovators in the path of creation of

wealth. The term Innovators is coined because the type of business and path they
choose in exploring the business ideas for setting up the business is truly novel. The
most important is the concept of sharing the wealth created, by all involved in making the
business a success. The economic development of any country is linked to the growing
number of its successful entrepreneurs.

A globalized world of today offers tremendous opportunities and avenues for young
qualified professionals to become part of wealth creation for their own and for the
country of their domicile. The highly skillful, talented and motivated professional youth
can avail these opportunities the connected world offers them with requisite skills and
programmes that any institute can offer.

In a developing country like ours nurturing of entrepreneurial qualities among the youth,
especially those in our professional colleges like management or engineering graduates
is of great importance to accelerate the growth of entrepreneurship in the country.
Students in professional colleges with technical/ management background can be
trained in various aspects of business. The opportunities thrown open by different
technologies for entrepreneurial growth is like never before. Students with technical
background are best suited to techno-entrepreneurship.

Young pool of professionals found in large numbers in our professional colleges across
the country can be motivated to become successful entrepreneurs through various
programs, initiated by different organizations associated with development of
entrepreneurship. Many Universities and Institutes of repute have included
entrepreneurship as a course in their professional college curriculum. The emphasis of
these courses is however theoretical in nature and sometimes abstract for student who
is admitted to professional course like engineering/management. Therefore there is a
need for a re look into the curricula by academia. The option of apprenticeship must be
viewed from the need to provide practical platform for enterprising and aspiring future
entrepreneurs who are studying in our professional colleges.

2. REVIEW OF LITERATURE.

Entrepreneurship is a phenomenon if successful in a particular environment & region

can change the economic scenario of that region, bringing along with it not only
economic prosperity but also a change in lifestyle of the people. Academic importance of
entrepreneurship has gained significantly. Importance of formal training for budding
entrepreneurs has increased. A brief review of the literature on entrepreneurship &
immense scope it has for our students in professional colleges has been given below.
Pallavi Aiyer in an article titled- Where Rags to Riches Stories are no Longer Rare,
published in The Hindu, April 7, 2006 writes, The Chinese city of Wenzhou owes its
success to the development of cluster model whereby hundreds of small enterprises
work together producing complimentary goods based efficient division of labour. Over
the last 25 years Wenzhou‘s farmers have turned tycoons, rags have transformed to
riches with almost monotonous regularity.

A book review of Sobroto Bagchi‘s (founding member and Chief operating officer of IT
consulting and software services – Mindtree Consulting) book titled The High
Performance Entrepreneur, by Rasheeda Bhagat in the Business Line, December 1,
2006, highlights the valuable tips the book offers to anyone involved in starting a new
enterprise and taking it to great heights. She quotes several instances of points of
interest the author has illustrated from his personal experience. According to him
entrepreneurs, have to be extremely disciplined hard working and goal oriented. Another
useful tip quoted from the book is those who dream of starting a great company should
develop ability to cope with rudeness and rejection from people. Last quote quoted by
the author of the book, which Rasheeda Bhagat finds interesting, is : Remember, the
actual experience is in the enactment, so go on and do it.

According to Hisrich Peters in his book titled Entrepreneurship, Entrepreneurial

education has never been so important in terms of courses and academic research.
According to him a total of 369 universities in the United States have at least one course
in entrepreneurship. Although most of these courses are in business schools.

Major articles in prestigious newspapers as the New York Times, Wall Street Journal
and the Washington Post have focused on the pioneer spirit of today‘s entrepreneurs
describe how this spirit benefits society by keeping US in lead in technology.

While Entrepreneurship offers promise of opportunities for many, it is by no means an

easy path to traverse to success it involves a lot of hard work and patience. However
Sudhakar Ram of Mastek in his article, Let‘s Show Some Enterprise, in Business Line
dated December 1, 2006 writes a key ingredient for India‘s success will be the level of
entrepreneurship activity that we can stimulate. Fortunately, the climate and support for
entrepreneurships are much better today than at any time to the past. The opportunities
for creating new businesses are also plentiful and diverse.

Thus there is wide spread acceptance in India that there is a great potential for growth of
enterprises specially of micro, small scale, medium level enterprises provided our
people, in particular the youth should be ready to take up such challenges.

3. OBJECTIVES OF THE STUDY

Primary Objective
Explore the option of Apprenticeship under a successful entrepreneur(s) for a minimum
of six months to get the ground realities of running a business.
Secondary Objective
• Entrepreneurial environment in Indian professional colleges.
• A study of training needs for prospective entrepreneurs.
• Identify reasons if any for not willing to become entrepreneurs.
• METHODOLOGY
Case study approach – Study of Students of Management, Department of Business
Management, Osmania University

• EVOLUTION OF ENTREPRENEURSHIP IN INDIA

Conceptually Entrepreneurship is not a new phenomenon in India, though the modern

definition associated with entrepreneurship may be new. Traditionally entrepreneurship
was associated with a caste or a community. Very few people outside these castes or
communities would venture in starting their own business.

Before the coming of the British to India, The village as an entity provided a platform for
the people in the village to showcase their entrepreneurial skills, be they craftsmen,
artisans, weavers etc. whole Family (young & old) was involved in developing these
artifacts that eventually be sold. Also the maharajas, rajas or feudal landlords patronized
arts, crafts, etc in a big way by giving opportunity to these people to prove their talents,
skills and combine it with entrepreneurial abilities.

Another important and interesting observation is entrepreneurship in India is generally

confined to some regions often referred to entrepreneur belts such as western region of
India like Marwaris from Marwar (Rajasthan), Sindhis, Punjabis, and Gujaratis. We
generally have more entrepreneurs from western belt than from other parts of India.
Similarly in South India especially in Andhra Pradesh people from costal districts have
entrepreneurial qualities.

After Independence there is considerable growth in entrepreneurship and entrepreneurs,

especially after the liberalization of economy and licensing procedures. There is a
gradual increase in entrepreneurs cutting across caste and communities. The financial
institutions in the country are adopting a more progressive and people friendly policies in
providing financial assistance to budding entrepreneurs. The central and state
governments are adopting various polices & measures to attract young, talented and
motivated professionals towards entrepreneurship.

• ENTREPRENURESHIP PROGRAMMES AND ACADEMICS

Premier academic bodies promoting and controlling higher education in India such as
HRD ministry, Ministry of Science & Technology, DSIR, UGC, AICTE etc are promoting
entrepreneurship education in a big way. They are encouraging colleges‘ especially
professional ones offering engineering and management programmes to set up
entrepreneur development cells or EDC to promote entrepreneurship culture through
entrepreneurship development programs. EDCs are funded by these premier agencies.
Similarly Government of India is also conducting a number entrepreneur development
programs through government-funded institutions such as NISIET1[1] etc. Government of
India also set up centers of excellence to promote & cultivate entrepreneurship among
various sections of our society in particular educated youth. These institutes such as
Entrepreneurship Institute of India (EDI) Ahmedabad, Indian Institute of
Entrepreneurship (IIE), Guahati, National Institute of Entrepreneurship and small
Industries development, New Delhi are few of them conducting various programmes &
research in entrepreneurial development programmes to foster entrepreneurial culture.

7. A CASE STUDY OF MANAGEMENT STUDENTS

A simple study conducted on the students of management, dept of business
management, Osmania University, Hyderabad revealed interesting results.

7.1 DEPARTMENT OF BUSINESS MANAGEMENT

The Department of Business Management2[2], Osmania University has been conducting

two-year programme in Business Management since 1964. It was established as an
independent entity in 1971. The Dept. offers different streams of MBA programme. MBA
(Regular) both Day&Part time for working executives, MBA (Technology Management)
Day & Part time for working executives. MBA (Regular) is a UGC funded programme
while MBA (Technology Management) is a self-financing course. MBA (Regular) has
total intake of 80 students with two sections of forty each. In all there are 160 regular
MBA (Day) students, MBA (TM) has intake of 40 students, so a total of 80 students are
there in MBA (TM).

Students to the MBA programme of the department of business management, Osmania

University are selected on the basis a rank secured in the state wide common entrance
test (ICET)3[3], while generally top rankers come to Osmania University Campus College.

A questionnaire was administered on MBA (Regular) & MBA (Technology Management)

students primarily to get the opinion of the students regarding the option of
apprenticeship in academic curriculum. The objective was mainly to know the opinion
from prospective entrepreneurs about the need for a formal training in the form of
apprenticeship for entrepreneurship as a prelude to entrepreneurship.

The questionnaire is divided into two parts. Part I consists of general profile of
respondents and part II consists of questions related to entrepreneurship and training
needs for promotion of entrepreneurial culture among students in professional colleges.

The analysis of the data gathered through the questionnaire showed following facts:

7.2 DATA ANALYSIS

The total number of Respondents: 80

1) Respondents breakup course wise (All of them day students only)

Course wise respondents

Frequency Percent
Valid MBA(Reg) 65 81.3
MBA(TM) 15 18.8
Total 80 100.0

Data Analysis: 80 students responded to the questionnaire. Out which a large section
of students are from MBA (Regular), nearly 81%. Only 19% are from technology
management stream.
3[3]
ICET: Integrated Common Entrance Test for Admission into MCA & MBA
programmes for the colleges in the state of Andhra Pradesh. The Test is conducted by
one of the state universities in the month of May every year.
2) No of Students interested in taking up entrepreneurship as a career:
Interested in Starting own business (Y/N)

Frequency Percent
Valid Yes 55 68.8
No 25 31.3
Total 80 100.0

Data Analysis: Out of 80 respondents 55 or 69% have said yes, while 31% have said
no.

3) Breakup of the respondents Gender wise

Frequency Percent
Valid Male 53 66.3
Female 27 33.8
Total 80 100.0

Data Analysis: 66% of the respondents are male students, while 34 % are female
respondents.
4) Breakup of MBA (Regular) & MBA (TM)4[4]

Q1
Yes No Total
C MBA(Reg) Count 43 22 65
% of Total 53.8% 27.5% 81.3%
MBA(TM) Count 12 3 15
% of Total 15.0% 3.8% 18.8%
Total Count 55 25 80
% of Total 68.8% 31.3% 100.0%

Data Analysis: The Table above shows that 53.8% of MBA (Regular) are keen on
taking up entrepreneurship after the completion of their course, while 15% of MBA(TM)
are keen on pursuing entrepreneurship.
4[4]
MBA (TM): MBA (Technology Management) is a programme offered by the Dept of
Business Management, Osmania University, and Hyderabad. The programme is first of
its kind and was started in collaboration with confederation of Indian Industry and
Department of Science & Industrial Research.
4.) Response of Students (Gender wise) to entrepreneurship as a career

Q1
Yes No Total
M/F Male Count 43 10 53
% of Total 53.8% 12.5% 66.3%
Female Count 12 15 27
% of Total 15.0% 18.8% 33.8%
Total Count 55 25 80
% of Total 68.8% 31.3% 100.0%

Data Analysis: 53.8 % of male respondents have shown interest towards

entrepreneurship. 12.5% of male are not interested in setting up their own business.
Among the female respondents 15% of them are interested in setting up their own
business and 18.8 % of the female respondents are not interested in setting up their own
business.

5) Reasons for taking up entrepreneurship:

i) My family is in business and so I am naturally inclined to do business.
ii) I am self-motivated to do business in some area.
iii) My professional education is motivating me to do business in a related area or
associated field of study.
iv) Environment around me is inducing me to do business.
v) Various schemes of state and central government are motivating me to go for
business.
vi) All the above
vii) None of the above.

Frequency Percent
Valid 1 2 3.6
2 9 16.4
3 9 16.4
4 3 5.5
23 10 18.2
24 6 10.9
26 1 1.8
34 1 1.8
35 1 1.8
46 1 1.8
123 2 3.6
135 1 1.8
234 4 7.3
1456 1 1.8
2345 4 7.3
Total 55 100.0
Data Analysis: A list seven reasons for taking up entrepreneurship as given above was
administered to the respondents. A high percentage of respondents have given self motivation
and present course they taken up for the award of degree as the reasons for entrepreneurship.

6) Reasons for not taking up entrepreneurship

i) Business involves a lot of risk and cannot handle it.
ii) Fear of losing in the game
iii) Not comfortable in dealing with the officialdom.
iv) Do not want to loose the comfort and security the job offers
v) Want to have a fixed salary
vi) Poor in dealing with interpersonal relationships.
vii) All the above
viii) None of the above.

Frequency Percent
Valid 1 6 24.0
3 4 16.0
4 2 8.0
5 2 8.0
7 1 4.0
8 3 12.0
14 1 4.0
45 3 12.0
145 1 4.0
234 1 4.0
3456 1 4.0
Total 25 100.0

Data Analysis: A list 8 options as given above was administered to the students to give their
opinion on reasons for not taking to entrepreneurship. 24% of the respondents have cited first
reason or are not capable of handling risks involved in personal business.

7. Scale of Business to start with:

i) Small Scale Business or Micro Business
ii) Medium Scale Business
iii) Large Scale Business

Frequency Percent
Valid Small Scale 24 43.6
Medium 30 54.5
Large 1 1.8
Total 55 100.0

Data Analysis: The above frequency table shows that 43.6 % of the respondents prefer to
setup small-scale units, 54.5% prefer medium and 1.8 % prefer large scale.

6) Had any formal training programmes? (Yes/No)

Frequency Percent
Valid Yes 10 18.2
 No 45 81.8

Total 55 100.0

Data Analysis: Only 18% have said they had attended some formal training programmes. A
large section of the respondents nearly 82% have said they have not attended or taken any
formal training programmes in entrepreneurship.

7) Need for formal training programmes? (Yes/No):

Frequency Percent
Valid Yes 53 96.4
No 2 3.6
Total 55 100.0

Data Analysis: A very large section of respondents nearly 96.4% want formal training
programme in entrepreneurship, only 2 respondents or 3.6 % said they do not need any.

8) Type of training programmes

i) Apprenticeship under some successful entrepreneur for a minimum of six months.

ii) Skill based Training programmes in a specific area of interest.

iii) Interactive secessions with successful entrepreneurs involved in different scales of

business, once a month during last semester in the completion of the degree.
iv) Awareness programmes to create awareness about various aspects of business.
v) Interaction with funding agencies to know about various financial assistance
schemes of financial institutions
vi) Awareness programmes on non-financial incentives provided by state & central
government agencies through lectures by eminent people.
vii) Leadership programmes to inculcate the decision-making and leadership qualities
among prospective entrepreneurs
viii) Communication programmes to provide formal training in handling successfully the
communication between various nodal agencies and people within the business.
ix) Motivational programmes to induce talented people

Frequency Percent
Valid 2 2 3.6
3 2 3.6
12 3 5.5
15 1 1.8
25 1 1.8
26 1 1.8
28 1 1.8
38 1 1.8
57 1 1.8
124 1 1.8
135 2 3.6
345 1 1.8
346 1 1.8
347 1 1.8
1239 1 1.8
 1249 1 1.8
1347 1 1.8
1379 1 1.8
1479 1 1.8
2357 1 1.8
4679 1 1.8
12356 1 1.8
12358 1 1.8
12359 1 1.8
12467 1 1.8
12479 1 1.8
12569 1 1.8
23459 1 1.8
23467 1 1.8
24578 1 1.8
124678 1 1.8
1234789 1 1.8
1345678 1 1.8
1356789 1 1.8
2345689 1 1.8
2345789 1 1.8
12345678 1 1.8
12346789 1 1.8
123456789 12 21.8
Total 55 100.0

Data Analysis: A list of nine probable training programmes were included in the questionnaire
like apprenticeship, skill based programmes, Interactive sessions with successful
entrepreneurs, awareness on financial & non-financial incentives programmes, leadership
programmes, communication programmes, motivational programmes.
The above frequency shows that 20% of them prefer all nine programmes.

9) Idea of Apprenticeship in the curriculum? (Yes/No)

Frequency Percent
Valid Yes 50 90.9
No 5 9.1
Total 55 100.0

Data Analysis: A majority, nearly 91% of the respondents favour the idea of apprenticeship in
the course curriculum. Only 9% do not favour the idea of apprenticeship.
10) Need a stipend (Yes/No)?
Frequency Percent
Valid Yes 46 83.6
No 9 16.4
Total 55 100.0

Data Analysis: Nearly 84% of the respondents want a stipend for the apprenticeship period,
while 16% do not want any stipend.

8. FINDINGS BASED ON THE ABOVE DATA ANALYSIS

The following are the findings from the above case study
1) Majority of the student respondents, in particular male students have shown an inclination
towards entrepreneurship as a career option, while only a few female students have
responded positively to entrepreneurship as a career option.
2) Student respondents from MBA (Regular) and MBA (TM) have shown interest in
entrepreneurship.
3) A large section of the respondents who want to take up entrepreneurship as a career have
cited self-motivation and the academic course they have taken for study in the college as
the reasons for their inducement to entrepreneurship. Very few have given family business
as the reason for taking up entrepreneurship
4) Students who are not interested in taking up entrepreneurship have given the reason of
not wanting to take the risks involved in running a business.
5) An interesting observation was - A significant majority of the respondents are breaking the
stereotype of wanting to set up a small- scale industry. They prefer to venture in medium
scale industry.
6) Very few students have attended training programmes on entrepreneurship.
7) All most all want to attend or undergo some training programme on entrepreneurship.
8) Many view the existing programmes such as awareness programmes, motivational
programmes; communication programmes, skill-based programmes, leadership
programmes and interaction with financial institutions are good and want them to continue.
9) Many student respondents are open to and favour the idea of apprenticeship for
entrepreneurship during their course of study in the college/University for the degree.
10) Majority of the respondents want a stipend to be paid during the period of apprenticeship

9. CONCLUSION
The above study makes an effort to explore the option of inclusion of apprenticeship in
entrepreneurship in the curricula of our professional courses like engineering and management
courses offered by many Indian universities. The study was conducted taking the case of
department of Business Management, Osmania University and from student‘s perspective.
The study concludes with the opinion that the student‘s response is encouraging and they are
keen on having it included in the syllabus with a stipend being provided to them during the
period of apprenticeship.

• REFERENCES

1. Amar Bide, What Role for Entrepreneurship in India?, www.bhide.net,

2. E. Gordon & K.Natarajan, Enterprise Development, Himalaya Publishing House, 2003.
3. Hisrich Peters, Entrepreneurship (Fourth Edition), Tata McGraw Hill Edition, 1998.
4. James J. Berna, Patterns of Entrepreneurship in south India, Economic Development
and cultural change, Vol 7, No.3, Part 1.
5. Mitra, Reshmi, Growth pattern of women run enterprises – An empirical study in
India, Journal of Developmental entrepreneurship in Business Finance, August 2002.
6. Pallavi Aiyer, Where Rags to Riches Stories Are No Longer Rare, The Hindu, April 7,
2006.
7. Rasheeda Bhagat, Go on …and do it, Business Line December 1, 2006.
8. Sudhakar Ram, Let’s Show some Enterprise, Business Line December 1, 2006.
 INNOVATION AND ENTREPRENEURSHIP IN A GLOBAL ECONOMY

Introduction

When Peter Drucker wrote about innovation and entrepreneurship in the mid 1980s (Innovation
and Entrepreneurship Principles and Practices, 1985), America employed 10 million more
people than had been predicted, and its dynamic economy was headed toward a primarily
entrepreneurially inspired, innovative business culture. There was an abundance of young risk-
takers who were willing to endure the ruthlessly long hours required by entrepreneurial
opportunities, especially because of the potential success they offered. At the same time, big
business dominated the corporate world and benefitted from a highly loyal workforce.
Incorporating innovative ideas in business quickly became a highly esteemed management
goal worthy of great effort. Corporate executives required their people to learn the disciplines of
innovation and entrepreneurship, and Peter Drucker became their teacher.

Drucker‘s ideas were the panacea for institutional giants of his time, and the business
climate of the 80s was ripe for adopting them. In this context, he treated both innovation and
entrepreneurship in the ―new entrepreneurial economy‖ as practices, decisive duties that could
be controlled best in a systematic work environment. Unfortunately for corporate America, the
bureaucratic organization structure was not able to sustain an entrepreneurial spirit, and many
of the proponents left to start their own ventures.

Twenty-five years and one computer revolution later, where do these concepts stand?
American business has undergone more extreme changes in every aspect in every industry
than could have ever been predicted. Many center on technology, information and productivity,
which Drucker steadfastly argued were less important than management. Before his death in
2004, he wrote a book called, Management Challenges of the 21st Century. In the chapter,
Management’s New Paradigms, he reminds business leaders, ―The center of a modern society,
economy and community is not technology. It is not information. It is not productivity. It is the
managed institution as the organ of society to produce results … Management is the specific
function, the specific instrument to make institutions capable of producing results.‖

Today, innovation and entrepreneurship have changed. There are different ways of
breeding, executing and practicing those concepts around the world. This paper looks at
Drucker‘s theory, what‘s applicable for today and what is not. The practical reality is
entrepreneurship and innovation are not manifested the same in an international marketplace.
In fact, they are not all systematic as Drucker believed. For example, the U.S. and China have
incubators to breed innovation and entrepreneurship, but they are not practiced similarly.
Likewise, some innovations, like the Internet, are opportunistic and accidental. Originally
developed by DARPA, the Defense Advanced Research Projects Agency as a means to share
information on defense research between involved universities and defense research facilities,
the internet quickly became the World Wide Web.

Companies tackling the global economy face unprecedented challenges and threats,
as well as remarkable opportunities. Fortunately, new generations of entrepreneurs are more
confident in themselves than were the baby boomers of the 80s. They are more inclined to
demand instant gratification from their careers, even if it doesn‘t include maximizing profits.
Today, entrepreneurs want to be intellectually challenged, and some even want to make a
difference in society. Their motivations are strikingly different from those of their predecessors
of the 1980s, which in the long-term could be a contributing factor to sustainable success.

Innovation Defined

Wikipedia defines innovation as simply, ―a new way of doing something.‖ It may refer to
incremental, radical and revolutionary changes in thinking, products, processes or
organizations. A distinction is typically made between invention, an idea made manifest, and
innovation, ideas applied successfully. (Mckeown 2008) Peter Drucker viewed innovation as
the tool or instrument used by entrepreneurs to exploit change as an opportunity. He argued
that innovation, as a discipline, is capable of being learned, as well as practiced. While he
never agreed to a theory of innovation, he realized enough was known to develop it as a
practice – a practice based on when, where and how one looks systematically for (innovative)
opportunities and how one judges the chances for their success or the risks of their failure.
From Drucker‘s perspective, systematic innovation consisted of the purposeful and organized
search for changes, and in the systematic analysis of the opportunities such changes might
offer for economic or social innovation. As such, innovation of the 1980s took place in large
corporate R&D departments, as well as academic institutions. Now when people want to
innovate and be entrepreneurial, they leave the corporate world and set out on their own. They
get money for their start-up ventures from a variety of sources, sometimes even mortgaging
their homes. Often they take substantial risks to follow their dreams, which is where the term
―lifestyle entrepreneur‖ was born.

While Drucker was once the foremost expert on the subject of innovation, new ideas
about innovation have emerged. For instance in 2004, William Lazonick, Professor in the
Department of Regional Economic and Social Development at the University of Massachusetts
Lowell and Director of the Massachusetts Lowell Center for Industrial Competitiveness,
referred to ―indigenous innovation‖ which is the development of a collective type of learning
within the organization. The strategy driving the innovation, he argued, was set in motion
socially rather than process-driven. He believed that the pursuit of innovation required much
more than taking up a practical course of action. Further, Lazonick noted that conditions for
success were far too reliant on economic factors to be measured by simply having a
systematic process in place as Drucker had suggested. (Indigenous Innovation and Economic
Development: Lessons from China’s Leap Into the Information Age, Industry and Innovation,
12/04 issue)

Another offshoot is ―disruptive innovation,‖ which improves a product or service in ways

that the market does not expect (e.g., lower prices, designed to appeal to a new customer, etc.)
Coined by Clayton M. Christensen in his 1995 article, Disruptive Technologies: Catching the
Wave, co-written with Joseph Bower, disruptive innovations are predominantly intimidating to
existing market leaders because they represent competition coming from an unexpected
direction. The concept of disruptive innovation carries on a long practice of recognizing radical
technical change in the study of innovation by economists.

Another method for practicing innovation involves the antithesis of what Drucker called
systematic innovation. It is based upon the concept, ―accidents happen.‖ Innovation cannot
always be planned, which is why this approach emphasizes how many important innovations
are the byproducts of accidents. ―The key is to be prepared for the unexpected,‖ says Robert
D. Austin, associate professor in the Technology and Operations Management unit at Harvard
Business School. Austin‘s research regarding the practical implications of accidental
innovation, make it difficult to deny its viability. Popular innovations discovered by accident
include cellophane, Cornflakes, nylon, penicillin, Teflon and so many more.

All of these examples show the evolution of innovation as adaptations to the

changing business landscape.

Entrepreneurship Defined

A little over 200 years ago, the French economist J.B. Say remarked, ―The entrepreneur
shifts economic resources out of an area of lower and into an area of higher productivity and
greater yield.‖ But, who is this entrepreneur Say speaks of? In the United States, an
entrepreneur was defined as ―one who starts his own, new and small business,‖ although
Drucker noted that not every new small business is entrepreneurial or represents
entrepreneurship. Also, not every entrepreneurial business is innovative.

Drucker identified entrepreneurs as people who see ―change‖ as the standard, echoing
Heraclitus of Ephesus, the Greek philosopher who said, ―The only constant in life is change.‖
Entrepreneurs regard change as essential and welcome it as beneficial to the lives of big
corporations and small businesses alike. However, the kind of change implied here, Drucker
clarified, is typically not the kind that can be brought about simply by deciding to create it.
Rather, it is created by entrepreneurs who actively go looking for existing change in order to
exploit it.

One example Drucker presented was the entrepreneurial genius behind the early days
of McDonald‘s. The truth was Ray Kroc never invented anything. In fact, hamburgers, French
fries and soda had been available for years. Kroc simply asked the question, ―How does our
customer define value?‖ Once he had the answer, he developed, standardized and branded it.
That, Drucker believed, represented entrepreneurial instinct at its best. At the same time, he
thought the risk in being an innovator was that it might come with ill repute, perhaps because
so few of the so-called entrepreneurs knew what they were doing. Although the McDonald‘s
example demonstrates that being entrepreneurial does not automatically come with a certain
degree of risk, it should still be approached systematically, as well as managed. And, Drucker
added, ―Above all it needs to be based on purposeful information.‖

In corporate America, this has changed dramatically. Entrepreneurship is not solely

based on purposeful information. Within corporations, those who look for change are
considered the troublemakers who often end up starting their own companies. Corporate
organizational structures, layers and silos inhibit employee creativity, as well as thwart efforts
to improve the customer experience. In many cases, they are programmed for inflexibility,
leaving employees no longer agile enough to cope with change.

Innovation and Entrepreneurship in the 1980s

By the 1980s, one of America‘s trademark fields, heavy industry, had been losing
ground for at least two decades. Further, deregulation had gained momentum in the late
1970s, and by 1980, President Carter began deregulating industries from trucking to airlines to
railroads. All combined, the external environment demanded that American management shift
its thinking toward a more innovative, entrepreneurial approach to business.

Halfway through the 1980s, three fourths of America‘s 113 million workers earned
their living providing services and establishing what would soon become known as the service
industry. By the end of the 80s, entrepreneurship had taken off, and American managers
were finally getting comfortable having shifted their focus from products to processes and
from quantity to quality. It wasn‘t just happening in America. All across the world industries
were undergoing transformation, which forced companies to begin laying the foundation for a
new breed of innovation.

Right in the thick of the decade‘s advances, Drucker‘s 1985 book on innovation and
entrepreneurship championed ―specifically entrepreneurial‖ strategies that Drucker described
as important, distinct and different. They were aimed at breaking down the barriers to change
that often discouraged CEOs. Resistance to change was a company‘s worst enemy in the
1980s, yet change was becoming increasingly unavoidable.

While each of Drucker‘s strategies is only briefly described, they are important to note.

• Being Fastest with the Mostest. Here the aim from the start is to eventually land a
leadership position being the first with the most. The entrepreneur aims at leadership if not
at dominance of a new market or industry. Blackberry provides a good example. With the
undeniably compelling nature of mobile e-mail, it was no big surprise that the (RIM)
Blackberry unit became popular so fast. Being first-to-market, its premium pricing didn‘t
seem as expensive as it does in today‘s much more competitive landscape. But, now the
company is being squeezed and needs to redefine its marketing strategy.

• Hit Them Where They Aint. In this strategy the innovator doesn‘t create a major new
product or service. Instead it takes something just created by somebody else and improves
upon it. Drucker called it ―creative imitation‖ because the innovator reworks the product or
service, coming up with a slightly more desirable option. Take the iPhone for example.
Apple entered the market of mobile phones at a time when it was mature and saturated.
But, the difference was found in the iPhone‘s revolutionary product design. As a cross
between a mobile phone and a lap top computer, the iPhone took the market standard and
turned it on its head.

• Entrepreneurial Judo. In this case, the strategy‘s success feeds on what is unfortunately
highly common among American companies: complacency. It takes what the market
leader considers its strengths and turns those strengths into the very weaknesses that
defeat it. In Drucker‘s Innovation and Entrepreneurship, Entrepreneurial Strategies
(Corpedia Online Program), he gives this example: When the Japanese became the
leaders in numerous U.S. markets (e.g., copiers, machine tools, consumer electronics,
automobiles, etc.) they always used the same strategy. If, for example, an American
company saw its high profitability as its greatest strength, then it probably meant the firm
focused on the high end of the market, leaving the mass market undersupplied and
underserviced. The Japanese moved in with low-cost products that had minimum
features and the American companies didn‘t even put up a fight. However, because the
Japanese had taken over the mass market, they soon had the cash flow to then move in
 on the high-end market, too. It didn‘t take long before they dominated both.

• Changing Economic Characteristics. Under all of the other strategies presented by Drucker,
the innovator has to create an innovative product or service. In this one, the strategy itself is
the innovation. Using this strategy, the company actually converts an existing product or
service into something new by changing its utility, its value and its economic characteristics.
Post conversion, there is new economic value and new customers, but no new product or
service. It‘s a commonly used strategy in the high-tech industry. Pricing is one of the most
successful ways to change the economic characteristics of a product or service. Drucker
used the example of Yahoo‘s situation a few years back. With the internet designed as an
information network, most providers charged access for it, (e.g. hosting an e-mail address).
But, Yahoo, among others, gave away internet access because it was paid for by
advertisers who ran ads the customers would see when they went online. Yahoo asked,
―Who is the customer?‖ The answer was that the customer is the supplier who wants
access to a potential customer. This changed the characteristics of the industry.

• Ecological Niche. This strategy aims at control. It obtains a practical monopoly in a small
area. In the most successful of the ecological niche strategies, the whole point is to be so
inconspicuous that despite the product‘s being essential to a process; no one will likely try
to compete, making them virtually immune to competition. Three distinct niche strategies
fall under this category.

One of these is called the ―toll-gate‖ strategy. Being in a toll-gate position means once
the product is developed and patented, it is in such high demand no one will do without
it. An example comes from Givun Imaging, an Israeli company that developed the first
ingestible video camera at a size so small it fits inside a pill. The device enables doctors
to view the small intestine from the inside, helping medical professionals to diagnose
cancer and digestive disorders. Used across the world, doctors couldn‘t do without it.
More importantly, price was not an issue. Givun Imaging was the first, putting itself in
one of the most desirable positions a company could occupy.

In addition to his list of strategies, Drucker offered several important caveats to emphasize
the connection between entrepreneurial strategy and innovation. Stated differently, before
implementing one of Drucker‘s strategies, it‘s important to make sure it‘s the right one. Some
entrepreneurial strategies fit better in certain situations, while other strategies work better in
combination with another. One entrepreneur may combine two or even three into one strategy.
These are his guidelines:

6) The strategies are not mutually exclusive.

7) The strategies are not always sharply differentiated.
8) Each strategy fits certain kinds of innovation and does not fit others.
9) Each strategy requires specific behavior on the part of the entrepreneur.
• Each strategy has its own limitations and carries its own risks.

―Still, entrepreneurial strategy remains the decision-making area of entrepreneurship

and therefore the risk-taking one,‖ Drucker stated. ―It is by no means hunch or gamble. But it
also is not precisely science. Rather, it is judgment.‖ Malcolm Gladwell examined that kind of
judgment in his book, Blink (Back Bay Books, 2005). He studied rapid cognition, the kind of
thinking that happens in the blink of an eye. Gladwell breaks down the two seconds anyone‘s
mind uses to jump to conclusions about any new information being presented. He believed
these instant conclusions we reach are really powerful. Since entrepreneurship comes with an
element of risk, it‘s helpful to know when snap judgments are good and when they‘re not.

By the end of the 80s it had become quite clear that what was transpiring in American
business went beyond ―change‖; it was a complete transformation that would wipe out any
company that wasn‘t prepared to exploit it. American business was heading into its final
decade before the turn of the century, and it was about to be turned upside down.

Innovation and Entrepreneurship in the 21st Century

As businesses move toward the year 2010, it‘s interesting to examine the strides
innovation and entrepreneurship have made. For starters, innovation has all but become a
necessity in today‘s global business setting, regardless of a company‘s market scope. This is
due to the new reality that competition for any business extends way beyond its local area. In
fact, companies that recognized this early on and nurtured innovation as the ultimate source
of competitive advantage are surely reaping the benefits now.

With the proliferation of elaborate think tanks and R&D facilities overseas, it is evident
that companies today are striving for an innovative climate. Yet, based on a comparative study
of innovation practices, the practice of innovation is not without its extreme challenges.
(Southern Business Review, Spring 2004, Harper, S. M., Becker, S.W.) The study was
completed using a series of interviews with corporate executives and senior innovation officers
in four of the largest Chicago-area, publicly traded companies (Chicago Tribune Top 50 List,
January 2003) and one government agency. The intent of the study was to learn how
individuals, groups, leaders and the organizational culture are influenced by creativity
(generating an idea) and risk-taking (taking action on the idea). Interview questions were based
on the Innovation Equation model, Innovation = Creativity + Risk-Taking (Byrd & Brown, 2003).

The study‘s findings showed a key difference between those companies that referred to
their culture as ―highly innovative‖ and those that did not. All of the highly innovative companies
had innovative processes in place. While each process had its strengths and weaknesses, the
simple act of articulating a process was enough to communicate the importance of innovation
to the whole company.

Preoccupations that consume the minds of today‘s entrepreneurs are very different from
those of the 1980s. Just over a year ago, most American businesses were forced to shift back
as the economy was brought to its knees at home and abroad. Although entrepreneurs are
known for turning such conditions into opportunities, this crisis hit hard and shows no signs of
abating anytime soon. In the book, Webs of Innovation: The Networked Economy Demands
New Ways to Innovate (Financial Times Prentice Hall, 2001) author Alexander Loudon argued
that even during recessionary times, the need for innovation persists. He recommended a
concept of ―networked innovation‖ as the way to help corporations adapt to carrying out
innovation in the Information Age. Companies with ongoing commitment to innovation, he
noted, are both able to take greater advantage of new markets and opportunities during boom
times, and to maintain and grow existing business during downward cycles. Companies that
don‘t take charge of their innovation processes cannot expect to profit from innovation, he
concludes.

Recent research conducted by the Kauffman Foundation in Kansas City reports that 70
percent of respondents believe entrepreneurship is the answer to getting America out of its
present financial calamity. Eighty percent are in favor of government allocating resources that
would strongly support entrepreneurship to develop and grow in the United States. But, it‘s one
matter to believe entrepreneurship is the answer and quite another to practice it. Over 70
percent of survey respondents answered that the financial predicament had just brought one
challenge too many to the entrepreneurial spirit. While almost 50 percent see opportunities,
only half of that 50 percent would consider investing time in a startup over the next five years.
These may be our future entrepreneurs.

If entrepreneurs are going to be an integral part of the answer to the world‘s turbulent
times, if they are destined to be the opportunity diggers and job creators, then it will probably
come from those who lean more to the creative side. According to Professor Jean-Claude
Larreche, Professor of Marketing at INSEAD in Fontainebleau, France, creative entrepreneurs
can weather this crisis better than traditional companies can. ―It‘s not the creative
entrepreneurs, but it‘s the large companies that are being challenged. Creative companies
can survive any condition,‖ says Larreche.

Speaking at the World Knowledge Forum in Seoul, South Korea (11/19/08), Larreche
used Virgin Atlantic as his shining entrepreneurial example. Richard Branson, founder and
entrepreneurial architect of the Virgin Group, embarked on his first business venture in 1967
at the age of 17. Branson started his second business three years later. It was a mail-order
retail record company: Virgin Mail. Three years after that he expanded to establish Virgin
Records.

What can now be called a Virgin empire contains a conglomeration of wholly owned
subsidiaries and outside partnerships. Branson actually maintains a controlling interest in
every company he starts, which contradicts Drucker‘s theory that entrepreneurs aren‘t
interested in ownership. What gives him such a unique entrepreneurial spirit? For one, he
advocates social responsibility by sticking to his belief that employees‘ personal needs come
first (social responsibility) and, while others cannot figure out how, he still manages to avoid
layoffs. Also, Branson believes in the power of informal communication. Each of his
companies is kept small and controllable even though they‘re run under a conglomerate
structure. Virgin is diversified in countless directions, with interests in airlines, retail stores, a
travel group, an entertainment group, a hotel enterprise, financial services, cinemas, radio
stations and much more. The man is doing something right, and many believe a large part of it
is his earnest consideration of his employees.

Brought to the World Knowledge Forum via satellite, Branson didn‘t deny how bad the
financial crisis was, but he did agree that with it comes enormous opportunity. One of his
underlying messages was that tapping into opportunity would come more easily to
companies that keep themselves flexible, because when a company determines it‘s time to
move it‘s going to want to move quickly.

Branson also thinks companies with available cash have a responsibility, to both their
country and their company, to invest the cash. Not excluding Virgin from this responsibility, at
the time of the Conference, oil prices and airline stock prices were falling. Branson divulged he
was looking at whether the time was right for Virgin to branch out to South Korea, Russia or
Brazil. He sees it as a cleansing. ―The best companies with the best products and services
survive in a crisis. You will see companies all around you going bust and you‘ll benefit from
that,‖ Branson says. Concluding his speech, the message came directly from the mind of a true
entrepreneur, ―I‘ve always believed there is no point in going into business unless you‘re going
to make an enormous and positive difference.‖ While these words might be inspiring and
admirable, they are far different motives than the entrepreneur described by Drucker. In
Branson‘s case, there is great drive to make his mark in the world, but – on his terms – which
seem to carry a great deal of ego. Drucker‘s entrepreneur thrived on systematizing, organizing
and bringing change to corporate giants.

Innovation on a Global Scale

Innovation as a practice has come a long way since Drucker shared his ideas in the
1980s. For starters, any present-day discussion about innovation is likely to include references
to international initiatives.

Also, due to the global economy, measuring innovative performance has moved to the
top of corporate executives‘ agendas. In fact, global innovation now has a formal means of
measurement. The Global Innovative Index, conceived and developed by INSEAD Business
School and World Business, is a formal model built to better see which nations are currently
meeting the challenges of innovation. The GII ranks the world‘s best and worst performing
economies from the standpoint of innovation, as well as providing insights into nations‘
strengths and weaknesses in their innovation-related policies and practices.

The availability of this Index means business leaders can more assuredly make
revealing comparisons and critical decisions because their research is based on concrete
data. Why is the Index likely to become increasingly important as we move further into this
new century? Since the GII shows to what degree individual nations and regions currently
respond to the challenge of innovation, it will begin to paint a picture of what constitutes
success and what does not.

Along the same lines, many questions are being asked about measuring
entrepreneurship. When two disciplines are so closely aligned, as are innovation and
entrepreneurship, shouldn‘t entrepreneurship play some role in such a measurement? For
example, there are countries that have enormous success with innovation, yet they often have
trouble getting these products to market. To get actionable information, we need to look at
entrepreneurship and innovation interchangeably and develop an index to reveal the linkage
between them on a global basis. Mounting concern over lack of access to global
entrepreneurial measurements became the catalyst for the Entrepreneurship Indicators
Project, a group that began to address these issues in 2008.

How is a country‘s entrepreneurship measured? Total number of patent acquisitions,

new start-ups, and number of publicly traded companies is a starting point. But, there are
missing links that the EIP seeks to fill as it develops comparable measures of entrepreneurship
and the factors that enhance or impede it. Led by Tim Davis of the Organization for Economic
Cooperation and Development (OECD), the group believes that if entrepreneurship is the
process leading to the creation and growth of a business, then creation and growth must be
measured.

Innovation: U.S., Switzerland and Israel

Ranked by number of start-ups, the top three countries are U.S. (#1), Israel (#2), and
Switzerland (#3). The innovative strengths and challenges of three distinctive countries, all
with comprehensive ratings within the GII‘s top 20, provide further insight to innovation and
entrepreneurial potential in the global marketplace.

Strengths
United States: Innovative Strengths (Ranked #1, Score: 5.80)

The U.S. remains far ahead of its rivals for a number of reasons, but it doesn‘t mean the
country doesn‘t face its share of question marks at home and abroad. In spite of challenges,
these are the noted U.S. strengths:

• Has a strong environment for innovation

• Is superior when it comes to exploiting this environment
• Constantly building on its human capital
• Universities and research establishments attract top thinkers
• Generous funding opportunities (U.S. venture capital dwarfs other nations‘)
• Adept at deploying technology (Accounts for up to 80 percent of U.S. productivity
gains since the turn of the century)
• Demanding customer base

Switzerland: Innovative Strengths (Ranked #6, Score: 4.16)

Even in Switzerland, a country known for being risk-averse, entrepreneurship as a field

of study is finally gaining acceptance and momentum. Clearly globalization is the reason the
country has lost ground and fortunately the Swiss realize it requires an innovative response.
This country‘s strengths are:

• Innovative performance has been amongst the best.

• Occupies a top position in knowledge-intensive market services which attracts many
people trained in science and engineering
• Has a very strong basic research capacity
• Public funding is widely available

Israel: Innovative Strengths (Ranked #18, Score: 3.68)

There is no better ―poster country‖ for keeping up the entrepreneurial spirit than in
Israel. Consider a country that faces warlike conditions daily, with little hope of resolve. Yet,
that seems only to drive its motive to innovate. Part of the reason is because Israel is learning
their lessons well. They used the wisdom they gained in the early 2000s to make them leaner,
meaner and smarter.
 The country‘s real strength is in developing cutting edge products that are also creative.
Many observers think that the reason they are so capable is because their mentality doesn‘t fit
the corporate mentality, nor are they in it for the long haul. They set up small companies and
work effortlessly to make it profitable for five to six years, only then to move on to a new project.
Other innovative strengths characteristic of Israel include:

• Supportive of risk-taking with a powerful drive to succeed

• Highest number of engineers per capita (Double that of U.S. and Japan)
• Powerful economy from the ground up
• Pioneering technology sector – boasting the highest concentration of high-tech
companies in the world outside of Silicon Valley
• Strong ties to Silicon Valley and U.S. academic and research institutions
• Successive governments have invested in education
• Fostered the highest R&D spending of any industrialized nation
• Developed effective investment incentives

Challenges

United States: Innovative Challenges

• Must stay aware of global landscape changes as China and India emerge as
economic powers
• Needs to produce more scientists and engineers from within
• Must improve the quality of an aging communication and transportation
infrastructure
• Tends to exhibit hostility since 9/11, which shows through in diminished enthusiasm
when welcoming newcomers

The global outlook presents ominous challenges to America‘s companies and their
innovation health. Although the United States remains on top of the Global Innovation Index
Rankings, the truth is America‘s innovation has been steadily declining since the mid-1980s.
Now, there are very real threats coming from China and India.

Switzerland: Innovative Challenges

Some of the barriers the Swiss are working on removing include lack of innovation
education, excessive regulation and risk-aversion. Other challenges include:

 Innovative performance has weakened in recent years

 Increased globalization of R&D
 Boosting innovative capacity of SMEs and removing obstacles to their growth
 Tertiary education participation is very low meaning reforms to university system are
necessary
 Falls short with respect to academic staff

Israel: Innovative Challenges

One of the best moves Israel could make right now would be to focus on narrowing the
time gap between R&D and final product. Other innovative challenges:
  Political situation drags down competitiveness rating
 Sales, distribution and marketing capabilities are weak
 No domestic market for its products as majority of sales are abroad

The Global Innovation Index

Measuring innovation performance internally, nationally and/or globally is a prudent

method for determining the rights and wrongs of innovation strategy and for determining under
what conditions the strong companies thrive. The framework of the GII model uses eight pillars
that are grouped in two categories:

Inputs: Aspects that enhance the capacity of a nation to generate ideas and leverage them for
innovative products and services.

Outputs: The ultimate benefits the nation derives from the inputs – more knowledge creation,
increased competitiveness and greater wealth generation.

Each pillar offers quantitative and qualitative data that make it possible to go below the
surface of the raw rankings. Only then can any interpretation be made about how and why a
given country responds to innovation. Furthermore, this is the first year of this ranking. The
analysis of this year in combination with subsequent years will evolve into more definitive
patterns and trends.

Five “Input” Pillars

1. Institutions and Policies

 Independence of judiciary
 Demanding regulatory standards
 Prevalence of laws relating to ICT
 Quality of IPR
 Soundness of banks
 Quality of scientific research institutions
 Quality of management/business schools
 Legal obstacles to foreign labor
 Time required to start a business
 Time required to obtain licenses
 Rigidity of employment index
 Investor protection index
 ICT priority for government

2. Human Capacity

 Brain drain
 Quality of human resource approach
 Quality of math and science education
  Graduates in engineering
 Graduates in science
 Population 15-64
 Urban population
 Schools connected to the internet

3. Infrastructure

 Quality of general infrastructure

 Quality of national transport network
 Quality of air transport
 Fixed line penetration
 Mobile penetration
 Internet penetration
 International bandwidth
 ICT expenditure
 Personal computer penetration
 Mobile price basket

4. Business Markets and Capital

 Access to loans
 Sophistication of financial markets
 Issuing shares in local share market
 Corporate governance
 Buyer sophistication
 Customer orientation of firms
 Domestic credit to private sector
 FDI net inflows
 Gross private capital flows
 Gross capital formation
 Extent of clusters
 Commercial services imports
 Manufactured imports
 Private investment in ICT
 Informal economy estimate

5. Technological Sophistication
 Country‘s level of technology
 E-Participation index
 E-Government index
 Government procurement of advanced technology
 Internet use by businesses
 Competition among ISP providers
 Company technology absorption
 Telecom revenue
  Secure internet servers per 1,000 people
 Spending on R&D
 Royalty and license fee payments
 Business/university R&D collaboration

Three “Output” Pillars

6. Knowledge
• Local specialized research and training
• Nature of competitive advantage
• Quality of production process technology
• High-tech exports
• Manufactured exports
• ICT exports
• Insurance and financial services
• Patents registered (domestic and non-domestic)
• Royalty and license fee receipts

7. Competitiveness
• Growth of exports to neighboring countries
• Intensity of local competition
• Reach of exporting in international markets
• Commercial services export
• Merchandise exports
• Goods exported
• Service exports
• Listed domestic companies

• Wealth
• Final consumption expenditure
• GDP per capita, PPP
• GDP growth rate
• Industry, value added
• Manufacturer, value added
• International migration stock
• Value of stocks traded
• FDI net outflows

Global Innovation and Entrepreneurship: Future Forecast

Based on the current information available, innovation and entrepreneurship will
continue to expand in the future across borders, because of the existence of these six
circumstances: global market conditions, entrepreneurial mindset, eroding confidence in
established institutions, shifting business environment, international collaboration and
environmental /technological advancements.

1. Global market conditions. Trade barriers are easing. Economies are interdependent.
Communication via the Internet has never been easier or more accessible. These
 conditions drive political reform, cultural transparency, social progress and a great deal of
wealth creation.
2. Entrepreneurial mindset. Entrepreneurs have the ability to see, understand and take
advantage of evolving markets. The entrepreneur‘s ability to think differently, use insights,
see what others don‘t, envision what doesn‘t yet exist, and identify opportunity when it‘s ripe
– these are the prized qualities of today‘s entrepreneur. Wayne Gretzky of national hockey
fame helped state it succinctly when he said, ―I skate to where the puck is going to be, not
where it‘s been.‖
3. Eroding confidence in established institutions. The recent world economic meltdown is
removing any last confidence that most people had in governments and large enterprise
banks and other financial entities. The resulting mistrust will lead to reinventing ourselves
as individuals, communities, countries and societies. As such, many more entrepreneurs
will be joining the field.
4. Shifting business environment. Large-scale firms are synonymous with bureaucracy which
tends to stifle innovation. In response, the business environment is shifting to
accommodate the needs of its rapidly changing market players. Innovation and
entrepreneurship are beginning to flourish around the world and will likely take the form of
much smaller, yet bolder companies. Knowing and catering to this is how entrepreneurial
ventures beat corporate giants to the punch. Any company, large or small, that continues
down the same path it has always taken will find it to be a losing proposition.
5. Entrepreneurial collaboration. Also, on a global scale, there will be more entrepreneurial
collaboration, which in turn will make shared innovation between countries a far more
common occurrence at the company to company level – not just at universities and
research institutions. One of China‘s approaches for creating an innovative nation is the
Technology Business Incubator (TBI). China‘s mission is to nurture ―technopreneurs‖ and
technology-based start-ups. Business incubation is considered a viable option for countries
that want to expand economic opportunities.
6. Growth of environmental and sustainable engineering technologies. A growing
consciousness about the value of protecting our world will fuel the demand for products
and services that can accomplish this goal.

In Drucker‘s world and for the past couple of decades, an exodus of people moved
―West‖ for a good education and often ended up staying because of the rich opportunities that
existed. But now, these opportunities are not limited to the West. Opportunities are
international in scope, and people are choosing to return to their homeland to utilize their newly
acquired talent and to build fortunes with it, and elevate global competition. The demand for
innovation on an international scale and for the entrepreneurship that accompanies it will focus
increasingly on being more purpose-driven. With intention at the helm, innovation and
entrepreneurship will adapt to accommodate the changing focus of the drive to live a better life,
do good, save the planet and make money. It‘s no longer about information as Drucker
thought. It‘s about building a better world and a better life through innovation with a purpose.
Book Chapters:

1. Drucker, P.F. (1999) ―Management‘s New Paradigms‖, Management Challenges for the
21st Century, Harper Business, New York, pp. 1-41
2. Drucker, P.F. (2004) ―August‖, Maciariello, J.A., The Daily Drucker, Harper Business,
New York, pp.16-23
3. Drucker, P.F. (1985) ―The Practice of Innovation‖, Innovation and Entrepreneurship
Practice and Principles, Harper & Row, New York, pp. 19-33
4. Drucker, P.F. (1985) ―The Practice of Entrepreneurship‖, Innovation and
Entrepreneurship Practice and Principles, Harper & Row, New York, pp. 141-188
5. Drucker, P.F. (1985) ―Entrepreneurial Strategies‖, Innovation and Entrepreneurship
Practice and Principles, Harper & Row, New York, pp. 207-243

Electronic Sources
6. Claiborne, C.B. (2007) ―Innovation: A Necessity of the New Global Business Paradigm,
7. International Journal of Business Research, http://findarticles.com/p/articles/mi_6773
/is_6_7/ai_n28522943/?tag=content;col1
8. Global Innovation Index: More on methodology
9. http://www.managementtoday.co.uk/news/610009
10. UXL Encyclopedia of World Biography (2003)
http://findarticles.com/p/articles/mi_gx5229/is_2003/ai_n19151605/?tag=content;col1
 TEACHERS AND SOCIO-EDUCATIONAL ENTREPRENEURSHIP:
COMPETENCE AS A CONSEQUENCE

Vijaya Sherry Chand and Geeta Amin-Choudhury

Indian Institute of Management, Ahmedabad, India.

INTRODUCTION

The primary education system in India is mainly characterised by its huge size and by
the crucial role the state continues to play in its funding and management. As of 2003,
India had 160 million children in the age group of 6 to 14 years enrolled in school and
another 25 million out of school. The number of primary schools (Grades 1–5, age
group 6–11 years) was about 664,000 (with about 91 per cent in the state sector) and
the number of primary school teachers was about 1,928,000 (Government of India,
2005). A third characteristic of the Indian primary education system is the seemingly
intractable problem of achieving acceptable levels of grade completion, learning
achievement and equity within the system. Though a variety of efforts—many of them
lar gescale, externally-funded projects—are being made, the experiences of those
teachers who have already achieved their educational goals through the
entrepreneurial ‗practices‘ that they have evolved on their own in response to their
specific socio-economic and classroom constraints, have not received sufficient
attention. These teachers have then developed a certain educational competence,
which has helped them achieve their goals in spite of constraints of extreme
deprivation. Our concern here is to understand the processes which underpin the
initiation of the teachers‘ socio-educationally entrepreneurial practice and the
development of the identity of competence as a consequence. Large numbers of
teachers, working in similar socio-economic contexts, would be interested in these
processes since they face constraints similar to those overcome by the teachers
discussed here.

One of the areas indicated for further study by our initial research into the work of
outstanding teachers (Chand & Shukla, 1998) was the set of roles that such teachers
seemed to play outside their classrooms and schools in order to start them off on their
quest for competence. Almost all the 120 teachers identified as successful educational
problem-solvers at that time indicated the importance of these roles, which though
strictly speaking not school-related, were important in achieving their educational goals.
A crucial proposition became evident: in situations of socio-economic deprivation,
successful teachers deliberately redefine their work context to locate the school in the
local community and among local stakeholders, and reshape their own roles. While
doing this, they exhibit many of the characteristics associated with social entrepreneurs
and social entrepreneurship. We develop this theme further here by drawing on a follow-
up study of fifty-eight ‗problem-solving‘ teachers conducted during 2003–04. In so doing
we hope to extend the concept of social entrepreneurship to their work. We begin by
outlining our conceptual framework, drawing on social entrepreneurship literature. We
then briefly describe the study‘s methodology, and follow this up with a discussion of the
patterns that emerge. We conclude with some implications for teacher development.

Social Entrepreneurship and Social Entrepreneurs

Social entrepreneurship is a relatively new concept compared to its cousin ‗conventional‘

or ‗commercial‘ entrepreneurship (Roberts & Woods, 2005: 45). However, the concept of
entrepreneurship with a ‗social dimension‘ has been extended to other fields like public
sector and university manage-ment, the non-profit sector and even ecologically friendly
enterprises. Yu (2001) developed a model of the ‗entrepreneurial state‘, drawing on the
experiences of a few East Asian economies. Public entrepreneurs working in such a
state focus on opportunity recognition, and pass through a four-stage process: they
project, select, elaborate and implement. Waddock and Post (1991) see social
entrepreneurs as people bringing about catalytic changes in the public sector and in the
perception of social issues. Though they may not play a direct role in solving problems,
their work provides a context for policy change. Pastakia (1998) has applied the concept
to ecological entrepreneurs or ‗ecopreneurs‘. Alvord, Brown and Letts (2004) employed
the social entrepreneurship framework to understand large-scale development
organisations and movements. However, there is little available on the application of
social and educa-tional entrepreneurship to basic education teachers working in
contexts of socio-economic deprivation. Steyeart and Katz (2004) provide a second
rationale for this article. While conceptualising entrepreneurship as a societal
phenomenon, they prescribe three justifications for a fresh per-spective:
entrepreneurship takes place in multiple sites and spaces (a new spatial understanding),
these spaces are political spaces (calling for a multi-discursive approach) and
entrepreneurship is a matter of everyday activities (a broader focus on social processes
that shape society, especially its democratic culture). Appropriate extension of
‗entrepreneur-ship‘ to hitherto neglected spaces, thereby generating alternative dis-
courses, can only help in making a difference where existing situations have stiffened in
all fields of a society where we feel involved and want to contribute (Steyeart & Katz,
2004: 194).

Yamada (2004), after an extensive review of the concept of entrepre-neurship,

presents a multi-dimensional view that incorporates civic, social and cultural factors in a
regional context with the traditional understanding of the roles and functions of an
entrepreneur. He identifies two basic roles of an entrepreneur. First, clearly defining
organisational domains, and obtaining a consensus among the various stakeholders;
this is know-ledge ‗creation‘ in ‗knowledge communities within a social network‘. Second,
obtaining the social capital necessary for establishing a domain consensus; this social
capital is the essential condition for the creation and functioning of knowledge
communities. Domain consensus is thus a socially reached agreement on the activities
that will be performed and those which will not be performed. Developing new domains
can therefore also be seen as a ‗destructive‘ activity—knowledge creation leading to new
domains. This is a key element of our own framework.

Social capital and entrepreneurial networks are well recognised as key elements in
creating and sustaining social and conventional entrepreneurship. Greve and Salaff
(2003) study the network activities of entrepreneurs in different phases of
entrepreneurship. Usually entrepreneurs rely on resource providers who are in social
networks that are not fixed. The contacts that lead to successful outcomes constitute the
social capital and they are a key element of successful entrepreneurial networks. Social
capital thus is the set of tangible or intangible resources that accrue to actors through
the social structure, facilitating the attainment of the actors‘ goals. Contacts become
capital when they contribute to entrepreneurial goals. Baron and Markman (2000)
suggest that social capital is the ‗actual and potential resources individuals obtain from
their relationships with others‘, and that social capital and social skills are analogous to
resource stocks and flows in organisations (p. 107). Both are necessary for entrepre-
neurial success. Social skills help entrepreneurs expand their personal networks thereby
enhancing their social capital. O‘Donnell et al. (2001) reinforce the need for a more
rigorous definition of the network construct in order to clearly distinguish personal
networks from inter-organisational networks.

Various conceptualisations of social entrepreneurship in literature have brought together

this emphasis on domain consensus and the use of social capital, skills and networks.
Mort, Weerawardena and Carnegie (2003) provide a rigorous conceptualisation of social
entrepreneurship as a multi-dimensional construct. They identify four key dimensions:
social entre-preneurs are socially entrepreneurially virtuous, they exhibit a balanced
judgement and a coherent unity of purpose in the face of complexity, they have the
ability to recognise opportunities for creating social value, and they exhibit the same
decision-making characteristics of conventional entrepreneurs (risk tolerance,
proactiveness and innovativeness). Roberts and Woods (2005) develop a ‗working‘
definition of social entrepreneur-ship by combining academic and practitioner views of
conventional and social entrepreneurship: ‗the construction, evaluation and pursuit of
opportunities for transformative social change carried out by visionary, passionately
dedicated individuals‘ (p. 49). They note that many of the attributes of social and
conventional entrepreneurs are common, but the former are motivated to address a
social need.

Thompson (1999) discusses the importance of creating a strategic position and

sustaining it through carefully planned changes, by establishing congruence among
environment, values (of the organisation) and re-sources (within the organisation).
Values are important in the sense that they determine the effectiveness of the current E-
R match and the ability and will of the organisation to change and strengthen it.
Entrepreneurship then is responding to opportunity in the ‗chaos‘, innovating and adding
value with a clear appreciation of risk and ‗a strongly developed ability to network‘.
Alvord, Brown and Letts (2004), in the context of develop-mental action, identify three
trends or models of social entrepreneurship: commercial enterprises that aim at social
impact, innovating for social impact (creating innovative initiatives to solve social
problems) and social entrepreneurship as a catalyst for social transformation. They tend
to privilege the third model. The teachers in this study are micro-social entrepreneurs,
concerned with achievement of local goals. Sharing of their experiences may perhaps
have a catalytic effect.

Thompson, Alvy and Lees (2000) note that social entrepreneurship, like other kinds of
entrepreneurship, involves three key elements: a vision, leadership skills to
operationalise the vision and a will to build something. They also note that many traits
and behaviours of conventional and social entrepreneurs are common. Thompson
(2002) also notes this overlap, and points out that ‗opportunity recognition‘ is the key
common element which is at the heart of entrepreneurship activities. Building on Sykes
(1999), he identifies four ways in which entrepreneurs contribute: en-visioning (clarifying
a need); engaging (with the opportunity); enabling (ensuring that something happens);
and enacting (championing the project up to a satisfactory conclusion). These roles
need not be played by one person alone, and can be shared.

Extending the characterisation of the social entrepreneur, Thompson (2002) defines

such a person as one who creates things valuable to the community, is on a voyage of
self-discovery, is driven by a cause or need she has spotted and exhibits skills and
abilities to identify need gaps and opportunity, imagine and envision solutions, motivate
others for the cause, build essential networks and secure resources, overcome
obstacles and handle risks. Working in the conventional entrepreneurial context,
Deamer and Earle (2004) have developed a psychometric tool by using a multi-
dimensional construct which combines the traditional entrepreneurial traits with
entrepreneurial orientation to measure entrepreneurial leanings. Prabhu (1999) focuses
on social entrepreneurial leaders as people who manage innovative ventures whose
primary mission is social change. They add value by creating jobs, utilising public funds
efficiently and empowering local client groups.

An important dimension of the social entrepreneur‘s own development is ‗learning‘.

Cope (2003) recognises the importance of learning events— discontinuous or non-
routine events that happen during the entrepre-neurial process that can lead to higher
order learning. In order to under-stand the significance of these events, an appreciation
of the context is necessary, and this is where entrepreneurs themselves can play a
mentor-ing role. Gielen, Hoeve and Nieuwenhuis (2003) discuss the dynamics of
innovativeness by seeing them as informal learning processes in which social networks
play an important role. Innovative entrepreneurs (learn-ers) define or redefine the
innovative task (learning task) based on what they receive from networks. Such learning
is embedded in strategic action for organising the knowledge context of the firm. Long-
lasting network contacts are usually informally organised, with old networks being seen
as more important than the weak links in new developing networks. The attention to
learning, however, has not resulted in sufficient exploration of the personal development
consequences of social entrepreneurship. Achievement of social goals and improvement
of entrepreneurial skills do happen in successful initiatives; but the under-addressed
area of identities of competence that emerges and perhaps reinforces further
entrepreneurial activity, is an important aspect of social entrepreneurship that this article
addresses.

We bring the elements identified above into an initial working theoretical framework
that we use to analyse the teachers‘ work (Figure 1).

FIGURE 1

Social Entrepreneurship in Education: An Initial Theoretical Framework

Method
We use a multiple case study design, drawing on case studies of twenty-two teachers.
These teachers were selected from a larger pool of fifty-eight teachers, all of whom had
achieved their educational goals through their own efforts, with a strong initial focus on
clearly identifiable out-of-school practices. All these practices were put through a
process of validation, which included visits to the schools by experts, teacher
participation in documentation workshops and sharing of their work with other teachers.
Though the context of socio-economic deprivation was common to all, the twenty-two
teachers were so selected as to include three kinds of context (combinations of levels of
infrastructure and socio-economic backwardness) in which they began their work.
However, the subsequent analysis did not indicate a significant variation in processes
across these three contexts. The unit of analysis was the teacher, and a few specific
practices identified by the teachers as critical were sub-units of analysis. One drawback
of the methodology is that given the focus of the study, theoretical replications (Yin,
2003)—cases with different theoretical conditions to produce contrasting results for
predictable reasons—were difficult. This may limit the scope for comparisons. However,
given that there is almost no literature on the extension of social entrepreneurship to
teachers working in deprived contexts, and therefore the proposition-generating
objective of this study, such an approach is defensible. The sources of data were
interviews with the teachers and local stakeholders, documents and educational
artefacts prepared by the teachers and the results of a peer-driven examination of a
teacher‘s work in teachers‘ workshops. The interview data were first analysed to
reconstruct the extra-school roles played by the teachers in a causal framework that
included the change in roles over time, the targeted stakeholders, the responses of the
community, the teachers‘ responses and the changes in local institutional frameworks
over time.

Initial Steps towards Socio-educational Entrepreneurship

All the teachers studied, without exception, entered villages where a culture of poor
educational performance had taken deep roots. While some of the teachers entered
one-teacher schools, others had to contend with colleagues who were indifferent to the
situation or even hostile to the community. Nevertheless, in both these situations,
realising the importance of creating ‗social value‘ was the first critical theme that drove
the teachers‘ later work. This process, in the cases studied, may be interpreted as a
translation by the teachers of ‗socially entrepreneurially virtuous‘ behaviour into clear
targets for themselves. Social value, in the teachers‘ words, meant clearly rejecting the
unsatisfactory state of current education levels, and then defining or evolving a desirable
state of affairs, in line with national goals. In this sense, they were trying to revive a ‗lost
organisation‘ or bring in a congruence where ‗strategic drift‘ had occurred (Thompson,
1999), while building up tangible and intangible assets for schools and schooling. The
factors motivating this realisation seem to be the result of an interaction of two kinds of
reflection which the teacher undertakes—on the personal experiences that she has had
and the bundle of skills that she brings to the work context (Figure 2).

FIGURE 2

Reflection on Prior Skills/Competence and Personal Experiences

 Notes: Explanations of the numbered arrows:

• Observed very often; leads to adoption of ‗provider for children‘ role.

• Teacher moves quickly into extra-school roles; focus on pragmatic community

linkages.

• Early development of a form of moral authority. (in some cases, teachers take
‗superior position in society‘ seriously).

• Perceiving self as ‗social service provider ‘, caring for children in ways not expected.

In all the cases, the importance of creating ‗social value‘ led, in the words of the teachers
themselves, to a new alertness or ‗proactiveness‘ to look at the environment differently—
a need to look for opportunities in the form of information, resources, advice, need gaps
and contacts within the same ‗environmental form‘ (Ray & Ramachandran, 1996;
Yamada, 2004). They now had to evaluate the context as an environment within which
constraints to achieving educational goals had to be overcome. If ‗social value‘ had to be
created, it became necessary for the teachers to recognise opportunities to develop
tangible and intangible assets for schooling and schools, while ensuring that their own
credibility went up. A rich diversity of opportunities and approaches are evident in the
cases. These have been classified in terms of the strategies employed to exploit them
(Table 1).

Creating assets for the school and improving the physical conditions in which schooling
took place, and defining community participation, are the two broad strategic approaches
for exploiting identified opportunities. Underlying the improvement of physical conditions
was the need to establish dignity for the place of work and an aesthetically and
physically tolerable environment. Teachers often had to start for activities like fencing or
repairs, gardening or tree plantation with their own money. In one particular case,
planting trees was essential since some of the classes had to be held under trees; the
existing Acacia trees were a threat because of their thorns and the children‘s tendency
to throw stones at the pods. Unfortunately, in this case the only colleague the teacher
had ac-tively hindered the planting of new trees. However, the teacher‘s persistent
efforts to establish his role as a ‗social service provider ‘ paid off, adding to his credibility
in the community. Other examples include simple activities like having the children
parade regularly (to attract the community‘s attention, give them something to laugh
about, but ultimately to convince them of the seriousness of the teacher) or the teacher
stitching school bags from empty plastic sacks collected in the village.

TABLE 1
Opportunity Recognition and Strategies for Opportunity Exploitation

Broad Strategies Illustrative Examples

Creating tangible and intangible Folk dances; drama; school as a hub for cultural
assets: activities in the area; use of katha (religious
1. Drawing on local cultural discourses) and culturally significant days for
experiences, introducing new educational tasks like enrolment; use of birthday
cultural elements and new roles cards for enrolment; creating roles for religious
for people. leaders like maulvis; new monitoring roles for
mothers; giving children a special identity through
uniforms; drawing on the handicraft skills of
children; exposure of children to outside places and
institutions; using one‘s traditional skill (for
instance pottery) to make educational toys.
Creating tangible and intangible (Many instances of mobilisation from within the
assets: community and from external donors.)
2. Resource mobilisation. Auspicious occasions for fund raising; cultural
events for corpus funds; use of community skills
(like carpentry and masonry); instituting
transparent accounting systems; beautification of
the environment.
Defining community participation: Adult education; irrigation facilities; welfare
1. Identifying community needs. benefits; blood supply; ensuring proper prices for
crops; flexibility in school timings; earning while
learning activities.

Defining community participation: Youth associations; bhajan mandlis; cooperatives;

2. Institution building efforts. moving into higher levels of education (high

school); establishing developmental organisations;
links with Panchayati Raj Institutions; village
libraries; ‗child panchayats‘.

Teachers who took on ‗provider for children‘ roles found it easier to establish their
credibility quickly. Examples of this provider role included inviting children to stay at their
homes, sponsoring some of the educational expenditure on notebooks and slates and
adjusting the school time-table during the agricultural season. In one particular case, a
teacher, realising that he could do very little to prevent child labour in agriculture, went
with the children to the farms, worked with them, gave whatever he earned to the
parents and then took the children to school to study. Such efforts were effective in
creating an intangible goodwill towards the children‘s education, while adding to the
personal credibility of the teacher.

The innovative aspects of the initiatives are evident in many instances. But certain
practices involved a very high element of risk. In one case, a teacher had to cope with a
typical social tradition. A girl engaged to be married wears a heavy silver band, locally
called a kadla, around her ankles. The kadla cannot be removed. This teacher had
focused on building the reputation of the school in a particular game called kabbadi.
Some of his good players wore kadlas, but the province‘s inter-school tournament rules
did not allow them to participate. Taking the girls into his confidence, he removed their
kadlas with the help of a smith, and refixed them when the girls returned. The parents
got to know this after more than a year, by which time the girls had acquired a province-
wide reputation in the sport and the school had gained a lot of intangible value.

Defining community participation in terms of creating social value was clearly more
complex. In most cases, the interaction between establishing personal credibility and
starting extra-school community-related activities was strong. With some degree of
personal credibility, the teach-ers found it easy to move to community services.
Interesting examples include starting a milk cooperative society (with the teacher
personally delivering the milk to the nearest collection centre in a neighbouring village),
establishing a society for disaster management, obtaining minor irrigation facilities from
the government and mobilising money for a temple. Creating ‗social value‘ and
opportunity recognition—by establishing personal credibility, creating tangible assets
and an intangible goodwill in the community—set the stage for building a consensus on
what education should mean.

Educational Domain Consensus and Informal Institutional Frameworks

Communicative competence is a key ability that all the teachers in this study used at two
levels: developing a specific understanding of education at the community level, and
reinforcing this understanding with formal or informal networks of wider stakeholder
groups. From the teachers‘ accounts, three specific conceptions of ‗education‘ are
identifiable:

• Education is an activity that requires a certain infrastructure. The community has to

assume responsibility for mobilising at least a part of this, but teachers can help.

• The state expects the community to achieve certain educational goals—primarily

attendance and enrolment of girls. The commu-nity has to respond.

• Schooling has to be understood as follows: (a) it is ‗common‘ or community property,

(b) specialisation is possible, depending on the skills and resources that the
community possesses (for instance, a school can gain recognition for its sports
prowess) and, (c) the benefits of schooling become more visible when the community
targets a higher level of education, not just the primary level.

At the same time, the teachers applied their communicative competence to tap into
external stakeholders, primarily government or local self-government functionaries,
individual donors, non-governmental organisations, friendly teachers or leaders from
outside the village. ‗Social networks‘ of ‗informally organised contacts‘ for information
exchange (Gielen, Hoeve & Nieuwenhuis, 2003) resulted in most cases; these were also
used to influence the local community in order to strengthen com-munity networks for
education. While influencing the village with the help of outsiders, most teachers had to
identify critical individuals who needed to be targeted first. For example, in a particularly
difficult context (rampant alcoholism, with even children being given locally brewed
alcohol when there was no food), one woman teacher‘s initial target was the owner of
the shop, whose daughter was her student. The teacher had built her credibility by
cleaning the school daily and developing other tangible assets for the school. The
breakthrough with this person helped her evolve a consensus on education that focused
on enrolment and an academic environment in the school.

The development of these institutional frameworks (community networks with some

participation of external stakeholders) can be seen both as a process to reinforce the
creation of a consensus on education, and as a deliberate outcome that could enable
people to communicate their expectations to the teachers. The analysis does not reveal
a clear correspondence between the various conceptions of education listed above and
the forms of the networks. However, the networks of contacts which the teachers
developed brought them trust, visibility, credibility and cooperation (Thompson, Alvy &
Lees, 2000; Yamada, 2004) at the local level, thus adding to the initial goodwill they had
established. What should also be noted is that the teachers went beyond the traditional
networks that they had been exposed to during their training—like teacher groups or
community elders—to look at unusual sources of solutions or ideas: for instance, talking
to a person well-versed in local cultural practices, to come up with the idea of tying a
lemon and some green chilly (auspicious symbols) to prevent destruction of newly-
planted saplings in school. In this sense, the teachers were entrepreneurial, identifying
new and unusual sources from which they could learn, and letting their learning depend
on weak and untested networks (Gielen, Hoeve & Nieuwenhuis, 2003). What has been
described above may be summarised as an emergent model of socio-educational
entrepreneurship (Figure 3).

While many of these elements correspond to those in the construct of social

entrepreneurship discussed earlier, what is critical is maintaining a ‗balanced judgment‘
(Mort, Weerawardena & Carnegie, 2003): a social entrepreneur has judgmental capacity
‗to deal with complexity and … prioritise, weigh and decide between conflicting activities
to maintain the social mission as the central, prime and uncompromised purpose of the
social enterprise‘ (pp. 83–84). Maintaining the central purpose of education even while
focusing on extra-school roles has been a key chal-lenge for the teachers. We now turn
to this process.

Figure 3 : Emergent Model of Socio-educational Entrepreneurship

From Networks to Identities of Competence

A key outcome of the development of networks and local institutional frameworks was
the growing ability and confidence of the community to communicate their expectations
to the teacher. These expectations can be broadly categorised into educational
demands and expectations regarding socio-economic development. Examples of the
former include seeking assurances about the links between regularity of attendance and
children‘s learning, trying to combine school-related activities with the generation of
some income for the children, promising to support infra-structure development while
seeking contributions from the state or the teacher‘s contacts, asking for a club for
singing religious songs or for children‘s physical exercises. Expectations regarding
development were centred on the state‘s help in sorting out issues related to land or
minor irrigation, facilitating access to governmental development schemes or
participation in the socio-cultural life of the community (for example, as a priest for the
community). In both these cases, however, what was communicated was an expectation
that the teacher—given the ‗social value‘ created and personal credibility—would play a
‗leadership‘ role. In other words, the compulsion to exhibit a form of ‗moral competence‘
was very strong. Their initial work with the community had already demonstrated the
teachers‘ leadership potential. The new demands were also, in most cases, similar to
what the teachers had attempted on their own. But now the compulsion was being driven
by the community, in contrast to the initial moral compulsion that the teachers had
imposed on themselves to show entrepreneurial behaviour.

The teachers responded in two ways. Most undertook an evaluation to assess their
readiness to refocus on mainstream classroom activities. The criteria used were very
context specific. For instance, would the com-munity be able to manage some of the
developmental initiatives on their own? Has the attention on enrolment and attendance
resulted in regularity and enrolment of children from disadvantaged sections of society?
Has the community contributed to or matched resource mobilisation efforts? Have
certain ‗social ills‘ (like alcoholism among children) or cultural barriers to education been
overcome? If the evaluation was positive, the teachers framed their further activities in
the direction of expanding pro-fessional formal teaching and classroom management
skills which they had brought with them to their work contexts. For instance, the
children‘s interest in singing and the demand for a singing club could be translated into a
richer and more ‗joyful‘ pedagogy. The teachers‘ own skills in art could likewise be used;
skills in conducting science experiments could be converted into a laboratory for the
school. Monitoring attendance could shift to assessing learning outcomes or ability to
embroider and stitch used to organise the children for extra-curricular activities. In a few
cases up till now, the result of this focus on educational activities has been a new
equilibrium between school and community, which rein-forces the initial educational
domain consensus. More teachers may establish this kind of equilibrium with time.

This equilibrium is similar to what Thompson (1999) notes as the congruence between
environment, value (understanding the school‘s goals and expectations, the purpose for
which it exists) and resources (teacher‘s behaviour, intention and competence while
reaching out to the environment). Pre-service training is traditionally expected to prepare
a teacher for the transaction of the curriculum and so teacher competence is described
in terms of certain craft skills required to do the job of teaching effectively—what Carr
(1993) calls competence in the ‗dispositional sense‘. This study has indicated that
successful teachers who have achieved their educational goals in situations of extreme
deprivation have needed to expand this understanding of competence to include a socio-
educational entrepreneurial role and then return to a redefined conception of
competence, which is closer to Carr‘s description of competence in the ‗capacity‘
sense—‗capacities are not just formed in us by the operations of causality—not just
explicable in terms of (scientific) knowledge— they are actually knowledge driven;
capacities entail the voluntary and deliberate exercise of principled judgement in the light
of rational know-ledge and understanding‘ (1993: 257). This shift towards a new identity,
characterised by a mix of social and educational leadership competence, marks a crucial
stage in a teacher‘s career. It reflects recognition of the moral authority that a teacher
can exercise. In the teachers‘ words, the characteristics of this moral authority are
respect for the teacher as an individual, appreciation from the community (often
reinforced by recognition from outsiders), the development of a persuasive competence
in the teachers that relies on accepting the community‘s arguments and view-points
while presenting to it alternative courses of action and the teacher being seen as a point
of reference by the youth of the community.

Conclusions

This article has tried to examine how teachers who have achieved their educational
goals in rural contexts of extreme socio-economic and educational deprivation have
redefined their roles using socio-educationally entrepreneurial practices, and as a
consequence have created an identity of ‗competence‘ for themselves. Pre-service
teacher training programmes equip teachers with a set of professional skills related to
the primary school curriculum, pedagogy and classroom management. When they begin
their work among socio-economically deprived communities, many teachers soon realise
that if they are to achieve their educational goals they need to reconstruct a new identity
for themselves to counter the difficult conditions that confront them—mainly in the form
of the low esteem in which the local community holds education and educators. We find
that teachers have chosen to develop first an identity centred on social leadership
competence. To do this, they have employed various out-of-school roles within a
framework of what we term here as socio-educational entrepreneurship. As they play
these roles there comes about concomitantly a building up of a consensus on what the
domain of edu-cation means in that particular context, and the development of local,
informal community networks. The latter convey back to the teacher the educational and
developmental expectations of the community. In response, the teacher reworks her
original educational competence context-ually, in order to add an educational leadership
dimension to her identity.

The new identity, which is defined by a mix of educational and social leadership
qualities, commands respect, invites appreciation and communicates moral authority.

We conclude with a series of propositions for further exploration:

• Successful teachers realise that developing a ‗social leadership competence‘ by

taking on a variety of extra-school roles (socio-educational entrepreneurship) is
necessary to achieve formal educational goals.

• A process of reflection on the skills brought to the workplace and on prior personal
experiences is essential to generate a socio-entrepreneurially virtuous understanding
of one‘s role as a teacher in educationally deprived contexts.

• Creating social value implies expanding the domain of a teacher‘s work to define a
desirable state of affairs and to include social service or developmental roles.

• Building and extending a domain consensus is dependent on recognising

opportunities, primarily in the areas of creating assets for schooling and the school,
and defining community participation.

• Realising opportunities serves to develop personal credibility of the teacher, and this
is the basis for building social capital and for extending the domain consensus to a
variety of stakeholders. Apart from personal credibility, communicative competence is
essential to develop and sustain the domain consensus.

• Maintaining the central educational purpose while attending to extra-school roles is

 essential to the development of a new identity of competence.

• The informal community network or framework resulting from the extra-school roles of
teachers is the primary vehicle for empowering the local stakeholders. It is through
this medium that the community imposes a ‗moral‘ compulsion on the teacher to
sustain positive educational and developmental outcomes.

• The community‘s moral compulsion leads the teacher, through a re-evaluation of her
extra-school roles, to frame her further activities in the context of formal and
mainstream teaching and class management skills. The movement from skills
attained through pre-service training to developing self-defined extra-school roles
returns to a redefined view of educational leadership competence which seeks to
refocus on the classroom.

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 THE SCOPE OF ACADEMIC INSTITUTIONS IN SPAWNING NEW-AGE
TECHNOLOGIES FOR BUILDING ENTREPRENEURIAL SOCIETY

H.C.Shiva Prasad; N.Yagnesh Sharma; B. Gopal Krishna

hcshipra@yahoo.comnysharma@hotmail.com gopalkrishnabarkur@yahoo.com
Manipal Institute of Technology, Manipal- 576 104

INTRODUCTION:

The modern world is driven by a myriad of technologically sophisticated as well as

advanced gadgetries, devices and tools. In this scenario, the entrepreneurial society
thrives on some form of technology or the other. But in general, the technology could be
a broad based one and could comprise of low-end user-high technology, or conversely
high-end user-low technology. A simple lathe is an example for the former while a CNC
lathe is an example of the latter. These examples illustrate the productivity vis-à-vis the
technology that drives towards the entrepreneurial society whose future growth is in fact
dependent on high productivity technology that gives it the competitive edge.

A ―Technopreneur‖ is one who always keeps a vision in anticipation of developments in

new-age technology. It is in this purview, that an academicians in universities/ institutes
are driven contribute to the creation of technopreneur by innovative research, to develop
novel and cutting edge technologies and to impart quality training in the form of
workshops/ seminars/ symposia for dissemination of the creative technological concepts.
There is a lot of discussion these days about the old and the new economies. The new
economy represents the future and suggests those areas where the greatest growth and
wealth will be realized. These changes in the economies are driven by the accelerated
development of new technologies. Understanding these changes are key to benefiting in
the new economy for any young entrepreneurial society. Some entrepreneurs never
move past a lifestyle enterprise while others create Fortune 500 corporations like
Microsoft by adopting new technologies. In fact it is to the credit of the research institute
worldwide that have contributed immensely in developing the new-age technology that
the modern entrepreneurial society is succeeding like never before.

The new-age technologies such as the Computer and Biotechnology have spawned
great entrepreneurial skill and the current crop of technopreneur can be described, at
best, as an integral part of this technology. Simple electronic gadgets like mobile
communication systems, Smart Cards, ATM cards, have revolutionized the job structure
and potential entrepreneurial skills. This has made tremendous impact on developing
great skills and tools to mobilize the technologies for the common man. It is foreseen
that the new-age entrepreneur will be able to run business even from his home
regardless of the volume of business, in general. Small firms are considered to be
important catalysts for change and innovative efforts are demanded in building new
technology based on knowledge intensive firms. In recent years, interest has also
increased on how new technology-based small firms can help employment and GDP
growth Bollinger et al. (1983);OECD (1996) in ever faster changing high-technology
markets (OECD, 1999). Such firms are seen as businesses whose products or services
are to some extent dependent on the application of scientific and/or technological
knowledge Allen T.J (1997). They can either use novel, advanced
technology to provide a new product or service, and/or employ existing technology in an
innovative way. The available literature suggests that technology-based, or knowledge-
intensive, high-growth Small & Medium Enterprises (SME) are created in various sectors of the
economy such as biotechnology, computer technology, electronics, information technology,
materials technology and telecommunications Allen T.J (1997) thanks to breakthroughs made
by academic institutes and universities. While all start-ups are bound to be small, some of them
are likely to grow rapidly and become medium and large companies within a short time after
their establishment. This paper focuses on these issues in detail with several cases to illustrate
the role of academic institutions and universities in building young entrepreneurial society
utilizing new-age technologies.

THE ROLE OF ACADEMIC INSTITUTIONS:

It is quintessential that academic institutions should develop sustainable skills/tools in new-age

technology. It is imperative for the academic institutions to nurture in developing cutting edge &
innovative technologies for sustainable entrepreneurial society for the economic
competitiveness in new-age technologies like biotechnology, information technology,
nanotechnology, and telecommunications.

The role of academic institutions as contributors to wealth creation and economic development
has received, of late good attention. Though academic science and technology were largely
―exogenous‖ (i.e. curiosity-driven invention) to the economic system, it is now recognized that
academic research has become much more endogenic (i.e. market-driven innovation) and
integrated into the economic cycle of innovation and growth. As the economic pressure on
academic research grows, universities have to cope with how they reconcile both the
―exogenous‖ and ―endogenous‖ components of the academic research community/ enterprises.
But it is to be noted that exogenous component of research is the one that may attract huge
market if it is having innovative application for mass use, for example one can cite ‗Internet‘, the
development of which has revolutionized communications.

Academic Institutions are the sources of scientific novelty and technological breakthroughs to
fuel the innovation process. And thus an increasing number of academic institutions is
becoming fully aware of the new age technologies like Stanford, Yale, M.I.T Cambridge, etc
which have their own entrepreneurial society in their campus. The fundamental values of
research and teaching are complimented rather than hampered by the university‘s active
engagement and involvement in the emerging processes of industrial and entrepreneurial
innovation and knowledge transfer. Universities appear as important actors throughout the
innovation value chain. Ever since Schumpeter described the role of the entrepreneur as a
principal economic agent in bridging the gap between science, technology and their commercial
application through innovation, technical entrepreneurs have received much attention. Ed
Roberts. (1991) in this he highlights the attention paid to technological entrepreneurs in bridging
this gap. He examined further their antecedents as well as the factors that made their ventures
successful and demonstrates the important role that can be assumed by academic research
and by academic researchers in this entrepreneurial process. As a consequence, universities
are demanded not only to play an active role in science and technology development, but also
in turning those developments into useful innovations whenever possible and desirable. Given
the generic failure of established firms in bringing new technologies to the market, universities
are increasingly looked upon as one source of incubators for knowledge transfer through new
venture creation. In other words, the traditional and well-established long-term time lags
between science, technology and utilization become more and more intertwined with direct,
short-term, non-linear, and ―rapid‖ linkages between science, technology and utilization. Allen
T.J (1997).

THE STRATEGIC OUTLINE:

To add more punch into the role of academic institutes for the creation of successful
entrepreneurial society, a well-balanced strategic planning is the prime requisite. The authors
are proposing the following strategies:

• Building intellectual capacity at state/deemed universities.

The growth of intellectual capacity is essentially need based one.

Accordingly the educational institutes must strive to collaborate with need-based industries for
generating intellectual capacity of its faculty and students. (See Fig.1)

For example, TCS has come up with a novel concept called TEEM - TCS Education
Excellence Model- which establishes criteria that identifies world class institutes by means
49
 of a group exercise and from these institutes it will identify islands of excellence and finally
integrate these to develop and deploy the need based core competencies for the company,
(See the example Case Study 1, below)
Research oriented high caliber faculty with the bent of mind towards innovations.
High profiled motivated research scholars able to visualize new innovative ideas by
brainstorming.

• Management of knowledge portfolios in order to ―optimize‖ involvement in Universities –

Industries collaborations.

Signing up of MOU‘s with industries and universities where in both optimizing their
efforts meeting their objectives.
• For example, QuEST (India) Ltd, Bangalore has signed an MOU with the authors
Institute for software training in ANSYS, a finite element analysis software tool in which a
number of students from the host institute are able to get industry standard training while
studying in the institute itself.

Similarly the Institute has received couple of more such proposals from CISCO (for net working
technology) and Mahendra & Mahendra (in the areas of finite element analysis and
computational fluid mechanics).

This kind of sharing of knowledge portfolios is vital to stir up the prospective entrepreneur
among the student community. This mix of mechanisms, tools and processes has enabled the
universities to generate an increasing flux of knowledge transfer, patents, know-how licenses
and spin-offs.

3. Establishing separate cell called STEP (Science and Technology Entrepreneur Park) the
modus operandi for which is essentially towards imparting skills for new- age technology
(both exogenous and endogenous) there by imparting entrepreneurship education.

• Establishing an Innovation center to encourage fresh graduates to think afresh in

identifying the business proposals, marketability, sources of finances, and project report
preparations in collaboration with participatory industrial concern.
• Establishing open learning centers (OLC) in collaboration with nationally reputed
Institution like Entrepreneurship Development Institute. (EDI) to impart knowledge on
techno entrepreneurship.

4. Every school of education should teach ethical ways of doing business and to take the
advantages of rapid changes in technologies.

• Every school should impart education in handling recession period and crisis dealing
should be added in the curriculum.
The above points can succinctly be put in the form of a block diagram as given below. It broadly
shows the main ingredients that go into the making of a successful entrepreneur.
(Fig. 2 See below) that explains the hierarchy ladder in developing new techno-preneur. It is
clear from the above that the funding is an apex component without which hierarchical breach
occur, and to bridge this breach it is essential that proper flow of funds is required from the
enterprising entrepreneur to sustain his society.

Fig 1: The basic strategy of successful techno-preneur development cycle.

ACADAMIC INSTITUTES / UNIVERSITIES

CENTRIC STEP KNOWLEDGE

BUSINESS PORTFOLIOS INTELLECTUAL

NEW AGE TECHNOLOGY

SUCCCESSFUL TECHNOPRENEUR 50
Fig.2 The hierarchical ladder in the development cycle of techno-preneur

FUNDING

MANAGING
KNOWLEDGE
PROTFOLIO

TRANSFER OF KNOWLEDGE
TO TECHNOPRENURES

The concept of Venture Capital or Venture Funding is commonly heard these days. A venture
fund has to be created including an advisory group, to assist academic entrepreneurs in
creating their enterprise, taking into account up to-date principles and best practices on
corporate governance.

SAMPLE CASE STUDIES:

The following are the case studies evolved in the authors institute spawning entrepreneurial
skills with the need-based industries.

CASE STUDY 1: Tata Consulting Services (TCS) has shown interest in selecting prospective
employees fro Manipal Institute of Technology (MIT) & other academic Institutes by
collaborating with them. Institutes are to impart hardware/ software skills required for the
prospective employees to be selected for TCS. Now the role of academic Institute is to tailor the
courseware as per their requirements. By having tie up with the software giants‘ techno-
preneuer will be more confident to venture in new avenues. It is a well- known fact that the
courses offered by computer engineering tends to fall rapid obsolesces. In order to cope with
the current trends in software/ hardware this type of academic research culture can spawn the
academics Institution goes beyond conventional thinking.

CASE STUDY 2: QuEST (India) Ltd, Bangalore has signed an MOU with the authors Institute
for MS software training in ANSYS, finite element analysis software in which a number of
students from the host institute are able to get industry standard training while studying in the
institute itself

CASE STUDY 3: QuEST (India) Ltd, Bangalore has signed another MOU to train and equip
knowledge portfolio required of its employees by imparting the same from subject experts
belonging to author‘s Institute, MIT Manipal. This kind of entrepreneurial skill set of interacting
faculty helps in building the bridges of knowledge sharing between academic institute and
Industry, which in turn helps developing techno entrepreneurial competencies of the new age
professionals.

The following are a few important case studies evolved over decade of spawning of
entrepreneurial skills in global scenario.

EXAMPLE CASE STUDY 1:

In 1981 a great new technology emerged from academic universities in the form of Personal
Computers (PC). The PC revolutionized the computational needs of a great many
establishments and it heralded a new genre of computer programmers who swept the business
enterprise with low capital high volume business ventures. The Microsoft started in 1982 with
just a handful of people, is now the richest enterprise in the world today.

EXAMPLE CASE STUDY 2:

An early promoter of the industrial applications of nanotechnology, Ottilia Saxl.(1996 ) defined it

as 'that area of science and technology where dimensions and tolerances in the range of 0.1nm
to 100 nm play a critical role'. It encompasses precision engineering as well as electronics;
electromechanical systems (e.g. 'lab-on-a-chip' devices) as well as mainstream biomedical
applications in areas as diverse as gene therapy, drug delivery and novel drug discovery
techniques. Because nanotechnology has opened up new worlds of possibility, it has spawned
a proliferation of new terminology - a kind of nano speaks to the uninitiated. There are huge
51
possibilities in terms of developing a cesspool of young entrepreneurs in this new-age cutting
edge technology.

FUTURE CHALLENGES:

The biggest disadvantage the academic entrepreneurs face is a lack of size, scope and
complementary assets when they start their companies. As a consequence, and based on
analysis of the evolution of the spin-offs that are created the following propositions can be made
as to what makes a spin off company successful:

(1) Academic start-ups need to develop systems and structures, including mechanisms to
develop and to coordinate various functional activities, as soon as possible, with minimal delays.
Having a well-calibrated board of directors proves to be a highly valuable asset in this respect.

2) The development of complementary activities further allows spin-offs to adapt their behavior
to their newly discovered market environment. As they develop these complementary assets
and activities, they learn by doing. This learning while experimenting ―with‖ and ―in‖ the market
is more valuable than any well-developed and long-studied business plan. It actually helps to
modify and to grow the business plan into a business model.

(3) Spin-offs should develop both ―focus‖ and ―complementary activities‖ as early as possible in
their life cycle. Moving from a business plan to a business model is therefore critical. It helps the
companies to generate cash flows and to develop a unique value network that charms and
attracts customers as well as potential partners and investors.

(4) Academic entrepreneurs should be ambitious as well. Ambition generates momentum,

attracts partners and investors, induces networking and creates a strategic intent that fuels the
further growth of the company.

(5) The entrepreneurs also need to develop a strategic vision on their products and markets.
They very often know the technology extremely well, though they often incur extreme liabilities
on the business model and the sales side of their business. Long-term strategic thinking is
therefore necessary. It demonstrates the entrepreneur‘s power for abstract thinking and creative
synthesis. It also enforces coherence and consistency of action if implemented, while it
stimulates networking and engender reputation for the entrepreneur

(6) Besides strategic vision, implementation is a final necessary and critical success factor.
Implementation truly is an asset since it forces the entrepreneurial team into consistent thinking.
It also generates new experiences and capabilities via learning by doing and, consequently, it
broadens the foundations of the company‘s value network. Implementation also confronts the
entrepreneur with real-life hardships, such as the necessity to negotiate and to collaborate with
large, well-established universities and innovators in order to fuel growth. In other words,
implementation does not only point to the complementarily between the new venture and large
established innovators, but it also forces the new venture to learn to ―dance with an elephant
without being crushed.‖ Hence, in growing from business plan to business model, the successful
spin-off entrepreneur learns about strategy, systems and structure.Ed Roberts. (1991).

CONCLUSION:

Thus, it can be concluded that the spin-off of new-age technology in building up entrepreneurial
skills of the future entrepreneurial society from academic institutions requires strategic
considerations enumerated in this paper. A successful technopreneur learns about how to build,
develop and motivate a team that can sustain the growth of the new technological ventures. For
all these, as described in this paper, a menu rich in innovative ideas and path-breaking research
must be fed by the responsible universities and institutions to sustain and encourage new
initiatives from the young entrepreneurial society.

Useful References
1. Allen T.J (1977Managing the Flow of Technology, Cambridge, Mass.: The MIT Press) pp 78-80,
2. Bollinger, L., K. Hope, J. Utterback (1983). ―A review of literature and hypotheses on new
technology-based firms‖ Research Policy 12: pp 1-4.
3. Ed Roberts. (1991). Entrepreneurs in High Technology, New York: Oxford University Press. pp 35-
36, 67-89
4. OECD. (1996) SMEs: Employment, Innovation and Growth.The Washington Workshop pp 77-79

52
THE ROLE OF UNIVERSITIES IN DEVELOPING COUNTRIES TO SUPPORT THE CREATION
OF HIGH-TECH START UPS: THE CASE OF MONTERREY, MEXICO

Myrna Flores
University of Applied Sciences (SUPSI), Department of Technology and Innovation
The iCIMSI Research Institute, Galleria 2, CH 6928 Manno, Switzerland
Tel: +41 58 666 66 29, Fax: +41 58 666 66 20 myrna.flores@supsi.ch
---------------------------------------------------------------------------------------------------------------------

1 INTRODUCTION

In the last years a growing interest has emerged to understand the role and significance of
Universities and research institutions in the Knowledge Based Economy to achieve innovations.
Not surprisingly, the effect of this new ―Entrepreneurial‖ role of Universities has been subject of
an international debate over the appropriate role of the University in technology transfer and
new knowledge creation and commercialisation. For instance, Etzkowitz and Leydesdorff
(2000) propose a ―third mission‖ for the University, which consists of direct contributions to the
industry. Others, instead argue that Universities should maintain their teaching and basic
research task. Nevertheless, few studies have tried to understand how these Industry-
University relationships start, evolve, weather they achieve successful results or not and the
positive or negative externalities that they could provoke.

Another important element to consider when analysing University-Industry interactions is

―innovation‖. The fundamental purpose of any innovation (product, process, organisational, etc)
is to improve business performance enabling its sustainability. Companies can be seen as
living organisms that impact the sustainable development of regions and nations on the
economic, social and environmental aspects. They have a dynamic life cycle: they are created
by entrepreneurs, then they may grow and in many cases if they are not competitive they could
die. Others who are fast innovators will develop new products which will substitute existing
ones motivating the generation of ―business cycles‖ as defined by Schumpeter (1949) when he
coined the term of ―creative destruction‖.

For catching-up countries, such as Mexico, innovation is a key element in the promotion of
sustainable development by creating higher value added employment and generating higher
income and hence making a significant contribution to the eradication of poverty. In the report
―Business Case for Sustainable Development, Making a Difference toward the Johannesburg
Summit 2002 and Beyond‖ (2002), it is stated that enterprises and innovation definitely play an
important role for Sustainable Development:

• Business remains the most potent force for wealth creation.

• Countries do not have low incidences of poverty because of their welfare programs, but
largely because they have created frameworks that encourage business enterprise.
• These enterprises offer people tools, business opportunities, jobs, wages, investment
possibilities, training, and pensions with which to build secure lives.

But innovation requires knowledge and continuous learning, which in many occasions for
companies, especially for SME‘s (both in developed and catching-up countries) are difficult to
achieve by themselves in a systematic way. This implies that firms need to develop and apply
knowledge to be faster to develop and commercialize new value added products, moving from a
production to a knowledge base economy to satisfy the current and emerging needs of the
society. Universities can play an active role in transferring technology to existing firms and to
generate spin-offs and thus develop new industrial agglomerations. Proximity is important in the
relationship between industry and local research institutions. It is therefore identified the
importance of a well-established innovation system for the generation of networks based on the
interaction of universities and companies for collective learning and generation of new
knowledge that can therefore enable sustainable economic growth (Rosenberg N. and Nelson
R., 1994). The strength of any open innovation system should be its ability to innovate by
sharing knowledge, science, technology and education to influence the local environment
(Arocena, R. and Sutz J., 2001).

The promotion of Industry-University networks is thus a fundamental node to foster innovation

enabling firms‘ sustainability, the development of new knowledge and thus regional
development. All over the world Universities experience an increasing pressure to extend their
traditional task to provide the society with basic research and qualified graduates with an
obligation to enhance interactions with external actors, especially private firms. The increasing
interaction between universities and other actors in the innovation system (firms, technological
institutes, hospitals, farms, consultancy, public entities, etc), involve a variety of forms, from joint
53
labs, spin offs, licensing, research contracts, mobilization of resources, conferences, exhibitions,
etc (Arocena R., et.al. 2005). However, it is not an easy task to design and implement a fruitful
collaboration between actors with different missions, culture, resources, power structure and
knowledge base, therefore the outcome of these efforts could show mixed results. The
challenging task, in fact, is ―to bridge knowledge systems rather than simply building links
between scientific institutions and industry―. This paper will describe three case studies of new
high tech start-up companies that have been supported by the business school (Escuela de
Graduados en Administracion de Empresas) of the Instituto Tecnológico y de Estudios
Superiores de Monterrey (ITESM) in Mexico.

2 RESEARCH AND DEVELOPMENT AND KNOWLEDGE TRANSFER IN MEXICO

During 1970 to 2000 Mexico lacked long term policies and goals regarding Science and
Technology; very low investment from both public and private sectors was provided for
Research and Development (Parada, 2002). The public sector currently invests 0.40% of the
GDP in R&D, positioning Mexico in lowest ladder in comparison with other OECD countries. At
the industrial level, Mexico has 2.8 million enterprises, 99.7 of them are SME‘s and less than
500 invest regularly in R&D. Regarding Mexico‘s industrial production, 39.1% of the GDP is
based on low value commodities such as textiles, agro industry, cement, steel and oil. On the
contrary, intensive research and development sectors such as biotechnology, aeronautics, ICT,
advanced materials, only count for 7.3% of Gross Domestic Product (GDP). As a consequence,
the Mexican government has designed a new model for growth. The main activities are to
reinforce the scientific infrastructure and the competitiveness of its industry to create high value
added enterprises. The main research and development priorities are:

1) Information Technologies and Communications, 2) Biotechnology, 3) Advanced

Materials, 4) Advanced product design and manufacturing technologies (focused on SME‘s) and
5) Cost Effective Solutions to Infrastructure Social Needs and Sustainable Development. In
order to accomplish this, Mexico is planning to increment the expenditure of GDP from 0.40% to
2 % for 2020 in R&D.

According to this OECD (2004) report, Mexican educational research has reached a high level
of development in certain subjects, such as mathematics teaching, ethnographical research or
the history of education. However, major gaps were also identified, such as:

• Lack of rapid development studies centred on the solving of concrete problems.

• Lack of studies of a quantitative nature, e.g. longitudinal studies; most studies are qualitative.
• Research into educational evaluation; currently very few studies are being carried out to
understand and identify the challenges to improve the educational system in Mexico.

Regarding government support to increase research and innovation activities in companies, the
National Council for Science and Technology (CONACYT) has implemented a programme to
stimulate in-house research and development by deducting up to 30% of R&D investment from
taxes. This programme is called RENIECYT (Registro Nacional de Instituciones y Empresas
Científicas y Tecnológicas). Even if the programme is looking forward to supporting R&D and
innovation activities of companies in Mexico, most projects with fiscal reductions benefiting from
this programme are carried out by larger companies and still the number of companies is rather
small in comparison with the total number of companies in the country as observed in Table 1.
One trend to notice is that there has been a substantial increase of companies and projects
during the period 2001-2003. Another important fact is that CONACYT asks companies to join
forces with Universities to develop joint projects. Still one critical element for joint industry-
university R&D in Mexico is the lack of funding. According to the Secretary of Public Education
report (SEP, 2004), private institutions receive virtually no public resources to support their
operations, and little funding to support applied research. This represents a big constraint for
private Universities in Mexico to do applied research and collaborate with the local industries.

2001 2002 2003

Number Numbe Number Numbe
Size of Number of r of of r of
Compan Number of of companie project companie project
y companies projects s s s s
Micro 11 17 22 51 17 35
Small 22 30 34 81 52 141
Medium 58 186 69 226 94 323
Large 60 315 76 429 112 698
Total 151 548 201 822 275 1197
Table 1 Companies benefiting from the RENIECYT Programme
54
 (Source, CONACYT 2003)

3 MONTERREY AND THE INSTITUTO TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE

MONTERREY (ITESM)

Monterrey is the capital of the northern state of Nuevo Leon which borders with Texas, USA. It
was founded in 1596 and it is well known for its industrial and commercial strength. It has
important iron and steel foundries, and it is a major cement, glass and beverages producer. In
the last decade the city has experienced further growth with the construction of maquiladoras
(foreign manufacturing plants with tax exemptions). Monterrey is Mexico's third-largest city and
one of the nation's most important industrial, financial, and business centre. The city of
Monterrey‗s per capita income is the second highest in the country after Mexico City.
Monterrey is responsible for 6.9% of the country‘s GDP and is producer of 12% of all of
México‘s manufactured goods (Ciencia, Conocimiento y Tecnologia, 2005). Monterrey was
declared ―The Best City for Doing Business in Latin America‖ by Fortune Magazine in
December 1999 due to its infrastructure (such as roads and airport), entrepreneur history,
strong working culture, academic institutions and proximity to the United States. It counts with
a high concentration of quality schools and universities which provide high skilled personnel to
local companies. Key to Monterrey‘s high GPD per capita and economic growth are Mexican
strong industrial groups and companies such as:

ALFA Petrochemicals, Food, Telecomm

CEMEX Cement
CYDSA Chemicals, Plastics
FEMSA Beverages
IMSA Metal Mechanics, Automotive
MASECA Processed Foods
PROEZA Autoparts, Processed Foods, Software
PROTEXA Construction, Petrochemicals, Tourism
PULSAR Biotech, Financial Services
VILLACERO Steel
VITRO Glass Products

ITESM stands for Instituto Tecnológicoy de Estudios Superiores de Monterrey, also known as
the "Tec de Monterrey", or simply "Tec". Since 1943 it provides a large variety of engineering
degrees and it is one of the most important private schools in the country and it is highly
recognised in the American continent.

ITESM was founded by a group of businessmen, headed by Eugenio Garza Sada, one of the
main entrepreneurs of the region. ITESM‘s mission is to forge individuals who are committed to
the social, economic and political improvement of their communities, and are internationally
competitive in their areas of specialty. The ITESM System is currently composed of over 30
satellite locations throughout the country with approximately 80,000 enrolled students, who are
required to take an active role in their own education, including participation in extracurricular
activities that develop skills and values contributing to personal growth.

Since its roots, the ITESM original goal was to teach young Mexicans to provide skills to the
local industry. With time, ITESM has also taken a very active role to train students to be
entrepreneurs; it is one of the few Universities in Mexico with a course to teach and motivate
students since the early stage of their studies to start their own business.

Also, it has provided different facilities such as incubators to support the initial stages of the
students‘ business start-up and growth. Some patents and innovations have been carried out,
such as the case of the company Innouva which will be presented in this paper. Also spin-off
activities from professors have been promoted.

In regards to Research and Development (R&D), as mentioned before, the University being a
private non-profit institution receives very little support from the government for research. In
contrast with other Universities with strong research tradition, the ITESM doesn‘t count with a
centralised office to manage and concentrate all the R&D activities and related issues (such as
publications and IPR). This somehow doesn‘t facilitate companies to have a unique contact
point from where to start when there is an interest to collaborate with ITESM. In most of the
cases, collaborations are based on informal relationships and of EX-A-TECs or new
multinational companies arriving to the city who contact directly professors on a peer to peer
basis.

55
Very recently the ITESM has started to push R&D activities, both for basic research and for
applied research. In 2002, Programme ―Cátedras de-Investigación‖ was started to motivate
basic research. This programme supports with internal funds research projects in different fields
such as:

• Environment, water, energy and housing

• Mechatronics, Automation, Manufacturing, Engineering, Industrial Design
• Information and Communication Technologies and Intelligent Systems
• Medicine, Biotechnology and Bioinformatics
• Management and Finance
• Economy, Politics and Public Administration
• Humanities and Social Sciences
• Regional and National Development
• Innovation in Education

The main scope is to strengthen the strategic areas of the ITESM, generating a culture of
research and publications impacting the educational model of the ITESM and generating a
knowledge base. The different priorities mentioned above are linked to post-graduate courses
(both masters and doctoral schools). Each Cátedra should provide a report every six months of
the activities performed together with the objectives, goals, etc. Another important project being
realised is the Centro de Innovación y Transferencia de Tecnología also known as (CIT2),
which stands for Centre of Innovation and Technology Transfer. It has the objective of
stimulating the development and growth of high tech based companies. One of its goals is to
support the transfer of knowledge process among ITESM professors and entrepreneurs taking
advantage of the proximity being inside the campus. It provides the necessary facilities covering
all the needs required to incubate high tech companies for two to three years when the
company should be ready to operate by its own.

4 SUCCESSFUL CASE STUDIES OF INDUSTRY-UNIVERSITY COLLABORATION OF NEW

HIGH TECH COMPANIES WITH ITESM – EGADE

One of the Cátedras de Investigación (Research) in the ITESM is for the development of new
high tech companies or start-ups. This Cátedra is led by Dra. Cobas, where a group of
engineers and master students help new companies which develop high tech products
completely new to the market to define their strategy, identify the best business model, perform
market analysis, define the business plan and obtain national or international loans to carry out
the project. Dra. Cobas is part of the ITESM business school EGADE (Escuela de Graduados
en Administración y Dirección de Empresas).

4.1 Innouva 3D Technologies

Innouva is the result of a dream of three ITESM students, who during their undergraduate
studies had the idea for the development of a new technology. Sergio Aguirre, the interviewee,
studied Electrical and Communications Engineering when he had the idea together with other
two undergraduate students Carlos Alejandro Covarrubias and Cesar Centeno Arriaga to
develop a television that could reproduce images in 3D. The first prototypes were developed as
part of the Entrepreneur undergraduate course in ITESM which is compulsory for all students;
after the concept was proofed; a patent was requested. There was no other system that could
reproduce in television colour images in 3D. As the product was still not commercialised, after
finalising their engineering degree in 1999, Sergio, Carlos and Cesar were invited by Dr. Jaimes
from ITESM to study a Masters degree to acquire new knowledge to improve the product and to
develop a business plan to seek for venture capital for its commercialisation. They opened a
start-up called Innouva.

Besides the television, this new 3D technology has different applications, such as for video
games and medical equipment. The technology was then developed to be further used for these
other applications, so three more patents were requested. It can be said that the infrastructure
from ITESM was provided but the development was done 100% by the company. The company
has sold its products already for three years. Innouva has participated in different programmes
for innovation funded by CONACYT (National Council for Science and Technology) and
PROSOFT (Governmental Programme for the Development of the Software Industry in Mexico).

To be successful selling this new technology Innouva founders realised that a main strength
was to target the American market. They also needed contacts that could provide more capital
to invest to further develop and commercialise INNOUVA products. Ing. Aguirre then
participated to the programme INVITE offered by the state of Nuevo Leon that has as strategy
to link business activities for development with Texas. In this initiative entrepreneurs were
invited to participate to courses in the Innovation and Creativity Centre IC2 in Austin to learn
56
how to commercialise the technology and look for potential customers. As a result, he obtained
several contacts and he obtained a partner for the medical products.

Mr. Aguirre believes that the support from ITESM to incubate his idea and from ITESM –
EGADE to develop the business plan have been very important for the company, especially for
the launching of the product into international markets.
Nevertheless, he also realises that many professors are mainly interested in publishing articles
and that the working culture from an entrepreneur is quite different from that of an academic. In
August 2005 with the support of EGADE a business plan was developed in order to participate
in the FUMEC Silicon Valley programme, which is a joint initiative of USA and Mexico to
accelerate the growth of Mexican companies with high technological content. Currently Innouva
has international clients such as Camel, and important pharmaceutical companies such as
Novartis and Merck. The interviewee, Ing. Sergio Aguirre looks forward to continuing the
collaboration with EGADE to develop a new business model that can enable Innouva to sell its
products in international markets allowing the company to grow and have more capital to invest
in continuous innovation.

4.2 Ecofreeze, Natural Refrigerants

ECOENERGIA Group was founded in 1985, in the city on Monterrey N.L., Mexico, since then its
Air Conditioning and Refrigeration business unit, has specialized on sustainable technology
base development and energy savings. Since 1977, through its different enterprises,
distributors and associates, the company developed a sustainable technology that culminated
on the launch to the market of the NATURAL REFRIGERANTS ECOFREEZE brand, and
recently established Strategic Alliance of Technological Development and financial support from
ITESM-EGADE (ECOFREEZEINTERNATIONAL, 2005).

The ECOFREEZE product was an idea from the two brothers‘ owners of the ECOENERGIA
Group. The interviewee, Lic. Juan Pablo Ochoa, one of the two brothers, explained how the
idea came to reality. At the beginning, ECOENERGIA Group commercialised Maytag products
to the Mexican market; Lic. Ochoa proposed several innovations to Maytag‘s products that
could satisfy the Mexican market needs. One idea proposed for a product innovation for Mexico
facilitated later the sales of Maytag in other countries that had similar conditions to the ones in
Mexico such as Malaysia, Greece, Egypt and Russia.

This idea was patented by the Mexican firm.

Lic. Juan Pablo Ochoa studied as undergraduate Business Administration and has done
marketing seminars in Universidad de Monterrey (UDEM); he also has a Masters Degree from
the London School of Economics. His brother has an Electrical Engineering background and
has done a Masters degree in Engineering in the Rensselaer Polytechnic Institute in NY, USA.
After working in the sector for more than 20 years, they realised the need for a new product that
could save energy. The two brothers combined the business and technical know-how needed to
develop this new idea. The value proposition of the product is to develop and commercialize a
new natural refrigerant that could save 30% of electric energy. Besides the energy savings this
refrigerant does not harm the ozone layer, like other refrigerants do. The interviewee initially
contacted the ITESM business school EGADE to ask them for a marketing analysis.

In Mexico there is still not enough R&D in Universities in this area, so the two brothers with their
own investment capital started to develop the new technology building their own laboratory. For
a field validation they collaborated with Coca Cola in Monterrey during 5 years, with which they
had already contacts. The ECOFREEZE product was then tested and provided the expected
results: energy savings of more than 30%. The company filed a patent request. This
breakthrough innovation intends to change the whole refrigeration sector providing a completely
new sustainable technology. Currently, other customers are Mexican multinationals such as
Vitro and Mabe. The company has also targeted the hotels as they also need refrigerant
solutions to save energy. ECOFREEZE has launched to the market two products:

ECOFREEZE 12 mainly for domestic refrigeration and cars air conditioning and ECOFREEZE
22 for commercial use.

The company is strongly collaborating with Dra. Cobas and her team from ITESM EGADE to
develop the new business model define the company strategy and look for investment capital
and develop the marketing plan to sell in international markets. So far, there has been no
collaboration in the technical part of the product development. The ECOFREEZE business unit
of the ECOENERGIA Group is currently located inside the Centro de Innovación y
Transferencia de Tecnología (CITT) in the ITESM Monterrey Campus incubating this highly
innovative start-up company. Other governmental institutions that have provided support for the
development are CONACYT and the State of Nuevo Leon. Since its launch to the market on

57
January 8th, 2006 ECOFREEZE has proved to be a product that satisfies the sustainable
refrigerants‘ market demand in a simple and productive way. Such demand is mainly coming
from multinational European companies such as Nestle and Danone. Such a success is a
reward for the perseveration, enterprise vision and 10 years of technical development from the
Ochoa brothers.

4.3 Pums & Toys, a new concept for children’s education on the internet
The company Pums&Toys started from a hobby from the president Gerardo Sandoval and a
close friend, as they enjoyed writing scripts for different characters creating new stories that
could teach children different values such as team work, multiculturalism, animal rights
protection and respect for the environment. Together with other two partners, experts in website
design and audio, they created a complete new concept for children entertainment on the
internet. In 2001 the company was founded integrating the different competencies of the
partners. They participated in a national award for Internet evolution from Banamex (one of the
main banks in Mexico) and won the first prize for the entertainment category. After this, one of
the partners left the group and the other three remained. In 2004 with the support of ITESM
EGADE, Pums&Toys won the first prize of the Moot Corp Competition in Austin, Texas, USA as
the best Business Plan. This is the world‘s biggest contest competition for intercollegiate new-
ventures to stimulate and nourish the Entrepreneurial Spirit in MBAs. The competition is for
student created, managed, and owned ventures. In other words, students must have played a
major role in conceiving the venture, have key management roles in the venture, and own
significant equity in the venture. Besides Mr. Sandoval‘s script writing and character creation
competences, he has a Masters degree in Finance and 10 years of experience working for one
important multinational in Monterrey, which definitely facilitated the development of the business
plan for this new start-up. Besides the multimedia entertainment, the firm offers services to
create the whole image and marketing for companies. They are also developing movies and
television series. The interviewee, Mr. Sandoval, in very interested for the growth of Pums&Toys
in international markets and he is open to explore different countries to identify their local needs
and develop new products and services to satisfy them. Pums&Toys creates the products firstly,
identifying the market needs; Secondly, translating the need into an integrated concept; and
finally creating a business model that can satisfy the original need. Mr. Sandoval has strongly
collaborated with Dra. Cobas and Ing. Arriaga from ITESM EGADE to develop the new business
model and marketing strategy. Pums&Toys is interested to participate in the FUMEC – Silicon
Valley programme to expand its markets to USA. Mr. Sandoval stated that ―thanks to the
collaboration with ITESM EGADE many doors have been opened; the company is exposed to
many different international programmes that enable firms to have new important business
contacts, without this starting for new company could be very difficult‖. Today, the company
owns fifteen different character families that are already in the production stage and ready to
entertain and educate the children that will turn to be the leaders of the future.

5 MAIN FINDINGS
The three companies are completely satisfied and very motivated with the collaboration and
support provided by EGADE which has provided new business contacts and enabled them to
define a business model and strategy. Two critical aspects were analysed for these cases
studies: the start-up – university collaboration and the innovation level (Table 2).

58
 Collaboration Level:
– Besides hiring students, courses and
info transfer, collaboration is carried out Defined Strategy
for business plans development and to For Collaboration
obtain business contacts and venture Acquire
capital. Loyalties
– No joint developments and no Joint
Development
acquisition of loyalties has been carried
Outsourced
out from the three start-up companies Project
to ITESM Business Plan
– A high level of trust to the ITESM- Business
Collaborative
EGADE research team for the business Levels with Contacts
model development was observed from EGADE-ITESM Info Transfer
the three interviewed entrepreneurs. Courses
Students
Innovation: Commercialisation
Companies
1 2 3
– Concentration of new products, Innovation
materials and/or processes LevelsCustomisation Existing
– Even if two of the companies are Changes Services
located inside the campus, the new Changes Processes
products have been developed by the
company alone, there has been no Changes
Products/Materials
collaboration in the development phase
New Services
with ITESM
New Processes
– One company has a patent of the new
product and is the result of the New Products/Materials
undergraduate entrepreneurship New Business Model
programme at ITESM
– The three entrepreneurs have studied in
the ITESM, so that facilitated the
contacts with professors, etc.
Table 2 Case Studies Main Findings
6 CONCLUSIONS

In Monterrey, the government is playing a catalyst role to encourage Industry-University

interactions. The initiative ―Monterrey, Ciudad International del Conocimiento‖ (Monterrey,
international city of knowledge) focuses on creating a platform where Industry-University can
interact to develop high tech clusters to increase the competitiveness of the region. Currently
special efforts are carried out to build proper linkages and infrastructures; results will not be
immediate, still there is a high interest from both the Industry and University to join forces with
the Government to become a city of knowledge (Flores and Cardenas, 2006).

In regards to entrepreneurship, ITESM is one of the most active Universities in Latin America.
All undergraduate students take Entrepreneur courses at the early semesters to be trained and
motivated to start their own business once they finish their studies. ITESM also provides
incubation facilities both for students and companies during their start-up phase. Important
efforts are also being done at the ITESM business school, EGADE, under the Cátedras de
Investigación led by Dr. Cobas, to support new businesses to perform their business plans, find
venture capital, participate in the FUMEC funding and be incubated in the Centro de Innovación
y Transferencia de Tecnología also known as (CIT2), which offers office spaces to domestic
and foreign high tech start up companies. The three successful case studies presented in this
paper show the importance of fostering Industry-University collaboration for knowledge transfer
to enable the successful development of new high tech companies and spur sustainable
development in the region.

7 REFERENCES
1. Arocena, R. and Sutz J., Changing Knowledge production in Latin American
2. Universities‖, Research Policy 30(8), 1221-1234, 2001
3. Business Council for Sustainable Development, The Business Case for
4. Sustainable Development: Making a difference toward the Johannesburg
5. Summit 2002 and beyond‖, the, http://www.wbcsd.ch/, Accessed on July 28, 2005
6. Casas R., Knowledge Based Social Capital for Local Development,

59
7. Presented at the Triple Helix Conference, Torino, Italy, 2005
8. Etzkowitz H. and Leydesdorff L. The dynamics of innovation: from National Systems and
‗‗Mode 2‘‘ to a Triple Helix of university–industry–government relations, Research Policy
29, 2000 109–123.
9. Etzkowitz H., Webster A., Gebhardt C. Cantisano B.R., ―The future of the University and
the University of the Future: evolution of ivory tower to entrepreneurial paradigm‖,
Research Policy (29) 313-330, 2000
10. Freeman, C., Technology Policy and Economic Performance: Lessons from Japan.
Pinter, London, 1987
11. Flores M., and Cardenas L., Industry-University Collaboration in Monterrey,
12. Mexico: Towards an International City of Knowledge, presented at the EUROMOT
conference, 2006
13. Lambert Review of Business-University Collaboration in UK, available on line:
http://www.hmtreasury.gov.uk/media/EA556/lambert_review_final_450.pdf
14. Lundvall B.A, ―The University in the Learning Economy, DRUID Working Paper No 02-
06, 2002
15. The Alliance for International Higher Education Policy Studies (AIHEPS),
http://www.nyu.edu/iesp/aiheps/
16. The Oxford Handbook of Innovation, Edited by Jan Fagerberg, David C.
17. Mowery, and Richard R. Nelson, Oxford University Press, 2004
18. Mapping the Nature and Extent of Business - University Interaction in Australia ,
available on line: http://www.arc.gov.au/pdf/01_03.pdf
19. Mowery D., The Changing Role of Universities in the 21st Century U.S. R&D System in
Science And Technology Policy Yearbook, 2002 Edited by Albert
20. H. Teich, Stephen D. Nelson, Stephen J. Lita (2002)
21. Mowery D, and Sampat B., Universities in national innovation systems,
22. Working Paper, Globelics PhD School, 2004
23. OECD, Innovative Networks: Co-Operation in National Innovation Systems, 1997
24. OECD National Review on Educational R&D in Mexico, 2003
25. Parada J., Joint OECD-Mexico Conference on International Public/Private Partnerships
for Innovation, Mexico, 2002.
26. Schumpeter, J. The Theory of Economic Development, Harvard University Press,
Cambridge, Massachusetts, 1949.
27. Silicom Ventures TechShow,
http://www.silicomventures.com/mexico_techshow_2006
28. Yin, R. K., Case Study Research: Design and methods (2nd ed.), Beverly Hills, Sage
Publishing, 1994

60
 EDUPRENEURSHIP

Rajiv Hajirnis
M. E. S. College of Arts & Commerce, Zuarinagar, Goa mescollege1@rediffmail.com

In a developing nation like India, for building up a democratic & liberal society it is necessary to
have a literate & skilled population as the foundational factor. This is our big problem. Despite
our investments in the formal primary education system, we still have 15 crores of school age
children missing from the schools. The dropout rate at the school stage is high. Out of 100
youngsters who enter grade 1, only about 35% finally take the secondary school certificate
examination in which 50% of these 35% face failure. Finally, only 6% of the population in the 17
– 22 age groups enters higher education. There are dropouts here also.

Besides the system produces unemployable.1 In this background getting ‗Demographic

Dividend‘ is next to impossible. How to make a drastic change in the present education system
which will be helpful for us to get Demographic Dividend is the million dollar question at present
on which serious discussions are going on EduPreneurship is one of the important way which
will play very positive role in this process.
Concept
EduPreneurship offers a choice for those who want a small community setting with personalized
education that stimulates students‘ natural talent through a thematic study approach, economic
based curriculum with real world products & character development. It offers experiences in
various learning styles so children can shine in areas of their own strength. Students are active
participants in a learning adventure using academic skills to solve problems & unlock meaning
in their lives.
While trying to find out whether this type of education system is followed by anyone in the world
I find out following two institutes, which are working to implement this system.
• Arizona School‘s EduPreneurship Student center – Scottsdale.
• National Foundation for Teaching Entrepreneurship (NFTE)
Arizona School’s EduPreneurship Student center – Scottsdale
Organization and Philosophy
Multiple Intelligences
Thematic Cottages
Life and Business Skills for Kids
Self – development Approach
Instructional Programs
Life shops
Integrated Themes

Literature Studies
Foreign Language
Small Group Instruction
Cooperative Learning
Micro – Community Activities Career Pathways

School / Academic Goals

Engage all students in the learning process through activities based on Gardner‘s
Theory of Multiple Intelligence within a multiage class.
Create integrated thematic units that incorporate core curriculum with exciting, high
interest and real – world application.
Establish a micro – community where students participate in simulated real = world
activities.
Nurture the citizen within every child; provide training a practice in good citizenship,
fair play, courtesy, honesty, caring and accountability.2
National Foundation for Teaching Entrepreneurship (NFTE)
The National Foundation for Teaching Entrepreneurship (NFTE, and pronounced ―nifty‖) is the
USA‘s leading youth entrepreneurship organization. Through entrepreneurship education, NFTE
teaches low – income young people, aged 11– 18, to become economically productive
members of society by improving their academic, business, technology, and life skills. NFTE
operates year – round programs in 10 regions of the United States, has served over 40,000
young people and trained more than 1,500 teachers and youth workers in 43 states and 14
Countries.
61
For more than a decade, NFTE‘s president and founder, Steve Mariotti, a former Special
Education / Business teacher and drop – out prevention specialist, has been a major force in
promoting and teaching entrepreneurial literacy and basic academic and business skills to
economically disadvantaged young people both in the United States and abroad. Mr. Mariotti
has spoken widely across the country about the subjects of youth entrepreneurship, at risk
youth development, vocational education, incarcerated youth, and teenage pregnancy
prevention. He has authored sixteen books, including How to Start and Operate a Small
Business, with Tony Towle; Entrepreneurs in Profile, with Jenny Rosenbaum; and A Young
Entrepreneurs Guide to Starting and Running A Business, which has sold more than 65,000
copies.

A Foundation in Personal Experience

After a life – altering incident where Mariotti was mugged by a gang of kids for $10 dollars he
walked away from his small import – export business to become a math teacher in some of New
York City‘s most impoverished areas, including Bedford – Stuyvesant in Brooklyn and the Fort
Apache district in the Bronx. While teaching, Mariotti realized that the traditional high school
approach to reading, writing and math didn‘t work well with youth facing the challenges of
poverty and street life. He knew that if he could speak to what kids understood – namely money
and ownership – he would capture their attention. Bolstered by his realization, he began to
incorporate business lessons into curriculum and noticed that many kids who had previously
been written off had a natural talent and finesse for entrepreneurship.

In 1987, Mariotti founded NFTE at Jane Addams Vocational High School in the South Bronx
with a $20,000 grant from the Boys and Girls Club of Newark, as an after – school dropout
prevention and academic performance improvement program. NFTE teaches many of the same
principles as business schools and, while students are learning skills, they are also learning how
to become better students, citizens and valued members of their communities.

Convincing government agencies and donors that teaching entrepreneurship to inner city
youth was beneficial was not the easiest sell. Many thought it might lead to efficiency in drug
trafficking or that the concept was too difficult for the students to grasp. But, Mariotti persevered
and today NFTE is widely viewed as the most successful program in the world for teaching
entrepreneurship to low – income youth.

Mariotti’s Growing Vision

Mariotti‘s continually teaches programs and mentors students, despite an extremely demanding
leadership schedule that includes fund raising, hiring and overseeing staff, as well as
developing curricula, textbooks, workbooks and mass– market books. Since only three percent
of NFTE‘s budget is from government sources, Mariotti has become a champion fund – raiser
and has created a complex funding strategy that includes foundation grants, program
sponsorships in the U. S. and abroad, an annual fundraiser, individual donor contributions, and
major corporate funding.
As a result of Mariotti‘s efforts, NFTE has expanded internationally with 127 board members
around the world. He is working to adapt his concept to fit the needs of youth in other countries
and cultures. The successful global expansion of NFTE is evidence that entrepreneurial skills
are universal and teaching them can contribute to eradicating poverty and the social problems
that develop as a result. In 17 years, Mariotti and his team have worked to change the common
perception of low – income youth from a drain on our society to savvy stakeholders in its
development and advertisement.3

EduPreneurship in India
EduPreneurship in above ways isn‘t into exist in our nation. But no. of organizations, NGO‘s &
educational institutions have been trying to promote entrepreneurship through education in our
country.

MITCON: Maharashtra Industrial Technology Consultancy organization.

MITCON is one of the pioneer institutes which has been providing industrial technology
consultancy for last more than twenty years. Like other state industrial technology consultancy
institutes; the state govt. of Maharashtra with other govt. & semi – govt. institutes came together
to form this professional institutes.

At the beginning MITCON was mainly involved in technology consultancy activities. The first
major achievement of this institute is that the institute becomes financially self – reliance. From
62
last five years the institute has started to enter in education field in a professional way. First the
institute introduced short term certificate courses mainly in those areas which have a great
market demand. At present the institute is running 14 different courses in the field of IT, 8
vocational courses in different areas, 4 courses in Cyber laws, One soft skill course, 4 courses
in Multimedia & animation, & one post graduate diploma in Multimedia & Animation
Technology.4

MITCON as a education Institute: Three years back the board of directors of MITCON has
decided to enter in the field of education by introducing MBA courses through its educational
institute. At present this institute is running three MBA courses – 1) MBA General, 2) MBA –
Pharmaceuticals, 3) MBA – Bio – Technology.

When I meet the pioneer person behind this innovative activity Mr. Sanjiv Davis, I realized that
this isn‘t only an interesting example of EduPreneurship in higher education but it is also a live
example of Intrapreneurship.

Mr. Sanjiv Davis, who joined MITCON as a faculty to run institute‘s certificate courses in IT, saw
a dream to introduce a unique MBA course through MITCON. Earlier the board of directors of
MITCON was reluctant to enter in new & vibrant area in a metropolitan city like Pune which is
established as a successful education center in the field of professional education at the
national & international level. Mr. Sanjiv took initiative to enter in this field & from
conceptualization to implementation level the role of Sanjiv is like an intrapreneur.

After getting permission from the BOD, MITCON started its MBA courses first in rental premises
& now all these three courses are ran in their own premises with modern & updated
infrastructure. Recently MITCON got affiliation by AICTE, which is the prime condition to run any
professional course in our country.

The above case of MITCON is also in true sense not a 100% example of EduPreneurship. But
as we are aware that MITCON‘s basic objective is to promote entrepreneurship & now this
institute has started educational activity, the case is nearer to the concept EduPreneurship.

In addition to the above case there are no. of educational institutes which are playing a partial
role to develop EduPreneurship. Especially those educational institutions that are in the field of
professional education realized the importance of entrepreneurship & introducing various
activities to promote entrepreneurship.

A pioneer institute in the field of entrepreneurship development EDI – India conducts

‗Entrepreneurial stimulation for children‘ for one week in summer vacation. EDI – India can play
an active role to promote EduPreneurship in India in following ways:

10) Organising ‗Entrepreneurial Stimulation for Children‘ in various parts of the country.
11) Organising special Trainers Training Programmes to organize
‗Entrepreneurial Stimulation for Children‘.
12) As an apex & pioneer institute from our country EDI – India can take initiate to convince
‗Human Resource Department of Central Govt. to provide financial assistance to those
schools which are ready to enter in the field of EduPreneurship.

References

• Dr. Chitra Naik – Globalizaing Education: Some Issues. Autonomy &

Higher Education page 12.
• Website – www.esckids.com
• Website – www.nfte.com
• Website – www.mitcon.com

63
 ENTREPRENEURIAL SUPPORT SYSTEMS

With the quickened pace of economic development, the most striking change in the Indian
economy has been the initiation of an industrial revolution and the re-emergence of small scale
industries. Infact, the growth of small scale industries in India in the recent past has been
nothing short of a revolution. Further, during the past five decades, there has been a deep
ending as well as a widening of small scale industrial structure. Not only have the established
small industries increased their installed capacity and output, but a wide range of new small
industries have also come into being. Thus, in the field of capital and engineering goods
industries, small units manufacturing such items as electrical and engineering equipment,
machine tools, chemicals etc. which provide the foundation for a self-sustained growth of the
economy have been set up; amongst consumer goods industries, small units producing such
items as bicycles, sewing machines, plastic products etc. are forging ahead. Consequent to its
spectacular growth, the small industries sector has come to occupy a position of unique
importance in the economy of our country.

These far reaching developments and the scale and scope of operation of small-scale industries
have brought to the fore the importance of provisions of administrative and institutional
assistance at various levels.

Since independence, Government of India has been giving all possible encouragement and
assistance to small scale industries in preference to large and medium scale industries. A
number of organizations have been set up by Government to provide assistance and incentives
to small scale industries. In certain cases, small scale industries are protected against
competition from large industries.

1. National Small Industries Corporation

National Small Industries Corporation (NSIC) is an important organisation at the national
level set up with the prime objective of supplying machinery and equipment to small
enterprises on a hire-purchase basis and assisting them in procuring government orders for
supplying various items of stores. The corporation has its headquarters at Delhi, regional
offices at Delhi, Mumbai, Kolkata, Chennai and Gauhati; and branch offices at Bangalore,
Bhopal, Ludhiana, Cuttack, Hyderabad, Jaipur, Kanpur, Patna, Trichur and Rajkot.

The main functions of the NSIC are as under:

(a) Supply of modern machinery to small scale industries on hire-purchase basis
(convenient repayment): This the most direct, useful and effective assistance offered by
NSIC and one should not miss to avail of this facility. NSIC also supplies sophisticated
tools, dies, moulds, jigs and fixtures under this scheme. One such exclusive scheme for
women has also been recently launched.
(b) Assistance to small scale units in securing orders for supply to Director General of
Supplies and Disposals (one who buys the maximum in this country, on behalf of the
Govt. of India for the letter's needs, Railways, Defense, Posts and Telegraphs. All India
Institute of Medical Sciences etc. The corporation enlists registered units under its
single point Registration Scheme for Central Government Stores purchase programme
of the Director General, Supplies and Disposals.
(c) Development of small industry units as ancillaries to large scale ones, by putting them in
touch with larger ones.
(d) Marketing assistance to small units (by starting emporia and sales depot) and promoting
their export.
(e) Distribution of scarce raw material.
(f) Operation of a credit guarantee scheme for those units which are registered with it for
supply of goods.
(g) Construction of industrial estates and the establishment and running of prototype
production-cum-training centres.
Address : NSIC Bhavan, Okhla Industrial Estate, New Delhi 110020

2. Small Industries Development Bank of India

In response to the long standing demand of the small scale sector in India, Small Industries
Development Bank of India (SIDBI) was set up, by an Act of Parliament, as an apex
institution at national level for promotion, financing and development of industries in the
small scale sector and for co-ordinating the functions of other institutions engaged in similar

64
 activities. SIDBI is operating through its Head Office at Lucknow and a network of 5
Regional Offices and 21 Branch Offices in all the States.

SIDBI under its Charter has, interalia, been assigned the task of being the main purveyor of
term finance to the small scale sector in the country. Small scale industrial units, artisans,
village and cottage industrial units in the tiny sector and small road transport operators are
extended financial assistance mainly by way of refinance through primary lending institutions
(PLIs) viz., State Financial Corporations (SFCs), State Industrial Development
Corporations/State Industrial Investment Corporations (SIDCs/SIICs) and banks which have
a wide network of branches.

With a view to encouraging bills culture and helping the SSI units realise their sale proceeds
of capital goods/equipment and components/subassemblies/intermediates, SIDBI directly
discounts bills arising out of these transactions and also rediscounts those bills that are
discounted by the banks. In addition, SIDBI has also introduced direct finance schemes for
specialised marketing agencies, sub-contracting/ancillary units and infrastructure
development agencies so as to fill the gaps in these areas in the existing credit delivery
mechanism. Recently, a venture capital fund has been set up by SIDBI for extension of
venture capital support to new ventures promoted by technocrats and other entrepreneurs
based on innovative, indigenous and other technologies.
Address : SIDBI, 'Vikas Deep' 6th & 7th Floor 22, Station Road, Lucknow-226019, (UP)

3. National Research Development Corporation

National Research Development Corporation (NRDC), A Government of India Enterprise
under the Department of Scientific and Industrial Research has been specially created to
serve as a vital link in the innovation chain and to act as prime vehicle for technology
transfer. Over the 40 years of its existence the corporation has established linkages with a
large number of technology generating agencies and has become a repository of indigenous
technologies particularly those generated at public funded R&D institutions.
Apart from its main activity of transfer of technology from R&D centres to industry, the
corporation has been actively engaged in the development of technology from the bench
scale to the pilot plant or prototype stage through specially designed funding mechanism
often in association with the user industry.
Address : NRDC, 'Anusandhan Vikas', 20-22, Zamroodpur Community Centre , Kailash
Colony, Extension, New Delhi-110048.

4. Entrepreneurship Development Institute of India

The Entrepreneurship Development Institute of India (EDIC) is an Apex Entrepreneurship
institute at national level promoted by Industrial Development Bank of India, Industrial Credit
and Investment Corporation of India, Industrial Finance Corporation of India and State Bank
of India. The institute enjoys active support of Government of Gujarat.

The Institute undertakes Entrepreneurship development programme to serve the following

developmental objectives:
 creating a multiplier effect on opportunities for self-employment,
 augmenting the supply of competent entrepreneurs through training, and develop
entrepreneur trainer-motivators,
 participating in institution building efforts, and inculcating the spirit of 'Entrepreneurship'
in youth,
 promoting micro enterprises at rural level,
 developing and disseminating new knowledge and insights in entrepreneurial theory and
practice through research,
 facilitating corporate excellence through creating intrapreneurs (entrepreneurial
managers), and improving managerial capabilities of small scale industries,
 sensitising the support system to facilitate potential and existing entrepreneurs establish
and manage their enterprises,
Address : EDI (I), Ahmedabad , Near Village Bhat via Ahmedabad Airport & Indira Bridge,
PO Batt -382428, Gujrat.

65
5. National institute for Entrepreneurship and Small Business Development
The National Institute for Entrepreneurship and Small Business Development (NIESBUD) is
an apex body at national level established by the Ministry of Industry, Government of India,
for coordinating and overseeing the activities of various institutions/agencies engaged in
entrepreneurial development in small industry and business. The activities of the Institute
includedes evolving model syllabi for training various target groups; providing effective
training strategies, methodology; manuals and tools; facilitating and supporting Central/State
Government and other agencies in executing programmes of entrepreneurship and small
business development, maximize benefit and accelerate the process; conducting such
programmes for motivators, trainers and entrepreneurs which are not commonly done by
other agencies and above all organise all those that help developing entrepreneurial culture
in the society.

The policy direction and guidance is provided to the Institute by its Governing Council,
whose Chairman and Vice-Chairman are the Union Minister for Industry and Union Minister
of State for Industry respectively. The Executive Committee of the Institute consists of five
members including the Additional Secretary and Development Commissioner (SSI) as its
Chairman, and the Executive Director of the Institute as its Member-Secretary. The
Executive Committee executes the policies and decisions of the Governing Council through
its Executive Director.
Address : NIESBUD, A-23, Sector-62, Industrial Area, Phase- II. Noida - 201301, U.P,
India

6. National Institute of Micro Small and Medium Enterprise

The National Institute of Micro Small and Medium Enterprise (NIMSME), Hyderabad was
established as a Govt. of India Society in 1962, to assist the promotion and modernization of
small industry. It conducts training programmes, undertakes research projects pertaining to
the development of small industries, provides consultancy services at the special request of
the state government etc. and maintains excellent library. It has established a
documentation centre known as small Enterprises National Documentation Centre
(SENDOC). It also produces a quarterly journal named Small Enterprises Development,
Management and Extension (SEDME)
Address : National Institute of Micro Small and Medium Enterprise (NIMSME), Yousufguda,
Hyderabad- 500 045 (India)

7. Small Industries Service Institutes (SISIs)

The largest extension training agency in the world concerned with Small Industry is the
Central Small Industries Organisation (CSIO) of the Govt. of India (GOI). Attached to the
Ministry of Industry, CSIO Administers 43 SISIs.

A Small Industry Service Institute (SISI) is a multipurpose institution. It is by and large an

advisory agency rendering services to SSI and to government departments, Semi-Public
institutions and other agencies directly or indirectly responsible for the development of this
Small Scale Sector, but it has no authority to inforce the proposals or advice.

Functions of SISIs:
Policy Advisory Service:
- To advise the Government of India and State Governments on policy matters relating to
Small Industry Development .
- To ensure small industry development in India on right lines.
Technical Advisory Service:
- To give direct technical advice for setting up new small scale enterprises, choice of
machinery, design, fabrication, lay-out, installation and operation of plant and machinery.
- To prepare designs and drawings for production equipment and accessories, jigs,
fixtures, tools and gauges and assist in improving the production processes generally.
- To provide technical guidance on the efficient use of raw materials, utilisation of
substitutes, salvages and scopes
- To provide technical assistance in design and development of new products and bye-
products, standardisation and simplification of designs of existing products.
- To provide technical assistance in the development of ancillary enterprises.
66
 Workshop and Laboratory service:
Most of the SISIs in India have attached workshops Laboratories, libraries and show rooms.
The workshops may include a tool room, heat treatment, forging, electroplating, a machine
shop, a small chemical laboratory for organic & inorganic chemical industries, development
testing and facility marking metallugical laboratories for physical and analytical testing with
the help of these workshops, SISIs perform following activities:
- To demonstrate use of modern technical process on selected machines and equipment.
- To Assist in the testing of raw materials and products of small scale enterprises and
assist in their inspection and quality control.
- To Provide common service and tool room facilities.
- To carry out experiments, and laboratory analysis on new and substitute raw materials
and study the effects of design variables on performance, quality improvement, and such
other field problems as are posed by small scale enterprises.
Management Consultancy Services
- To give guidance in proper methods of industrial management including cost reduction,
financial management, production management, marketing and in areas of industrial
engineering with a view to ensuring intensive utilisation of resources.
- To conduct complete integrand in-plant studies, as well as provide adhoc managerial
advice on specific problems.
- To provide special techno-managerial advice for cost reduction and quality improvement
to export-oriented small scale enterprises.
Assessment Services
- To assess the capacities of small units for imported/controlled materials.
- To recommend to import licensing authorities cases of replacement licensing for
machinery, emergency spares etc.
Technological Training
- To conduct technological training courses in various subjects for supervisors and
Artisans, such as, in Machine Shop Practice, Tool Room Practice, Foundry Practice,
Blue Print Reading, Heat treatment, Electro-plating, Footwear Manufacture, Fruit
Preservation etc.
- To train village artisans in the use of improved tools and equipment through mobile
workshops.
Economic Services
- To conduct economic surveys of particular industries and areas and make concrete
recommendations for development programmes.
- To undertake market distribution aid surveys for individual enterprises.
- To supply market information in selected cases.
Information Service
- To provide guidance on the establishment of new enterprises.
- To prepare and publish model schemes, technical bulletins, industry prospect sheets
and other promotional literature.
General Services
- To enlist small scale enterprises for participation in Government stores purchase
programme.
- To recommend small scale enterprises to public and private large industries for supply of
stores.
- To guide and encourage small scale enterprises to undertake exports.
- To recommend small scale enterprises for financial assistance from the State Bank.
- To render advice on procuring machinery on hire-purchase basis from the National
Small Industries Corporation.
- To render all assistance-technical, managerial, economic, etc. in the programmes of
Rural Industrialisation launched by the planning commission.
- To represent the Govt. of India on various committees of State Government, of semi-
government organisations. etc.

8. State Directorate of Industries

Small Scale Industries sector is a state subject under the Indian Constitution and as such
the primary responsibility for all executive action in regard to its development and the
implementation of the programme of assistance to it is that of the state government. The
work relating to the development of industries in general and small scale industries in each
67
 state and in each union territory. They register the new units, issue certificate of
essentiality for imports of machinery's and raw materials, procure machinery and raw
material and provide financial and other assistance.

State Directorate of Industries and DICs offer the following assistance to small scale
entrepreneurs:
a) Registration : Registration of small scale unit is not compulsory but the entrepreneur
should get his unit registered as registration will help him in applying for other assistance
such as procurement of machinery on hire-purchase, import license, finance etc.
Registration, provisional as well as permanent, is given by concerned DIC.
b) Distribution of Machinery and Raw Materials : Only on the advice of the Directorate
of Industries, a small entrepreneur can obtain machinery under hire purchase from the
National Small Industries Corporation. Distribution of some imported scarce raw
materials is routed through the State Trading Corporation and the Minerals and metals
Trading Corporation. This, the scarce raw materials allotted to a state, are distributed by
the Directorate of Industries to the small scale units through DICs for import of
machinery, its compoments and spare parts, earlier DICs used to help entrepreneurs in
getting licences, but now after liberalisation, the entrepreneurs can themselves obtain
open General licence (OGL) for import purposes.
c) Financing of Industries : The State Directorate of Industries also assists the industrial
units in obtaining loans from various institutions set up for this purpose. In some of the
states loans under the State Aid to industries Act are granted by the Directorate. DICs
are also now running Govt. of India's Prime Minister's Rozgar Yojna (PMRY) scheme
under which educated unemployed youth between 18-35 years of age can get a loan of
maximum Rs. 95000/- for starting their micro manufacturing/Trading or Servicing units.
d) Allotment of Sheds : The Directorate of Industries either on its own or through
Infrastructure Development Corporation develops industrial estates and constructs
industrial sheds. Developed land and constructed sheds are allotted to needy
entrepreneurs based on merits of the projects. Hi-Tech, export oriented, Import
substitute, environmental friendly, employment generating and units to be run by
technical entrepreneurs are given preference.
e) Quality Marking and Marketing Assistance : The Directorate helps the small scale
units in marketing their goods. Directorate helps the small scale units in marketing their
goods. Directorate implements the scheme for product standardisation, testing and
quality marking.
f) Supply of Power and Water : The Directorate helps in arranging the supply of electric
power, water and transport facilities and organising the industrial cooperative societies.
g) Promotional Assistance : This assistance includes conduct of economic survey-area-
wise and product-wise preparation of schemes, blue prints, designs, and imparting
technical assistance and managerial and technical training.

9. Technical Consultancy Organisation

Technical Consultancy Organisations (TCOs) have been conceived as service
organisations for the promotion of industrial activities. The objective in setting up these
organsiations is to provide a package services to entrepreneurs, particularly to small and
medium entrepreneurs. There are 17 TCOs in our country sponsored by IDBI, IFCI, ICICI,
Commercial Banks, Industrial Development Corporations, State Financial Corporations,
and State Small Scale Industries Corporations. These TCOs provide consultancy services
to new entrepreneurs, existing units, sick units, industrial development corporations and
government departments. TCOs offer the following services to small scale entrepreneurs:

i) To identify industrial potential through surveys or otherwise.

ii) To prepare project, profiles, comprehensive techno-economic feasibility reports and
pre-investment studies.
iii) To identify potential entrepreneurs, conducting of entrepreneruship development
programmes for them and providing technical and commercial counselling to them, for
setting up and managing new industrial projects.
iv) To provide turnkey services for new projects right from project conception stage to
project commissioning stage.
v) To help prospective and existing entrepreneurs in coordinating with government
agencies and financial institutions for speedy implementation of projects.
vi) To help the new entrepreneurs in filling up of application forms for registration, land
allotment, financial assistance and other infrastructural requirements.
vii) To undertake techno-economic appraisal of projects on behalf of an industrial unit.
viii) To undertake market research and surveys for specific products.
ix) To act generally as an industrial management and financial consultant.
68
 x) To undertake project supervision and, where necessary render any administrative
assistance for improving the working of industrial concerns.
xi) To organise an information cell and a data bank relating to industrial and economic
activities and provide information for the development of industries to entrepreneurs

10. State Small Industries and Export Corporations (SSIEC)

Almost every state has set up a Small Industries Export Corporations. These Corporations
seek to promote, stimulate and accelerate the development of Small Industries in the States.
In certain states almost all functions relating to development of industries are performed by
these corporations.

Broadly, the functions of these corporations include:

- Supply of Scare Raw Materials.
- Marketing Assistance.
- Import Assistance.
- Supply of machinery on hire purchase basis.
- Subsidy on preparation of project report by recorgnised consultants.
- Promotion of rural Industries.

11. Khadi & Village Industries Commission:

Khadi and Village Industries Commission (KVIC), Bombay deals with the promotion and
development of khadi and village industries. KVIC Act, 1956 defines as any cloth woven
on handlooms in India from cotton, silk or woolen yarn, hand spun in India or from a
mixture of any two or all such yarns. KVIC acts through the Khadi and Village Industries
Boards (KVIBs) set up in almost each state. These boards advance loans and grant for
the development of various industries approved by KVIC, Bombay. Loan assistance is
being provided by KVIB to the following industries:

i) Khadi & Village Industries

1) Bee-Keeping
2) Cottage match
3) Cottage pottery
4) Cottage soap
5) Flaying, curing and tanning of hides
and skins and ancillary industries,
connect-ed with the same and the
cottage leather industry.
6) Ghani Oil
7) Handmade Paper
8) Manufacture of cane Gur and
Khandsari
9) Palmgur making and other palm
products
10)Processing of cereals & pulses
11)Manufacture and use of manure
and methane
12)Line manufacturing
13)Manufacture of Shellac
14)Collection of forest plants and fruits
for medical purposes.
15)Fruit processing and fruit
preservation
16)Bamboo and cane work
17)Blacksmithing
18)Carpentry
19)Fibre other than coir
20)Manufacture of household
aluminum utensils
21)Manufacture of Katha
22)Manufacture of Gum and Resins
23)Poly Vastra

69
 KVIC implements its training programme through voluntary institutions and the state
KVIBs. The artisan training is organised locally and some stipend is also given in addition
to conveyance changes provided to selected candidates. For a higher level training there
are Central Training Research Institutes for each industry where the candidates are
sponsored for training. Besides KVIC there are other All India Boards also which help the
entrepreneurs like India Handloom Board, All India Handicrafts Board Central Silk Board
Coir Board, Tea, Coffee, Cardamon rubber boards. These commodity boards project the
commodity image in the market in India and abroad and the engaged in research work.

12. Export Promotion Councils:

Eighteen export promotion councils have been established for the promotion of the export of
specific commodities or groups of products. These councils are registered as non-profit
organizations under the Companies Act. A list of these export councils is given below:

1. ENGINEERING EXPORT PROMOTION COUNCIL

Address : Vanijya Bhawan, 1st Floor, International Trade Facilitation Centre
1/1, Wood Street, Kolkata – 700 016
Tel.: 91-33-22890651/52 Fax: 91-33-22890654 E-mail: eepcho@eth.net
Website: http://www.eepcindia.org or http://www.eepcindia.com
2. PROJECT EXPORTS PROMOTION COUNCIL OF INDIA
Address : H-118,Himalaya House,11th Floor,23,Kasturba Gandhi Marg, New Delhi-
110 001
Tel. : (91)11-23722425/23350367 Fax : (91)11-23312936
E-Mail : info@projectexports.com Website : - http://www.projectexports.com
3. BASIC CHEMICALS, PHARMACEUTICALS AND COSMETICS EXPORT
PROMOTION COUNCIL
Address : Jhansi Castle, 4th floor, 7-Cooperage Road, Mumbai-400 039
Tel. : (91)22-2021288/2021330/2026549 Fax : (91)22-2026684
Website: http://www.chemexcil.gov.in
4. CHEMICALS & ALLIED PRODUCTS EXPORT PROMOTION COUNCIL
Address : World Trade Centre, 14/IB, Ezra Street, Kolkata-700 001.
Tel. : (91)33-22215652/22358217/8219 Fax : (91)33-22215657
Website: http://www.capexil.com
5. COUNCIL FOR LEATHER EXPORTS
Address : 3rd floor, CMDA Tower-2 Gandhi Irwin Bridge Road, Egmore,Chennai-600
008
Tel. : (91)44-28594367-71(5 lines) Fax : (91)44-28594363/64
E-Mail : cle@vsnl.com Website : http://www.leatherindia.org
6. SPORTS GOODS EXPORT PROMOTION COUNCIL
Address : 1-E/6, Swami Ram Tirth Nagar, Jhandewalan Extn. New Delhi-100 055
Tel. : (91)11-23525695-23516183 Fax : (91)11-23632147
E-Mail : sgepc@vsnl.com Website http://www.sportsgoodsindia.org
7. GEM & JEWELLERY EXPOR PROMOTION COUNCIL
Address : Diamond Bazar, 5th floor, 391-A, Dr.D.Bhadkamkar Marg, Mumbai-400
004
Tel. : (91)22-23821801/23821806 Fax : (91)22-23808752/23804958
Website: http://gjepc.org
8. SHELLAC & FOREST PRODUCTS EXPORT PROMOTION COUNCIL
Address : "Vanijya Bhawan" International Trade Facilitation Centre,1/1 Wood Street,
2nd Floor, Kolkata - 700016
Tel. : (91)33-22834417,22834697, 22834698 Fax : (91)33-22834699
Website: http://www.shellacepc.com
9. CASHEW EXPORT PROMOTION COUNCIL
Address : Post Box No.1709,Chittor Road, Ernakulam South., Cochin-682 016
Tel. : (91)484-351973/361459 Fax : (91)484-370973
Website: http://www.cashewindia.org
10. PLASTICS EXPORT PROMOTION COUNCIL
Address : Crystal Tower, Crystal Co-operative Housing Society(Ltd.),
Gundwali Road No. 3, Offsin M.V.Road, Andheri(East), Mumbai-400 005
Tel. : (91)22-26833951/52 Fax : (91)22-26833953/4057
E-Mail : plexcouncil@vsnl.com Website: http://www.plexcon.org
11. Export Promotion Council for EOUs & SEZ Units
Address : 705, Bhikaji Cama Bhawan,Bhikaji Cama Place, New Delhi- 11 0066
Tel. : (91)11-26167042/5805/6185 Fax : (91)11-26165538
E-Mail : epces@vsnl.net Website: http://eouindia.com

12. Pharmaceutical Export Promotion Council

Address : 101, Aditya Trade Center, Ameerpet,Hyderabad - 500038
Tel : (91)40-23735462/66 Fax: (91)40-23735464
E-Mail : info@pharmexcil.com Website : www.pharmexcil.com

13. APPAREL EXPORT PROMOTION COUNCIL

Address : NBCC Towers,15 Bhikaji Cama Place, New Delhi - 110 066.
Tel. : (91) 11-26183351/26169393/94/56/57 Fax : (91) 11-26188584/26188300
E-Mail : hochrm@nda.vsnl.net.in Website : http://www.aepc.com
14. CARPET EXPORT PROMOTION COUNCIL
Address : 101-A/1, Krishna Nagar, (Behind Govt. Sr. Sec. School), Safdarjung
Enclave, New Delhi 110029.
Tel. : (91) 11-26102742/26101024 Fax : (91) 11-26165299
E-Mail : cepc@nda.vsnl.net.in. Website:
http://www.indiancarpets.com
15. COTTON TEXTILE EXPORT PROMOTION COUNCIL
Address : Engineering Centre, 5th Floor, Mumbai - 400 004.
Tel. : (91) 22-23632910/11/12/13 Fax : (91) 22-23932914
E-Mail : exprocil@bom3.vsnl.net.in Website : http://www.texprocil.com
16. EXPORT PROMOTION COUNCIL FOR HANDICRAFTS
Address : Plot No.1,Pocket 6&7,Sector-C,Local Shopping Centre,Vasant Kunj,New
Delhi - 110 070.
Tel. : (91) 11-6875377/60087 Fax : (91) 11-606144
E-Mail : epch@vsnl.com Website : http://www.epcd.com
17. HANDLOOM EXPORT PROMOTION COUNCIL
Address : 18, Cathedral Garden Road, Nunagambakkam, Madras 600 034.
Tel. : (91) 44-8278879/8276043 Fax : (91) 44-8271761
E-Mail : hepccatp@vsnl.com Website: http://www.hepcindia.com
18. INDIAN SILK EXPORT PROMOTION COUNCIL
Address : 62, Mittal Chambers, 6th Floor, Nariman Point, Mumbai - 400 021.
Tel. : (91) 22-202049113/2027662/2025866, Fax : (91) 22-2874606
 E-Mail : isepc@bom2.vsnl.net.in Website: http://www.silkepc.com
19. POWERLOOM DEVELOPMENT & EXPORT PROMOTION COUNCIL
Address : 16, Ist Floor, Mittal Chambers, Nariman Point, Mumbai -400 021.
Tel. : (91) 22-2846518/19 Fax : (91) 22-2846517
E-Mail: pdexcil.pdepc@gems.vsnl.net.in Website: http://www.pdexcil.org
20. SYNTHETIC & RAYON TEXTILE EXPORT PROMOTION COUNCIL
Address : Resham Bhavan, 78, Veer Nariman Point Road, Mumbai - 400 020.
Tel. : (91) 22-22048797/22048690 Fax : (91) 22-22048358
E-Mail srtepc@vsnl.com Website:
http://www.synthetictextiles.org
21. WOOL & WOOLENS EXPORT PROMOTION COUNCIL
Address : 906, New Delhi House, 27, Barakhamnba Road, New Delhi - 110 001.
Tel. : (91) 11-23315512/23315205 Fax : (91) 11-23730182
E-Mail : wwepc@bol.net.in Website : http://www.wwepcindia.com

The role of these councils is generally that of guidance, encouragement and invocation. The
Broad functions of these councils are to advise the Government, local authorities and public
bodies in respect of their policies and measures in relation to their effect on the export of the
commodities, to undertake market surveys, and to organise trade delegations, exhibitions,
publicity, quality control arbitration etc. to promote exports.

Exports promotion councils are non-profit making limited companies registered under the
Companies Act. Nominees of State Governments and the concerned ministries of the Central
Government serve on the committees of administration set up by the councils to establish the
necessary liaison between those councils and the Government agencies represented by them.
Some of the councils have established overseas offices in different countries to promote exports
and project the image of the goods meant for export. The working committee of each council
discusses all the problems and policies relating to the export of the products coming under it
and the necessary action is promptly initiated. The Government provides grants under specific
heads for these export promotion councils.

***
DIFFERENT FUNDING FACILITIES PROVIDED FOR ENTREPRENEURS FROM DIFFERENT
BANKS IN INDIA

Fund based Bank Facilities

TERM LOANS: Term loan is an installment credit repayable over a period of time in
monthly/quarterly/half yearly/yearly installments. Term loan is generally granted for creation of
fixed assets required for long-term use by the unit. Term loans are further classified in three
categories depending upon the period of repayment as under:

 Short term loans repayable in less than 3 years.

 Medium term loans repayable in a period ranging from 3 years to 7 years.
 Long term loans repayable in a period over 7 years.

CASH CREDIT FACILITY: a major part of working capital requirement of any unit would consist
of maintenance of inventory of raw materials, semi finished goods, finished goods, stores and
spares etc. In trading concern the requirement of funds will be to maintain adequate stocks in
trade. Finance against such inventories by banks is generally granted in the shape of cash
credit facility where drawings will be permitted against stocks of goods. It is a running account
facility where deposits and withdrawals are permitted. Cash credit facility is of two types
(depending upon the type of charge on goods taken as security by bank.)

(i) Cash credit - pledge: when the possession of the goods is with the bank and drawings in the
account are linked with actual movement of goods from/to the possession of the bank. The
physical control of the goods is exercised by the bank.

(ii) Cash credit- hypothecation: when the possession of the goods remains with the borrower
and a floating charge over the stocks is created in favour of the bank. The borrower has
complete control over the goods and the drawings in the account are permitted on the basis
of stock statements submitted by the borrower.

OVERDRAFT FACILITY: Overdrawing permitted by the bank in current account is termed as an

overdraft facility. Overdraft may be permitted without any security as 'clean overdraft' for
temporary periods to enable the borrower to tide over some emergent financial difficulty.
'Secured overdraft' facility is against fixed deposits, NSC, and other securities.

BILLS FINANCE: This facility is against bills of sales raised or book debts.

EXPORT FINANCE: Banks grant export credit on very liberal terms to meet all the financial
requirements of exporters. The bank credit for exports can broadly be divided in two groups as
under:

1. Pre Shipment advances/packing credit advances: Financial assistance sanctioned to

exporters to enable them to manufacture/procure goods meant for exports and arrange for
their eventual shipment to foreign countries is termed as pre shipment credit.
2. Post shipment credit the bills purchase/discount facility granted to exporters is grouped as
post shipment advance.

Non - Fund based Bank Facilities

Credit facilities, which do not involve actual deployment of funds by banks but help the
obligations to obtain certain facilities from third parties, are termed as non-fund based facilities.
These facilities include issuance of letter of credit, issuance of guarantees, which can be
performance guarantee/financial guarantee.

 National Level Financial Institutions

 State Financial Corporations Offering Specialised SSI Schemes
 Venture Capital Organisations
 Other Banks Offering Financial Assistance

National Level Financial Institutions

Small Industries Development Bank of India Industrial Development Bank of India

[SIDBI]
National Bank For Agriculture And Rural
Industrial Finance Corporation of India Development (NABARD)

ICICI Bank State Bank of India

State Financial Corporations Offering Specialised SSI Schemes

Andhra Pradesh State Financial Corporation Arunachal Pradesh Industrial

(APSFC)
Assam Financial Corporation (AFC)
Delhi Financial Corporation (DFC)
Gujarat State Financial Corporation (GSFC)
Development and Financial Corporation
(APIDFC)
Bihar State Financial Corporation (BSFC)
The Economic Development Corporation
(EDC) of Goa

Himachal Pradesh Financial Corporation Haryana Financial Corporation (HFC)

(HPFC)
Jammu & Kashmir State Financial
Karnataka State Financial Corporation (KSFC) Corporation (J&KSFC)

Madhya Pradesh Financial Corporation Kerala Financial Corporation (KFC)

(MPFC)
Orissa State Financial Corporation (OSFC)
Rajasthan Financial Corporation (RFC)
The Maharashtra State Financial
Corporation (MSFC)
Punjab Financial Corporation (PFC)

West Bengal Financial Corporation (WBFC) Uttar Pradesh Financial Corporation

(UPFC)
Venture Capital Organisations

ICICI Venture Funds Management IFCI VENTURE CAPITAL FUNDS LTD.

Company Limited (IVCF)

SIDBI Venture Capital Limited (SVCL) IL & FS Group Businesses

Gujarat Venture Finance Limited (GVFL)

Other Banks Offering Financial Assistance

Canara Bank Corporation Bank

Bank of India Indian Bank

Indian Overseas Bank IndusInd Bank Ltd.

Syndicate Bank State Bank of Travancore

Union Bank of India UCO Bank

***
 PLANNING OF A SMALL SCALE INDUSTRY

With the understanding of the concept of planning, following steps details our the procedure for
starting a small scale industry :
1. Product Identification

For this purpose :

- Look up all possible publications on the subject.
- Consult specialists from SISIs, SSIDC, SIDC, DOI, DIC etc.
- Study the market and discuss with knowledgeable persons around you.
- Look into banned items for SSI
- Technology, raw materials, labour requirement, equipment requirement, investment and
personal strengths and weaknesses are some of the other considerations for product
identification.

2. Preparation of Preliminary Project Report (PPR) : After selecting the product, the next
step is to prepare a PPR which gives an idea regarding the financial requirement namely,
working capital and fixed capital. Further, PPR will give a rough idea about the requirement
of machinery, power, lahour and raw material.

3. Form of Ownership : Depending upon the financial and other requirements, one has to
decide the form of ownership which may be sole-proprietary / partnership / cooperative /
joint stock company (private / public).

4. Decide Location : For deciding the location, one has to take into consideration the market,
the sources of raw material, availability of power, labour, climatic conditions, incentives and
facilities, tax rates, types of buildings needed, provision for future expansion, environment,
transportation, etc. One has to contact DOI, UDA, SIDC and Municipal Corporation for
allocation of land.

5. Procurement of Land / Shed : The next step is to decide whether it would be

advantageous to construct the workshed or to take a workshed on rent. One should check
with DOI regarding possibility of getting readymade shed in an industrial estate.
Alternatively, the entrepreneur may take a shed on rent from any third party. The
entrepreneur will have to enter into lease agreement with concerned agency / party. Rent
lease deed should be atleast for a period of 5 to 8 years.

6. Invite Quotations for Machinery Equipment : Invite minimum of three quotations for
machinery / equipment clearly specifying type, size, and capacity of each machine. Sources
of machinery can be obtained from SISI and they will even assist in the selection of suitable
machinery. For obtaining machinery on hire purchase, contact National Small Industries
Corporation (NSIC) and SSIEC.

7. Preparation of Detailed Project Report : A detailed project report include the following :
- Introduction of the project - Requirement of raw material
- Present demand - Requirement of labour
- Future demand - Requirement of power
- Requirement of land - Requirement of finance
 - Break even analysis - Profitability analysis
Preparation of project report needs considerable thought and foresight. The project report
must reflect techno-economic viability of the project.

8. Apply for Registration : Application in the prescribed form to be filled in duplicate has to be
made to concerned DIC. Following documents are generally required for registration :
- Filled in registration forms - 2 nos.
- Copies of project report - 2 nos.
- Rent lease deed
- To copies of photographs etc.

9. Apply for Term Loan and Working Capital Loan : Application for term loan can either be
submitted to State Financial Corporation or to Commercial Bank. However, working capital
loan will be available from commercial bank only. The following documents should be
submitted to financial institutions / bank while applying for loan.
- Copy of the project report
- Rent deed / title deed
- Partnership deed (in case partnership)
- Memorandum of Association (in case of Co,)
- Loan application processing fee
- Two copies of photographs
- In case of existing concerns financial statements including balance sheet for the past
three years should be submitted.
- A copy of layout plans.
- Three quotations from reputed machinery suppliers
- Copy of provisional / permanent registration certificate
- A copy of letter addressed to your banker to whom reference can be made about your
credit worthiness and past dealings.

10. Apply for Seed Capital / Equity Fund Assistance : In case you need seed capital or
equity fund assistance a separate application should be submitted for that, to concerned
agency. Normally seed capital is given by SFC / State Directorate of Industries and equity
fund assistance is given by State Bank of India. Seed money / equity fund assistance is
meant for needy entrepreneurs only. Therefore, the entrepreneur will have to convince the
concerned agency about the need for seed money / equity fund assistance.

11. Arrange Your Own Contribution : In the project report an entrepreneur is required to show
cost of his project and proposed means of financing. Financial institutions and bank will
appraise his project and determine the financing pattern according to their norms. At this
state when the project is being appraised, the entrepreneur should being in his contribution
and deposit the same in his bank account.

12. Pre-sanction Follow-up and Sanction of Loan : On submission of loan application to

financial institution / bank, the appraisal of the project will start. During project appraisal
stage entrepreneur will have to pay a number o visits to financial institution / bank and give
them all necessary details which are required for appraisal of the project. After the project
has been found viable, the funding agency would sanction the loan to the entrepreneur. The
 entrepreneur will have to abide by the terms and conditions stipulated by the funding agency
in the loan agreement.

13. Legal Formalities and Documentation : In between sanction of loan and actual
disbursement of loan there are some legal formalities involved. The borrower and the
banker will have to agree upon the terms and conditions laid down in loan agreement.
Some legal documents will have to be signed and assets will have to be pledged /
hypothecated to the bank. All such formalities are required to be completed before
disbursement of loan.

14. Disbursement of Loan : On completion of legal formalities and documentation,

disbursement of loan can start. Normally, the loan is released in installments depending
upon the physical progress of the venture.

15. Place Orders for Machinery : At this stage it is assumed that entrepreneur has already
taken possession of shed and got the loan sanctioned. Now the next step should be to
place order for plant and machinery. At the same time the entrepreneur should procure all
necessar7y miscellaneous fixed assets required in implementing and managing the
proposed project.

16. Arrange Power Connection : Getting power connection for the unit takes considerable
time. Therefore, immediately after placing order for machinery the entrepreneur should
apply for power connection to State Electricity Board. Delay in getting power connection
may cause you considerable loss. It is advisable to arrange power connection before
entrepreneur starts erection of machinery.

17. Procurement for Machinery : Normally, machinery is ordered immediately after sanction of
loan. At this stage the entrepreneur should make necessary payment to machinery
suppliers and start receiving the same.

18. Establish Product Distribution Network : On receipt of machinery the entrepreneur will
start erection work and within a few weeks or few months he is expected to start commercial
production. It is advisable to chalk out a marketing plan well in advance. Entrepreneur
should establish contact with some dealers and finalize arrangements for setting his product
through those dealers.

19. Machinery Installation : When machinery has been received at the site of the unit it should
be installed without losing time. Delay in installation of machinery will result in accumulation
of loss during project implementation stage itself.

20. Insurance : Insurance of factory building, plant and machinery is more or less a must. In
fact the machinery should be insured when it starts from the works of the suppliers.
Numerous types of insurance policies are made available to small scale entrepreneurs by
insurance companies. The entrepreneur should go to the nearest branch office of the
insurance company and take an insurance cover for his factory shed, plant and machinery.

21. Government Clearance : Central sales tax and state sales tax registration, clearance from
municipality and pollution control boards etc. if required, should be taken well in advance,
before starting commercial production.
22. Recruitment and Training of Staff : An enterprise, big or small, has got to engage some
manpower. Persons of various cadre (supervisory, skilled, semi-skilled, unskilled labout)
should be recruited and given necessary training at this stage. If necessary, a few key
personnel may be got trained in a unit similar to the one proposed by the entrepreneur.

23. Apply for Central Government Subsidy : Units located in centrally declared backward
areas eligible for getting Central Government Subsidy ranging from 15 to 25% of the cost of
fixed assets. Claim for subsidy should be submitted on prescribed application form through
the concerned District Industries Centre. The claim should be submitted after getting the
machinery erected.

24. Undergo Technical / Managerial Training : Setting up of a small scale industry takes
considerable time. During project formulation and implementation stage if entrepreneur has
time and if there is an opportunity he should attend an EDP or any other programme which
could improves his entrepreneurial, technical and managerial skills and attitude.

25. Produce Raw Materials : If an entrepreneur has installed machinery, got power connection
and has recruited and trained manpower then he should purchase required raw materials
immediately. Raw materials will be required for trial run and subsequently for commercial
production. If the raw material required in a particular unit falls under scarce raw materials
category or it is indigenously available, the entrepreneur should contact DIC or Stage Small
Industries Corporation for his requirement of raw material.

26. Trial Runs : Immediately on receipt of raw materials, trial runs can be started. The period of
trial runs will vary depending upon nature of project, complexities of the project and size of
the project.

27. Commencement of Commercial Production : If the entrepreneur has established quality

of the product in trial runs, it is time for his to go in for commercial productions. This is the
last step in setting up a small scale unit thereafter enterprise building and enterprise
management process will start.
 STEPS FOR SETTING UP A SMALL SCALE INDUSTRY

The planning and setting up of small enterprise involves number of activities to be completed
and several important issues to be understood. Apart from these the entrepreneur has to take
many important decisions in order to be successful. The project of establishing the small
industry can be explained in the following step by step approach:

The First Step: The individual has to take the decision to get self-employed rather
than scout for job.
The second step: Decision on the type of activity to be undertaken or the identification of
the dream project
The third step: Deciding on the size of the project: The level of Investment will decide the
status of the venture under any of the following categories: small manufacturing industry,
ancillary industry, exports oriented unit, tiny sector, service venture or Business enterprise. One
has to take this decision depending on one's investment capacity
Fourth Step: Location of the Project: The selection of the place to setup venture as to be
done
Fifth Step: Preparation of the Project Report- Technical Feasibility – This is an important step
which not only describes all the features of the project but also justifies the feasibility of the
dream with all the details to convince not only the entrepreneur but also others who are to
commit resources for the project.
Sixth Step: Financial Viability – The project should not only technically feasible but also
financially viable. Financial viability means that the products/services can be produced at
reasonable cost, marketed at competitive price with decent profit.
Step Seven : Arrangement of Finance – Long Term Finance Funding requirements of a
Project are of Long term needs for acquiring fixed asses like land & Building, Plant &
Machinery and for security deposits and working capital margin.
Step eight : Arrangement of Finance - Working Capital – Working Capital is required for:
Purchase of raw materials, Consumable Stores/Spares ,Stock in Process Manufacturing
Expenses ,Credit Sales/Bills Receivable
Step Nine : Provisional registration as small industry – District Industries Centers issue the
registration based on Project report of the Entrepreneurs.
Step Ten: Acquiring Industrial Shed – Factory Building can be rented or owned. Investment
in Land & Building is better to be avoided in the initial stages to prevent locking up of funds and
increase of borrowed capital.
Step Eleven : Purchase of Machinery – The requirements of machinery, spares, tools etc are
to be carefully assessed and the proper size of plant & machinery should be decided.
Step Twelve : Raw Materials – Entrepreneur has to ensure timely availability of raw materials
for continuous production. Modern Material Management & Inventory methods have to be
understood & followed.
Step thirteen: Statutory Licenses – Many product lines if taken up for manufacturing need
licenses and one cannot ignore them. Manufacture of drugs & Cosmetics need license from
drug controllers, food processing industry from ministry of agriculture, Inspector of factories,
Pollution Control Boards, Commercial Tax departments, Collector of Central Excise and so on
depending on the products to be made.
Step Fourteen : Man Power Needs – A realistic assessment of the man power requirement in
skilled, semiskilled and unskilled category should be made after deciding on the size of
operations. Recruitments have to be carefully made at the right time.
Step Fifteen: Synchronizing various aspects – The various aspects of preliminary operations
to establish an industry should be synchronized within a time frame. The machinery orders
should be placed in such a way that it arrives after the shed is constructed and ready.
Step Sixteen: Power Connection – The power connection should be obtained without delays.
It is always better to contact the Electricity Board.
Step Seventeen: Production - Entrepreneur should draw blue print of layout of factory, install
machinery & plan production once planned then production to be commenced taking care of
quality & time schedules.
Step Eighteen: Sales - Marketing is the most important aspect the entrepreneurs are to plan
for. Making a study of Government marketing assistance's programs, appointing distributors,
dealers, retailers have all to be carefully done appropriate to products marketing strategy.
Watching competitors & taking care of customers are very important.
***
SETTING UP A SMALL SCALE INDUSTRY

The planning and setting up of small enterprise involves number of activities to be completed
and several important issues to be understood. Apart from these the entrepreneur has to take
many important decisions in order to be successful. The project of establishing the small
industry can be explained in the following step by step approach:

The First Step: The individual has to take the decision to get self-employed rather
than scout for job.
The personality traits of the to be entrepreneurs are:
Intuition : Instantaneous and instinctive perception of Opportunities
Vision : Imaginative foresight
Optimism : Faith in oneself and confident endeavor in search of opportunities
Dynamism : An ability to face the pace of change
Enterprise : Rational risk taking and capacity to manage men & material
Determination : Indomitable will.

The second step: Decision on the type of activity to be undertaken or the identification of
the dream project.
Thousands of manufacturing projects, service ventures, Business activities are possible under
the small industry sector classified as mechanical, electrical, electronics, glass, ceramics,
hosiery, food leather, and other categories. Entrepreneurs have to carefully think over on the
project selection taking into consideration several factors such as:
a) His inclination/aptitude towards the project,
b) His background such as education, technical skills, and training
c) Potential for making profits
d) Availability of technical know-how, machinery and raw materials
e) Substantial market/demand for the products/services planned
f) Capacity to invest : the project investment requirements should be within the
limits of the entrepreneur.

The third step: Deciding on the size of the project: The level of Investment will decide the
status of the venture under any of the following categories: small manufacturing industry,
ancillary industry, exports oriented unit, tiny sector, service venture or Business enterprise. One
has to take this decision depending on one's investment capacity

Fourth Step: Location of the Project: The selection of the place to setup venture as to be
done taking into consideration the following:

a) Nearness to market
b) Availability of basic infrastructures like power, water, roads, trained labor, communication
facilities etc
c) Availability of industrial sheds and so on.
Fifth Step: Preparation of the Project Report- Technical Feasibility

This is an important step which not only describes all the features of the project but also justifies
the feasibility of the dream with all the details to convince not only the entrepreneur but also
others who are to commit resources for the project. Many financial institutions prescribe specific
formats in which the report has to be prepared. One has to
check and decide the format according to the needs. A study of technical feasibility is to ensure
that the activity proposed can be accomplished and that the inputs are not only adequate but
also optimum. However the project report should cover the entire spectrum of activity and
include the following:

a) Land & Building

b) Plant & Machinery
c) Description of the product/service/business
d) Production process and technology
e) Inputs required such as raw materials, power, water, labor
f) Plant layout & flow chart. Decision should also be taken on ownership
(proprietary/partnership).
Sixth Step: Financial Viability
The project should not only technically feasible but also financially viable. Financial viability
means that the products/services can be produced at reasonable cost, marketed at competitive
price with decent profit. The project report should contain proposed investments in capital items,
working capital needed, & Breakeven level of operation. The Financial feasibility analysis is
complete only when the total financial requirements for implementing the project are assessed
and sources of financing the project identified. While considering financial feasibility, the ability
of the promoter entrepreneur to bring in his share of contribution must always be kept in view.

Step Seven : Arrangement of Finance

Long Term Finance Funding requirements of a Project are of Long term needs for acquiring
fixed asses like land & Building, Plant & Machinery and for security deposits and working capital
margin. Short term advances for working Capital in the form of pledge/hypothetication/cash
credit/bills facility. The term Loans for fixed assets land, building, plant & machinery are
preferably got from State Financial Corporation.

Step eight : Arrangement of Finance - Working Capital

The Industrial Unit needs short term loans for its working capital requirements. Working Capital
is required for: Purchase of raw materials, Consumable Stores/Spares ,Stock in Process
Manufacturing Expenses ,Credit Sales/Bills Receivable

Step Nine : Provisional registration as small industry

District Industries Centers issue the registration based on Project report of the Entrepreneurs.
This registration is required to obtain Industrial sheds from Government built Estates, to obtain
license from Municipal corporations, to get power connection from electricity board, to apply for
loans from Banks.
Step Ten: Acquiring Industrial Shed
Factory Building can be rented or owned. Investment in Land & Building is better to be avoided
in the initial stages to prevent locking up of funds and increase of borrowed capital. It is
advisable to go in for Industrial sheds in approved areas or estates.
If the factory building is to be constructed it should be ensured that the land is free from
encumbrances, it can be used for industrial purposes and all needed infrastructure facilities are
available. Before starting construction activities, the entrepreneur has to obtain necessary
license from corporation or municipal authorities and should also ensure the plan of the building
conform to the norms stipulated by the inspector of factories. The small industry development
corporation of the state offer constructed sheds in the industrial estates.

Step Eleven : Purchase of Machinery

The requirements of machinery, spares, tools etc are to be carefully assessed and the proper
size of plant & machinery should be decided. Once fixed assets are created it will be difficult to
change them. The machinery should be necessary and adequate. It is some time cheaper and
convenient to have some components bought out or got done on job works basis from outside
making investments on machinery for making them. The Names of different machines &
suppliers be obtained. Then get Quotations, evaluate specifications, quality, delivery time, price
and decision to be taken to place orders for machines.

Step Twelve : Raw Materials

Entrepreneur has to ensure timely availability of raw materials for continuous production.
Modern Material Management & Inventory methods have to be understood & followed.

Step thirteen: Statutory Licenses

Many product lines if taken up for manufacturing need licenses and one cannot ignore them.
Manufacture of drugs & Cosmetics need license from drug controllers, food processing industry
from ministry of agriculture, Inspector of factories, Pollution Control Boards, Commercial Tax
departments, Collector of Central Excise and so on depending on the products to be made.

Step Fourteen : Man Power Needs

A realistic assessment of the man power requirement in skilled, semiskilled and unskilled
category should be made after deciding on the size of operations. Recruitments have to be
carefully made at the right time.

Step Fifteen: Synchronizing various aspects

The various aspects of preliminary operations to establish an industry should be synchronized
within a time frame. The machinery orders should be placed in such a way that it arrives after
the shed is constructed and ready. The man power is to be in place just before the machine
arrive and the power connection will be available. The orders for materials and other tools etc
be placed at appropriate time. The Statutory clearances should be obtained while the entire
exercise is in progress.

Step Sixteen: Power Connection

The power connection should be obtained without delays. It is always better to contact the
Electricity Board once the location is decided and quantum of power needed is estimated to
check availability of power lines. Applications should have been submitted on time and
authorities convinced on all procedural aspects.

Step Seventeen: Production

Entrepreneur should draw blue print of layout of factory, install machinery & plan production.
once planned then production to be commenced taking care of quality & time schedules.

Step Eighteen: Sales

Marketing is the most important aspect the entrepreneurs are to plan for. Making a study of
Government marketing assistance's programs, appointing distributors, dealers, retailers have all
to be carefully done appropriate to products marketing strategy. Watching competitors & taking
care of customers are very important.

***
 ACHIEVEMENT MOTIVATION TRAINING

In a very short period, AMT exposes participants to a variety of experiences. These

experiences are aimed at changing and consolidating the entire behaviourial personality into
a personality which is move conducive to entrepreneurship. To these experiences,
participants may not psychologically be prepared and open. On the above, the methodology
of AMT is based on self-learning and experiencing, using the process of unfreezing, changing
and refreezing the behaviour related to entrepreneurial competencies.

1. MICRO-LAB:

AMT starts with Microlab (also called Participants' Adjustability Exercise). It consists of a
series of small exercises which represent the nature, experience and process the participants
are going to have in AMT. These require some unconventional activities like
1. Go round and laugh in five different ways.
2. Make a circle and share your weak as well as strong points with your partner.
3. Change the partners and repeat the exercise.
4. Make a circle and go round, Stop, find a partner. Talk to each other in language neither
of you know.
5. Know in detail about your partner and give his introduction.
6. Form a circle, Run, Revolve, Stop, find a fresh partner. One of you is Sun and other
Earth. Tell each other what you feel, see, hear and think.
7. From a square, Walk, Stop. From a group of four individual. Share in the group at least
one experience which pleased you the most.
8. Make a circle, Start walking Stop. Find a partner & share your projects with him, your
dreams, your aspirations, and your hopes.
9. Tell each other about the four changes you want in yourself.
10. Tell why did you opt for entrepreneurial career.
11. Spend sometime to manufacture a slogan to attract other people to come forward & start
their own independent units.
12. Group the participants as per Sun Birth Signs & let them discuss
 What they have common in addition to astrological signs?
 How can the training be useful to us?
 How are we likely to behave in this training programme & make it more useful etc?
13. Great each other differently.

Tell the participants that these exercises were just as a part of energizer and also as a part of
appetizer. It is energizer because it has intention to unfreeze you and prepare you mentally
to go through the training based - unconventional methodology. It is also an appetizer
because it makes you more receptive and participative in the programmed.

2. RING TOSS EXERCISE

Simple well structured exercises quite often bring to surface different-facets of individual's
behaviour with the force of a revelation, and open avenues for self learning. Ring Toss falls
in this category. This simple exercise is generally used to generate "here and now" data in
class-rooms on various facets of individual styles of functioning. It helps ascertain one's
orientations towards "risk-taking", "goal-setting", "planning", "personal responsibility",
"learning from feed-back", etc, which influence performance. The exercise promotes forceful
learning through analysis and feedback when done in group settings. It can be effectively
used to:

 Experience and analyse the processes through which one passes while setting activity
goes.
 Understand one's approach to risk-taking.
 Examine one's attitude towards success and failure.
 Highlight the influence exerted by group and social factors on one's behaviour.
 Underscore the distinctly different influence exerted by intrinsic and extrinsic incentives
on different personality orientations.

The exercise is primarily based on the hypothesis that persons with high need achievement
tend to make moderate risk, set challenging goals, exhibit high concern for excellence, are
more influenced by intrinsic incentives and moved into action by hope of success.

Some of the issues and concepts which are likely to help in explaining the different performer
behaviours are listed below:

 Hope of success vs. fear of failure

 Searching the environment for goal-setting
 Levels of confidence and moderate risk-taking
 Goal-setting and concern for excellence
 Learning from feedback or experience
 Money Incentives and challenging goals
 Taking personal responsibility

3. TOWER BUILDING EXERCISE

The exercise is generally used to generate "here and now" data in class-room on such facets
of the helping process which have a direct bearing on human resource development,
effective task performance, and sound decision-making. Even though people in positions of
authority have genuine intentions of helping their subordinates, they find it difficult to realise
them. Genuine helping requires sound understanding of the person being helped and the
situation. The exercise promotes experience-based learning through analysis of participant
behaviours and feedback, when done in group settings. It can serve a variety of objectives
that seek to unfold the intricacies and implications of the helping process. It can be used.

 To differentiate between guidance, encouragement and diffusion of confidence

 To internalise the various factors that quality genuine help
 To understand significance of "goal-setting" and "expectation" in task performance.
 To internalize various factors in the decision-making process that influence
performance of others.
 To crystallize the techniques of motivating others
 To understand organisational significance of cooperation and competition
 To understand motivational orientation of the helping behaviours
The Tower Building Exercise is primarily designed to under score the formidable influence
one person's expectations exert on another's behaviour, and to underline the significance of
relationships in help which leaves behind a healthy & satisfying trial.

The underlying concepts of Tower Building Exercise are:

 Goal setting
 Decision making
 Guidance and Encouragement
 Time as a resource
 Concern for quality
 Effect of stress on performance
 Clarity of Roles

4. BUSINESS EXERCISE (BOAT MAKING GAME)

The exercise helps the participant to ascertain the influence that various factors exert on his
thought processes, his feelings, and on his actions and affect the outcome, while he is
engaged in planning for a challenging task performance. It is designed for use primarily in-
training labs devoted to motivation development, development to entrepreneurs,
development of achievement motivation and to management development. It is simple in
form and promotion Trainers who have conducted this exercise once or have observed it
being conducted should experience no difficulty in administering. This exercise can be
effectively used.

 To help the participant analyse his thinking processes in relation to his achievement
planning activity and internalise the thought processes which are related to high need
achievement
 To help the participant internalise the concept of moderate risk-taking and its
implications for the confidence level
 To enable him understand his behaviour while under pressure for time and results
 To help him develop sensitivity to the environmental factors which influence outcome.
 To help him analyse his behaviour in competitive situations. More particularly to make
him aware of the internal relations and their effect on his performance

Since feelings and emotions vitally affect thought processes of an individual disturbances
caused by them or the block created by them need to be accounted for while planning for
achievement oriented pursuits. They essentially constitute "internal environment" which
needs cognizance while planning for anticipated results. The exercise is therefore, based on
a simple premise that cognizance of internal environmental factors are their disciplining are
as crucial to achievement oriented planning, as researching the external environment.

UNDERLYING CONCEPTS:
The exercise is primarily designed to create situations which would release various
behaviours relevant to high need achievement. Some of the important elements in the action
strategies that generally promote achievement oriented thinking and influence the outcome in
that direction, are interwoven in the structure of this exercise. They are listed below:

 Researching the environment and taking cues from the situation for developing action
strategies
 Taking personal responsibility for one's own actions
 Competing with one's own standard of excellence rather than working for mediocre task
performance.
 Accepting time as a limited resource
 Awareness of personal blocks and making allowance for them in the planning strategies
 Learning from feedback.

********
 BUSINESS OPPORTUNITY IDENTIFICATION

A good business opportunity is that which is a techno-economically and commercially viable and
feasible and environmentally sustainable proposition. Every entrepreneur needs to identify a
sound opportunity. To identify an opportunity, one needs to:

 Collect basic information on local resource base, e.g. agriculture, forest and mines
 Collect information on Opportunity Identification (OI) exercise done earlier (if any), by DIC,
banks, other financial institutions, etc.

 Discuss the potential business opportunities with existing entrepreneurs

 Discuss with octroi and sales tax officials about the inflow of goods
 Collect information on new major investment going to materialize in the area
 Collect negative list of banned items for financing
 List out poor performing industries
 Collect information on skill base — especially on handicrafts, etc.
 Collect information on availability of infrastructure like power, water and transport, etc.

The opportunities in the food-processing sector may be classified on the basis of the following
parameters:

1. Natural Resource-Based Opportunities: such as the ones based on cereals, cash crops,
fruits and vegetables, agro-wastes, animals, marine-based, processing of food products like
cereals and pulses, fruit preservation, pickles, honey, etc.
2. Local Industry Based: those dealing in supply of intermediary raw material, ancillarisation,
job-work, recycling of industrial wastes, by-products, etc.
3. Local Demand Based: which may include products like bread, biscuits, flour, spices, etc.
4. Export Based: any local product, which is being exported; or resources available locally to
manufacture the items, which have good export potential

Following the above method, will offer a large number of business opportunities. However,
please remember these opportunities are location and time specific. An opportunity today may
not remain an opportunity tomorrow. Or an opportunity in a forest area may not hold good in the
deserts of Rajasthan, as the resource base will change. Moreover, one would also need to
assess the viability and feasibility of the opportunities before pronouncing them as business
opportunities.

An opportunity may be absolutely viable but may not be feasible if it is mismatched. For
example, although setting up a large flourmill may be a perfectly viable proposition, it may not
be feasible to set up one in Sunderbans for an illiterate rural or tribal man. Therefore, one needs
to consider the following facts before deciding upon an opportunity:
1. One‘s Education
2. Experience
3. Economic Background
4. Investment Capacity
5. Family Background
6. Managerial Capabilities
7. Market Competition with other Producers/Size of Market
8. Location of the Unit
9. Availability of Technology and Process Know-how

Entrepreneurial - The Success Formula

Every year, hundreds of thousands of businesses are started. Most will fail, some will muddle
along, and a few will thrive. Which ones thrive, and why? The reason some businesses
experience spectacular sales and profit growth from the start isn't because they had a lot of
money at the beginning. Their fast growth can be attributed to the fact that they were put
together the right way.

In every instance, the founders either had or acquired the experience and knowledge they
needed to startup and run the business. They recognized what their weak points were,
subsequently nurtured alliances, and acquired the skills they needed to start their company off
right. They also understood how the various parts of the business fit together to form a total
structure and knew that if one part was missing, the total structure would break. For example,
they knew that a successful sales plan is directly dependent upon support from the marketing
and promotional plans, and that the strategic business plan acts as the glue that holds all the
sub-plans together so that they work in concert.

Developing Ideas Clever product and service ideas are a dime a dozen. Everybody has one,
and most of them never get implemented. The successful entrepreneur starts with a basic idea.
This idea is first tested to staying power. Can it be used to grow a customer base, and will it be
profitable? The pseudo-entrepreneurial itch often ends before the basic idea gets tested.
Studies show that a high percentage of people who open new businesses do so because they
are frustrated with their current job. They'll jump into any business venture that comes along
without first checking it out. Ninety percent of this group will go out of business in their first year.

Those that make it are smart enough to recognize the symptoms of their emotional state. They
are acutely aware that they may be in a vulnerable position. As a result, they may hang on to
the security of their current job and start a business on the side. They'll make the move to
become a full-time entrepreneur when the time is right for them and after they have thoroughly
checked out their business venture ideas. There are three basic concepts to keep in mind as
you develop and refine your business start-up ideas.

Be Creative The opposite of creativity is rigidity. Entrepreneurs are not rigid in their thinking. If
you cling to the old ways of doing things because "that's the way we have always done it," you'll
never come up with the new solutions that are demanded by today's small businesses. To test
your creative ability, practice finding ways to tie together seemingly unrelated ideas.

Understand Every Problem You must have a clear understanding of what it is you are trying
to achieve and be able to identify the obstacles that stand in your way. Break each problem
down so that you understand it and know what you need to do to eliminate it. For example, the
problem may be that you need more space. Why do you need more space, and what are the
alternatives? An alternative may pose a new set of problems, but if they reduce the magnitude
of the original problem, the alternative may be a more viable option.

Brainstorming When you come up with a solution to a problem, brainstorm the solution with as
many qualified people as you can find to avoid judging your own answer. Accept modifications
that make sense, and be prepared to replace the solution with a totally new and better
alternative. The key to the brainstorming process is to be objective. Brainstorming is an
excellent way to come up with a new set of ideas for new products, services, or improvements
that could accelerate the growth of your business.
***
 ENTREPRENEURSHIP IN IT

Anurag Jain, IIM - Bangalore

ENTREPRENEURSHIP:

Entrepreneurship is the lifeblood of a free market economy. Entrepreneurs are the people
who bet their own time and, typically, of their net worth to implement ideas that create new
things and new wealth. Where others see only a problem, entrepreneurs see an
opportunity. When they are successful, they transform industries and entire economies.

The Seed Sown – The Rise of Entrepreneurship: Since the 1980s, the world of work has
changed dramatically. We have all witnessed the turbulence resulting from waves of
corporate restructurings and downsizing. Thus it is not surprising that the career aspirations
of those people left in the work force would also start changing. Indeed since the old
corporate

‗psychological contact‘ implying a guarantee of lifetime employment to loyal workers has

now become virtually null and void: many workers departing from corporations prefer to try
a new career direction rather than return.

New Career Patterns: Indeed, we see how new patterns in corporate hiring practices have
had a substantial impact on the language and strategies of people in the labour force. For
example, many people who in the past would have preferred traditional corporate full-time
employment have now become acknowledged entrepreneurs, choosing to describe
themselves as ―independent contractors‖ to earn interim income via ―foot-in-the-door‖
assignments. Often these assignments are with potentially attractive employers who may
not have full time openings, yet still have work that needs to be done. The contractor gets a
chance to show off his or her skills prior to trying to secure traditional employment should an
opening eventually arise or be created. Thus, in the new paradigm, wearing an
entrepreneurial hat can often be an effective jog search strategy and can also provide
interim income.

Moreover, another new pattern that is developing is the rise of the ―situational
entrepreneur‖. Some departing employees are now using the windfall of an attractive
severance package to buy a business not because they are so committed to
entrepreneurship per se but rather because they wish to ―buy a job‖.

For various reasons, often due to their age and economic status, they believe that their
chance to earn a solid income is better served by entrepreneurship than by seeking another
full time job. These examples represent just two of the many new career patters and
configurations occurring in today‘s complex workplace. Entrepreneurship is simply finding
new opportunities to do things better, and then seizing the opportunity. Relentlessly pursue
new opportunities. Commit to innovation. Challenge traditional boundaries of thought. That‘s
what entrepreneurship is all about.

• The Five Roads of Self-Employment:1 Making a sound decision to become an

entrepreneur is not an overnight process. Indeed such a major career transition should
involve a careful analysis of many subjective and objective factors.
For example, early on you examine factors such as your motivation and commitment. Next
you proceed to more objective realms such as designing your business idea and then
seeking evidence of its worth in the marketplace. You may now be ready to review key facts
about the five general categories entrepreneurship:

Starting A Business
Buying a Business
Buying a Franchise
Starting a Consulting Business
Becoming an Independent Contractor

All of these have their pros and cons. For example, some of these are more suitable for
first-time entrepreneurs whereas other are more suitable for serial entrepreneurs. Due to
the lack of space, we would not go into details.

5. ENTREPRENEURSHIP IN IT:

Here are the five principles of the business revolution in the new information economy:

• Ideas are more valuable than factories, equipment, natural resources, and cash.
• It‘s not enough to have good ideas. One must implement those ideas more quickly than
ever before.
• Companies compete globally.
• Companies are less hierarchical than they used to be
• Companies have many, shifting alliances.

Business revolutionaries believe these principles are applicable to any industry, but they
think that technology companies precipitated the revolution and hence, best exemplify them.
Silicon Valley, in other words, is a managerial model for agriculture, mining or
manufacturing or any business at all.

New, technology based firms can be divided into four categories based on two systematic
factors:
 The novelty of technology applied by the new, technology-based firm
 The novelty of the customer needs targeted by the firm

The four categories are:

1. Application innovators are companies applying existing technology in an established
market. Often, these companies act as agents of technology diffusion. Even though the
technology applied by application innovators may be sophisticated and demanding, it is
not new to the world. Many application innovators can be expected to target relatively
narrow market niches, using customer specialization as an important differentiating
asset. The bulk of new, technology-based companies probably belong to this category
.
2. Market innovators excel in developing new product concepts. The technology applied
by market innovators does not have to possess any radical features as such. The
innovative impact is produced by a new combination of existing technologies. For
example, the basic components needed for the creation of a personal computer were
widely available before the introduction of the first personal computer. As the success
 story of Apple suggests, the new product concept may sometimes lead to the creation of
completely new industries.

3. Technology innovators introduce new generic technologies into existing markets. Thus,
technology innovators often directly challenge the existing status quo of the industry they
try to penetrate. If the competence base needed to develop the new technologies is far
enough from the competence base of the existing players, technology innovators may be
able to push existing players out of the market. It seems more probable, though, that a
technology innovator is either pushed to serve a narrow market niche, or the technology
offered by it is rejected by the market.

4. Paradigm innovators are firms introducing new product concepts based on a

completely new technology. Some paradigm innovators possess the potential of
initiating radical innovations, changes in technological systems, and sometimes even
changes in technological systems and in the prevailing techno-economic paradigm.
Paradigm innovators can be assumed to depict strong technology links with sourced of
advanced technology and basic research.

All these four types of technology firms form the base of (I) Technological Entrepreneurship,
or specifically Infopreneurship for IT entrepreneurship. Infopreneur is the new word for the
new breed of entrepreneur who is changing the course of history.

2.1 Challenges to Infopreneurs: To make the wildest dreams come true, infopreneurs have
several challenges to resolve. First and foremost, they need to resolve the conflict between
freedom through privacy and the pervasive nature of technology. It is their responsibility as
infopreneurs to balance the benefits. While the industrial economy was built on mass
production, the infopreneurial revolution is built on data distribution. Moving quality data is
the key. In this context, the se3cond challenge is to integrate information technology to
revitalise old business and to recapture lost customers. The great attraction is helping the
customers do more with less.

One more challenge is to apply their knowledge toward what turns people on. The fastest
path to success here is when you build your business, surround yourself with top talent, and
reward them with equity. For an example, just look at Infosys. It has more than 1000
employees who have become millionaires through their stockholdings.

The final challenge is to understand how information links people and improves productivity.
Digitised information has become a global currency. When you leverage data distribution to
meet needs and solve problems, you have established a very powerful competitive
advantage.

2.2 A few guidelines for Infopreneurs: The goal of infopreneur is to turn data into rupees,
not vice versa. Here are some components of the recipe to help one establish a new
approach for the business:
• Add value
• Fill a need
• Provide instant gratification
• Link your business with the tie that bind
• Make it simple
• Try to get what you pay for
• Respect the system
• Stay focused and patient
• Be realistic
• Give your customers what really want
• Make a profit in order to progress
• Recognise the value of ads on the internet
• Make the change from platform to forum
• Rapidly develop technology
• Be prepare for universal access
• Seek virtual support
• Take advantage of global mobilisation
• Think local, act global
• Know what you are looking for
• Provide ease of interactivity
• Shape the future
• Keep up with the speed of change
• Recognise information‘s potential

2.3 Bridging the Gap between Information Technology and Entrepreneurship: Linking
entrepreneurship with information technology is key to moving rapidly into the 21st century.

The challenge is to grow the size and scope. We need to create a strong culture for
innovation, for new product creation, and for new business start-up. To accomplish that
goal, must focus on providing a suitable breeding ground for the venture capitalists from
beyond the region who will invest in the country.

2.4 Measurements for Success: According to Jon Goodman, Director of the Entrepreneur
Programme at Southern California University, the following are important traits for
technology entrepreneurship:

Tenacity
Technical skills to run the business and produce results
Belief in your abilities
Passion
Choice
Deep knowledge
Imagination
Ability to envision alternative scenarios
Self-determination

2.5 Conditions for Success2 : Studying Silicon Valley as a case, we can identify following
factors which help shape up success in IT entrepreneurship:

 Collaboration: The casual lifestyle of Silicon Valley leads to fluid social interaction,
networking, and collective learning. Competitors recognise the value of cooperation
through informal support, joint ventures, and licensing agreements.
 Entrepreneurial Spirit: The long history of success encourages risk-taking with no
stigma attached to failure. Culture of individualism also fosters the spirit to be on one‘s
own.
• Innovation: A high level of experimentation leads to innovation, and this flood of new
ideas creates a self-sustaining chain of rapid development.
 • Funding: The informal networks promote access to capital within the heavy
concentration of private ―angle‖ investors and venture capitalists. (50% of U.S. venture
capitalists are based in Silicon Valley).
• Research: Silicon Valley companies put an emphasis on research, spending 16% of
sales on R&D – twice the U.S. national average. 719 major research centres are
located in this area, including SRI, Xerox PARC, and the USGS.
• Human Resources: The strong education system replenishes the pool with well-
trained graduates, and the benefit of opportunity attracts a diverse, talented work force.
Rapid movement between jobs is considered acceptable.

• Case of Silicon Valley: Everyone has now realised that the real heart of the Silicon
Valley success story is the entrepreneur, a character that is not easily invented, fostered, or
even understood. Jean-Baptiste, the French economist credited with coining the label,
describes the entrepreneur as one who ―shifts economic resources out of an area of lower
and into an area of higher productivity and greater yield.‖ And the statistics bear this
definition out. While the return on investment for American business in general over last 30
years has averaged 16 percent, the average return of entrepreneurial companies in
technology is well over 50 percent.

With the Internet tornado destroying geographical boundaries, swirling across the corporate
landscape, and radically changing the way businesspeople communicate, gather and
process information, and buy and sell products and services, even Bill Gates is sounding
breathless about all the new opportunities. ―These are the good old days, ―Mr. Gates told
1,200 world leaders in Davos, Switzerland. The venture capitalist Tim Draper agrees.
―There has never been a better time to saddle the naked ambition of the entrepreneur,‖ he
told a group of enthusiastic Israeli entrepreneurs at a recent gathering in Jerusalem.
Though a full third of all venture capital raised around the world is still invested in
companies in Northern California, money is certainly beginning to spread around the globe.
Israel alone has spawned more than 70 venture capital firms in the last five years.

The black magic of Silicon Valley is ultimately about attitude; you have to be able to take
risk. It won‘t hurt --- so go for it. The worst that can happen is that you have to go back to
your day job! The Silicon Valley way is to get behind what works and what customers
want—even if you have to chuck your technology in the process.

The not-invented-here syndrome was killed right around the time that the Internet was
commercialised. Successful technology entrepreneurs cannot be protective either.
Entrepreneurs must share their ideas and be open to doing business in different ways. The
best entrepreneurs move quickly. The best decision is the right decision. The next-best
decision is the wrong one, because then you will learn what the right one was supposed to be.
The worst decision is no decision at all. This kind of attitude carried people like Mr. McNealy,
Mr. Gates, Larry Ellison, and Steve Jobs to the helms of multibillion-dollar companies. If they
can do it, we can too!

2.7 Wealth creation through IT: It is only recently that there is some acceptance, in India, of
the idea that creation of wealth is the only way to solve the debilitating problem of poverty.
Mahatma Gandhi‘s dream was to wipe the tears of every poor person in the country. Fulfilling
this dream requires a consensus on the following tenets:

a. The only way we can solve the problem of poverty is by creating new wealth legally and
 ethically; not by redistributing existing wealth.
b. There are only a few people who can lead the task of creation of wealth, just as there are
only a few good surgeons, professors, and lawyers.
c. These people are human beings and they need incentives to create wealth.
d. The job of the government is not to create wealth but to create an environment where these
leaders are enthused to create more and more wealth.

There are two kinds of wealth creators – those that add to existing wealth passed on to them
by the previous generation of wealth creators; and those that create wealth from scratch.

Here, we are concerned about creating wealth from scratch. Entrepreneurship refers to such a
creation of corporate wealth by leveraging sweat equity. In general, entrepreneurship
translates to leadership and innovation. Lack of adequate finance forces an entrepreneur to
take a path hitherto un-trodden and create a niche for himself. A necessary but not a sufficient
condition for entry of entrepreneurs into an industry is that it must afford opportunities for
innovation executed with sweat equity at least in the initial stages of the enterprise. The
software industry worldwide is full of successful entrepreneurs. Rapid advances in technology
and the consequent productivity gains have opened great market opportunities for innovation
and, thus, ensured a steady stream of entrepreneurs in the American software industry.
Whether it is Bill Gates of Microsoft or Larry Ellison, the common factors are: sweat equity,
innovation, a brilliant vision, a well thought out strategy and flawless execution.

A quick study of entrepreneurship in the Indian IT industry for over 20 years reveals following
points:

During 1979-1981, ten to twelve entrepreneurs (professionals) started software companies for
operating in the domestic and export markets. As of today, only one or two of them have
survived, succeeded and been consistently among the top five Indian software export houses.
A case study of these ten to twelve companies is a great education. We can draw certain
conclusion from these case studies and can define some criteria for success.

The physiology of successful Indian IT companies and pathology of unsuccessful companies

bring out the following criteria for success:

• Shared vision: The founders of the company must articulate a clear vision of what they
want their company to be in the long run. This vision must be something that provides for a
clearly definable synergy between corporate objectives of the enterprise and personal
aspirations of the entrepreneurs and the professionals working for the enterprise.
• A marketable idea: Unless you have a good idea that adds value to a customer, there is
no point in proceeding further. Your product or service must provide one or more of the
following benefits – reduce cost, reduce cycle time, and improve productivity to improve
free time – for users of the product. Most failures are due to negligence of this cardinal
principle.
• A sound strategy and an implement able action plan: Strategy is about making oneself
unique in the marketplace. A strategic plan that clearly brings out the competitive
advantages of the idea of the entrepreneurs, that masks the weaknesses of the
entrepreneurs, that is realistic, and that ensures sustainability is needed. A realistic action
plan that had the required resources is needed to put this strategy into action.
• A layer of competent management: The bane of most IT entrepreneurs is that they are
primarily technocrats and hardly understand managerial issues in building an enterprise.
Indeed, there are entrepreneurs who cannot read a balance sheet and hardly distinguish
 between term loans and working capital. They have a healthy contempt for anything other
than technical challenges! Such an attitude is a sure recipe for unmitigated disaster. A
successful enterprise will bring together complementary skills in technology and
management. Surely, success in an enterprise requires a good understanding of human
motivation, finance, leadership, technology, quality, and a host of other skills.
• A shared value system: A value system for a group of entrepreneurs is like the rudder for
a ship. The temptation to bend your own sea of Do‘s and Don‘ts is very compelling but the
ability to stand firm in the face of an adverse situation is what separates men from boys.
There are plenty of examples wherein enterprises flounder because the entrepreneurs
could not come out with a shared value system.
• Professionalism: Several budding entrepreneurs criticise their employers and do exactly
what they criticised when they start their company. Professionalism is drawing a line
between personal needs and company resources, treating all your colleagues with respect,
and dignity, being issue-based and not personality-based, establishing and following
person-independent rules and procedures in the company and showing integrity and
honesty in all transactions with your customers, colleagues, vendor-partners, government
and the society.
• Divorcing control from management: Indeed, if there is one critical issue in succeeding
in entrepreneurship, it is the ability to divorce control from management. In the US, any
entrepreneur will know that his venture capitalist will put in a management structure
independent of his shareholding in the company. You, as the entrepreneur, will be asked to
perform the role best suited to the organization‘s needs. We all know the story of Steve
Jobs and how he himself brought in John Sculley to head Apple when he realised the need
for professional leadership. You must recognise your strengths and contribute to the
organization only in that role.
• Spirit of sacrifice: Nothing can ever be built unless there is some sacrifice at least in the
initial period. Most entrepreneurs fall prey to the trappings of the so-called ―Industrialist
syndrome‖ and end up jeopardising the interests of the enterprise.
• Pride in creation of wealth: There are entrepreneurs who are very apologetic about
creation of wealth. For heaven‘s sake, there is absolutely nothing wrong in creating wealth
by legal and ethical means. Do not ever confuse creation of wealth with charity. First, you
create wealth efficiently and only then can you donate your share of the profit to any
charity.
• Ideology, intellectual arrogance and the enterprise: There are several instances where
entrepreneurs have destroyed their enterprise just because they went on an ill-founded
ideology trip. For example, one of such entrepreneurs felt that his company must produce
compilers and word processors inIndia and compete with Microsoft‘s and Borland‘s even
though it was clear to everybody but him that such a strategy was absolutely unwise and
disastrous. His whole argument was that we Indians are second to none and that we will
prove to the world that we can produce system software better than anybody else.
Obviously, he did not succeed as much as his superb intellect should have enabled him to.
• R&D and the bread-and-butter stream: It is a truism in any business that the bread-and-
butter stream of your enterprise pays for all costs including R&D. A smart enterprise
derives its revenues from a bread-and-butter stream, pays for the operational costs and
uses a small percentage of this revenue (usually 5% to 10%) to conduct R&D in promising
new streams. Some of these new streams will, in the future, become bread-and-butter
streams for the enterprise. There are a couple of entrepreneurs who tried to derive a large
part of their revenues from R&D and they are in serious trouble.
• Leadership-by-example: In enterprises dominated by white collar and knowledge
professionals, you must lead by example. Today‘s professional has global level skills and
opportunities and he is aware of it! Any discrepancy between what you preach and what
 you practice will be easily analysed by your younger colleagues and articulated well enough
to create a dissonance; After all, Mahatma Gandhi was not wrong! Speed and imagination
are the two hallmarks of any successful entrepreneurs. Those who leverage these two
attributes will survive and succeed in the coming millennium of intense competition. One
can be sure that Indian entrepreneurs will use speed and imagination very effectively to
become the leading wealth creators for this nation.

3.0 MAJOR ISSUES INVOLVED IN IT ENTREPRENEURSHIP:

Sustainable business leadership requires embracing co evolution and going beyond the
dualism of competition vs. cooperation. Co evolution means cultivating innovation in
ourselves and others. Competition and cooperation as the most important concerns of
business are dead. Today, the challenges of rapidly coevolving with others to shape the
future are much more important.

IT entrepreneurship is one area where co evolution is required more than anywhere else.
There are a variety of requirements of an IT start-up. Most of these requirements such as
Content, Technology, etc. today are outsourced. That makes a lot-of-sense as a start-up
organization cannot have expertise in all the areas.

Forming a company of any kind is a Herculean task. Starting a technology company is even
more so. The main concern has to be product and, these days, how it is delivered. There
are all the usual business chores to be dealt with: marketing, content, public relations,
branding… it‘s endless.. Not only is it impossible for one person to handle all that needs
doing, but even a fair-sized group of very smart, experienced people is likely to need help
with at least a few tasks.

Fortunately it‘s possible to outsource a lot of this work, and for most technology companies,
it is mandatory. It just is not practical to do all the accounting, advertising, or legal work in-
house. For a start-up, it often makes good sense to enter into business alliance with other
firms to take care of some of the jobs that more-established companies handle in-house,
such as public relations and marketing. The resources these firms offer can prove a huge
relief to company founders, who usually have months of around-the-clock work behind them
and are looking at many more.

3.1 Finance/investors: One of the most critical factors for the success of any start-up is its
ability to raise adequate money to run the business. One of the most difficult tasks that new
owners face is find the money needed to start a new business. On the one hand, investors
are flooded with money and looking for good investment opportunities, while on the other
hand, many entrepreneurs are not able to raise the finances to covert good business ideas
into successful business ventures. There is enough money available in the market to
support good business ventures, what is lacking is the correct approach and presentation of
their ideas on the part of the entrepreneurs. The basic requirement in raising finance for
your business is that the idea should be appealing to investors. Startup businesses often
find it difficult raise funds from conventional financing sources because the present a
tremendous risk to lenders and investors. Commercial lenders tend to shy away from new
small businesses because they believe the risks of failure are too high. Commercial lenders
want to see a history of success and a solid credit record. Before venturing into business,
entrepreneurship should critically evaluate their business for its commercial viability. The
business plan should stand the scrutiny of prospective investors as a viable business
promotion.
Entrepreneurs can and do tap a broad range of sources for capital: their own assets, family
friends, former business associates, finance companies, commercial banks,

Angel Investors and venture capital firms. Approach the angel investors/venture firms only if
you are willing to sell stock to them. They will buy private stock in your company, hoping to
sell it at a profit when your business has grown.

Most financiers will require to scrutinise certain financial statements such as your

―Business Plan‖ before they are willing to invest in your business. The plan should reflect
your personal business goals, and should outline your business strategy, market analysis,
business team and financials.

One of the most important points for entrepreneurs to remember is that there is no standard
formula for raising finance. Attempting to slot your business into a rigid financing ―formula‖
can limit your own innovative thinking. You need to do a SWOT analysis and think through
for yourself what the strengths, weaknesses, opportunities and threats are, for your
business. Your task is to present the most attractive overall portrait of your particular
business by emphasising its strong points and identifying its weaker traits, and the plan you
have for countering these weaknesses. Your overall approach to, and formulation of, your
business plan should be such that your business should be found appealing to investors.

3.1.1 Angel Investors: Angels are typically wealthy individuals who allocate a small part of
their net worth to investments in high risk/high reward early stage businesses. Angel
financing, though popular for very long time, was earlier concentrated in the unorganised
sector. Recent trends indicate that angel funding is becoming a matured business. With the
emergence of professional angle networking firms, angel investment has now become an
organised source of funding; start-up businesses have trouble securing conventional
financing because they present a high risk to lenders and investors.

The result is that most of the start-up businesses are funded through the owner‘s own
resources, such as personal resources. Family members, friends, and investments by
privacy contacts or ―angels‖ provide most the remaining ―seed‖ funds for new small
businesses.

No standard ―angel‖ profile exists, but these investors are often individuals or groups of
either local professionals or businesspersons who are interested in assisting new business.
They are not typically interested in controlling the business, although they usually want an
advisory role. In addition, they may make financing contingent upon the business‘s
adherence to certain goals or practices. Most entrepreneurs already recognise that potential
―angle‖ investors for their business might be just about anywhere. Networking within your
community and your business circles can often provide a good starting point. Potential
financing contacts can arise through your business associates, affiliations with relevant
trade associations, inquiries through your local banker, accountant, local chambers of
commerce, and through other small business entrepreneurs.

Angels are at demanding at any other investor is: They want a CEO who takes advice,
and their interest wanes if you do not give them an exit strategy. They look at minimum
internal rate of return of at least 30% over five years.
―Angel financing‖ is often the first round of financing for early-stage companies.
For the entrepreneur, angel financing often provides the critical first funds needed to attract
key employees and to develop a technology or a product to the point of commercialisation
or to a stage where more significant venture capital funding becomes available.

Angels operate in a number of ways: sometimes through groups of pooled funds, or

individually. Angels are even available now through Internet links and networks. Typically,
angel investors are those individuals who know the entrepreneur from a family or business
relationship or understand the business, either through the angel‘s own business
experience or through prior investments. An entrepreneur considering raising equity through
angel financing should consider the following in structuring a deal with angels:

Angels usually invest in equity shares: Some angels ask for preference shares, with
certain rights and liquidation preferences over the common shares. Some even ask for
convertible debt, or redeemable preferred shares, which provide a clearer exit strategy for
the investor but also places the company at the risk of repaying the investment plus interest.
If the angel asks for preferred shares or convertible debt, the entrepreneur will need to
consider the ability to repay the investment as well as the possible impact of the investment
in future financing rounds. Some angels ask for a right of first refusal to participate in the
next round of financing.

Angels often serve on the Board of Directors following an investment: As the

company raises future rounds of financing, the issue arises as to how long the angel should
continue to have the right to be elected to the Board. One alternative is to have the board
right disappear once the Company raises a certain amount of equity financing or if the
angel‘s ownership percentage falls below as certain level. Structured correctly, angel
financing can provide not only needed capital but also momentum to an early stage venture,
allowing the company to grow and raise additional equity to propel its growth into the future.
As in all stages financing, entrepreneurs should work with advisors who have the
experience necessary to assist the entrepreneur regarding the mix of contract rights and
restrictions appropriate to the particular circumstances.

Angel investors are not from the organised sector: The terms of angel financing
depends entirely on what you can negotiate with a particular investor, but almost any type of
debt or equity financing is a possibility. Some angels may offer loans at very low interest
rates simply to help a new business or the community; others may expect specific rates of
return on an equity investment. Some deals involve a debt instrument that allows the
investor an option to convert the debt into an equity investment at either a specified time or
if certain conditions are met. The investor can thereby protect himself or herself by retaining
a debt claim if the business does not do well or can profit by converting the interest into
equity ownership if the business succeeds.

Most commonly, however, angels will want an equity interest in the business and some
guaranteed ―exit‖ provisions, such as a mandatory buyout, ―put‖ option requiring the
business to repurchase the stock at the investor‘s option, or a public offering of stock. Angel
investors expect minimum annual return of 30% plus.

For decades, thousands of entrepreneurs had to swallow their ideas for lack of capital and
along with it died their dreams to make it big on the Indian corporate scene. But not
anymore – today the number of venture capitalist, including angels chasing promising ideas,
is ever increasing. Not that there any dearth of ideas in India and the enterprising spirit, but
the viability of the concept and the people behind it matters, which even the venture
capitalist emphasise upon.

A year ago little did anyone know what a venture capitalist stands for except may be finance
professionals But the success stories and wealth generated, thanks to Sabeer Bhatia of
hotmail and Rajesh Jain of India world fame, has kicked off a new rage even among the
little known employees in the Indian corporate. The result being 4 to 5 portals popping up
every day in India.

Despite the much hoopla, the definition of different kinds of venture capitalist is mired. But
the general perception is the angels, private equity funds, incubators and VCs, all of whom
are a bunch of investors with piggy bags of money at their disposal.

It is indeed true, that the venture capital industry has come off age, going by. Along with the
incr4ease in foreign investment as well as local, the VC industry is setting out strategies for
themselves as well as the industry.

3.1.2.1 Prime Sectors: There are about 30-odd registered venture funds in India. While the
venture capitalists recognise the potential of high growth areas and go through the learning
process, the InfoTech and telecom sectors are considered as clear favourites by them.
However, they are now spreading their tentacles into mind ware-media, entertainment,
health and pharma too. With the healthcare industry is in its infancy and the pharma sector
all set to boom once again, the VCs are now according greater significance to these areas
along with services and retail sector. And all this is happening at a time when the traditional
economy model is collapsing.

The VC activity is fast catching up as wildfire, and going by the recent Nasscom study, India
is all set to become one of the top five global locations in the creation of technology
ventures with annual investment of over $ 10 billion. The report further adds that the VC
industry is on e take off stage and that angel investments in high-tech firms in India will
touch $750 million in 2000 and $1200 in 2001. The industry is gung-ho about the high
growth predictions and some of the VCs even believe that ―all will go well despite the
competition.‖

3.1.2.2 Success & Returns: The success rate and the rate of return for the venture capital
industry is not yet clearly defined. However, most venture capitalists expect a return of
above 30 percent depending on the type of funds.

It is now widely believed that one of the 10 ventures turn successful. However, some put the
success rate in venture capital funded companies at 70 percent. If so then how do the VCs
make good the money invested? Well, as said, the few that click cover up their investments
and as well may be with the desired profits. A section of the VCs believes that in 3 to 5
years the future of VC funding in India will be brighter than ever, but warn against expecting
too much overnight. May be you should hold on your ideas for a while….. they may fetch
much more tomorrow.

3.1.2.3 Accessing Venture Capital Funds: Venture Capital (VC) funds, both domestic and
offshore, have been around in India for some years now. However, it is only in the at 12 to
18 months that we have seen intense activity amongst entrepreneurs proactively seeking
out venture capital funds. It is interesting to note that for4 everyone investment, which is,
funded by VC, anywhere up to one hundred ventures are not funded by the VC. As such,
understanding the dynamics behind VC funding is important while seeking funds.

VC funds are broadly of two kinds; generalists or specialists. From the investee company
perspective it is critical that the funding be obtained from those who understand the
business. This backing of smart money for a growing company can prove to be invaluable
as focused/specialised funds open doors, assist in follow on round of funding and act as an
excellent sounding board on strategy. In as sense the investee company choosing a
Venture Capitalist applies as much as does a VC fund‘s choice of the investee company.

Venture Capitalists are driven by the profit motive. In effect the VC and the entrepreneur are
really on the same side, since VC‘s do not seek to profit through arbitrage. VC funds invest
in the company, with a view to build and facilitate growth. At the time of exit, leaving behind
an ongoing concern painstakingly built over 3 to 4 years is a matter of pride for a VC fund.
Apart from ensuring returns for its investors such as company serves as an example of the
calibre of the VC fund also; a reference of sorts of a good track record. Hence, with a view
to de-risking the investment most VC‘s tend to follow a similar set of guidelines, written or
otherwise.

As such, while qualifying a potentially winning investee company, venture capital funds look
at a select band of generic parameters:

The Management Team:

First amongst such parameters is the quality of the management team, consisting of the
entrepreneur as well as professionals in the team. Success or failure of the venture is
fundamentally a people game – the best ideas, backed by a great business plan; well
funded, cannot be a winner without a winning team.

It is important to distinguish the entrepreneur clearly from the professional management

team. In the field of information technology, where, in India the average entrepreneur is
around 30 to 35 years of age and reducing, he or she may not possess adequate
experience or a tack record in the chosen area. The value of the idea, the vision, putting the
team together, getting the funding in place, are, amongst others, some key aspects of the
role of the entrepreneur. VC‘s will insist on a professional team coming in, including a
CEDO to operationalize the idea in the absence of a complete team. In the overall team,
VC‘s will look for positive reinforcement on personal integrity, transparency as well as
leadership, from the team, and more specifically from the entrepreneur.

Many Venture Capitalists tend to be hands on in a strategic sense and will be with the
entrepreneur on the board of the company. In such cases, the VC fund manager will seek
personal chemistry with the entrepreneurs; a meeting of the minds facilitates the ability to
listen to each other out of respect and nothing else, thus facilitating working together to
build the company.

The Idea:
The second key factor venture capital funds look at is obviously the idea and the potential of
the idea to be monetised resulting in growth in valuation and profit. In effect the business
model. Here key factors include:

Scalability: Venture funds look for scaleable markets enabling the investee company to
also be scaleable in terms of the business model. The scalability potential, at a country level
or a regional/global level is critical in building valuations, revenues and profits. In a
scaleable model the presence of $ revenues provides a hedge against potential rupee
depreciation.

Competitive Entry Barriers: Does the business model allow for adequate entry barriers to
competition? Entry barriers in the form of technology, products and now in terms of speed of
entering and securing markets/customers.

Creation of Value: Does the business model allow for creation of intellectual property,
patents, methodologies, processes and Brands, which will add to increased valuations?
Increasingly the value of building brands is becoming critical to valuation increase in a
company. In this day of the Internet it is an entirely possible for an Indian entrepreneur to
think of and build a global company, with speed as a key entry barrier and brand as a major
asset. In essence, the importance from a valuation perspective, of softer assets, is
increasingly becoming critical for a VC fund.

Valuation
The third key factor is valuations. VC funds are sensitive to valuations whether for a start up
or an ongoing concern. Valuations typically are drawn from parallels in the stock market,
business projections and experience. Expectations of valuations by investee companies vis
VC funds will differ. However, the prime driver is not only the state of the business today but
also expected returns by the VC fund in the future. In India, while calculating returns, VC
funds will take into account issues like rupee depreciation, political instability – such issues
tend to suppress valuations today. Presence of intellectual property, brands or predictability
of future revenues and profits enhance valuations.

Linked to valuations is of course the stake or percentage share of the company, which a VC
funds takes. In a seed stage company, where the entrepreneurs bring to the table a great
idea in combination with a world class management team and no capital, the VC fund will
typically take a stake of above 50% and even up to 70% depending on the funds required.
E.g. If the pre-money valuation agreed upon is Rs. 5 crores and the fund requirement is Rs.
8 crores than the share of the VC ownership will be 61%. In the US markets, this is normal;
Indian entrepreneurs are still uncomfortable with the VC ownership will be 61%. In the US
markets, this is normal; Indian entrepreneurs are still uncomfortable with the VC ―taking
control‖ in a seed stage project. It is critical to understand that the VC is owning stock
commensurate with the financial risk being taken. In early stage or expansion stage
companies VC funds tend to take lesser ownership based on valuations determined on
factors mentioned earlier.

Exits
A fourth key factor is the issue of exits. For the VC fund to earn it must exit. Exit can be in
the form of a trade sale or an IPO. Here structuring for tax optimisation while existing is
essential as well as the time frame of the holding. For the investee company and the
entrepreneur, life after exit is critical, in the event of IPO, the VC and the entrepreneur are
really creating an ongoing concern with fiduciary responsibility to a larger set of investors.
VC funds will discuss exit options at the time of investment.

Multiple Rounds of Funding:

While investing, VC funds look for investee companies, which have got Angel funding
already. Angel funding is smart funding at the start up stage. Angel funding also means that
the angel has spent time to grow the company. Angel funding is specialist funding giving
very high value add. Typically for an early stage, expansion stage or a seed stage
investment, co-investments by Venture funds is a practice increasingly being followed. VC
funds with complementary strengths e.g. one focused on a given sector and the other say a
geography/markets, are the ones most likely to get together.

Portfolio Balancing:

One of the key internal requirements of VC funds in deciding upon investments is portfolio
balancing. Most Venture Capital funds invest in companies at seed stage, early stage and
at the expansion stage, in the life cycle of a company. However, if for example a VC has
invested in a portfolio of companies predominantly at seed stage, VC‘s will focus on
expansion stage projects for future investments to balance the investment portfolio.

In summary, VC funds go through a certain due diligence to select a good investment. The
due diligence starts at the management team level and goes on to encompass the idea and
the potential of the idea to be monetised as well as exit opportunity evaluations, for a seed
company. For a running concern, the above set of due diligence parameters are
supplemented by legal and accounting due diligence typically done by an external agency;
e.g. one of the Big 5 audit concerns.

In the event of a seed stage opportunity VC‘s tend to take up to 2 to 3 months to decide
whether to back a project or not; for early stage or expansion stage projects being valuated
in India; the legal and accounting due diligence cycle itself will add another two months to
the final go ahead signal for a VC fund. Comparatively in US Company the time cycle in far
smaller at less than 30 days in many cases, or an average of 60 days in most cases.

In effect, next time you are going to raise Venture Capital Funding do keep 2 to 4 months
from time fund raising starts to final disbursement for Indian companies or up to 2 months
for USA structured companies.

3.2 Content:
3.2.1 The Importance of Content on a Commercial Web Site: There are many things to
consider when designing your web page. However, content is one very important element
you should focus on because content is what involves the most important part of your web
page; the audience. If your audience has an unpleasant or frustrating experience in visiting
your web page, your site is not fulfilling its purpose, which will eventually result in a major
loss in readers. Thus, you must ―tailor‖ your content for your audience in as many ways
possible, whether it be through formatting, content shaping, or netiquette so that visitors can
get the most out of your site. How do you create a Web site that will make a significant
contribution to your organization? The responsibility is on the design team, but content is
critical.

All too often, organization will have a web site built only to put it out on the web and then
forget about it. Within a few months, or a year, the site becomes out of date. In web design
parlance, this is known as a ‗cobweb‘.

Many organizations are wise enough to know that they need to keep their site current and
fresh. So, they collect changes they need to the site and they periodically call up their web
developer, who, in turn, makes the requested changes to the site. This process is slow and
expensive. There‘s a lead time between when the new content becomes available and the
web developer is called, and between when the developer is called and the changes are
made. The developer typically charges by the hour for the modifications, which adds up
quickly.

Some organizations make the changes to their web site themselves. They call up
FrontPage or Home Site or some other HTML editor and they directly change the site and
upload their changes to the web server via FTP. This process can work when somebody
has been properly trained and is careful about the changes they make.

However, all too often, the staff person maintaining the site unintentionally makes
adjustments to the site‘s overall look and feel. As time elapses, the site gets uglier and
uglier. Or, what might happen is that the staff person maintaining the site finds the whole
process to be hard and time consuming so they do not do it anymore! Or at least not nearly
as often as they should.

There is, however, a solution that eliminates all of the above problems: A Content
Management System. A Content Management System is software which allows staff
people to add, delete, and modify their web site‘s content easily and directly.

Key benefits of this system include:

• The whole system is web based. All somebody needs in order to maintain the site‘s
content is a browser connected to the Internet and a login/password. Content is
maintained through the use of HTML forms. No special software is needed on the staff
person‘s computer whatsoever.
• The interface is simple. Anybody who knows how to use a browser to surf the web can
use the Content Management System with little to no training.
• It‘s immediate. Once somebody makes a change and hit‘s ‗submit‘, the web site is
updated with the new information immediately.
• The system is designed to allow users to maintain only the content of the site
WITHOUT

being able to adjust the look and feel. This prevents the site from degrading in
appearance over time.
• Once it is set up, there is no reason to call me to make changes. It just works. This
saves time and money.

Web sites are an integral part of an organisation‘s operation. No longer relegated to the role
of electronic billboards, sites are used to actively promote companies and products, deliver
services and information, manage transactions, and facilitate communications. Changes
must occur quickly, daily, hourly, or even minute-by-minute. This need for rapid change, the
―ripple effect‖, changes can have throughout a site, and the sheer size of today‘s dynamic
business sites make it impossible for all revisions to flow through one or two people.
Complexity and speed have created the demand for automated ways to effectively mange
Web content.

But as with most technologies, not all Web content management solutions are created
equal. The design philosophy behind the solution, as well as the architecture employed, can
directly impact the suitability of the product for your organisation‘s sites. Selecting a Web
content management solution that does not properly address your requirements can make it
difficult to enhance the site‘s functionality, size, or scope. Overall, your organisation‘s
productivity and growth will be constrained when content changes cannot keep pace with
the business environment and everyone, from content providers and designers to IT
professionals – must work harder to compensate for the site‘s technological shortcomings.

In contrast, the right Web content management solution can enable your organization to
save time and money, improve communications, strengthen business relationships, and
increase revenues. The right solution also can provide the scalability, flexibility, and
enterprise system interoperability necessary to meet future site requirements; an important
consideration when the future can arrive in a matter of months. It is an important decision,
worthy of further investigation.

3.3 Technology:

Technology is the base of a high-tech IT start-up. The technology needed to develop the
end product or service can come from a range of sources. When technology emerges solely
from science and engineering, the technology is pushing products into the market such as
in the case of Wireless Application Protocol. In contrast, when technology is required in
order to satisfy needs, the market is pulling, for instance e-commerce technologies. One
difficulty with new technology is its acquisition. The best way, and in some cases the only
way, to transfer technology is to transfer the people associated with the creation of that
technology.

Because technology is rarely measured, many ventures start without knowing how much
technology they need, how long will it take acquire it, or how much will it cost. The founders
of an IT start-up must understand the firm‘s technology well enough to measure it.

Core issues such as Architecture, Platform etc. are very important to be defined in the
beginning itself in case of Net ventures. There are two ways in which the Netpreneur can go
about building the technology part if the venture:

• Build his/her own team of technical people

• Enter into a business alliance with a technology company.
• Both ways have their own pros and cons.

Even though on one hand building own team is very time-consuming, on the other hand, it
offers a lot of flexibility. A lot of infrastructure is also needed to allow own team to work.
Office space, computing facilities, and all kind of requirements pop up. Also, human
resource management becomes even more critical. The better alternative, especially for Net
start-ups, is to enter into a business/strategic alliance with an existing information
technology company. The IT company will already have technical expertise which can be
readily employed to develop the site rapidly as there is no learning curve involved. The level
of involvement is very low when compared to owning a technical team. In this case, it is
more like a project management.

But there is a downside to it; How do you ensure the same level of commitment from the
technology partner, ass y9ou would expect from your own team. The solution is to tie the
partner‘s fortunes with yours. The most practical and practiced way these days in the cyber
space is to enter into an equity-alliance with the technical company. That will fetch some
equity money while at the same time ensuring commitment. Of course, for the technical
company to sign on the dotted line of partnership, it has to believe in the venture the same
way as you do.
A possible equity model could be a staggered equity stake model. According to this model,
total equity stake to be given to technical partner is staggered over a time horizon. A part of
this total offered stake is given upfront at the beginning of partnership. The rest of the stake
might be given on a monthly or quarterly basis. There monthly/quarterly stake offerings can
be made conditional by tying these up with expected performance clauses.

Technical business alliance offers one more advantage. In return of the equity stake given,
you ask the technical partner to postpone its cash flows arising out of the development work
going in their premises on your venture. Also, the manpower rates that the technical partner
will charge you have to be much lower than the industry standards. Possible disadvantages
of technical alliance as compared to owning a team are:

• Limited or lack of control on the technical team.

• Quality of people cannot be ensured always.

4.0 FUTURE OF IT ENTREPRENEURSHIP IN INDIA:

Almost half of all H-IB visas were granted to Indian nationals last year, according to the
Immigration and Naturalisation Service. China ranked second, grabbing just 9% of the
visas.

But increasingly, Indians are dong the hiring themselves. Thanks in large parts to mentoring
and organised networking efforts, more Indians are heading technology companies of their
own.

In fact, this phenomenon has prompted the magazine Silicon India to create the Si Tech
Index, which tracks the performance of 20 firms founded and managed by Indians both in
the U.S. and India. The stock index jumped more than 200% last year. That‘s compared
with 19.5% for the Standard & Poor ‗s 500 index and 102% for the Nasdaq 100.

Most Indian –led technology companies are no more than 3 or 4 years old. Before that, it
was a rarity to see Indians at the helm of start-ups.

4.1 Better Networking: Once major reason for the change has been more organised
networking among Indians:

The Indo-US Entrepreneurs (TIE) has emerged as the pre-eminent networking group for
Indian entrepreneurs.

TIL: hosts monthly Angel Forums, in which budding entrepreneurs pitch their business plans
in hopes of receiving angel investing or mentoring from charter members. Lastly year, 37
venture capital firms were TIE sponsors. It hopes to attract 60 this year.

Sunil Wadhwani, CEO of iGate Corporation, an IT services firm in Oakdale, Pa., estimated
that he has provided between and $500,000 in angel funding to Internet companies founded
by Indians during the past year.

But an entirely different scenario existed 10 years ago. This network was pretty weak.

In fact, Wadhwani launched his company without any venture capital funding. The first time
it got outside help was three years ago, when Wadhwani took the firm public.

Even just five years, the outlook was bleak. In 1995, K.B. Chandrasekhar, chairman of

Santa Clara, Califbased Exodus Communication Inc., said he ―knocked on the doors of
every venture capital firm,‖ but the view was that Indians while skilled technically, did not
possess the managerial talent to lead new companies.

―The credibility of India was not high at that time because few Indians had been
entrepreneurs,‖ said Chandrasekhar, who is also CEO of Sunnyvale, Calif-based
application service provider portal Jamcracker Inc.

In fact, Chandrasekhar‘s firm was on the verge of bankruptcy when TIE members helped
him with an initial $700,000 in funding.

Srini Anumolu, co-founder of Sunnyvale-based eLance Inc., an electronic market place for
services, said the Internet also has aided Indians.

Before he co-founded eLance in 1998, Anumolu had tried unsuccessfully to run a start-up in
San Franscisco during the earlhy ‗90s. But back then, the environment was tough, he said.
People needed a lot of capital and a sales distribvution channel. The Internet levels the
playing field because you do not need a dedicated sales force or shelf space in stores to get
a new business running.

With respect to the generals lack of infrastructure, three types of infrastructure need to be
developed: (1) governmental, (2) educational and (3) business. At this point the
governmental infrastructure works against entrepreneurship, rather than supporting it. The
educational and business infrastructures are just beginning to show signs of transformation,
driven by the role of economic desperation in creating the entrepreneurial spirit. Training
and incubator initiatives have been undertaken by academics and businesspeople. In a
sense these programmes have created small oases of entrepreneurial economic activity in
the harsh desert of a rapidly failing centrally planned economy that so far has been unable
to transform itself.

4.2 Cyber Economy: Yes, Internet mania has arrived in India, have no second thoughts
about it. The energy level, the hope and the hype all match Silicon Valley levels, as any
veteran of that Internet glasshouse can tell you. After the frenzy generated by
announcements of a national VC fund, an MoU between Nasscom and OTCEI for Internet
IPOs, and setting up of local chapters of the highly successful angel group. The Indus
Entrepreneurs dies down, what is to be seen is that though the path has been paved, India
is not quite there. As yet.

For starters, there will still be challenges in the exit strategy for companies, which choose
the IPO route. The recent Asian Internet Forum at the Internet World conference in New
York revealed that Asian companies that have gone public have faced many management
obstacles, highlighting the need to introduce more openness and accountability. Indian
companies like Infosys have risen to this challenge admirably, but it remains to be seen how
well other public-bound companies perform.

Second, we need excellent networking fora, peer evaluation, and global inputs into crucial
start-up activities like business plan assessment. Are the companies on the right track? Are
their revenue and growth estimates feasible? Is the competitor analysis adequate?
Organisations like IIT-Bombay have started some entrepreneurial competitions in the filed;
McKinsey‘s proposed business plan event India Venture 2000 com should be a big draw as
well. The third issue revolves around legal aspects of the CVC process. This whole area for

Internet startups in India is still embryonic, and entrepreneurs will have to do a lot of work to
understand the finer workings and implications of shared equity, distributed risk, and public
offers. Sure, technology and business are extremely crucial considerations – but so are the
legal and financial aspects of running a start-up.

Fourth, where do Indian financial and consulting institutes fit in? Observers not steeped in
the workings of Internet financing were rather bewildered that the valuation of India world,
the brokering of the buyout deal, and a big chunk of the funds for the acquisition, all of
which came from US-based institutions and investors.

Have no doubt about it, the Internet economy has a distinct Silicon Valley (read: US) stamp
on it. How we go about emulating and eventually home-growing this expertise and wealth
will be a big challenge for Indian organizations hoping to rock the Internet cradle.

Fifth, though numerous angel investors have jumped into the fray, where are the Indian IT
giants and other corporate in the investment money game? Companies like Wipro are only
recently announcing plans to fund start-ups spawned by their employees-a most welcome
and encouraging trend worthy of emulation by other Indian players.

With determination, passion, luck, and an eye out for these give aspects of the internet
financing game, India should finally earn its place in the cyber firmament.

5.0 CONCLUSION:

In spite of the formidable challenges presently faced by India, I believe that

entrepreneurship will be a major factor in the expected and unavoidable transformation of
the country. The longer range potential of the Indian market is attractive to both local and
western companies. In fact, there is at present hardly any local or foreign competition in
technology-intensive products and services. There is a large pool of well-trained engineers,
scientists and skilled workers available, and wage levels are modest. The younger
generation, if properly trained, could develop many highly-motivated entrepreneurs and
business persons. Also, many enlightened and progressive Indians realise that social
independence can only be achieved by entrepreneurial and innovative small and medium
size companies. Judging by the run-away success of IndiaNet.Inc. and the attention that it
has attracted so far, all one can say is WAY TO GO to Indian ITT Entrepreneurs.

Appendix –A1

IT in India
India is a major player in the IT sector with particular strengths in programming and
solution-based software. Over the last two years, the growth rate of India‘s IT sector has
exceeded 50 per cent, and user of the Internet has increased by over 160 per cent per year.
The successes of IT entrepreneurs in India are testament to the strength and vitality of the
country‘s IT sector.

India‘s IT sector has grown dramatically over the last decade. IT industry revenues have
increased eight-fold over the decade, from A$75 million in 1988-89 to A$5.9 billion in1998-
99. Today, India is acknowledged as one of the most important based for offshore IT
services, with 1203 of the Fortune 5000 companies among its customers. India has a strong
IT presence in the United States. American-Indians now generate approximately US$60
billion in revenue annually and manage 40 per cent of the ventures in Silicon Valley. India‘s
strong ties with the United States have further substantiated its posit6ion in the marketplace
as a global IT leader. The success of India‘s IT sector, particularly its software development
capabilities, is revolutionising the Indian economy. IT is creating significant employment
opportunities, generating wealth and foreign exchange and driving massive social changes.
Software driven IT is at the top of India‘s national agenda; it has become an instrument and
a model for the modernisation of the Indian economy.

As we move into the new connected economy, ideas are quickly becoming more important
than assets-5hwe intangible more valuable than the tangible. Knowledge intensive
industries are the fastest growing parts of the new connected economy, and Information
Technology (IT) is the driving force behind this growth. IT is used to disseminate
knowledge; it is the enabler of unprecedented change in the new connected economy; and
it is revolutionising business models around the globe. IT is empowering business owners to
lower costs, raise revenue, create greater organisational efficiency, and improve partner
relations. Ultimately, IT is empowering businesses to become more competit5ive and more
profitable.

Fuelled by the demands of the new connected economy, the global IT landscape is rapidly
evolving to better meet the needs of business. Emerging trends include:

• Increased IT Based interaction with business partners and customers,

• Applications moving towards e-Commerce,
• Software packages increasingly delivered services,
• Greater-emphasis on extracting business intelligence from available data,
• Integration and convergence of voice, data and communication and
• Increased adoption of outsource models by companies.

These global trends are responsible for the convergence of services, web-enabling
applications and embedded software, shifts in product-service dynamics, dramatic changes
to customer environments, and evolving business models. India has emerged as a major
player in this new global IT environment. Indian IT sector has particular strengths and
capabilities and yields clout in the IT arena.

Indian and India-centric companies have reached critical mass and India now has two
InfoTech companies lasted on the NASDAQ. The market capitalisation of the Indian IT
industry exceeded A$40 billion in November 1999. The global and financial community is
showing considerable interest in the Indian software and service sector, and sustaining the
growth of the software industry is at the forefront of the government of India‘s agenda.

When analysing the evolution of the Indian IT sector, an ineluctable question is what drives
the success of the industry-especially in a country where the PC penetration rate is about
three computers to every 1000 people and IT spending as a percentage of GDP is currently
less than 1 per cent (versus 3.5 per cent in the US).

A number of reasons exist for this:

1. First, the Indian software industry has been built predominantly on an export driven
model. IT generation in Indian commercial establishments and government is still well
below international standards.

2. Second, the success stories that abound with respect to Indian IT capabilities, be it in
India or the United States, al share a fundamental advantage of advanced development
skills and technical expertise. This advantage is spawned and fostered through
educational initiatives in a number of technical institutes, universities, and engineering
colleges. The output of trained manpower at degree/diploma level has increased from
1000 in 1983 to about 67,785 in 1998. India is expected to continue to lead the sills
market, even in the low-end data processing and IT enabled services markets, simply
because of the sheer availability of resources and the sheer size of the market. Cost will
then cease to be a driving advantage..

3. Third, the IT industry requires a relatively lower level of capital investment and
infrastructure for EGCs; this is notable in a country with lower access to institutional
capital.

4. Fourth, there is significant government backing of the IT industry, an identified thrust

sector not only because it is a considerable foreign exchange earner, but also because it
is a front-runner of the modern knowledge society. Currently, 14 state governments have
IT policies and seven more have set up IT task forces and committees.

5. Finally, relatively lower operating costs have also worked to the advantage of the Indians
in terms of securing business contracts and facilitating growth. The advantage of low
cost manpower, however, may soon be eroded due to decreasing compensation and
incentive differentials, and wage arbitrage.

The Indian IT industry has evolved in scope and capabilities and moved from a perceived
lower-cost model to one that is internationally recognised for its excellent quality and high
reliability. India retains the largest number of groups with the highest Capability Maturing
Model in the world, and it is now a world centre for application development outsourcing,.
Most of the large players in the Indian IT industry, especially those in the software sector,
have quality certifications such SD ISO9000 and SEI Level 5 and are familiar with current
client-networking, e- Commerce, Internet Java, CASE tool, GUI, and 4GL technologies, as
well as computer peripherals and VLS1 design.

A1.1 The Growth and Trends: The IT industry in India has witnessed incredible evolution
and explosive growth over the last decade. Compounded annual growth rates between
1990 and 1998 have been over 50 per cent almost twice the growth rate experienced in the
US software sector during the same period. Over 1000 IT companies have proliferated,
especially in the software sector. The total value of business generated in the software
sector during the period 1997-98 is estimated to be A$6610 million. In 1999, software
exports were valued at an estimated A$3.9 billion and are expected to account for 4.5
per4cent of total exports; the latter figure is expected to rise 23 per cent by FY02. In relation
to Fortune magazine‘s top 500 companies, 158 of these outsource their software
requirements to India. IT stocks like Wipro, Infosys Technologies, NIIT, Tata Infotech,
Satyam Computers and Pentafour Software have over shadowed those of giants like Telco,
Tisco, Grasim CC, Hindalco and Mahindra & Mahindra. The aggregate market capitalisation
of the six leading Indian IT companies outstrips that of industry majors that make up the
index composite on a revenue-per-revenue basis.
The boom in the Indian software industry has put the country on the global IT map. It has
revolutionarised the Indian economy, creating considerable employment opportunities,
generating wealth and significant foreign exchange, and driving massive social changes.
Software-driven IT is today at the top of India‘s national agenda. It is an instrument and a
model for the modernisation of the Indian economy

Notwithstanding these high growth rates, India‘s share in the world software market is still
comparatively low. However, India‘s inherent competitive advantage in terms of software
exports stems from housing the world‘s second largest pool of IT manpower. The high
quality and relatively low cost of India software provides the country with a strategic
opportunity in the world market. Currently, India‘s software industry employs more than
200,000 people, and it continues to rank among the fastest growing sectors in the economy.

Key facts about the Indian IT industry are presented below:

• In the 98 financial year, the Indian IT industry is estimated to have earned revenue of
$6912 million, a growth of 36.2 per cent over the revenue of A$5075 million in 1996-97.
• In the last five years (1993-1998), the Indian IT industry has recorded a CAGR of 32.7%
• IT spending in India is currently less than 1 per cent of the GDP as compared to more
than 3.5% of GDP in USA.
• The IT manufacturing sector has been growing at an average rate of 340 per cent
annually over the past decade.
• The IT industry has over 150 major hardware players supported by over 700 ancillary
units engage in subassemblies and equipment manufacturing.
• The major sectors that are witnessing a special thrust on adoption of IT are insurance,
banks, financial institutions, customs, telecom, education and home/individuals.
• The penetration levels of personal computers 9PC) in India are three computers per
1000 people

A deterrent to the growth of the domestic IT market has been the lack of adequate IT
infrastructure. With a low PC penetration and even low Internet penetration, domestic
opportunities for web-based application e-Commerce have not yet matured. Computer
penetration is mostly restricted to English speaking cities. There are efforts to develop
applications and peripherals in local languages, but they are sporadic. The poor access to
venture capital has also hampered the development of entrepreneurial growth
companies (EGC) in the IT sector.

The hardware industry is witness to fierce competition from mult5inationals and domestic
companies. However, the IT industry has shown remarkable resilience. Hardware revenues
for 1999 are up by about 11.16 per cent, as compared to the previous year. There exists a
strong general awareness of the impact of technological change and its effect on business
processes and integration which, in turn, is expected to drive IT spending and increase the
size of the domestic ITY market. Although not at the forefront of development, technologies
in telecommunications, artificial intelligence, computer-aided systems engineering, and
computer integrated manufacturing are also growing.

The Indian IT industry, especially with respect to software, was built on a low-cost, export
driven model. Today, the ITY industry is having to rethink and reorder its internal dynamics.
The flurry of activity on the stock markets with IT hi-tech companies commanding extremely
favourable valuations is commanding a spurt of investor interest and renewed focus on
private equity and venture capital funding deals. After a decade of robust growth, the Indian
IT industry is in the throes of consolidation with a number of smaller firms merging
operations and larger companies acquiring their way to quick market share and revenues.
Many Indian companies have established subsidiaries in the United States and are now
exploring the possibility of overseas acquisitions; especially in the United States, to bolster
revenues and business development. India currently has an 18.5 per cent market share in
the global customised software market. This figure is expected too increase significantly as
a result of expansion and global acquisitions. While the cost advantage is c\eroding as most
software revenue continues to be derived from turnkey projects and onsite development,
Indian companies are realising the competitive need to move up the value chain and
develop high-margin and high-risk products and solutions.

A1.2 Market Dynamics: The Indian IT spectrum consists of the operations of multinationals
(liaisons offices, branch offices, and wholly owned subsidiaries) and domestic Indian
entrepreneurial growth companies (EGCs). IT companies spawned by the Indian Diaspora
in the United States and the UK may also be included in the spectrum. Another point of
interest is the presence of India technical talent in a number of the world‘s leading IT
industries and companies.

The Indian software development and solutions sector has experienced a higher degree of
entrepreneurial activity than the electronic components and hardware design-engineering
sector. This is due primarily to market changes and lower capital costs. Poor access to
capital, which in the past has deterred growth, is improving. The Indian IT industry is now
taken much more seriously by the financial community. Consequently, the sector has
witnessed increased financial activity with the domestic consolidation of small and
fragmented EGCs, overseas acquisitions, IPOs, private equity funding, and robust stock
market performance. However, access to pure IT venture and risk capital is still in its
infancy.

India is increasingly emerging as a development centre, with an ever-growing number of

MNCs setting up subsidiaries and operations. Some of the biggest names in the global IT
and telecommunications industry have set up in India, including Intel, Texas instruments,
IBM, Microsoft, Computer Associates, Hewlett Packard, Sony, Sun Microsystems, Verifone,
Analog Devices, Development centres for insurance companies and the outsourced
operations of British Airways, Swissair and United also tapped into the Indian market. The
MNCs are either wholly owned subsidiaries, joint ventures with Indian companies, or
strategic tie-ups for marketing and technical alliances. The data has been segmented along
the size of the company as well as the size of package development. It is significant to note
that software SMEs as well as small packages have predominantly entered into a marketing
collaboration. This is indicative of a lack of expertise in that area, and represents an
opportunity for investment and development by those who possess such expertise. By
contrast, large software firms as well as large package manufacturers have no significant
leaning towards any kind of collaboration.

A1.3 Opportunities: The vast global market presents a source of tremendous opportunity in
terms of products and packages, and outsourcing. The domestic market has also been
performing well with the increasing popularity of the Internet and a growing demand for
personal computers. Strong market segments for software companies continue to be in the
banking and financial services and manufacturing industries. The main areas of opportunity
after the Y2K boom include Euro currency solutions, embedded software, offshore software
development, and systems integration.
Government is also emerging as a large market as ain increasing number of national and
state departments increases their use of IT. The financial sector presents one of the largest
opportunities for IT, including bank computerisation and networking, credit cards,
transaction automation, ATM, electronic fund transfer, foreign exchange and treasury
management, stock exchange computerisation, insurance, and leasing. Multimedia is also
an emerging opportunity caused in part by the convergence of the telecommunications,
broadcast and IT industries. The multimedia market size in India is estimated to have
reached A$700 million in 1999. Global outsourcing and IT enabled services are emerging
as a major window of opportunity with a number of global majors outsourcing most of their
development and maintenance activities. Package enabled re-engineering and the global
ERP markets have contributed to software revenues, though the Indian market has shown
signs of slowing. There is a market for ‗bolt-ons‘ and smaller tier two company applications;
Indian companies like Ramco with its Marshall solution are leading this market.

The Indian IT training and education segment, valued at about A$315 million, has posted a
growth rate of about 30 per cent in 1999. A growing IT awareness and a shortage of skilled
personnel have been traditional demand drivers. The market is dominated by NIIT (National
Institute of Information Technology) and Aptech Computers. The training segment has
witnessed particularly high growth rates (more than 60 per cent) in 1995 and 1996,
attributed largely to a growing awareness of IT as a career opt9ion for graduates and the
necessity of IT literacy. The growth drivers will continue to be the booming software exports
market and the widely perceived need for IT literacy among graduates.

A1.4 Indian software capabilities: The Indian software industry employs 200,000 people
and has an annual turnover of A$3.7 billion for the period 1997-98. It continues to grow at
rates far surpassing those of world standards of 50 per cent annually. About 60 per cent of
Indian exports are received in the United States and 22 per cent in Europe. The three
biggest exporters of Indian software are Tata Consultancy Services, Wipro, and HCL. The
domestic market is worth A$1.3 BILLION, WHITH PACKAGED SOFTWARE WOTRH
a$520 MILLION AND AUTHORIESED DUPLICATION WOTRH a$280 MILLION. Indian
companies nearly dominated the financial software market.

Cheap labour costs and a vast pool of English speaking technical expertise have caused
tremendous growth in the global software market. Still, Indian accounts for only 1 per cent
of the software produced in the world. About half of the value of software exports is drawn
from on-site development; these exports have been decreasing each year.

The Indian software sector is currently focusing on developing software that involves
intellectual property rights. This initiative is being pursued in order to derive multiplier
income. Almost all income now is based on labour hours spend multiplied by the wages.
Rising input costs, mostly employee costs, are beginning to have an adverse effect on
profitability margins. Salaries in this sector have e been rising by 30 per cent annually.

Companies such as NIIT and Infosys are looking to acquire US companies and to list on the
NASDAQ and American Stock Exchange. Infosys Technologies was the first Indian
company to list on NASDAQ, followed by Satyam. Human resource management issues are
merging, and innovative schemes for valuation and incentivising (employee stock options
and performance linked incentive plans) are being introduced. Meanwhile, global software
giants such as Microsoft, Baan, Cisco. SAP, and Computervision now have development
subsidiaries in India. Some of the hardware giants such as IBM, Compag and Digita now
have a software development presence as well. The packaged software market in India
grew 14 per cent in 1998-99, with revenues of A$480 million. Elimination of duties, an
increased use of legal software growth in use of ERP solutions and increased adoption of
suites and RDBMS were the main drivers for growth.

Application development tools now account for the largest share in the Indian packaged
software market. The fastest growth is being exhibited by application solutions such as
ERP. In the coming years, application solutions are expected to become a much larger
segment of the packaged software market; the expected boom in the ERRP market will fuel
this growth. The share of system software is expected to decline due to falling prices and
increased bundling of operating systems with PCs.

Growing at over 20 per cent in 1998-99, the Indian IT maintenance and services market is
slowly gaining momentum. A significant deterrent is the perceived attitude change toward
the implementation of IT. Hardware and software maintenance is the largest component of
the ITY services market in India with a share of over 38 per cent. Customised software
development and LAN/WAN implementation are important components as well.

A1.5 Future Expectations: The growth in the Indian software sector has been linked to
overall growth in industrial production. It is expected that industrial growth will improve. In
the first two months of 1999, there has been an improvement in diesel consumption, steel
output, cement consumption and railway freight. Worldwide GDP is also expected to
improve from 2 per cent in 1998 to 2.5 per cent in 1999. Growth in industrial production,
then, will likely have positive effects on the growth of the IT sector.

IT spending across sectors is also expected to improve, adding impetus to the proliferation
of Indian IT SMEs. Spending in both the public and private arenas is expected to increase in
2000. Banks and financial institutions will continue to computerise rapidly. However, the
directive issued by the Central Vigilance Commission will have a limited impact until year
2000, slowing computerisation investment among the smaller banks.

Home, small office and small business segments will continue spending on IT products like
PCs and peripherals Although these segments will continue to grow at above rates, IDC
believes that growth might taper off following 1999. Currently there is low penetration in the
Indian ISP market. However, the Internet subscriber base will show dramatic change in
growth in the near term. Still, access charges are unlikely to change dramatically, curbing
growth to some extent.

NASSCOM-McKinsey report on India’s e-biz future (December 1999) says that India
could build e-business of up to $1.5 billion by 2004 in the business-to-business (B2B) and
business-to-consumer (B2C) form of commerce and, by 2008, the value of e-bis9mess in
India could expand to around $10 billion. E-business are defined as those that operate
through the Internet, allowing electronic exchange of information, goods, services and
payments.

The report states that 0.3 per cent of household income of the country‘s population that is
likely to be spend on the net by 2004, rising to 1 per cent by 208. The report also outlines a
list of ‗should haves‘ that cover areas such as the absence of a regulatory regime and cyber
laws, and good telecom infrastructure.
The study says the Indian software industry could grow to $50 billion by 2008 if the Indian
government brought about dramatic improvements in its telecommunications infrastructure.
It expresses the hope that bottlenecks to e-business growth in the country will soon be
removed.

The study recommends seven steps for India‘s IT industry to thrive:

• build a base of world-class ―knowledge workers‖;
• create a favourable regulatory environment;
• create Indian-based multinational IT companies;
• build a world-class telecommunications infrastructure;
• develop an entrepreneurial tradition;
• create brand-name recognition for Indian IT products; and
• expand India‘s IT market to create new market niches.

The study also suggests that Indian companies should begin developing management skills
needed to develop direct relationships with customers so that they can add more value to
their products, as different from the current practice where overseas offices support
domestic ―software factories‖

Appendix –A2

PROMINENT VCs

Traditionally, the role of venture capital was an extension of the developmental financial
institutions like Industrial Development Bank of India (IDBI), Industrial Investment

Corporation of India (ICICI), and State Finance Corporation (SFCs).

The first origins of modern venture capital in India can be traced to the setting up of
Technology Development Fund (TDF) in the year 1987-88, through the levy of a cess on all
technology import payments. TDF was meant to provide financial assistance to innovative
and high risk technological programmes through the Industrial Development Bank of India.
This measure was followed up in November 1988, by the issue of guidelines by the (then
Controller of Capital Issues (CCI). These stipulated frameworks for the establishment and
operation of funds/companies that could avail of the fiscal benefits extended to them. The
industry‘s growth in India can be considered in two phases. The first phase was spurred on
soon after the liberalisation process began in 1991. In 1996, the Securities and Exchange
Board of India (SEBI) came out with guidelines for venture capital funds to adhere to, in
order to carry out activities in India.

This was the beginning of the second phase in the growth of venture capital in India. As of
December 1999, SEBI has the funds lined up for registration; ICICI Venture, Unit Trust of
India‘s India Technology Venture Fund and the Andhra Pradesh Industrial Development
Corporation (APIDC) Venture fund. The Indian Venture Capital Association (IVCA), is the
nodal centre for all venture activity in the country. The association was set up in 1992 and
over the last few years, has built up an impressive database.

• Alliance Venture Capital Advisors Limited

• APIDC – Venture Capital Limited
• Baring Private Equity Partners (India) Limited
• Canbank Venture Capital Fund Limited
• HSBC Private Equity Management Mauritius Limited
• ICF Ventures Private limited

• ICICI Venture Funds Management Company Limited

• Risk Capital and Technology Finance Corporation Ltd.
• Chrysalis Capital
• e-Ventures India Holdings
• IFB Venture Capital Finance Limited
• Indus Venture Management Limited
• Indus East Holding Limited/Sutter Hill Investments Mauritius Limited
• Industrial Development Bank of India
• Industrial Venture Capital Limited
• International Venture Capital Management Limited
• JF Electra Advisors (India) Limited
• Marigold Capital Management Limited
• Pathfinder Investment Company Private Limited
• Small Industries Development Bank of India
• Walden Nikko India Management Company

Venture funds in India can be classified under:

• Financial institutions led by ICICI ventures, RCTC, ILFS, and so on, and private venture
funds like Indus, and the like.
• Regional funds like Warburg Pincus, JF Electra (mostly operating out of Hong Kong)
• Regional funds dedicated to India like Draper, Walden, and so on
• Offshore funds like Barings, TCW, HSBC, and so on.
• Corporate ventures like Intel, Infosys, Microsoft, Computer associates and so on
• Incubator funds and Angels like National Venture Fund and Infinity Venture Fund.

The size of investment is generally less than US$1 million (A$1.53 million), US$1-5 million
(A$1,53-7.6 million), US$5-10 million (A$7.6-15.3 million), and greater than US$10 million
(A$15.3 million). As most funds are of a private equity kind, size of investments has been
increasing. IT companies generally require funds of about A$1.1-1.5 million in an early
stage, which falls outside funding limit6s of most funds and that is why the government is
promoting schemes to fund start-ups in general, and IT in particular. However, in addition to
the organised sector, there are a number of players operating in India whose activity is not
monitored by the IVC. Add together the infusion of funds by overseas funds, private
individuals, ‗angel‘ investors and a host of financial intermediates, and according to industry
estimates the total pool of Indian venture capital today stands at Rs. 50 billion.

Some of the IT companies that have received funding through this route include:

• Mastek, one of the oldest software houses in India;

• Geometric Software, a producer of software solutions for the CAD/CAM market.
• SQL Star, a Hyderabad-based training and software development company;
• Microland, networking hardware and services company based in Bangalore;
• Satyam Infoway, the first private ISP in India; and
• Rediff on the Net, an Indian website featuring electronic shopping, news, chat, and so
on.

Bibliography:

1. Harvard Business Review on Entrepreneurship, HBS Press

2. ―Welcome to the World of Infopreneurship, ―Part I of ―Infopreneurs, Online and Global,‖
by Weitzen & Parkhill, Wiley, 1996.
3. High-Tech ventures: The guide for entrepreneurial success, Bell, Gordon C;
1991; Addison-Wesley publishing company.
4. ―The Entrepreneurial Edge,‖ Chapter 7 of ―Doing business on the Internet,‖ by Simon
Collins, Kogan Page, London, 1997.
5. ―Using the Internet as a Business Tool: An Overview of Current Opportunities‖ by
Robert L. Gordon, Spectrum January 31, 1995.
6. The Internet and International Marketing‖ by John A. Quelch and Lisa R. Klein, Sloan
Management Review, Spring 1996.
7. ―The Strategic implications of the Internet‖ by Albert A. Angehrn, European
Management Journal, August 1997.
8. Ernst and Young‘s Emerging Opportunities in Information Technology for Australia and
India Report.
9. The Fourteenth Anantharamakrishnan Memorial Lecture On Entrepreneurship by N.R.
Narayana Murthy, Chairman and Managing Director, Infosys Technologies Limited.
10. NASSCOM-McKinsey report on India‘s e-biz future (December 1999).
11. www.redherring.com
12. www.upside.com
13. http://www.webentrepreneurs.com/visitorshome.cfm
14. http://www.virtualprenuer.com/
15. http://netcapital.net/
16. http://www.edge2000.com/
17. http://www.entrepreneurstoolbox.com/
18. http://www.domain-b.com/economy/index.html
19. http://www.emergingindia.com/
20. http://www.entrepreneurmag.com/
21. http://edgeonline.com
22. http://www.EntreWorld.org
23. http://www.stanford.edu/class/ee353/Abstracts1.htm
24. http://www.babson.edu/
 SOCIAL ENTREPRENEURSHIP: AN EMERGING FIELD

Shivani Dhand
Assistant Professor in Lovely Professional University
shivanidhand@gmail.com

It is all about Imagination, if we imagine a world that we want, that world can be
created everyone has the ability to imagine the world in his/her way. My
imagination is to create a world which would be absolutely free from poverty;
there will be no poor person on this planet.
Mohammad Yunus

Most of the people first see and then believe but social entrepreneurs are those who believe
first and then see.

Approximately 7 billion is the population of world; everyone is struggling for making the both
ends meet. Economies are growing at very fast track, for the accomplishment of the goals of the
successful economies business corporate plays very integral role. According to various
academicians and researchers the economic development of the nations is not feasible without
the active participation of the entrepreneurs. In this is era of competitions among the various
corporate everyone is running after money making process. In this money making process
business corporate are exploiting various natural resources like air, water, soil, natural
resources, forest etc.

Social entrepreneurship has emerged as an important research field crossing academic

disciplines (e.g. management, entrepreneurship, political science, economics, marketing,
sociology and education etc.). However, its theoretical underpinning has not been adequately
explored and need for contributions to the theory of practice in this area is imminent. Social
entrepreneurship as a field is at exiting stage of infancy short on theory and definition but high
on motivation and passion. Although much of the literature is on defining the concept of social
entrepreneurship., it seems that there is currently little consensus on the definition of social
entrepreneurship. In other words, although social entrepreneurship is gaining popularity. It still
means different things for different scholars and practitioners. But, it is noted that social
entrepreneurship is not the same thing as charity or benevolence. Although there is a
benevolent attitude at the core of social entrepreneurship, it goes beyond this attitude. Social
entrepreneurship is getting global interest over past decades.

In broad sense social entrepreneurship refers to innovative activity with social objective. The
basic bottom line in social entrepreneurship is it is a social change which is triggered by social
problems. Social entrepreneurship is still emerging as a field for an academic inquiry (Austin,
Stevenson et al., 2006), although the common features of it are already on many social
missions. Essentially, the greatest challenge in understanding social entrepreneurship seems to
lie in identifying the boundaries of what the term ‗social‘ means.

Today there are several organizations that support social entrepreneurship in innovative
manner. Every individual at a state of mind need to think about the about the society because
we can exploit the environment upto a certain limit. Social entrepreneurship is not only as an
emerging field but it will be the basic need of the societies, nations. It need to be emerged as a
big opportunity. Globally if we are discussing about CSR it itself a subsidiary of social
entrepreneurship. As far concern about the career of social entrepreneurs it can be an amazing
field for the growth of the individuals as well as for the companies. As companies are taking
 benefit from the society like water, air, land, material labor etc. This is the responsibility of the
companies to give something in return. The crucial aspect of return can be in the form of social
entrepreneurship. Social entrepreneurship is very desirable concept that need to be promoted
among the youth

Scholars and practitioners have presented a wide range of theories and ideas about
entrepreneurship, including social entrepreneurship, and the concept of social entrepreneurship
is recently gaining popularity. However, it is argued that, based upon a review of the existing
literature, some critical issues in the field of social entrepreneurship are still not fully answered.
In this regard, this research paper tries to identify and clarify these unanswered issues,
elaborating the answers for them. But, it is acknowledged that a more in-depth research on
these issues is required in order to answer them more thoroughly. Therefore, the issues
presented in this paper can also be considered as future research agendas.

Social entrepreneurship is not so much a career as it is a calling, a driving vision that compels
one to dedicate a life to a particular social outcome. The creation and taking to scale of
breakthrough enterprises in the social sector, whether nonprofit or for-profit, is at the core of
social entrepreneurship. Most social entrepreneurs get started by finding a solution to an
unresolved social problem, and taking action to mobilize resources toward this solution by
creating a transformative enterprise. Social enterprise professionals look to take on leadership
roles within an existing organization, applying management techniques to achieve social impact
within the context of the nonprofit, government, or business
Various career
Social Enterprises
Sample Career Opportunities

Social Enterprises : Following are the list of social entreprise.

• See Forever Foundation • The Mind Trust

• Network for Good • Parents Alliance
• Share Our Strength • Think New Mexico
• New Creations Community Outreach • Peace First (formerly Peace Games)
• Smiles Change Lives • Twin Cities RISE!
• New Leaders for New Schools • Peer Health Exchange
• Social Enterprise Alliance • U.S. Public Service Academy
• New Schools for New Orleans • Playworks (formerly Sports4Kids)
• SpringBoard Forward • Upwardly Global
• NewSchools Venture Fund • Points of Light Institute
• Streetwise Partners • Work NOLA
• New Sector Alliance • Project HEALTH
• Summer Advantage USA • Year Up
• NFTE • Public Allies
• Summer Search • Youth Villages
• Nurses for Newborns • REDF
• Taproot Foundation • YouthBuild
• One Economy • Roca
• Teach for America • Zero Divide
• Operation Warm
 Conclusion

Social entrepreneurship is a ray of hope for the upcoming future, what we are giving to the next
generation is wholly dependent on the establishment of the social entrepreneurs. With the help
of this paper I tried to develop one ideology which leads to a common understanding on the
concept of social entrepreneurship

References
1. Exploring an emerging field: the implications of global social entrepreneurship assistant
professor phd hyuk kim frostburg state university, frostburg, usa email: hkim@frostburg.edu
2. Social Entrepreneurship :future prospective TVET in Bhutan by Shivani Dhand
3. https://www.maxwell.syr.edu/uploadedFiles/Career/Career%20Opportunities%20in%20Social%
20Entrepreneurship%203.23.pdf
 SOCIAL ENTREPRENEURSHIP: A CONCEPTUAL FRAMEWORK

Shivani Dhand & Dr. Mohd Farhan Assistant Professors Lovely Professional University
Jalandhar shivanidhand@gmail.com mohdfarhan7@gmail.com

Whenever society is stuck or has an opportunity to seize a new opportunity, it needs an

entrepreneur to see the opportunity and then to turn that vision into a realistic idea and then
a reality and then, indeed, the new pattern all across society. We need such entrepreneurial
leadership at least as much in education and human rights as we do in communications and
hotels. This is the work of social entrepreneurs.
Bill Drayton
Founder of Ashoka: Innovators for the Public

1. INTRODUCTION

Sixty years of independence one out of every four Indians lives in poverty. The government of
the country is unable to deliver the basic services like education, community development and
water resource management. In this era of fast growing economies throughout the world, there
are many problems that keep on arising in today‘s world. Every government ,media various
other social activist are toiling for the resolution of these societal issues whether it is related to
air,water,societal or any other sensitive issue related to healthcare. It itself is a big challenge to
resolve the problems. In this world of Liberalization, privatization and globalization where there
are cut throat competitions among the economies .The world leaders are working day to night
for the economic development of their economies to raise the human development Index which
is very demanding. The governments are struggling to satisfy the basic needs of the society.
There are numerous troubles that is generating day by day. It is related to our society, culture,
and environment. The rate at which the tribulations have been generating it is not in the vicinity
of the government hands to overcome or resolve it. That need has given rise to the social
entrepreneurs to give solutions to the social problems. Social entrepreneurs as it is being
advanced needs to have a more expensive and inclusive view of what it is and who are included
as social entrepreneurs. Social entrepreneurship has not recognized as sector. The practice of
social entrepreneurship does not happen in vacuum .It takes place within an ecosystem that can
enhance or undermine the effectiveness of social entrepreneurs. This field is getting
momemtum.But lack of any definition is the biggest problem.

Social entrepreneurs can help get better various issues like nutrition, education and health care
and many are still blighted by unemployment and illiteracy by helping those less fortunate
towards a worthwhile life. Rather than leaving societal needs to the government or business
sectors, they can solve the problem by changing the system. Social entrepreneurship is
expected to be the next big thing to influence Asian countries juggles to achieve a balance
between a growing GDP growth, ensuring inclusive growth and attempting to address issues
ranging from education, energy efficiency to climate change. Social entrepreneurship is a
complex and multi‐level phenomenon, which can be investigated through the use of various
concepts and theoretically at different levels ‐ individual, organizational and group.

Many said that they did not identified themselves as social entrepreneurship, until they were not
officially recognized as such for some award or fellow program.George foundation is dealing
with the poverty in two ways livelihood and income generation.The second way is income
generation.The founder of this organization says that we are trying to income and wealth for the
poor people to earn their livelihood. As it is not feasible for all 500 million people to become
entrepreneurs as it is totally unrealistic scenario.

Social entrepreneurship is a new breed of entrepreneurs which is developing solutions to social

problems. It is the practice of responding to market failure with the transformative, financially
sustainable innovations aimed at solving social problems. While individuals may be publicly
recognized as social entrepreneurs for their contributions to improve the welfare of communities
the field of social entrepreneurship continues to struggle to gain academics legitimacy. Social
entrepreneurship is a term search of a good definition. A lack of common definitions hinders
research in this area. Most of the economist and academicians support the notion of the
entrepreneurship is becoming a crucial factor in the development and well being of society. The
use of term social entrepreneurship is gaining popularity. However confusion and uncertainties
is there are constantly notes that what exactly social entrepreneurship is and does. Social
entrepreneurship is the attempt to draw upon business techniques to find solutions
to social problems. Anyone creating some kind of social benefit can claim to be social
entrepreneurship.

2. SOCIAL ENTREPRENEURSHIP
In last two decades we have witnessed the growing awareness of social entrepreneurship
education especially in developing countries. The value of social entrepreneurship as a
discipline is gaining grounds in today‘s world. The value of social entrepreneurship has been
increasing day by day from last few years, There are more than 148 institutions in United States
offering courses related to social entrepreneurship.

What is social Enterprise? : Social enterprise are organization is that have an economic
,social ,cultural or environmental mission aligned to public or community benefit. Generally in
case of entrepreneurship trader has only business objective but in case of social enterprise they
do have social objective. In the canvas of social enterprise should provide an opportunity to see
not just the business but also identify social impact they are trying to achieve.

Commerce IMPACT
3.Proposed Model of social entrepreneurship Education

Social
Entrepre neur shi p

Social Innovation

Social Impact

Social Values and perceptions

Social opportunities and Initiatives

Entrepreneurship Education

There are many definitions of social entrepreneurship both foreign and Russian Author. The
term and phenomenon were likely introduced on the west to determine the specific activity
aimed at solving social problems commercially. Due to closest definition to the essence of social
entrepreneurships was proposed by Martin and Osberg. A literature review on social enterprise
is a special organization social mission is combined with market activities under the conditions
of self sufficiency .Unlike socially responsible.

There are various definition of social entrepreneurship which need to be conceptualized and it is
a big challenge to define the boundaries of Social entrepreneurship. In this paper I tried to define
the concept of social entrepreneurship for the future research scope. There are various
contributors in this field and following definitions have been given by the various thinkers.

Leadbetter (1997) the use of entrepreneurial behavior for social ends rather than for profit
objectives, or alternatively, that the profits generated from market activities are used for the
benefit of a specific disadvantaged group.

Thake and Sade (1997) Social entrepreneurs are driven by a desire for social justice. They
seek a direct link between their actions and an improvement in the Quality of life for the people
with whom they work and those that they seek to serve. They aim to produce solutions which
are Sustainable financially, organizationally, socially and environmentally.

Dees (1998) play the role of change agents in the social sector, by:
1) Adopting a mission to create and sustain social value (not just private value),
2) Recognizing and relentlessly pursuing new opportunities to serve that mission
3) Engaging in a process of continuous innovation, adaptation, and learning,
4) Acting boldly without being limited by resources currently in hand.
5) Exhibiting heightened accountability to the constituencies served and for the outcomes
created.

Reis (1999)(Kellogg Foundation) : Social entrepreneurs create social value through innovation
and leveraging financial resources for social, economic and community Development.
Fowler (2000) Social Entrepreneurship is the creation of viable socio-economic structures,
relations, institutions, organizations and practices that Yield and sustain social benefits.
Brinkerhoff (2001) Individuals constantly looking for new ways to serve their constituencies and
add value to existing services
Mort et al. (2002) A multidimensional construct involving the expression of entrepreneurially
virtuous behavior to achieve the social mission the ability to recognize social value creating
opportunities and key decision-making characteristics of innovation, proactiveness and risk
taking
Drayton (2002) A major change agent, one whose core values center on identifying, addressing
and solving societal problems.
Alford et al. (2004) Creates innovative solutions to immediate social problems and mobilizes
the ideas, capacities, resources and social arrangements required for social transformations
Harding (2004) Entrepreneurs motivated by social objectives to instigate some form of new
activity or venture.
Shaw (2004) the work of community, voluntary and public organizations as well as private firms
working for social rather than only profit objectives.
Said School (2005) a professional, innovative and sustainable approach to systematic change
that resolves social market failures and grasps opportunities
Fuqua School (2005) the art of simultaneously pursuing both a financial and a social return on
investment (the ―double‖ bottom line)
Schwab Foundation (2005) Applying practical, innovative and sustainable approaches to
benefit society in general, with an emphasis on those who are marginalized and poor.
NYU Stern (2005) The process of using entrepreneurial and business skills to create innovative
approaches to social problems. ―These non-profit and for profit ventures pursue the double
bottom line of social impact and financial self-sustainability or profitability.‖
MacMillan (2005) (Wharton Center) Process whereby the creation of new business enterprise
leads to social wealth enhancement so that both society and the Entrepreneur benefit.
Tan et al. (2005) Making profits by innovation in the face of risk with the involvement of a
segment of society and where all or part of the benefits Accrue to that same segment of society.

Core
Source Definition
Characteristics
Schumpeter An entrepreneur is an innovator who implements Innovator
(1934) entrepreneurial change within markets, where
entrepreneurial change has five manifestations:
1) the introduction of a new/improved good
2) the introduction of a new method of production
3) the opening of a new market
4) the exploitation of a new source of supply
5) the carrying out of the new organization of any
industry
McClelland The entrepreneur is a person with a high need for High achiever
(1961) achievement. This need for achievement is directly Risk bearer
related to the process of entrepreneurship Dedicated
Entrepreneur is an energetic moderate risk taker.
Kirzner The entrepreneur recognizes and acts upon market Arbitrageur
(1978) opportunities. The entrepreneur is essentially an
arbitrageur.
Shapero Entrepreneurs take initiative, organize some social and Organizer
(1975) economic mechanisms and accept risks of failure. Initiative taker
Carland et al. The entrepreneur is characterized principally by Strategic thinker
(1984) innovative behavior and will employ strategic
management practices in the business.
Kao and Entrepreneurship is an attempt to create value through Value creator
Stevenson recognition of business opportunities. Opportunity aware
(1985)
Timmons and Entrepreneurship is a way of thinking, reasoning, and Leader
Spinelli acting that is opportunity obsessed, holistic in approach Holistic
(2008) and leadership balanced. Persistent
Committed
Mair and Marti (2006a) A process of creating value by combining resources in new
ways,intended primarily to explore and exploit opportunities to create social value by stimulating
social change or meeting social needs.
Peredo and McLean (2006) Social entrepreneurship is exercised where some person or group
aim(s) at creating social value shows a capacity to recognize and take advantage of
opportunities, employ innovation accept an above average degree of risk and are unusually
resourceful in pursuing their social venture.
Martin and Osberg (2007) Social entrepreneurship is the:
1) Identification a stable yet unjust equilibrium which the excludes, marginalizes or causes
suffering to a group which lacks the means to transform the equilibrium
2) Identification of an opportunity and developing a new social value proposition to challenge the
equilibrium
3) Forging a new, stable equilibrium to alleviate the suffering of the targeted group through
imitation and creation of a stable ecosystem around the new equilibrium to ensure a better
future for the group and society.
Social entrepreneurs drive social innovation and transformation in various fields including
education, health, environment and enterprise development. They pursue poverty alleviation
goals with entrepreneurial zeal, business methods and the courage to innovate and overcome
traditional practices. A social entrepreneur, similar to a business entrepreneur, builds strong and
sustainable organizations, which are either set up as not-for-profits or companies.

3.A typology of social entrepreneurship. There are following categories of social

entrepreneurs

Type Social Bricoleur: Perceive and act upon opportunities to address local social needs they
are motivated and have the expertise and resources to address. Small scale, local in scope—
often episodic in nature. Knowledge about social needs and the abilities to address them are
widely scattered. Many social needs are non-discernable or easily misunderstood from far,
requiring local agents to detect and address them. Collectively, their actions help maintain social
harmony in the face of social problems Atomistic actions by local social entrepreneurs move us
closer to a theoretical ―social equilibrium.‖ Being on the spot with the skills to address local
problems not on others' ‖radars.‖ Local scope means they have limited resource requirements
and are fairly autonomous. Small scale and local scope allows for quick response times. Not
much aside from local laws and regulations. However, the limited resources and expertise they
possess limit their ability to address other needs or expand geographically .Not much aside from
local laws and regulations. However, the limited resources and expertise they possess limit their
ability to address other needs or expand geographically

Constructionists Social Engineer : Build and operate alternative structures to provide goods and
services addressing social needs that governments, agencies, and businesses cannot. Small to
large scale, local to international in scope, designed to be institutionalized to address an
ongoing social need. They mend the social fabric where it is torn; address acute social needs
within existing broader social structures, and help maintain social harmony. Addressing gaps in
the provision of socially significant goods and service creates new ―social equilibriums.‖

Social engineer : Schumpeter has given the concept of social engineer. They seek to rip apart
existing social structures and replace them with new ones. They represent an important force for
social change in the face of entrenched incumbents. Creation of newer, more effective social
systems designed to replace existing ones when they are ill-suited to address significant social
needs.

4. Characteristics:

Core
Source Definition
Characteristics
Bornstein (1998) A social entrepreneur is a path breaker with a powerful Mission leader
new idea who combines visionary and real-world Persistent
problem-solving creativity, has a strong ethical fiber,
and is totally possessed by his or her vision for change.
Thompson et al. Social entrepreneurs are people who realize where Emotionally charged
(2000) there is an opportunity to satisfy some unmet need that Social value creator
the state welfare system will not or cannot meet, and
who gather together the necessary resources (generally
people, often volunteers, money, and premises) and
use these to ―make a difference‖.
Dees (1998)  Social entrepreneurs play the role of change agents in Change agent
the social sector by: Highly accountable
 Adopting a mission to create and sustain social value Dedicated
 Recognizing and relentlessly pursuing new Socially alert
opportunities to serve that mission;
 Engaging in a process of continuous innovation,
adaptation, and learning;
 Acting boldly without being limited by resources
currently in hand;
 Exhibiting a heightened sense of accountability to the
constituencies served for the outcomes created.
Brinckerhoff A social entrepreneur is someone who takes Opinion leader
(2009) reasonable risk on behalf of the people their
organization serves.
Leadbeater Social entrepreneurs are entrepreneurial, innovative, Manager
(1997) and ―transformatory‖ individuals who are also: leaders, Leader
storytellers, people managers, visionary opportunists
and alliance builders. They recognize a social problem
and organize, create, and manage a venture to make
social change.
Zahra et al. Social entrepreneurship encompasses the activities and Innovator
(2008) processes undertaken to discover, define, and exploit Initiative taker
opportunities in order to enhance social wealth by Opportunity alert
creating new ventures or managing existing
organizations in an innovative manner.
Ashoka (2012) Social entrepreneurs are individuals with innovative Visionary
solutions to society‘s most pressing social problems. Committed
They are both visionaries and ultimate realists,
concerned with the practical implementation of their
vision above all else.

Unique characteristics of the social entrepreneur

 High achiever
 Risk bearer  Persistent
 Organizer  Committed
 Strategic thinker  Mission leader
 Value creator  Emotionally charged
 Holistic  Change agent
 Arbitrageur  Opinion leader
 Innovator  Social value creator
 Dedicated  Socially alert
 Initiative taker  Manager
 Leader  Visionary
 Opportunity alert  Highly accountable
A Focuses first and foremost on the social and/or ecological value creation and tries to optimize the
financial value creation. Innovates by finding a new product, a new service, or a new approach to a
social problem. Continuously refines and adapts approach in response to feedback. Combines the
characteristics represented by Richard Branson and Mother Teresa.

The Schwab Foundation employs the following criteria when looking for leading social
entrepreneurs: Innovation, Sustainability, Reach and social impact. Social entrepreneurs share
some come common traits including: An unwavering belief in the innate capacity of all people to
contribute meaningfully to economic and social development.

A driving passion to make that happen.

A practical but innovative stance to a social problem, often using market principles and forces,
coupled with dogged determination that allows them to break away from constraints imposed by
ideology or field of discipline, and pushes them to take risks that others wouldn't dare.
 Zeal to measure and monitor their impact. Entrepreneurs have high standards, particularly in
relation to their own organization‘s efforts and in response to the communities with which they
engage. Data, both quantitative and qualitative, are their key tools, guiding continuous feedback
and improvement.
 A healthy impatience. Social Entrepreneurs cannot sit back and wait for change to happen – they
are the change drivers.

5. CONCLUSION

With the passage of time there are various troubles that keep on increasing around the globe. The
speed of the increasing problems is very high. To tackle all these problems government efforts are
not sufficient. Social entrepreneurship is the ray of hope for the upliftment of the standard of the
society, where people would have raised their standards and there will be solutions to various social
evils of the society. Entrepreneurship activity with an embedded social purpose has been on the rise
in recent decade .A partial indicator of the surge is revealed by the growth in the number of nonprofit
organizations which increased 31% between 1987 to and 1997 to 1.2million ,exceeding 26% rate of
new business formation (the New Nonprofit Almanac and desk Reference 2002).However dynamic
is even more robust ,as other forms of social entrepreneurship ,beyond that occurring within
nonprofit sector have also flourished in recent years. But all these social entrepreneurs need
government support which is somehow lacking.

References
1) http://www.schwabfound.org/content/what-social-entrepreneur
2) Journal of Business Venturing 24 (2009) 519–532
3) http://timreview.ca/article/523
4) Teaching Social Entreprenurship ,Indian Journal of Economics & Business,Vol.13
No.3(2014)
5) International Journal of Contemporary Business Management 1(1): 52-62eISSN: REQUEST
PENDING© 2014 Universiti Selangor
6) Theme paper in TVET in Bhutan, Published Shivani Dhand
 THE SEVEN PRINCIPLES OF ENTREPRENEURSHIP

 Ski with your knees bent.

 Refine the skill of falling down.
 Get comfortable with "close enough."
 Be happy with a "conditional yes."
 Remember that business model innovation is often as important as tech innovation.
 Think small.
 Strive to understand and mitigate risk.

Let's examine these principles in detail:

Ski with your knees bent.

For those of you who enjoy downhill skiing, you know that one of the first principles of survival is to
keep you knees bent and flexible and your center of gravity low. This style enables you to
successfully adjust to change – on the slope, in surface conditions or with obstacles or other skiers –
and still successfully achieve your goal of gracefully traversing the hill. Conversely, skiing with
locked knees, a rigid posture and a fixed gaze is a formula for disaster.

It's too easy, when working in an established organization, to develop a certain rigidity in how one
approaches decision-making and day-to-day operations. Most times, you can get away with it,
standing upright, knees locked, eyes trained straight ahead. Why? Because established
businesses necessarily develop standard operating procedures, and oftentimes little changes day-
to-day. The rigidity can creep up on you. Sameness and predictability are comforting, and its
human nature to embrace and standardize behavior that succeeded in the past.

By contrast, entrepreneurship is, metaphorically, a bit like skiing moguls (big, scary, unpredictable
bumps)… blindfolded. If you're an entrepreneur, you have to keep your knees bent. You have to
stay loose. You know full well that things will change, probably dramatically, and that you'll
experience dramatic shocks; you just don't know exactly what those shocks will be, where they'll
come from or when they'll occur.

Keeping loose and with a low center of gravity helps business managers absorb change and keep
the business on its feet. Entrepreneurs have always operated this way as a matter of course. And
this sort of flexibility and adjustability can be a crucial advantage for corporate executives as well,
whether in accommodating change in existing markets of tackling new business initiatives.
Refine the skill of falling down.

To continue the skiing metaphor, one of the first things a ski instructor teaches novices is how to fall
down. Why? Because it's an inevitable part of the sport, and it's the primary way of getting hurt, but
good skiers fall gracefully and bounce back quickly.

Similarly, successful entrepreneurship requires getting comfortable with the idea of falling down
repeatedly and springing back up each time. Startup business is all about expecting, gracefully
accommodating and learning from failure. After all, even with the best-thought-through venture, it's
reasonable to expect that fifty percent of the original business plan will prove to be wrong. Worse
yet, you won't know which 50 percent until you get into it – until you point your skis down the hill and
go.
Understanding this phenomenon is why venture investors often prefer to invest in entrepreneurs
who've experienced failure. It's also why many startups prefer to hire, as key managers, individuals
who have experienced the good and the bad of a previous startup or two. A previous fall or two is
not considered a scarlet letter of failure on a person's career, but rather an indication of maturity and
a willingness to take calculated risks.

For established organizations to successfully grow through innovation, they'll be delving into less
certain and more ambiguous environments. Therefore, they need to take more calculated risks
without being paralyzed by fear of failure. They need to refine the skill of falling down.

Get comfortable with "close enough."

The vast majority of corporate innovations never see the light of day because they're "killed in
committee." Why do so many die that way? Because innovative new ventures and business
initiatives almost always have too many unknowns for many people's comfort, and the powers that
be in established companies – often groups or committees – possess the negative power to say
"No" based on that uncertainty. Just as, in the old days, IT executives knew they'd never get fired
by buying IBM, with corporate innovation, it's nearly always a safer bet to say "No" to something
new.

Meanwhile, successful entrepreneurship – or corporate venturing and new-business-development –

requires operating in a highly uncertain, ambiguous environment. It's a bit like trying to solve an
algebraic equation with seven variables and six unknowns. Technically, it can't be done, so the
"correct" answer is, "We can't do it." The equation can't be solved without taking intelligent guesses
and trying out different combinations based on inadequate information, approximations and instinct.

But the perfect is often the enemy of the good. Remember, in entrepreneurship: The best decision
is the perfect decision (which you'll never have sufficient information or time to divine). The next
best decision is "close enough" and move – you can always adjust course as you go (i.e., ski with
your knees bent). And the worst decision of all is to continue to study, or form a committee (which
so often translates to the "safe no," and therefore doing nothing).

The entrepreneurial approach accepts "close enough": Roll up your sleeves and work with
customers from the start. Get something in customers' hands, even if it's not finished. Experiment,
and don't be afraid to adjust, occasionally fall down and get back up. Do it, try it, fix it… and repeat.

Be happy with a "conditional yes."

The tendency in big organizations is to seek budget approval for an entire, multiyear project up-
front. After all, nobody wants to launch into building, say, a new $275 million plant when they only
have corporate funding approved for the first $30 million for planning and site prep.

The problem is when we see corporate new-business-development folks trying to apply this up-front
approval formula to venturing.

In the entrepreneurial world, nobody expects to receive 100 percent funding up-front; it just doesn't
work that way. With independent ventures, investors believe in "milestone investing," progressively
meting out capital sufficient to fund the next 9 to 18 months worth of activity and the achievement of
the next crucial value-building milestones. For instance, it's not uncommon for a venture requiring a
total of $15 million in investment capital in order to reach self-sustaining profitability to seek seed
funding of only a million dollars or less to build a prototype and do some preliminary testing; a
subsequent "A" round may be for just a few million dollars to enable the venture to build a team,
productize the technology and sign up the first few customers; and so on. Typically, early-stage
investors are keenly interested in continuing to participate in subsequent rounds; they just like to see
incremental progress along the way.

Internal corporate ventures – and here we're referring to risky ones entailing new technologies, new
business models and/or new markets, not capacity-expansion projects and the like – should
approach funding with the same venture-funding mentality. Remember the principle we mentioned
in our last issue: that 50 percent of a new venture's business plan will inevitably prove to be wrong,
you just don't know which fifty. If that holds true, it only makes sense for the parent company
(playing the role of venture capitalist) and the internal startup team to agree on funding increments
and associated milestones rather than the all-in approach. Less capital is committed, inevitable
mistakes or discoveries are less costly and more easily accommodated, and the new business
remains nimble.

Remember that business model innovation is often as important as tech innovation

We've never seen any statistics or studies in this regard, but it sure seems that the majority of
shareholder value created over the last half century had a lot more to do with companies innovating
around their business model than around technology. Think of eBay with online auctions. Store
brands and generic drugs. Amazon cutting out the retail middle man. Manufacturers asking
suppliers to co-locate. Dell building PCs to order. Social networking typified by sites such as My
Space and Face book. The way HMOs and PPOs fused insurance and healthcare delivery. Sure,
in many cases, technology was involved, but technology was not the strategic driver that created
shareholder value. Instead, it was creativity applied to the business model (product/service mix,
value proposition, channels, pricing) that made the difference. This kind of thinking needs to be
applied not only by entrepreneurs but by corporate new-business professionals as well.

Think small

An executive in a tech startup, recently hired away from a Fortune 500 company, unfortunately
brought his big-company thinking with him. Inheriting management responsibility for a professional
services operation of about 50 people growing at over 50 percent annually, he saw a crying need for
more coherent project management. His solution? Call in the vendor who'd provided similar
software and services to his last employer, and get a quote. The result? A half-million-dollar
expense where PC-based project management software and rigorous management communication
would have sufficed nicely; worse yet, the expensive "solution" never worked, the manager was fired
and the system scrapped for a simpler approach.

Too often, we see established corporations trying to innovate and getting caught in this big-
company, go-big-or-go-home mentality. We've seen an internal corporate venture of a multinational
tech company spend millions on PR – because, "That's how we do things at XYZ Corp." – before
they'd even fully defined their product, value proposition, positioning and go-to-market strategy.
Bizarre. Entrepreneurship, even if it's taking place under the corporate umbrella, calls for small,
inexpensive, rapid-turnaround experiments and trials. "Thinking small" doesn't mean that you don't
have big aspirations for your new venture. (Indeed, we don't think of startup ventures as small
businesses; we think of them as global enterprises that happen to be young.) But by iteratively
discovering what works and what doesn't – what fifty percent of your original business plan was
wrong – you'd be surprised how far you can get on how little capital.

Strive to understand and mitigate risk

Contrary to popular belief, entrepreneurs and venture investors are not risk-seeking nuts, the
business equivalent of helmet-free bungee jumpers. In fact, the best ones are remarkably risk-
averse, skilled at identifying and mitigating venture risk. Whether they do it intuitively or explicitly, A-
list venture folks are constantly working to wring risk – whether it's product risk or risk of a market,
financial or management nature – out of their startups. There's a method to their madness that
corporate startups need to apply.

***
 INTELLECTUAL PROPERTY RIGHTS- A BOON TO INDIAN COMPANIES

Intellectual property plays an important role in an increasingly broad range of areas, ranging from
the Internet to health care to nearly all aspects of science and technology and literature and the arts.
Understanding the role of intellectual property in these areas many of them still emerging often
requires significant new research and study. To promote informed discussion of the intellectual
property, education and awareness in this field is important.

Today, possession of land, labour and capital are just not enough for a country to succeed.
Creativity and innovation are the new drivers of the world economy. The policies adopted by a
country shall determine the nations well being and further as to how it is developing the trapped
intellectual capital. An effective intellectual property system is the foundation of such a strategy.
Within knowledge-based, innovation-driven economies, the intellectual property system is a dynamic
tool for wealth creation providing an incentive for enterprises and individuals to create and innovate;
a fertile setting for the development of, and trade in, intellectual assets; and a stable environment for
domestic and foreign investment.

Regarding the laws governing the IPR for Indian companies : Agreement of Trade Related
Intellectual Property Rights - better known as TRIP's- to which India is a signatory, is an integral part
of WTO and it has an enormous impact on Indian business and trade partnerships. Accordingly,
India has complied its obligations by amending the Indian Patents Act 1970(based on the Ayyangar
Report of 1959) twice, once in 1999 and later again last year and now the third and the final
amendment is expected to be done by 2005. In the last few years, India has enacted fully TRIPs
compliant Trademarks Act, Copyright Act, Designs Registration Act and such other Acts related to
fields of IPR.

However, though most acts have been TRIPs compliant, in the Patents Acts there are areas where
substantive or procedural amendments could be considered for complying with the TRIPs. While
doing so changes maybe required, specially keeping view the Indian Companies, by giving
protection under the Patents Acts to business methods qualifying as technology, which at present is
not patentable. Business methods/models or computer programme comprising only of mathematical
or scientific principles are not patentable under the present Act.

Computer programmes qualify as expressions and can be protected under the copyright law,
however in certain sectors the need is being felt for getting a patent protection for certain software in
addition to copyright. Copyright protects the coded expressions of software, while patent protection
can protect the qualifying features of the software such as its sequence, structure and organization
or its functional elements. On the other, a trademark is a brand name, it identifies the product and its
origin, guarantees the quality, advertises the product and creates an image for the product.

How Indian companies can avoid falling into trap over misuse of Trademarks and Patents ie
Protection of IPR: One has to be extremely cautious while selecting a good brand name, which is to
the extent possible free from potential litigation in future. Good brand names must be easy to
remember, easy to pronounce, easy to spell and must be legible, short and appealing to the naked
eye and ear and most importantly must be distinctive.

While using a brand name it is not necessary to register with the appropriate Trademarks Office, but
it is definitely advantageous to do so as in the event of any dispute over the brand name all that is
required to establish is the right to the monopoly of the brand, which is the certificate of registration.
Once the brand name is registered, it is as valuable as your fixed assets. It can be assigned to any
other party for a consideration and you may even grant a license to the use of the brand by others.
Patents on the other hand are IP created by employees in the course of their employment, but when
it comes to the owing of the right to the IP created is on the facts and circumstances of a particular
employer-employee relationship. Many Indian Companies have framed an IPR Policy to this effect,
but in absence of any such policy the clarity of ownership is again a question mark. To avoid
disputes with employees the Companies need to follow a few golden rules:
Seek legal advice- It is essential to get skilled advice before entering into any agreement with the
employees. Documentation and maintenance of secrecy is considered as prime issues.

Adopt internal policies and regulations or guidelines on employee inventions- Such policies and
regulations should contain provisions on the categories of inventions which fall within the field of the
employers business, the employee inventors obligation to notify the employer of inventions, the
employers procedures for handling such notifications, confidentiality requirements and patent
prosecution, remuneration/royalty for the inventor, etc.

IP Licensing- Another way by which Indian Companies can benefit monetarily to a large extent is by
IP licensing. Licensing is the sharing or the renting of IP through a legally binding contract that
specifies certain conditions with another company in exchange for the payment of royalties or may
involve a sharing of IP by cross licensing in which both parties have IP and exchange it, here there
is no financial exchange between the parties.

The strategy of licensing IP is also perhaps the best way for all Indian companies to walk the middle
road between services and products specially software. IP can also act as a competitive barrier to
stop other companies from targeting your niche domain. Further, the same IP can also be used to
provide services in a faster manner, though commercialization and marketing remains the key issue
for an IP.

Importance of Intellectual Property

Intellectual property protection is the key factor for economic growth and advancement in the high
technology sector. They are good for business, benefit the public at large and act as catalysts for
technical progress. Whether IPRs are a good or bad thing, the developed world has come to an
accommodation with them over a long period. Even if their disadvantages sometimes outweigh their
advantages, by and large the developed world has the national economic strength and established
legal mechanisms to overcome the problems so caused. Insofar as their benefits outweigh their
disadvantages, the developed world has the wealth and infrastructure to take advantage of the
opportunities provided. It is likely that neither of these holds true for developing and least developed
countries. (Extracts from Report on Commission on IPR London September 2002).

Why care about IPR?

Patents benefit none other than the owner of the IP and add value to all industrial as well as
business concerns and laboratory discoveries and in doing so provide incentives for private sector
investment into their development. Anyone in the above business should have an independent
Research and development (R&D) center. Offering free R&D and processes in over enthusiasm
must be avoided.

Globalization and the rapid proliferation of technology have elevated the importance of intellectual
property protection for small and medium sized enterprises (SMEs). The intangible nature of
intellectual property and the worldwide inconsistency of standard practices create challenges for
those businesses wishing to protect their inventions, brands, and business methods in foreign
markets. The three most common vehicles for protecting intellectual property are patents,
trademarks, and copyrights.

The Biotechnology Industry Organization advocates a strong and effective intellectual property
system. Strong intellectual property protection is essential to the success, and in some instances to
the survival, of the biotechnology companies in this country. For these companies, the patent
system serves to encourage development of new medicines and diagnostics for treatment and
monitoring intractable diseases, and agricultural products to meet global needs. While giving holistic
interpretation to TRIPS agreement public health should be the prime consideration rather than
merely protecting the interest of the companies.

In the era of knowledge age or information age, the fundamental unit of most products and services
is information - in one or another form. Have you seen that n-number of websites, virtual enterprises
and virtual products? All these rest upon the cornerstone of 'information': in digital or non-digital
form. These have become the top IPR issues, this Internet shall bring several new IPR issues to the
fore. In several cases such information is of proprietary nature, hence, the investment in that
information product, knowledge product or the virtual product must be protected to encourage other
similar initiatives. With increasing worldwide access to electronic distribution, the damage caused by
piracy to content producers may completely destroy the value built in their intellectual property.

The same context is valid in the case of companies who have earned consumer recognition for their
brand names and trade marks. A recognized brand name or trade mark represents the goodwill that
has been built into the product or service. Consumers tend to associate the recognized brand name
or trade mark with certain characteristics that are specific to that name or mark. Therefore,
companies should manage, protect and safeguard the investment in the related intellectual property
rights. Not only this, they should be vigilant if anyone else is misusing or causing infringement of this
Intellectual property.

That is the crux of the intellectual property rights: to give credit where, and when, it is due. With the
emergence of the knowledge society and virtual products, the issue of safeguarding the investment
in the information-based products has certainly gained high importance. We, as consumers or
producers in the information chain, cannot afford to be ignorant about the intellectual property
rights!! Thus protection of IPR has definite (tangible) benefits, such as to propagate innovative
culture, profitability, market leadership and helps creation of wealth for the individual and the nation.
India falling one among the developing countries have miles to go, as she has a vulnerable
collection of traditional, oral, folklore, customary, agricultural, traditional medicinal like Ayurveda etc.
and besides not having much wealth and infrastructure, lack of awareness of IPRs among all
strata‘s of people, is a major set back to a developing country like India.
 PROMOTION OF KNOWLEDGE BASED ENTERPRISES THROUGH INSTITUTIONS
OF HIGHER LEARNING - A CONCEPT NOTE

Neeraj Sharma, Advisor, NSTEDB, Dept. of Science & Technology,

Govt. of India, New Delhi
Background

With innovation in driving seat in the Knowledge Economy today, Institutions of Higher
Learning are at the Centre Stage of economic development. Higher Education
Institutions (HEIs) are not only a source of qualified manpower for the job markets of the
new economy but are now sowing seeds for new enterprises in the new and emerging
areas of economy. Engagement of HEIs with industry began with the objective of
creating fit between the education and training imparted to the graduates and knowledge
and skills required by industry. Then this evolved to transfer of technology and knowhow.
Now it has matured to creation of new enterprises itself on the strength of intellectual
resources of HEIs. It is therefore not surprising that we find clusters of industrial activity
near the prestigious higher education institutions the world over.

For many institutions of higher learning, patents, technology transfer and technology
incubation are an important third stream of revenue source, other than Govt. grants and
fee income. Their new role of cultivating the spirit of entrepreneurship and contribution
towards society and nation is being recognized and appreciated widely. More so, some
of these institutions have also started functioning in entrepreneurial style and utilizing
their hitherto untapped resources which include expertise, know-how and facilities to
their full potential. Integration of HEIs with business enterprises resulting in the
establishment of Science Parks, Technology Parks and Research Parks was started in
the USA in 1950s. Subsequently, these initiatives gained acceptance the world over as
these helped in the promotion and growth of New Technology Based Enterprises
(NTBEs), in generation of additional avenues of gainful employment and also as an
additional source of income for HEIs to support its scholastic and research activities.
With the services sector becoming a significant part of the new economy, the focus on
need for land, labor and capital has been substituted by ideas that work.

With the delivery of many services possible through remote provision, new enterprises
can be set anywhere in the outsourcing mode. Emergence of new enterprises is
therefore not only confined to physical locations where the economic activity takes
place. Such enterprises are now possible where there are people to offer quality
services at competitive prices. Possibility of setting up of knowledge processing units
anywhere (even remote parts of the Country like the North East / J & K) irrespective of
physical location has thus emerged.
Global Scenario
At present, there are nearly 4000 incubators of various types operational in the World. In
USA, there are more than 1000 incubators including about 200 Internet incubators.
Europe has nearly 1000 incubators including 300 in Germany.
Among the developing countries, China has shown exponential growth in the incubators
and over a period of ten years has set up almost 400 incubators. Most of them are linked
to HEIs. Korea too, is reported to have about 300 Incubators. While, Japan, Malaysia
and Singapore are catching up.

Initiatives in India
India has a huge and diverse system of higher education and large R & D Lab system
(particularly in the Govt. Sector)- 310 university level institutions, 15000 colleges, 400
National laboratories. This has helped in the growth of scientific and technological
culture and creation of a vast pool of science & technology manpower. Yet, the impact of
these institutions in creation of new enterprises has been rather limited. In most cases,
R&D output is not getting commercialized for want of initial investment, the needed
enabling environment and networking. There have been some successes though.

Recent initiatives of the Department of Science and Technology, Government of India on

focusing its attention to plug the existing gaps and starting with several institution-based
programmes like Entrepreneurship Development Cells (EDC), Science & Technology
Entrepreneurs Park (STEP) and Technology Business Incubator (TBI) have some
successes.

Entrepreneurship Development Cell:

The EDC scheme is aimed at creating entrepreneurial culture in S&T institutions to foster
techno-entrepreneurship for generation of wealth and employment by S&T persons. The
EDCs are established in academic institutions (science colleges, engineering institutes,
universities, management schools) having requisite expertise and infrastructure. An EDC
aims at developing and introducing curriculum on Entrepreneurship Development in the
Host Institution and other such institutions in the vicinity besides conducting focused
training programs for the benefit of S &T persons. Around 50 EDCs have been
supported at various S&T Institutes and Universities.

Science and Technology Entrepreneur's Park:

Science parks and similar initiatives create an atmosphere for innovation and
entrepreneurship for active interaction between academics & industries, for sharing
ideas, knowledge, experience and facilities for the development of new products and
services and their rapid transfer to the end users. About 15 STEPs have been set up by
the Department in various technical institutes of the country. Some of the successful
STEPs are located at NIT Trichy, SJCE Mysore, PSG-College of Technology,
Coimbatore and IIT Kharagpur. Each STEP has essentially the following features:

• Has formal and operational links with a University, other Higher Education Institution
or Research Center.
• Is designed to encourage the formation and growth of knowledge based and
technology led businesses and other organizations normally resident on site.
• Has a management function, which is actively engaged in the transfer of technology
and business skills to the organizations on site.
Technology and Business Incubator*:

A TBI is a recent initiative, which has already been, experimented successfully the
world over to bolster economic development by stimulating growth of technology
and knowledge based enterprises and generation of value added employment. A
TBI helps in incubating knowledge-based start-ups into sustainable businesses by
providing specialized guidance, critical support services, innovative financing and
networking support within a well-equipped workspace. As compared to STEP, a TBI
is more service oriented with emphasis on value added services. Over 15 TBIs have
been established by the Department in several Institutions of excellence including
IIT Bombay, IIM Ahmedabad, National Institute of Design-Ahmedabad, BITS Pilani
and ICRISAT Hyderabad in well identified thrust areas.

Plan of Action
We have a long way to go to promote entrepreneurship through our institutions of
higher learning. This is perhaps the only way to ease pressure on the already tight
job markets and create new opportunities for the large population that we have in
this Country. This is also a sure way to keep the Country on high Growth Rate
Trajectory for a long period.

Higher Education Institutions will have to play a more proactive role in promoting
entrepreneurship. University Grants Commission (UGC) has therefore partnered
with the National Science and Technology Entrepreneurship Development Board
under the Department of Science & Technology (Govt. of India) for promoting
mechanism of developing knowledge based enterprises through the institutions of
higher learning. Suitable mechanisms for supporting Entrepreneurship Development
Cells, Technology Business Incubators and Knowledge Processing Units jointly with
DST / NASSCOM would be explored.
 CREATIVITY AND INNOVATION

There is no doubt that creativity is the most important human resource of all.
Without creativity, there would be no progress, and we would be forever repeating
the same patterns.
--Edward de Bono

Creativity is the act of bringing something into existence that is genuinely new, original, and of
value either personally (of significance only to the individual or organization) or culturally (adds
significantly to a domain of culture as recognized by experts).
Creativity is defined here at two important levels: that which is culturally significant, and that
which is personally or organizationally significant. Both hold great value.
Human social, emotional, and intellectual development has been driven by creativity. Perhaps
more than any other human quality, creativity has left permanent and lasting marks on cultures
worldwide—and it is at the very heart of the knowledge-based age. According to the
Progressive Policy Institute (2002), "The New Economy is all about economic dynamism…and
is epitomized by fast-growing, entrepreneurial companies, one of its hallmarks. The ability of
firms to innovate…is becoming a more important determinant of competitive advantage" (p. 1).
President George W. Bush (2002) believes "the strength of our economy is built on the creativity
and entrepreneurship of our people" (p. 1).
Many individuals and teams of individuals have creatively influenced our culture through
emerging technologies (e.g., breakthroughs such as the silicon chip, laser surgery, and the
Internet). The literature confirms that such cultural creativity requires not only originality and a
deep understanding of a given field but also widespread societal acceptance of the cultural
breakthrough or invention in order to be considered creative (Csikszentmihalyi, 1996; Weisberg,
1999).
Today, the creative individual potentially has more to offer—and gain—from society, than ever
before. Our knowledge-based age has shifted power from those who own raw physical
materials to those who have intellectual capacity—the capacity to create and produce
knowledge. At an economic level, creative, knowledge-producing individuals and organizations
are highly likely to be economically solvent. At a personal level, the lives of persons who are
personally creative can be richer, more interesting and, possibly, more fulfilled (Collins &
Amabile, 1999; Nickerson, 1999). In addition, technology has provided individuals and
communities with the time to spend in creative pursuits, resulting in extraordinary extensions
and expansion of domains as well as the establishment of new ones such as biotechnology
(Csikszentmihalyi, 1996). To that end, the current federal administration is aggressively
promoting innovation and entrepreneurship—encouraging creativity in the worlds of science,
business, and industry.

Students Who Are Personally Creative:

Exhibit Innovation and Risk Taking
 Produce original, unique, and cogent ideas, phrases, and products.
 Exhibit expertise in at least one domain.
 Take risks and excel despite mistakes.
Are Intrinsically Motivated
 Exhibit curiosity, inquisitiveness, wonder, and excitement.
 Are flexible and adaptable.
 Become immersed in challenging learning for intrinsic reasons.
 Tolerate ambiguity well and respond with spontaneity and ingenuity.
Exhibit Complex Personalities
These students are often:
 Energetic, yet able to quietly contemplate ideas.
 Divergent thinkers, yet able to think convergently at appropriate times.
 Playful, yet disciplined and able to persevere.
 Imaginative, yet rooted in reality.
 Extroverted, yet able to be introspective.
 Passionate and committed to learning, yet analytical and objective.
 Driven and aggressive, yet sensitive.
 Rebellious, yet able to operate within traditions.
Caveat: Although a student may be personally creative, that is no guarantee that the student
will be able to be creative within a group or organization. Creativity within a group requires a
learning environment that promotes creativity within strong teaming and collaboration. Creativity
within an organization requires a learning environment that promotes and encourages creativity
among individuals as valued members of the organization (Williams & Yang, 1999).
References
1. Abdulezer, S. (2001). The state of the arts: Curating the digital classroom. Converge
Magazine, 4(6).
2. Albert, R. S., & Runco, M. A. (1999). A history of research on creativity. In R. Sternberg
(Ed.), Handbook of creativity (pp. 16-31). Cambridge, MA: Cambridge University Press.
3. Bush, G. W. (2002, May 6). A proclamation. Small Business Week. Retrieved April 13, 2003,
from http://www.whitehouse.gov/news/releases/2002/05/20020506-2.html
4. Collins, M. A., & Amabile, T. M. (1999). Motivation and creativity. In R. Sternberg (Ed.),
Handbook of creativity (pp. 297-312). Cambridge, MA: Cambridge University Press.
5. Csikszentmihalyi, M. (1996). Creativity: Flow and the psychology of discovery and invention.
New York: HarperCollins.
 PROBLEM SOLVING

INTRODUCTION

Problem solving is a natural part of everyday life. Every day you solve complex problems such
as driving a car, shopping, producing work all without even considering it. Most of the situations
we are so familiar with that we don‘t even consider them to be problems. In fact, the more
advanced society becomes the more complex problems we face on a daily basis. The same
methods we used when we first solved these common everyday problems can be applied to
more complex problems.

Of course, it is ridiculous to assume that every problem can be solved. But solutions (or at least
compromises) can be found to most problems if you take the time to analyse them, and solve
them logically and thoroughly. You may also need to be a little creative to look beyond the
obvious logical alternatives that first come to mind.

DISTANCING

Firstly, many problems are difficult only because they seem difficult. The way a problem is
presented can often make it look unnecessarily complex. This is one reason why consultants
from outside the organisation often solve problems quickly and easily —because they come into
the situation with no background, and take a fresh look at what is happening, without even
knowing many of the complicating factors surrounding the problem and making it seem
unsolvable,

DEFINING

The first thing to do therefore is to take a good look and decide what the problem actually is.
What is being asked? The tendency of problems to confuse us is because, rather like a low-
RAM computer, the memory in our brains which is immediately available to us sometimes
cannot take in the whole problem at once. Concentrate on exactly what is being asked for.
Ignore the details of the problem, and just work out what is wanted. What is the end result you
are looking for? Because until you know this, you cannot start thinking about how to solve the
problem itself.

EVALUATION

So the first step is to define the problem what exactly is the desired solution? One word of
caution: There may be more than one solution i.e. you may be looking at a problem that has
more than one desired outcome. If this is so, you need to evaluate which solution is the ideal
answer to that particular problem. It may end up being impractical, so you need to compromise,
but you should try to get to the ideal solution if possible. You may have to list a whole range of
possible solutions and then eliminate some. Some of the possibilities may be unrealistic. Others
may be realistic but need modifying as a compromise before they are really workable. As the
popular saying goes: if you don‘t know where you‘re going, you won‘t get there. At the end, you
want to have the problem defined, and a clear idea about what solution you are trying to
achieve.

QUESTIONS

A good way of finding which is the real desired solution from a number of alternatives is to ask
yourself these questions:

What are you trying to achieve?

What are you trying to preserve or maintain?
What are you trying to avoid or prevent?
What are you trying to stop, remove or eliminate?

Understanding : The next thing to do is to analyse and understand the information you have at
your disposal. This may be part of the problem posed, or you may have to rely on your own
knowledge for information, or even do additional research. In any event, the first thing you need
to do is to really understand the problem. Key to this is not just knowing what result you are
looking for and what information you have, but also evaluating whether you need to know
anything else in order to solve the problem. You also need to think whether you have seen a
problem like this before that might assist with this one. To understand the problem, it may help
to ask a number of questions: what is happening, where, how, why, when? Who is involved?
Writing Statements : Writing a statement of the problem in one paragraph may be helpful.
Something along the lines of ―x should be happening, but it isn‘t - except when y occurs, or
when J physically intervenes, which is impractical‖ It can also be very useful to draw a picture or
diagram of the problem. This may be a flowchart, chart, even a map —whatever — but it can
help you to see the problem more clearly, and the relationships between the various parts of it.

Prioritising : If the problem is still complex, break each step down into a paragraph of
description, until you really understand what is going on, It can be helpful to discuss your
summary with someone else, to check whether you have missed anything. If the problem turns
out to be more than one interrelated or smaller problems, you just prioritise which order you will
look at them in, and not get caught up in addressing the whole messy bundle at once. In
prioritising, remember that urgency and importance are not the same. Urgent problems aren‘t
necessarily important, and important ones aren‘t necessarily urgent.

Finding Causes : Look at potential causes of the problem. Make a list. None of your ideas at
this stage may turn out to be right, but at least you are getting deeper into the problem and its
possible causes. But do beware of wasting time here — the cause of a problem may be very
relevant, but for some problems, it couldn‘t matter less, so don‘t waste a lot of time looking for a
cause if it‘s immaterial. Basically, not all problems have an identifiable cause, and even where
they do, not all causes can be remedied.

Listing Solutions : Then you need to work out a way or ways in which you could solve the
problem. Don‘t just think of one way and then make a start — there is more than one way to
skin a cat, and your first idea may not work or may be not nearly as good as another idea. So
make a list of potential ways you might solve the problem, before picking one.

Brainstorming : Looking for possible solutions or ideas is where you may need to be really
creative. Even really crazy ideas are worth noting down, because although they may be totally
impractical, they do several things. Firstly, they may be able to be adapted to come up with a
really good, workable idea. On the other hand, if they are just too wacky to be of use, at least
they tell your brain that it‘s OK to have unusual ideas — that you will accept them just as you do
with more conventional ideas. This gives the brain permission, in effect, to be really creative and
override limits to get to a solution. This technique is called Brainstorming.

Suspending Judgement : To brainstorm, you need to suspend your judgement of an idea. It

can be useful to have a whole group of people here to chip in and call out ideas — different
people‘s ideas make others have new ideas, and more solutions are generated. Sometimes,
you can use physical representation — for example where problems involve people, materials
or processes, you can have paper or cards with the items on, and try different combinations of
physically moving them around.

Taking A Break : If you find it hard to come up with ideas, take a break. There is a
phenomenon which animal trainers and psychologists recognised in animals a long time ago.
They noticed that when training an animal, for example a dog, you could sometimes repeat the
exercise over and over again, but the animal simply didn‘t understand what you wanted it to do.
If you then took a break and returned to the same exercise several days later, the dog
mysteriously suddenly understood what was required. They called this ―latent learning‖.

Stress : It is now thought that the creative part of the brain, the right brain, is greatly reduced in
operation under stress, and can actually shut down almost completely under pressure. This
creative right brain is also responsible for insight, and making connections between things.
Under pressure or stress, it can therefore be very hard to solve a problem, but if you take a
break to give the brain time to relax, or use a technique designed to stimulate the right brain,
you can see the way through much easier. It is as if the brain subconsciously works on the
problem whilst we are unaware of it, if we give it a break in which to do so.

Evaluation : When you have a list of possible solutions, the next step is obviously to evaluate
them. Ask yourself for each solution; ―What would happen if we actually did this?‖ Make realistic
judgements, and don‘t immediately discard solutions that might work just because they would
be difficult to implement. It can be useful to make a list of pros and cons for each potential
solution if no one answer jumps out as being the best.

Disconnects : Beware of what is often referred to as ―disconnects‖. Disconnects are solutions

that become completely separated from the problems they are supposed to solve. To explain,
imagine you have come up with a range of potential solutions to your problem. Suddenly, you
realise that one of them is very easy to implement and could save the organisation a great deal
of money. So your attention is easily and naturally diverted into looking at this. In fact, it could
be done as a separate project, as it isn‘t solely to do with the problem at hand Well, this is a
perfect example of a disconnect —something that can take up a lot of your time and attention if
you are not careful. Keep these things until later, or delegate them to someone else to get
started now. This enables you to keep focused on the problem at hand.

Example : You quite often see disconnects with, for example, IT installations. A problem is
identified and one of the solutions is to purchase and install a new IT system. Well, that
captures a lot of attention, and it‘s started. As it takes so long, however, in the short term people
have to make do, and find other ways to solve the problem. Eventually, the new system is either
scrapped because of time and cost, or when it is implemented, it no longer addresses the
problem, as the makeshift systems devised have now either changed the situation, or even
created new problems of their own. A disconnect.

Decisions : Once you have your potential solutions, you need to make a decision. Consult the
necessary, people and explain the options, and decide how to proceed. Then produce an action
plan for implementing the solution, so it works — don‘t just decide and let people get on with it.
Because you thought of the answer, you are the one who knows best how to make it work, the
potential pitfalls — all the ins and outs of that particular solution and problem.

CONCLUSION

Finally, always remember to go back to the problem and have a final look. Re-examine the
problem. Did the solution work? Now that it is in place, is there a better solution that comes to
light? Can you take some more actions to enable you to get to an even better solution? This
completes the circle, and makes sure that the solution you devise actually solves the problem.
Ask some questions:

Did this solve the problem?

Did it create any new problems?
Is there anything we might have done better?
How can we improve on this the next time?
Now we have finished, how can I learn from this for next time?

***
 PRODUCTION PLANNING AND CONTROL

In any manufacturing enterprise production is the driving force to which most other functions
react. This is particularly true with inventories; they exist because of the needs of production. In
this chapter the relationship of production planning and control to work-in-process inventories is
stressed.

Objectives of Production Planning Control

The ultimate objective of production planning and control, like that of all other manufacturing
controls, is to contribute to the profits of the enterprise. As with inventory management and
control, this is accomplished by keeping the customers satisfied through the meeting of delivery
schedules. Specific objectives of production planning and control are to establish routes and
schedules for work that will ensure the optimum utilization of materials, workers, and machines
and to provide the means for ensuring the operation of the plant in accordance with these plans.

Production Planning and Control Functions

All of the four basic phases of control of manufacture are easily identified in production planning
and control. The plan for the processing of materials through the plant is established by the
functions of process planning, loading, and scheduling. The function of dispatching puts the plan
into effect; that is, operations are started in accordance with the plant. Actual performance is
then
compared to the planned performance, and, when required, corrective action is taken. In some
instances re-planning is necessary to ensure the effective utilization of the manufacturing
facilities and personnel. Let us examine more closely each of these functions.

Process Planning (Routing): The determination of where each operation on a component part,
subassembly, or assembly is to be performed results in a route for the movement of a
manufacturing lot through the factory. Prior determination of these routes is the job of the
manufacturing engineering function.

Loading : Once the route has been established, the work required can be loaded against the
selected machine or workstation. The total time required to perform the operation is computed
by multiplying the unit operation times given on the standard process sheet by the number of
parts to be processed. This total time is then added to the work already planned for the
workstation. This is the function of loading, and it results in a tabulated list or chart showing the
planned utilization of the machines or workstations in the plant.

Scheduling : Scheduling is the last of the planning functions. It determines when an operation is
to be performed, or when work is to be completed; the difference lies in the detail of the
scheduling procedure. In a centralized control situation - where all process planning, loading,
and scheduling for the plant are done in a central office- the details of the schedule may specify
the starting and finishing time for an operation. On the other hand, the central schedule may
simply give a completion time for the work in a given department.
Combining Functions : While it is easy to define ―where‖ as process planning, ―how much work‖
as loading, and ―when as scheduling, in actual operations these three functions are often
combined and performed concurrently. How far in advance routes, loads, and schedules should
be established always presents an interesting problem. Obviously, it is desirable that a minimum
of changes be made after schedules are established. This objective can be approached if the
amount of work scheduled for the factory or department is equal to or slightly greater than the
manufacturing cycle. For optimum control, it should never be less than the manufacturing cycle.

Dispatching: Authorizing the start of an operation on the shop floor is the function of dispatching.
This function may be centralized or decentralized. Again using our machine-shop example, the
departmental dispatcher would authorize the start of each of the three machine operations –
three dispatch actions based on the foreman‘s routing and scheduling of the work through his
department. This is decentralized dispatching.

Reporting or Follow – up: The manufacturing activity of a plant is said to be ―in control‖ when the
actual performance is within the objectives of the planned performance. When jobs are started
and completed on schedule, there should be very little, if any, concern about the meeting of
commitments. Optimum operation of the plant, however, is attained only if the original plan has
been carefully prepared to utilize the manufacturing facilities fully and effectively.

Corrective Action: This is the keystone of any production planning and control activity. A plant
in which all manufacturing activity runs on schedule in all probability is not being scheduled to its
optimum productive capacity. With an optimum schedule, manufacturing delays are the rule, not
the exception.

Re-planning: Re-planning is not corrective action. Re-planning revise routes, loads, and
schedules; a new plan is developed. In manufacturing this is often required. Changes in market
conditions, manufacturing methods, or many other factors affecting the plant will often indicate
that a new manufacturing plan is needed.

Factors Affecting Production Planning and Control

The factors that affect the application of production planning and control to manufacturing are
the same as the factors we have already discussed that affect inventory management and
control.

Let us briefly review these in relation to production planning and control.

Type of Product: Again, it is the complexity of the product that is important, not what the product
is, except as this may in turn relate to the market being served. Production control procedures
are much more complex and involve many more records in the manufacture of large steam
turbine generator sets or locomotives to customer orders then in the production of large
quantities of a standard product involving only a few component parts, such as electric blankets,
steam irons, or similar small appliances.

Type of Manufacturing : This is probably the most influential factor in the control situation. For a
large continuous manufacturing plant producing a standard product, we have already indicated
that the routing was included in the planning of the plant layout.

Production Planning and Control Procedures

A detailed discussion of all the techniques and procedures of production planning and control is
beyond the scope of this book; many complete text books exist on the subject. We have already
indicated that planning and control practices will vary widely from plant to plant. Further the
many ways in which of the functions might be carried out in practice were indicated earlier in
this chapter.

Though no production control function can be entirely eliminated, the least control that results in
effective operation of the factory is the best control. It must be remembered that production
planning and control systems should be tools of management. The objective is not an elaborate
and detailed system of controls and records, but rather, the optimum operation of the plant for
maximum profits.

Production Planning and Control Systems: Because production planning and control places an
emphasis on the control of work-in-process, the system will in effect tie together all previous
records and forms developed in all planning for the manufacture of the product.

Market forecast: The market forecast is discussed in Chapter 26. Its value to production
planning and control is that it will indicate future trends in demand for manufactured product.
Work shift policies, plans for an increase or decrease in manufacturing activity, or possible plant
expansions may often be based upon the market forecasts and in turn affect the planning of the
production planning and control group.

Sales Order: This is the second of the five classes of orders. It is a rewrite of the customer‘
order specifying what has been purchased – product and quantity and authorizing shipment of
the goods to the customer. Multiple copies are prepared and all interested functions are
furnished a copy. Sales orders may be written by marketing, inventory control, or production
control.

Stock Order: This third class of order is not always used. In the preceding paragraph we
indicated how it may be used after sales order accumulate to an economical manufacturing lot.
It is, of course, the principal order when manufacturing to stock. It will authorize production in
anticipation of future sales.

Shop Order: This fourth class of order deals with the manufacture of component parts.
Customer orders, sales orders, and stock orders are for the finished product. In the preceding
chapters we discussed how, by product explosion, the requirements are established for
component parts to build assembled products.
Standard Process sheet : This form is prepared by process engineering and it is the source of
basic data as to the type of machine to be used, the time required for processing and the
sequence of operations in the manufacture of the product. Routing and scheduling of shop
orders, as well as loading of workstations in advance of scheduling, depend on up-to-date
standard process sheets being available to the production planning and control group.

Engineering Specifications: Blueprints and bills of materials are used by production planning
and control when they become a component part of the packaged instructions issued to the
shop through the control office. One good planning procedure is to accumulate all necessary
data for a shop order in a single package the standard process sheet, the blueprint, the bill of
material (if an assembly operation is involved), the route sheet, and possibly the schedule for
the production of the order.

Route Sheet : This is the form on which the route of a shop order is indicated. In practice, this
form is generally combined with one of the other forms in the system. For example, the shop
order, the standard process sheet, and the route sheet are often one piece of paper- usually
called the shop order or the manufacturing order.

Load Charts: These charts are prepared to show the productive capacity that has been ―sold‖ –
and at the same time the available productive capacity. These charts may be prepared for each
workstation or machine in the plant, or they may be for groups of machines or departments.

Job Tickets: This is the fifth and last type of order in a manufacturing situation. Job tickets
authorize the performance of individual operations in the manufacturing process.

Project Planning Methods : The production planning and control methods discussed thus far in
this chapter deal primarily with the production of consumer or industrial products which could be
considered to fall within the area of ―repetitive manufacturing‖. The products to be produced are
often manufactured in quantities of more than one, and their total processing time can be
measured in hours, or at most days. The best –known methods that have been developed are
CPM (for Critical Path Method) andPERT (for Program Evaluation and Review Technique). The
original PERT technique is now considered, more accurately, PERT TIME, whereas a later
development is known as PERT COST.

From the optimistic, most likely, and pessimistic times, the expected elapsed time (te) can
beobtained by statistical techniques. The relationship of the three estimates to the expected
elapsed time is given by the formula

Te = a + 4m + b
6
Where a = optimistic time
b = pessimistic time
m = most likely time
It can be seen from the formula that the most likely time estimate is given four times as much
weight as the optimistic and pessimistic estimates when computing the expected time.

Systems Analysis : As with other manufacturing control systems and procedures, production
planning, and control lends itself to modern mechanization techniques such as machine
accounting and use of computers. Careful study of the control system through procedure
analysis will indicate the savings that may be effected by the utilization of modern equipment.
These savings may be in the clerical help required in the administration of the system or in the
advantages of quick compilation of data, which in turn results in up-to-date control data.

Production Planning and Control Organization

It should be obvious that there is no single pattern for the organization of the production
planning and control activity. In many small plants the routing, loading, and scheduling functions
may well be included in the duties of the operating line; the shop manager, superintended, and
foremen. But it is difficult to combine day-to-day work with adequate planning, and as a result it
is often more feasible to break away the production planning and control functions and assign
them to qualified specialists. These groups should be organized as staff sections normally
reporting to the top manufacturing executive.

Centralized Production Planning and Control : Centralization or decentralization of duties of the

production control staff depends upon the design of the production planning and control system.
In a completely centralized setup, determination of shipping promises; analysis of sales, stock,
and shop orders; preparation of routes, load charts, and schedule charts; and dispatching of
work to the shop complete with job tickets and all other necessary paper would be
accomplished by a central production planning and control unit. In addition, as work is
completed, a careful analysis of the actual performance would be made, and if corrective action
were required, it would be initiated by this group.

Decentralized Production Planning and Control : We have discussed at great length that no
matter how general the planning may be in a central office, the plan must eventually be
developed into a detailed plan on the shop floor. Some companies are now endeavoring to
make each foreman a manager of his own departmental operation. In these cases the foreman
is furnished with a complete staff for the production planning and control of the activities in the
department.

Planning Phase : We have already indicated in some details the duties involved in the
production planning phase. Working from the basic data mentioned earlier, the personnel in this
part of the activity routes and load and schedule charts.

Control Phase: The completed job ticket, or its equivalent, is the key to this phase of the
production planning and control system. It is the means of reporting back from the shop floor
that indicates that a job is completed; or if daily job tickets are turned in, the daily progress of a
job can be determined.
Relation to Other Functions : Good relationships with all the other functions in the enterprise are
essential to effective production planning and control. Full cooperation with the marketing group
is necessary, particularly in view of the importance of market conditions and the goodwill of
customers. Both product engineering and process engineering must keep production planning
and control informed as to their plans to avoid the manufacture of goods either to incorrect
specifications or by an improper method.

Measurement of Effectiveness
In determining the effectiveness of a production planning and control system, there are quite a
few problems. The key criterion might well be whether or not shipping promises are being kept –
the percentage of the order shipped on time. This, however, would not be a true criterion if
excessive overtime of expediting costs were involved in getting any of these orders shipped.

The cost of the control system in relation to the value of goods shipped is another possibility.
Again, however, this may not be sound: if markets slump, a bad ratio will develop. Many good
production planning and control systems have been discontinued because of ―high costs‖ under
these conditions- and have never revived after business picket up. In a study of benefits and
costs of computerized production planning and control systems, Schroeder et al. list the
following performance criteria by which production planning and control systems might be
judged:

1. Inventory turnover
2. Delivery lead time
3. Percent of time meeting delivery promises
4. Percent of orders requiring ―splits‖ because of unavailable material.
5. Number of expeditors
6. Average unit cost.

***
 EFFECTIVE BUSINESS COMMUNICATION

Good communication skills are imperative for any business. In fact, these skills
can often mean the difference between success and failure.

The Importance of Good Business Communication

Communication is vital in an organization because it not only connects members within a

specific department but also connects them to members from other departments, from other
branches, and, in today‘s global economy, from around the world. Moreover, communication
can make the difference between success and failure for a company.

Good communication helps ensure the efficient operation of all levels of an organization, from
lowest to highest, whereas poor communication often results in inefficiency; and as successful
business leaders know, inefficiency equals a loss of productivity and, consequently, a loss of
profits.

Increased efficiency isn‘t the only corollary of good communication, however, since it also
creates a sense of unity between members, resulting in their feeling that they are working
together toward a common goal, and that goal is the success of the organization.

Categories of Business Communication

There are two categories of communication within an organization: external and internal.
1. External Communication involves the transfer of information either to or from individuals
outside the organization, and the goal of this type of communication is often to obtain a
favorable response to the organization‘s needs. For example, a company might send a sales
advertisement to an existing customer or a proposal, prospectus, or solicitation to a potential
client; or an organization might post an ad in hopes of attracting qualified applicants for a job
vacancy.
2. Internal Communication involves the transmittal of information between individuals within the
company, and its aim is usually to accomplish internal objectives. For example,
management might let employees know when and how a particular task should be
completed, or employees might ask for clarification of the specifics for a task. Additionally,
management might suggest improvements to products or services, or employees might
present their qualifications when asking for a promotion or pay increase.

Tone of Internal and External Communication

According to Kenneth Zimmer, Professor Emeritus of the School of Business and Economics at
California State University, and Sue C. Camp, Associate Professor of Business Administration
at Gardner-Webb College, ―Tone, as it applies to communication, usually refers to the general
quality or effect of a conversation, discussion, or speech.‖ Moreover, ―the tone of internal
communication compared to that of external communication is usually quite different.‖ (1990, p.
15)

When one is transmitting information internally, one‘s tone tends to be friendlier and rather
informal, but when one is transmitting information externally, one‘s tone tends to be more
reserved and formal. On the other hand, there are different levels of internal communication; for
example, when an employee is conversing with a coworker, he or she is likely to use different
wording, phrasing, inflection, and intonation than when conversing with a supervisor or the
company‘s president.

The Challenge of External Communication

Communicating externally is far more challenging than communicating internally, mainly

because when members are communicating with people outside the organization, not only are
they representing themselves as individuals, but also the organization as a whole.
Subsequently, whenever members place a telephone call; send an advertisement, business
letter, or e-mail; or conduct a face-to-face meeting on the organization‘s behalf, these members
are making an impression that can possibly mean either success or failure for the organization

Developing Good Business Communication Skills

In today‘s electronic age, with all its gadgetry, for example, cell phones, fax machines, iPods,
Blackberries, and computers, information is transmitted at the speed of light. Such electronic
devices, however, are only as effective as the humans operating them, which is why members
of an organization must possess proficiency in writing, speaking, listening, and reading.
 Writing skills are important because the majority of organizational correspondence is
through the written word, in the form of letters, announcements, proposals, reports, memos,
and perhaps case studies.
 Speaking is important because members must be able to express ideas verbally in a way
that will both clearly get points across and hold the interest of listeners. Additionally,
members might be called upon to conduct presentations to management, existing
customers, or prospective clients.
 Listening is important because, as Lee Iacocca maintained, ―The ability to listen — or the
ability to tune in to the needs and objectives of clients, customers, and colleagues — is the
one skill that can make the difference between a mediocre company and a good company‖
(Zimmer & Camp, p. 17).
 Reading is important because members of an organization must be able to interpret
information correctly; moreover, they must be able to proofread their own written
communications in order to ensure their messages will be properly interpreted.

In summary, the reality is that members of an organization can possess brilliant ideas for
company growth and expansion, product development, or groundbreaking innovations, but
unless they can get those ideas across to management, existing customers, and/or potential
clients, those ideas will come to nothing and, in the end, get the organization absolutely
nowhere.
References:
 Seldes, G. (1995) The Great Thoughts; New York: Ballantine Books.
 Zimmer, K., Camp, S. (1990) College English and Communication. New York: McGraw-Hill.
FINANCIAL MANAGEMENT
***
What is financial management?

Financial Management can be defined as: The management of the finances of a business /
organisation in order to achieve financial objective.

Taking a commercial business as the most common organisational structure, the key
objectives of financial management would be to::

- Create wealth for the business

- Generate cash,
- Provide an adequate return on investment bearing in mind the risks that the business is
taking and the resources invested

There are three key elements to the process of financial management:

(1) Financial Planning

Management need to ensure that enough funding is available at the right time to meet the
needs of the business. In the short term, funding may be needed to invest in equipment and
stocks, pay employees and fund sales made on credit.

In the medium and long term, funding may be required for significant additions to the productive
capacity of the business or to make acquisitions.

(2) Financial Control

Financial control is a critically important activity to help the business ensure that the business is
meeting its objectives. Financial control addresses questions such as:

- Are assets being used efficiently?

- Are the businesses assets secure?
- Do management act in the best interest of shareholders and in accordance with business
rules?

(3) Financial Decision-making

The key aspects of financial decision-making relate to investment, financing and dividends:

Investments must be financed in some way - however there are always financing alternatives
that can be considered. For example it is possible to raise finance from selling new shares,
borrowing from banks or taking credit from suppliers

A key financing decision is whether profits earned by the business should be retained rather
than distributed to shareholders via dividends. If dividends are too high, the business may be
starved of funding to reinvest in growing revenues and profits further.
WORKING CAPITAL INTRODUCTION

Definition of working capital : The net working capital of a business is its current assets less
its current liabilities. Current Assets include:

1. Stocks of raw materials

- Work-in-progress
- Finished goods
- Trade debtors
- Prepayments
- Cash balances

2. Current Liabilities include:

- Trade creditors
- Accruals
- Taxation payable
- Dividends payable
- Short term loans

Every business needs adequate liquid resources in order to maintain day-to-day cash flow. It
needs enough cash to pay wages and salaries as they fall due and to pay creditors if it is to
keep its workforce and ensure its supplies.

Maintaining adequate working capital is not just important in the short-term. Sufficient liquidity
must be maintained in order to ensure the survival of the business in the long-term as well.

Even a profitable business may fail if it does not have adequate cash flow to meet its liabilities
as they fall due. Therefore, when businesses make investment decisions they must not only
consider the financial outlay involved with acquiring the new machine or the new building, etc,
but must also take account of the additional current assets that are usually involved with any
expansion of activity.

Increased production tends to engender a need to hold additional stocks of raw materials and
work in progress. Increased sales usually means that the level of debtors will increase. A
general increase in the firm's scale of operations tends to imply a need for greater levels of
cash.

WORKING CAPITAL NEEDS OF A BUSINESS

Different industries have different optimum working capital profiles, reflecting their methods of
doing business and what they are selling

 Businesses with a lot of cash sales and few credit sales should have minimal trade debtors.
Supermarkets are good examples of such businesses;
 Businesses that exist to trade in completed products will only have finished goods in stock.
Compare this with manufacturers who will also have to maintain stocks of raw materials and
work-in-progress.
 Some finished goods, notably foodstuffs, have to be sold within a limited period because of
their perishable nature.
 Larger companies may be able to use their bargaining strength as customers to obtain more
favourable, extended credit terms from suppliers. By contrast, smaller companies,
particularly those that have recently started trading (and do not have a track record of credit
worthiness) may be required to pay their suppliers immediately.
 Some businesses will receive their monies at certain times of the year, although they may
incur expenses throughout the year at a fairly consistent level. This is often known as
‗seasonality‘ of cash flow. For example, travel agents have peak sales in the weeks
immediately following Christmas.

Working capital needs also fluctuate during the year

The amount of funds tied up in working capital would not typically be a constant figure
throughout the year.

Only in the most unusual of businesses would there be a constant need for working capital
funding. For most businesses there would be weekly fluctuations.

Many businesses operate in industries that have seasonal changes in demand. This means that
sales, stocks, debtors, etc. would be at higher levels at some predictable times of the year than
at others
In principle, the working capital need can be separated into two parts:

 A fixed part, and

 A fluctuating art

The fixed part is probably defined in amount as the minimum working capital requirement for the
year. It is widely advocated that the firm should be funded in the way shown in the diagram
below:

The more permanent needs (fixed assets and the fixed element of working capital) should be
financed from fairly permanent sources (e.g. equity and loan stocks); the fluctuating element
should be financed from a short-term source (e.g. a bank overdraft), which can be drawn on and
repaid easily and at short notice.

Working capital cycle

The working capital cycle can be defined as: The period of time which elapses between the
point at which cash begins to be expended on the production of a product and the collection of
cash from a customer.

The diagram below illustrates the working capital cycle for a manufacturing firm
The upper portion of the diagram above shows in a simplified form the chain of events in a
manufacturing firm. Each of the boxes in the upper part of the diagram can be seen as a tank
through which funds flow. These tanks, which are concerned with day-to-day activities, have
funds constantly flowing into and out of them.

- The chain starts with the firm buying raw materials on credit.
- In due course this stock will be used in production, work will be carried out on the stock, and
it will become part of the firm‘s work in progress (WIP)
- Work will continue on the WIP until it eventually emerges as the finished product
- As production progresses, labour costs and overheads will need to be met
- Of course at some stage trade creditors will need to be paid
- When the finished goods are sold on credit, debtors are increased
- They will eventually pay, so that cash will be injected into the firm

Each of the areas - stocks (raw materials, work in progress and finished goods), trade debtors,
cash (positive or negative) and trade creditors - can be viewed as tanks into and from which
funds flow.

Working capital is clearly not the only aspect of a business that affects the amount of cash:

- The business will have to make payments to government for taxation

- Fixed assets will be purchased and sold
- Lessors of fixed assets will be paid their rent
- Shareholders (existing or new) may provide new funds in the form of cash
- Some shares may be redeemed for cash
- Dividends may be paid
- Long-term loan creditors (existing or new) may provide loan finance, loans will need to be
repaid from time to time, and
- Interest obligations will have to be met by the business.

Unlike movements in the working capital items, most of these 'non-working capital' cash
transactions are not everyday events. Some of them are annual events (e.g. tax payments,
lease payments, dividends, interest and, possibly, fixed asset purchases and sales). Others
(e.g. new equity and loan finance and redemption of old equity and loan finance) would typically
be rarer events.

***
 Seven Habits of Highly Effective People

The Seven Habits - An Overview

Our character is a collection of our habits, and habits have a powerful role in our lives. Habits
consist of knowledge, skill, and desire. Knowledge allows us to know what to do, skill gives us
the ability to know how to do it, and desire is the motivation to do it.

The Seven Habits move us through the following stages:

1. Dependence: the paradigm under which we are born, relying upon others to take care of us.
2. Independence: the paradigm under which we can make our own decisions and take care of
ourselves.
3. Interdependence: the paradigm under which we cooperate to achieve something that cannot
be achieved independently.

Much of the success literature today tends to value independence, encouraging people to
become liberated and do their own thing. The reality is that we are interdependent, and the
independent model is not optimal for use in an interdependent environment that requires
leaders and team players.

To make the choice to become interdependent, one first must be independent, since dependent
people have not yet developed the character for interdependence. Therefore, the first three
habits focus on self-mastery that is, achieving the private victories required to move from
dependence to independence. The first three habits are:

Habit 1: Be Proactive
Habit 2: Begin with the End in Mind
Habit 3: Put First Things First

Habits 4, 5, and 6 then address interdependence:

Habit 4: Think Win/Win

Habit 5: Seek First to Understand, Then to Be Understood
Habit 6: Synergize

Finally, the seventh habit is one of renewal and continual improvement, that is, of building one's
personal production capability. To be effective, one must find the proper balance between
actually producing and improving one's capability to produce. Covey illustrates this point with
the fable of the goose and the golden egg.

In the fable, a poor farmer's goose began laying a solid gold egg every day, and the farmer soon
became rich. He also became greedy and figured that the goose must have many golden eggs
within her. In order to obtain all of the eggs immediately, he killed the goose. Upon cutting it
open he discovered that it was not full of golden eggs. The lesson is that if one attempts to
maximize immediate production with no regard to the production capability, the capability will be
lost. Effectiveness is a function of both production and the capacity to produce.

The need for balance between production and production capability applies to physical,
financial, and human assets. For example, in an organization the person in charge of a
particular machine may increase the machine's immediate production by postponing scheduled
maintenance. As a result of the increased output, this person may be rewarded with a
promotion. However, the increased immediate output comes at the expense of future production
since more maintenance will have to be performed on the machine later. The person who
inherits the mess may even be blamed for the inevitable downtime and high maintenance
expense.

Customer loyalty also is an asset to which the production and production capability balance
applies. A restaurant may have a reputation for serving great food, but the owner may decide to
cut costs and lower the quality of the food. Immediately, profits will soar, but soon the
restaurant's reputation will be tarnished, the customer's trust will be lost, and profits will decline.

This does not mean that only production capacity is important. If one builds capacity but never
uses it, there will be no production. There is a balance between building production capacity and
actually producing. Finding the right tradeoff is central to one's effectiveness.

The above has been an introduction and overview of the 7 Habits. The following introduces the
first habit in Covey's framework.

FROM DEPENDENCE TO INDEPENDENCE

Habit 1: Be Proactive

A unique ability that sets humans apart from animals is self-awareness and the ability to choose
how we respond to any stimulus. While conditioning can have a strong impact on our lives, we
are not determined by it. There are three widely accepted theories of determinism: genetic,
psychic, and environmental. Genetic determinism says that our nature is coded into our DNA,
and that our personality traits are inherited from our grandparents. Psychic determinism says
that our upbringing determines our personal tendencies, and that emotional pain that we felt at a
young age is remembered and affects the way we behave today. Environmental determinism
states that factors in our present environment are responsible for our situation, such as
relatives, the national economy, etc. These theories of determinism each assume a model in
which the stimulus determines the response.

Viktor Frankl was a Jewish psychiatrist who survived the death camps of Nazi Germany. While
in the death camps, Frankl realized that he alone had the power to determine his response to
the horror of the situation. He exercised the only freedom he had in that environment by
envisioning himself teaching students after his release. He became an inspiration for others
around him. He realized that in the middle of the stimulus-response model, humans have the
freedom to choose.

Animals do not have this independent will. They respond to a stimulus like a computer responds
to its program. They are not aware of their programming and do not have the ability to change it.
The model of determinism was developed based on experiments with animals and neurotic
people. Such a model neglects our ability to choose how we will respond to stimuli.

We can choose to be reactive to our environment. For example, if the weather is good, we will
be happy. If the weather is bad, we will be unhappy. If people treat us well, we will feel well; if
they don't, we will feel bad and become defensive. We also can choose to be proactive and not
let our situation determine how we will feel. Reactive behavior can be a self-fulfilling prophecy.
By accepting that there is nothing we can do about our situation, we in fact become passive and
do nothing.

The first habit of highly effective people is proactivity. Proactive people are driven by values
that are independent of the weather or how people treat them. Ghandi said, "They cannot
take away our self respect if we do not give it to them." Our response to what happened to
us affects us more than what actually happened. We can choose to use difficult situations to
build our character and develop the ability to better handle such situations in the future.

Proactive people use their resourcefulness and initiative to find solutions rather than just
reporting problems and waiting for other people to solve them.

Being proactive means assessing the situation and developing a positive response for it.
Organizations can be proactive rather than be at the mercy of their environment. For example, a
company operating in an industry that is experiencing a downturn can develop a plan to cut
costs and actually use the downturn to increase market share.

Once we decide to be proactive, exactly where we focus our efforts becomes important. There
are many concerns in our lives, but we do not always have control over them. One can draw a
circle that represents areas of concern, and a smaller circle within the first that represents areas
of control. Proactive people focus their efforts on the things over which they have influence, and
in the process often expand their area of influence. Reactive people often focus their efforts on
areas of concern over which they have no control. Their complaining and negative energy tend
to shrink their circle of influence.

In our area of concern, we may have direct control, indirect control, or no control at all. We have
direct control over problems caused by our own behavior. We can solve these problems by
changing our habits. We have indirect control over problems related to other people's behavior.
We can solve these problems by using various methods of human influence, such as empathy,
confrontation, example, and persuasion. Many people have only a few basic methods such as
fight or flight. For problems over which we have no control, first we must recognize that we have
no control, and then gracefully accept that fact and make the best of the situation.

SUMMARY OF THE SEVEN HABITS

Habit 1:Be Proactive

Change starts from within, and highly effective people make the decision to improve their lives
through the things that they can influence rather than by simply reacting to external forces.
Habit 2: Begin with the End in Mind
Develop a principle-centered personal mission statement. Extend the mission statement into
long-term goals based on personal principles.

Habit 3: Put First Things First

Spend time doing what fits into your personal mission, observing the proper balance between
production and building production capacity. Identify the key roles that you take on in life, and
make time for each of them.

Habit 4: Think Win/Win

Seek agreements and relationships that are mutually beneficial. In cases where a "win/win" deal
cannot be achieved, accept the fact that agreeing to make "no deal" may be the best alternative.
In developing an organizational culture, be sure to reward win/win behavior among employees
and avoid inadvertantly rewarding win/lose behavior.

Habit 5: Seek First to Understand, Then to Be Understood

First seek to understand the other person, and only then try to be understood. Stephen Covey
presents this habit as the most important principle of interpersonal relations. Effective listening
is not simply echoing what the other person has said through the lens of one's own experience.
Rather, it is putting oneself in the perspective of the other person, listening empathically for both
feeling and meaning.

Habit 6: Synergize

Through trustful communication, find ways to leverage individual differences to create a whole
that is greater than the sum of the parts. Through mutual trust and understanding, one often can
solve conflicts and find a better solution than would have been obtained through either person's
own solution.

Habit 7: Sharpen the Saw

Take time out from production to build production capacity through personal renewal of the
physical, mental, social/emotional, and spiritual dimensions. Maintain a balance among these
dimensions.

***
 MARKETING MANAGEMENT IN SSIs

One of the greatest needs of managers of business is to understand and develop marketing
programs for their products and services. Business success is based on the ability to build a
growing body of satisfied customers. Modern marketing programs are built around the
"marketing concept," which directs managers to focus their efforts on identifying and satisfying
customer needs - at a profit.

Marketing continues to be a mystery . . . to those who create it and to those who sponsor it.
Often, the ad that generates record-breaking volume for a retail store one month is repeated the
following month and bombs. A campaign designed by the best ad agency may elicit a mediocre
response. The same item sells like hotcakes after a 30-word classified ad, with abominable
grammar, appears on page 35 of an all-advertising shopper tossed on the front stoops of homes
during a rainstorm! The mystery eludes solution but demands attention.

Your marketing results can be improved through a better understanding of your customers. This
approach usually is referred to as the marketing concept.

Putting the customer first is probably the most popular phrase used by firms ranging from giant
conglomerates to the corner barber shop, but the sloganizing is often just lip service. The
business continues to operate under the classic approach - "Come buy this great product we
have created or this fantastic service we are offering." The giveaway, of course, is the word we.
In other words, most business activities, including advertising, are dedicated to solving the firm's
problems. Success, however, is more likely if you dedicate your activities exclusively to solving
your customer's problems.

Any marketing program has a better chance of being productive if it is timed, designed and
written to solve a problem for potential customers and is carried out in a way that the customer
understands and trusts. The pages that follow will present the marketing concept of putting the
customer first. Marketing is a very complex subject; it deals with all the steps between
determining customer needs and supplying them at a profit.

The Marketing Concept :The marketing concept rests on the importance of customers to a firm
and states that:
 All company policies and activities should be aimed at satisfying customer needs, and
 Profitable sales volume is a better company goal than maximum sales volume.
To use the marketing concept, businesses should:
 Determine the needs of their customers (Market Research);
 Analyze their competitive advantages (Market Strategy);
 Select specific markets to serve (Target Marketing), and;
 Determine how to satisfy those needs (Market Mix).

Market Research : In order to manage the marketing function successfully, good information
about the market is necessary. Frequently, a small market research program, based on a
questionnaire given to present customers and/or prospective customers, can disclose problems
and areas of dissatisfaction that can be easily remedied, or new products or services that could
be offered successfully.

Marketing Strategy : Marketing strategy encompasses identifying customer groups (Target

Markets), which a small business can serve better than its larger competitors, and tailoring its
product offerings, prices, distribution, promotional efforts and services towards that particular
market segment (Managing the Market Mix). A good strategy implies that a business cannot be
all things to all people and must analyze its markets and its own capabilities so as to focus on a
target market it can serve best.

Target Marketing : Owners of small businesses have limited resources to spend on marketing
activities. Concentrating their marketing efforts on one or a few key market segments is the
basis of target marketing. The major ways to segment a market are:
 Geographical segmentation - developing a loyal group of consumers in the home
geographical territory before expanding into new territories.
 Product segmentation - extensively promoting existing best-selling products and services
before introducing a lot of new products.
 Customer segmentation - identifying and promoting to those groups of people most likely to
buy the product. In other words, selling to heavy users before trying to develop new users.

Managing the Market Mix : There are four key marketing decision areas in a marketing
program. They are:
 Products and Services,
 Promotion,
  Distribution, and
 Pricing.
The marketing mix is used to describe how owner-managers combine these four areas into an
overall marketing program.

Products and Services : Effective product strategies for a business may include concentrating
on a narrow product line, developing a highly specialized product containing an unusual amount
of service.

Promotion : This marketing decision area includes advertising, salesmanship and other
promotional activities. In general, high quality salesmanship is a must for small businesses due
to their limited ability to advertise heavily. Good yellow-page advertising is a must for small
retailers. Direct mail is an effective, low-cost medium of advertising available to small
businesses.

Price : Determining price levels and/or pricing policies (including credit policy) is the major
factor affecting total revenue. Generally, higher prices mean lower volume and vice-versa,
however, small businesses can often command higher prices due to the personalized service
they can offer.

Distribution : The manufacturer and wholesaler must decide how to distribute their products.
Working through established distributors or manufacturers' agents generally is most feasible for
small manufacturers. retailers should consider cost and traffic flow as two major factors in
location site selection, especially since advertising and rent can be reciprocal. In other words,
low-cost, low-traffic location means you must spend more on advertising to build traffic.

Marketing Performance : After marketing program decisions are made, owner-managers need
to evaluate how well decisions have turned out. Standards of performance need to be set up so
results can be evaluated against them. Sound data on industry norms and past performance
provide the basis for comparing against present performance. Owner-managers should audit
their company's performance at least quarterly. The key questions to ask are:
 Is the company doing all it can to be customer-orientated?
 Do the employees make sure the customer's needs are truly satisfied and leave them with
the feeling that they would enjoy coming back?
 Is it easy for the customer to find what he or she wants and at a competitive price?

How to develop a marketing concept

Unfortunately, there is still a misunderstanding about the word marketing. Many people,
including top executives, use it as a sophisticated term for selling. Marketing representative is
commonly used in ads to recruit salespeople. Actually, marketing is a way of managing a
business so that each critical business decision is made with full knowledge of the impact it will
have on the customer.

Here are some specific ways in which the marketing approach differs from the classic, or sales,
approach to managing a business.
1. In the classic approach, engineers and designers create a product, which is then given to
salespeople who are told to find customers and sell the product. In the marketing approach,
the first step is to determine what the customer needs or wants. That information is given to
designers who develop the product and finally to engineers who produce it. Thus, the sales
approach only ends with the customer, while the marketing approach begins and ends with
the customer.
2. The second major difference between the sales and marketing approaches is the focus of
management. The sales approach almost always focuses on volume while the marketing
approach focuses on profit.
In short, under the classic (sales) approach the customer exists for the business, while under
the marketing approach the business exists for the customer.

The marketing concept is a management plan that views all marketing components as part of a
total system that requires effective planning, organization, leadership and control. It is based on
the importance of customers to a firm, and states that: All company policies and activities should
be aimed at satisfying customer needs. Profitable sales volume is a better company goal than
maximum sales volume. In order to conduct a successful marketing program you must be able
to answer the following questions:

 What type of business are you in (manufacturing, merchandising or service)?

 What is the nature of your product(s) or service(s)?
 What market segments do you intend to serve? (Describe the age, sex, income level and
life-style characteristics of each market segment.)
 What strategies will you use to attract and keep customers?
 Product
 Price
 Place
 Promotion
 Persuasion (personal selling)
 What is your unique selling proposition (USP)?
 Who is your competition, and what will you do to control your share of the market?

How to Expand Your Market

Expanding your business, explore all the strategic alternatives available to you. Select the one
that makes the most sense and then prepare a marketing plan on how to implement that
strategy. There are at least a dozen common strategies and a variety of strategic combinations
or special situations to choose from.

Expansion of Present Location : Learn to spot telltale signs of saturation in your present
facilities. Grocery stores, for example, keep track of abandoned carts. When a shopper fills a
cart and then leaves because the checkout line is too long, the grocer should realize that there
is a serious problem. If you are experiencing bottlenecks, think about adding to your facilities.
Determine how many additional customers you could service by building up or out and compare
the additional sales to the cost of construction and temporary inconvenience.

Relocation : If it appears unlikely that you can draw more customers to your present location
(at a reasonable cost), consider moving closer to your customers. A location on Main Street, in
a shopping mall or an industrial park may cost you more in rent, but if you gain exposure to new
customers it may be a sound investment.

Additional Outlets : Reaching the most customers may require opening several outlets at
convenient locations throughout your market area. In addition to the added costs of real estate
and multiple inventories, carefully analyze the cost and availability of labor and training, and the
cost of hiring a manager for each location and installing an efficient monitoring system. Your
advertising dollars may become more efficient since your radio, TV and newspaper ads cover
your entire market. The multiple locations will make it more convenient for customers to find
you.

Downward Vertical Integration : If your profits depend on the prices you pay for raw materials,
your most profitable growth strategy may be to buy a farm, mine or processing plant to produce
your own materials. This strategy also may make sense if your product quality is based on a
consistent supply of goods at an acceptable quality level.

Upward Vertical Integration : Most small manufacturing businesses that start are forced to
conform to the existing marketing channels and sell through established manufacturers'
representatives, jobbers or dealers who have access to the market. As you grow, however, it
makes sense to analyze your distribution system to see when you can improve your situation by
hiring your own sales team, contracting with distributors, buying a truck fleet, opening retail
stores or factory outlet stores or doing anything else you need to do to get closer to your market.
Remember, every time someone gets between you and your customer, it either reduces your
revenue or increases your operating costs. Also, it impedes the provider-consumer
communication that is essential to a good marketing program.

Exporting Goods or Services : Literally, there is a world of markets available to you if you are
willing to learn how to get started.

Tourists' Business : When you are looking for new customers, don't ignore tourists who could
be attracted to your area. Work with your local convention and visitors' bureau to determine the
impact if you cooperate with local tourist attractions or hotels and restaurants to get more
people to visit and spend money in your community.

Franchises : Franchising as a growth strategy offers advantages if you are short of expansion
capital, yet have a concept that can be packaged and taught to people who wish to invest in a
business. The legal problems can seem overwhelming, but with a good plan and competent
advice, you can develop a franchise system that could prove extremely profitable.

License Agreements : If you have a technical process or service, you may be able to find
people in other markets who would be willing to pay you a royalty for the rights to use your
process. Perhaps you could sell raw materials, secret ingredients, special tooling or promotional
materials to your license holders.
Direct Marketing : Selling directly to your customers is one of the oldest and most effective
methods of marketing. Today, there are few door-to-door salespeople; most direct marketing is
seen in party plan selling and through mail, TV and magazines. Direct selling requires good
selection and training techniques and a commission plan plus liberal incentives.

Telemarketing : If you have a good list of prospective customers, telemarketing may be an

effective method of informing them about your business, qualifying them for sales follow-up or
selling your product or service to them. Professional firms can be used, or you can set up your
own telephone room. Here again, recruiting and training are critical because only a few people
can do telemarketing well.

Private Labeling : One method of reaching out to new markets is to sell your product under the
name of your distributor or retailer. However, you cannot build customer or brand loyalty
because the consumer does not know you are the producer. Another potential problem is that,
should the owner of the label find a cheaper producer, you may be out of the business.

How to forecast your sales

Sales forecasting is the process of organizing and analyzing information in a way that makes it
possible to estimate what your sales will be. This guide outlines some simple methods of
forecasting sales using easy to find data. Books containing simple and sophisticated techniques
of forecasting sales can be found in libraries and business oriented book stores

If you sell more than one type of product or service, prepare a separate sales forecast for each
service or product group.

There are many sources of information to assist with your sales forecast. Some key sources
are:
 Competitors
 Neighboring Businesses
 Trade suppliers
 Downtown business associations
 Trade associations
 Trade publications
 Trade directories

Factors that can affect Sales

Sales Forecasting for a New Business

These steps for developing a sales forecast can be applied to most kinds of businesses:

Step 1: Develop a customer profile and determine the trends in your industry.
Make some basic assumptions about the customers in your target market. Experienced
business people will tell you that a good rule of thumb is that 20% of your customers account for
80% of your sales. If you can identify this 20% you can begin to develop a profile of your
principal markets.
Sample customer profiles:
 Male, ages 20-34, professional, middle income, fitness conscious.
 Young families, parents 25 to 39, middle income, home owners
 Small to medium sized magazine and book publishers with sales from $500,000 to
$2,000,000
Determine trends by talking to trade suppliers about what is selling well and what is not. Check
out recent copies of your industry's trade magazines. Search the Business Periodicals Index
(found in larger libraries) for articles related to your type of business.

Step 2: Establish the approximate size and location of your planned trading area. Use available
statistics to determine the general characteristics of this area. Use local sources to determine
unique characteristics about your trading area.

How far will your average customer travel to buy from your shop? Where do you intend to
distribute or promote your product? This is your trading area.

Estimating the number of individuals or households can be done with little difficulty using
statistics census data. Statistics family expenditure survey can identify what the average
household spends on goods and services. Information on planned construction is available from
a variety of sources. Directories the Yellow Pages can help identify names of companies located
in your trading area. Neighborhood business owners, the local Chamber of Commerce, the
Government Agent and the community newspaper are some sources that can give you insight
into unique characteristics of your area.
Step 3: List and profile competitors selling in your trading area. Get out on the street and study
your competitors. Visit their stores or the locations where their product is offered. Analyze the
location, customer volumes, traffic patterns, hours of operation, busy periods, prices, quality of
their goods and services, product lines carried, promotional techniques, positioning, product
catalogues and other handouts. If feasible, talk to customers and sales staff.

Step 4: Use your research to estimate your sales on a monthly basis for your first year.
The basis for your sales forecast can be the average monthly sales of a similar-sized
competitor's operations who is operating in a similar market It is recommended that you make
adjustments for this year‘s predicted trend for the industry. Be sure to reduce your figures by a
start-up year factor of about 50% a month for the start-up months.

Consider how well your competition satisfies the needs of potential customers in your trading
area. Determine how you fit in to this picture and what niche you plan to fill. Will you offer a
better location, convenience, a better price, later hours, better quality, better service?

Consider population and economic growth in your trading area. Using your research, make an
educated guess at your market share. If possible, express this as the number of customers you
can hope to attract. You may want to keep it conservative and reduce your figure by
approximately 15%.
Prepare sales estimates month by month. Be sure to assess how seasonal your business is and
consider your start up months.

Sales Forecasting for an Existing Business : Sales revenues from the same month in the
previous year make a good base for predicting sales for that month in the succeeding year. For
example, if the trend forecasters in the economy and the industry predict a general growth of
4% for the next year, it will be entirely acceptable for you to show each month‘s projected sales
at 4% higher than your actual sales the previous year.

Credible forecasts can come from those who have the actual customer contact. Get the
salespersons most closely associated with a particular product line, service, market or territory
to give their best estimates. Experience has proven the grass roots forecasts can be surprisingly
accurate.

Sales Forecasting and the Business Plan : Summarize the data after it has been reviewed
and revised. The summary will form a part of your business plan. The sales forecast for the first
year should be monthly, while the forecast for the next two years could be expressed as a
quarterly figure. Get a second opinion. Have the forecast checked by someone else familiar with
your line of business. Show them the factors you have considered and explain why you think the
figures are realistic.

Your skills at forecasting will improve with experience particularly if you treat it as a "live"
forecast. Review your forecast monthly, insert your actuals, and revise the forecast if you see
any significant discrepancy that cannot be explained in terms of a one-time only situation. In this
manner, your forecasting technique will rapidly improve and your forecast will become
increasingly accurate.

Selling Tips

Most people are always striving to better themselves. For proof, check the sales figures on the
number of self-improvement books sold each year. This is not a pitch for you to jump in and
start selling these kinds of books, but it is an indication of people's awareness that in order to
better themselves, they have to continue improving their personal selling abilities.

To excel in any selling situation, you must have confidence, and confidence comes, first and
foremost, from knowledge. You have to know and understand yourself and your goals. You
have to recognize and accept your weaknesses as well as your special talents. This requires a
kind of personal honesty that not everyone is capable of exercising.

In addition to knowing yourself, you must continue learning about people. Just as with yourself,
you must be caring, forgiving and laudatory with others. In any sales effort, you must accept
other people as they are, not as you would like for them to be. One of the most common faults
of sales people is impatience when the prospective customer is slow to understand or make a
decision. The successful salesperson handles these situations the same as he would if he were
asking a girl for a date, or even applying for a new job.
Learning your product, making a clear presentation to qualified prospects, and closing more
sales will take a lot less time once you know your own capabilities and failings, and understand
and care about the prospects you are calling upon.
Our society is predicated upon selling, and all of us are selling something all the time. We move
up or stand still in direct relation to our sales efforts. Everyone is included, whether we're
attempting to be a friend to a co-worker, a neighbor, or selling multi-million dollar real estate
projects. Accepting these facts will enable you to understand that there is no such thing as a
born salesman. Indeed, in selling, we all begin at the same starting line, and we all have the
same finish line as the goal - a successful sale.

Most assuredly, anyone can sell anything to anybody. As a qualification to this statement, let us
say that some things are easier to sell than others, and some people work harder at selling than
others. But egardless of what you're selling, or even how you're attempting to sell it, the odds
are in your favor. If you make your presentation to enough people, you'll find a buyer. The
problem with most people seems to be in making contact - getting their sales presentation seen
by, read by, or heard by enough people. But this really shouldn't be a problem, as we'll explain
later. There is a problem of impatience, but this too can be harnessed to work in the
salesperson's favor.

We have established that we're all salespeople in one way or another. So whether we're
attempting to move up from forklift driver to warehouse manager, waitress to hostess, salesman
to sales manager or from mail order dealer to president of the largest sales organization in the
world, it's vitally important that we continue learning.

Getting up out of bed in the morning; doing what has to be done in order to sell more units of
your product; keeping records, updating your materials; planning the direction of further sales
efforts; and all the while increasing your own knowledge - all this very definitely requires a great
deal of personal motivation, discipline, and energy. But then the rewards can be beyond your
wildest dreams, for make no mistake about it, the selling profession is the highest paid
occupation in the world!

Selling is challenging. It demands the utmost of your creativity and innovative thinking. The
more success you want, and the more dedicated you are to achieving your goals, the more
you'll sell. Hundreds of people the world over become millionaires each month through selling.
Many of them were flat broke and unable to find a "regular" job when they began their selling
careers. Yet they've done it, and you can do it too!

Remember, it's the surest way to all the wealth you could ever want. You get paid according to
your own efforts, skill, and knowledge of people. If you're ready to become rich, then think
seriously about selling a product or service (preferably something exclusively yours) - something
that you "pull out of your brain;" something that you write, manufacture or produce for the
benefit of other people. But failing this, the want ads are full of opportunities for ambitious sales
people. You can start there, study, learn from experience, and watch for the chance that will
allow you to move ahead by leaps and bounds.
Here are some guidelines that will definitely improve your gross sales, and quite naturally, your
gross income. I like to call them the Strategic Salesmanship Commandments. Look them over;
give some thought to each of them; and adapt those that you can to your own selling efforts.

1. If the product you're selling is something your prospect can hold in his hands, get it into his
hands as quickly as possible. In other words, get the prospect "into the act." Let him feel it,
weigh it, admire it.

2. Don't stand or sit alongside your prospect. Instead, face him while you're pointing out the
important advantages of your product. This will enable you to watch his facial expressions
and determine whether and when you should go for the close. In handling sales literature,
hold it by the top of the page, at the proper angle, so that your prospect can read it as you're
highlighting the important points. Regarding your sales literature, don't release your hold on
it, because you want to control the specific parts you want the prospect to read. In other
words, you want the prospect to read or see only the parts of the sales material you're telling
him about at a given time.

3. With prospects who won't talk with you: When you can get no feedback to your sales
presentation, you must dramatize your presentation to get him involved. Stop and ask
questions such as, "Now, don't you agree that this product can help you or would be of
benefit to you?" After you've asked a question such as this, stop talking and wait for the
prospect to answer. It's a proven fact that following such a question, the one who talks first
will lose, so don't say anything until after the prospect has given you some kind of answer.
Wait him out!

4. Prospects who are themselves sales people, and prospects who imagine they know a lot
about selling sometimes present difficult selling obstacles, especially for the novice.

But believe me, these prospects can be the easiest of all to sell. Simply give your sales
 presentation, and instead of trying for a close, toss out a challenge such as, "I don't know,
Mr. Prospect - after watching your reactions to what I've been showing and telling you about
my product, I'm very doubtful as to how this product can truthfully be of benefit to you." Then
wait a few seconds, just looking at him and waiting for him to say something. Then, start
packing up your sales materials as if you are about to leave. In almost every instance, your
"tough nut" will quickly ask you, Why? These people are generally so filled with their own
importance, that they just have to prove you wrong. When they start on this tangent, they will
sell themselves. The more skeptical you are relative to their ability to make your product
work to their benefit, the more they'll demand that you sell it to them. If you find that this
prospect will not rise to your challenge, then go ahead with the packing of your sales
materials and leave quickly. Some people are so convinced of their own importance that it is
a poor use of your valuable time to attempt to convince them.

5. Remember that in selling, time is money! Therefore, you must allocate only so much time to
each prospect. The prospect who asks you to call back next week, or wants to ramble on
about similar products, prices or previous experiences, is costing you money. Learn to
quickly get your prospect interested in, and wanting your product, and then systematically
present your sales pitch through to the close, when he signs on the dotted line, and reaches
for his checkbook.

6. After the introductory call on your prospect, you should be selling products and collecting
money. Any call backs should be only for reorders, or to sell him related products from your
line. In other words, you can waste an introductory call on a prospect to qualify him, but
you're going to be wasting money if you continue calling on him to sell him the first unit of
your product. When faced with a reply such as, "Your product looks pretty good, but I'll have
to give it some thought," you should quickly jump in and ask him what it is that he doesn't
understand, or what specifically about your product does he feel he needs to give more
thought. Let him explain, and that's when you go back into your sales presentation and
make everything crystal clear for him. If he still balks, then you can either tell him that you
think he's procrastinating, or that overall, you don't think the product will really benefit him, or
it's purchase be to his advantage. You must spend as much time as possible calling on new
prospects. Therefore, your first call should be a selling call with follow-up calls by mail or
telephone (once every month or so in person) to sign him for reorders and other items from
your product line.

Review your sales presentation, your sales materials, and your prospecting efforts. Make sure
you have a "door-opener" that arouses interest and "forces" a purchase the first time around.
This can be a $2 interest stimulator so that you can show him your full line or a special marked-
down price on an item that everybody wants; but the important thing is to get the prospect on
your "buying customer" list, and then follow up via mail or telephone with related, but more
profitable products you have to offer.
***
 LABOUR LEGISLATION FOR SSIS

The Labour Policies for Small Scale Industries is governed by comprehensive laws. The
following laws and policies are applicable for Small Scale Industries in India:

 Apprentices Act, 1961

 The Bidi and Cigar Workers (Conditions of Employment) Act, 1966
 Bonded Labour System (Abolition) Act, 1976
 Child Labour (Prohibition & Regulation) Act, 1986
 The Children (Pledging of Labour) Act, 1933
 The Contract Labour (Regulation & Abolition) Act, 1970
 The Employees Provident Funds and Misc. Provisions Act, 1952
 Employees State Insurance Act, 1948
 Employers Liability Act, 1938
 Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
 Equal Remuneration Act, 1976
 The Factories Act, 1948
 The Industrial Disputes Act
 The Industrial Employment (Standing Orders) Act,1946
 The Inter-state Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
 Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain
Extablishments) Act, 1988
 Maternity Benefit Act, 1961
 The Minimum Wages Act, 1948
 The Payment of Bonus Act, 1965
 The Payment of Gratuity Act, 1972
 The Payment of Wages Act, 1936
 The Sales Promotion Employees (Conditions of Service) Act, 1976
 The Shops and Establishments Act, 1953
 The Trade Union Act, 1926
 Workmen‘s Compensation Act, 1923
 The Weekly Holidays Act, 1942

1. The Factories Act, 1948

Objectives
 To ensure adequate safety measures and to promote the health and welfare of the
workers employed in factories.
 To prevent haphazard growth of factories through the provisions related to the approval of
plans before the creation of a factory.
Scope and coverage
 Regulates working condition in factories.
 Basic minimum requirements for ensuring safety, health and welfare of workers.
 Applicable to all workers.
 Applicable to all factories using power and employing 10 or more workers, and if not
using power, employing 20 or more workers on any day of the preceding 12 months.

Main provisions
 Compulsory approval, licensing and registration of factories.
 Health measures.
 Safety measures.
 Welfare measures.
 Working hours.
 Employment of women and young persons.
 Annual leave provision.
 Accident and occupational diseases.
 Dangerous operations.
 Penalties.
 Obligations and rights of employees.

When to consult and refer

 On starting a factory.
 Throughout the life of the factory.

2. The Minimum Wages Act, 1948

Objectives
  To determine the minimum wages in industry and trade where labour organisations are
non-existent or ineffective.

Scope and coverage

 Applicable to all employees engaged to do any work, skilled, unskilled manual or clerical,
in a scheduled employment, including out-workers.
 Fixation of minimum wages.

Main provisions
 Fixation of minimum wage of employees.
 Procedure for fixing and revising minimum wages.
 Obligation of employees.
 Rights of workers.

When to consult and refer

 At the time of fixation of salary of new/existing employees.

3. The Payment of Wages Act, 1936

Objectives
 To ensure regular and prompt payment of wages and to prevent the exploitation of a
wage earner by prohibiting arbitrary fines and deductions from his wages.

Scope and coverage

 Application for payment of wages to persons employed in any factory.
 Not applicable to wages which average Rs 1600/- ($35.83) per month or more.
 Wages include all remuneration, bonus, or sums payable for termination of service, but
do not include house rent reimbursement, light vehicle charges, medical expenses, TA,
etc.

Main provisions
 Responsibility of the employer for payment of wages and fixing the wage period.
 Procedures and time period in wage payment.
 Payment of wages to discharged workers.
 Permissible deductions from wages.
 Nominations to be made by employees.
 Penalties for contravention of the Act.
 Equal remuneration for men and women.
 Obligations and rights of employers.
 Obligations and rights of employees.

When to consult and refer

 Deciding wages and salary administration at all times.

4. The Employees Provident Funds and Misc. Provisions Act, 1952

Objectives
 To make provisions for the future of the industrial worker after he retires or for his
dependents in the case of his early death.
 Compulsory Provident Fund
 Family Pension
 Deposit linked insurance

Scope and coverage

 Application to factories and establishments employing 20 or more persons.
 Can be made applicable by central government to establishments employing less than
20 persons or if the majority of employees agree.
 Excludes establishments employing 50 or more persons or 20 or more persons but less
than 50 persons, until the expiry of three years in the case of the former, and five years
in the case of the former, and five years in the case of the latter, from the date of setting
up of establishment.
 Applicable to all persons who are employed directly or indirectly through contractors in
any kind of work.

Eligibility
 Employees drawing pay not exceeding Rs. 3500/- ($78.37) per month.

Benefits
 Apart from terminal disbursal of non-refundable withdrawals for Life Insurance Policies
 House building
  Medical treatment
 Marriage
 Higher education
 Family pension
 Retirement-cum-withdrawal benefits
 Deposit linked insurance Amount equal to the average balance in Provident Fund of
deceased subject to a maximum of Rs. 25,000/- ($559.79).

5. Workmen’s Compensation Act, 1923

To provide compensation for workmen in cases of industrial accidental / occupational

diseases in the course of employment resulting in disablement or death. Coverage for
persons employed in Factories, Mines, Plantations, the Railways and others mentioned
in Schedule II of the Act.

Benefits
Compensation for Death
- Minimum - Rs. 20,000 ($447.83) Maximum - Rs. 1,14,000 ($2,552.62)
Compensation for Permanent disablement
- Minimum - Rs. 24,000 ($537.4) Maximum - Rs. 70,000 ($1567.4)
Temporary disablement
- 50% of wages for a maximum period of 5 years.

6. The Contract Labour (Regulation & Abolition) Act, 1970

 Not to be required to work beyond 9 hours between 6 A.M. and 7 P.M.
 With the exception of midwives and nurses in plantations.

7. The Inter-state Migrant Workmen (Regulation of Employment and Conditions of

Service) Act, 1979

 Separate toilets and washing facilities to be provided in employment covered by the 3rd
and 6th laws.

8. Maternity Benefit Act, 1961

 Maternity benefits to be provided on completion of 80 days working.
 Not required to work during six weeks immediately following the day of delivery or
miscarriage.
 No work of arduous nature, long hours of standing likely to interfere with
pregnancy/normal development of foetus or may cause miscarriage or likely to affect
health to be given for a period of one month immediately preceding the period of six
weeks before delivery.
 On medical certificate, advance maternity benefit to be allowed.
 Rs. 250 ($5.6) as medical bonus to be given in case when no prenatal confinement and
post-natal care is provided free of charge.

9. Equal Remuneration Act, 1976

 Payment of equal remuneration to men and women workers for same or similar nature of
work protected under the Act and also under the provisions at ISMW Act, mentioned
above.
 No discrimination permissible in recruitment and service conditions except where
employment of women is prohibited or restricted by or under any law.

10. The Children (Pledging of Labour) Act, 1933

 Any agreement to pledge the labour of children is void.

11. The Bidi and Cigar Workers (Conditions of Employment) Act, 1966
 Employment of children under 14 years of age prohibited under the laws at Sl. Nos. 2 to
5.
 Except in the process of family based work or recognised school-based activities,
children not permitted to work in occupations connected with: Passenger, goods mail
transport by Railway Cinder picking, cleaning of ash pits Building operations,
construction Catering establishments in Railway premises or port limits Beedi making
Carpet weaving Cement manufacturing Cloth printing Dyeing, weaving Manufacture of
matches, explosives, fireworks Mica cutting, splitting Wool cleaning
 In occupations and processes other than the above mentioned, work by children is
permissible only for six hours between 8.00 A.M. and 7.00 P.M. with one day's weekly
rest.
  Occupier of establishment employing children to give notice to local Inspector and
maintain prescribed register.

12. The Payment of Gratuity Act, 1972

Objective
 To provide for payment of gratuity on ceasing to hold office
Coverage
 Factories, Mines, Oil fields, Plantations, Ports, Railway Companies, Shops &
Commercial Establishments and to other establishments to which the Government
extends the law.

Eligibility
 Employees drawing wages not exceeding R. 3500/- ($78.37) per month.
Benefits
 15 days wages for every completed year of service or part thereof in excess of six
months subject to a maximum of Rs. 50,000 ($119.58)

13. Employees State Insurance Act, 1948

Objective
To provide for health cover, Medical care and Cash benefits for
 Sickness
 Maternity
 Employment injury
 Pensions to dependents in case of Death (or) Employment injury

Eligibility
 Employees drawing wages not exceeding Rs. 3000/- ($67.17) per month

Benefits
 Compensation for Death Minimum - Rs. 20,000 ($447.83 Maximum) - Rs. 1,14,000
($2552.62)
 Compensation for Permanent disablement Minimum - Rs. 24,000 ($537.4) Maximum -
Rs (70,000) $1,567.4
 Temporary disablement 50% of wages for a maximum period of 5 years.

14. The Payment of Bonus Act, 1965

Objectives
 To provide statutory obligations for payment of bonus to persons employed in certain
establishments on the basis of profits or productivity.

Scope and Coverage

 Applicable all over India to factories under the Factories Act and to other establishments
employing 20 or persons on any day during a year.
 Government can extend its coverage to establishments employing between 10 and 20
workers.
 Covers all workers including supervisors, managers, administrators, technical and
clerical staff employed on salary or wages not exceeding Rs 2,500 ($55.97) per month.

Main Provision
 Eligibility for bonus.
 Payment of minimum and maximum bonus.
 Time limit for payment of bonus.
 Deductions from bonus.
 Computation of gross profits and available allocable surplus.
 Rights of employees.

When to Consult and Refer

 When the factory if registered under the Factories Act.
 When the number of employees in the establishment reaches 20 or above.
 When calculating the bonus.

15. The Shops and Establishments Act, 1953

Objectives
 To provide statutory obligation and rights to employees and employers in the
unorganised sector of employment, i.e., shops and establishments.
Scope and Coverage
 A state legislation; each state has framed its own rules for the Act.
 Applicable to all persons employed in an establishments with or without wages, except
the members of the employer's family.
 State government can exempt, either permanently or for a specified period, any
establishments from all or any provisions of this Act.

Main Provisions
 Compulsory registration of shop/establishment within thirty days of commencement of
work.
 Communications of closure of the establishment within 15 days from the closing of the
establishment.
 Lays down the hours of work per day and week.
 Lays down guidelines for spread-over, rest interval, opening and closing hours, closed
days, national and religious holidays, overtime work.
 Rules for employment of children, young persons and women
 Rules for annual leave, maternity leave, sickness and casual leave, etc.
 Rules for employment and termination of service.
 Maintenance of registers and records and display of notices.
 Obligations of employers.
 Obligations of employees.

When to Consult and Refer

 At the time of start of an enterprise.
 When framing personnel policies and rules.

16. The Trade Unions Act, 1926

Objective
 To confer a legal and corporate status on registered trade unions.
Scope and Coverage
 Applicable to unions of workers as well as associations of employers.
 Extends to the whole of India.
 A central legislation but administered and enforced by the state governments.
Main Provisions
 Defines trade union.
 Registration of a trade union by any seven or nine workers of an establishment on
applying with a copy of the rules of the union, the name and address, and the list of
office bearers.
 Cancellation and dissolution of trade unions.
 Obligations of registered trade unions.
 Rights of registered trade unions.

When to Consult and Refer

 At the time of start of an enterprise.
 Throughout the running of the enterprise.

17. The Industrial Disputes Act

Objectives
 To provide a machinery for peaceful resolution of disputes and to promote harmonious
relation between employers and workers.

Scope and coverage

 Applicable to all industrial and commercial establishments
 Covers all workers and supervisors drawing salaries up to Rs. 1600/- ($35.82) per
month.
 Not an applicable to person employed in managerial and administrative capacities.

Main provisions
 Defines industry, industrial dispute, layoff, lockout, retrenchment, trade union, strike,
wages. workman, etc.
 Provides machinery for investigating and settling disputes through works committees,
conciliation officers, boards of conciliation, courts of enquiry, labour courts, tribunals and
voluntary arbitration.
 Reference of dispute for adjudication.
 Awards of labour courts and tribunals.
 Payment of wages to workers pending proceedings in High Courts.
  Rights of appeal.
 Settlements in outside conciliation.
 Notice of change in employment conditions.
 Protection of workmen during pendency of proceedings
 Strike and lockout procedures.
 Lay-off compensation.
 Retrenchment compensation.
 Proceedings for retrenchment.
 Compensation to workmen in case of transfer of undertakings.
 Closure procedures.
 Reopening of closed undertakings.
 Unfair labour practices.
 Recovery of money due from employer.
 Penalties.
 Obligations and rights of employees.

When to consult and refer

 When a dispute arises with the workers' union.
 When you plan changes in employment conditions.
 When there is a strike.
 When there is a lockout.
 When retrenchment of workmen.
 When undertaking is being transferred
 On closure of an establishment.
 On re-opening establishment.

***
 FORMS OF BUSINESS ORGANISATION

Learning Objective
 Outlining different forms of business, their features, advantages and disadvantages.

Important Terms
 Sole proprietorship
 Partnership.
 Limited liability partnership.
 Limited company.
 Ordinary shares
 Preference shares

Forms of Business Organisation

1. Sole Proprietorship
An unincorporated business owned by an individual and is not treated as a separate legal entity
to its owner. The individual receives all profits or losses and is liable to the obligations of the
business. Sole proprietorships represent the largest number of businesses in most countries,
but typically they are the smallest in size.

Advantages of sole proprietorship:

o Cheap set up cost: There are no legal complications in setting up a sole proprietorship.
There are no minimum or maximum limits for capital. The business is flexible in its
operations as it can engage in any other operations without any restriction as it may be the
case with the limited companies.

o Reduced operating costs : As much of the running of the business is done by the owner, the
business saves on labour costs as will not be required to hire expert help. Being run by the
owner ensures prompt decision making and is able to capture business opportunities as
they arise.

o The business avoids corporation tax: Sole proprietorship is not required to pay corporation
tax because it is not a separate legal entity from its owner so the profit made by the
business will be taxed in the hands of its owner. Personal tax is slightly lower than
corporation tax. Example here in Malawi the first K36,000 is tax free for a sole trader, next
K18,000 is at 10% , next K18,000 at 20% and the K1,128,000 at 30% and the excess over
40%. While for the incorporated companies the rate is 30% regardless of the level of profit
made.

o It is subjected to few government regulations : As stated above there is no regulation on

minimum or maximum capital, the sole proprietorship is not required to file its accounts with
the registrar of companies no need to produce memorandum and articles of association.
There is no compulsory audit as is the case with limited companies.

Disadvantages of Sole proprietorship:

o Failure to raise funds: Many financial institutions consider sole proprietorship as risky
ventures and are not willing to extend finance to these entities. Sole proprietor may not able
to raise capital on his own unlike in partnership where they are able to share the financial
burden of raising funds.

o The proprietor has unlimited liability: As the business is not treated as a separate legal entity
from its owners any unpaid debt by the enterprise can be recovered from the personal
wealth of the owner even if it was generated from other sources not related to the business.

o Short life of business :Most sole proprietorship faces the problem of succession, if the
original owner dies then the business goes with him or her. Usually there are no laid plans
for continuity in most sole proprietorships.

o Lack of business skills: There is no division of responsibilities in most sole proprietorships as

management and running of the business is done by a single individual. This affects the
daily operations of the business because if the owner is sick or engaged in other personal
activities then usually the business is incapacitated.

2. Partnership
A Partnership is a relationship that subsists between or more persons carrying on business in
common view of sharing the profits or losses of the business. It operates as a collection of sole
proprietorship. The partners share the profits and losses of the partnership according to an
agreed –upon formula. Generally, any partner can bind the partnership to another party, and if
necessary, the personal resources of each partner can be called on to pay obligations of the
partnership. A partnership, just like as sole proprietorship, is not a separate legal entity legal
entity from its owners hence the need to call on private assets when partnership fails to settle
any obligation.

A partnership must be dissolved if the ownership changes, as when a partner leaves or dies. If
the business is to continue as a partnership after this occurs, anew partnership must be created
and new partnership agreement be signed.

Contents of Partnership Agreements

The written agreement can contain as much, or as little, as the partners want. The law does not
say what it must contain. The usual accounting contents are:

o The capital to be contributed by each partner.

o The ratio in which profits are to be shared.
o The rate of interest, if any, to be paid on capital before the profits are shared.
o The rate of interest, if any charged on partnership drawings.
o Salaries to be paid to partners.
o Arrangements for admission on new partner.
o Procedures to be carried out when a partner retires or dies.

Limited Partnership
Limited partnerships are partnerships containing one or more limited partners. Limited partners
are those partners which are not liable for the partnership debts.i.e they can not use personal
properties to cover the partnership unpaid liabilities. Limited partnership has the following
characteristics and restrictions on their role in the partnership;

o Their liability for the debts of partnership is limited to the capital they have put in. They
can loose the capital but can not be required for more money to pay partnership debts.
o They are not allowed to take out or receive back any part of their contribution to their
partnership during its lifetime.
o They are not allowed to take part in the management of the partnership or to have the
power to make the partnership take decision. If they do, then they will be liable to
partnership debts.
o All partners cannot be limited partners, so they must be at least one general a partner
with unlimited liabilities.

Advantages of partnership

o Cheap set up cost : There are no legal complications in setting up just as in a sole
proprietorship. There are no minimum or maximum limits for capital. The business is flexible
in its operations as it can engage in any other operations without any restriction as it may be
the case with the limited companies.

o More capital raised : Partnership is able to raise more capital than the Sole proprietorship
though not as much as can be raised by the limited company.

o Reduced tax liability: Just as in sole proprietorship the partnership is not required to pay
corporation tax. Each partner will be assessed tax on individual basis basing on the profits
allocated from partnership. As stated above individual tax is lower than the corporation tax.

Disadvantages of partnership

o The proprietor has unlimited liability : As the business is not treated as a separate legal
entity from its owners any unpaid debt by the enterprise can be recovered from the personal
wealth of the Partners even if it was generated from other sources not related to the
business. The liability is high in partnership as the action by one partner will render all
partners liable even if the action was effected without their consent. The exception is for a
limited partner as is not required to share the debts of the partnership.

o Short life of business : When one partner dies or retires legally means the partnership is
dissolved and there will be a need to negotiate for a new partnership. Transfer of ownership
is very difficult unlike in limited companies where the stake can be acquired or disposed off
easily.
o Failure to raise capital: It is very difficult to obtain large loans from financial institutions as
they consider partnerships as more risky. Partnerships may not able to raise capital as in
limited companies because they have no access to share markets.

o Limit on number of partners: Partnership has a requirement that its members should not be
less than two and can not exceed twenty, so even if more people are willing to join and bring
in new capital they are legally barred.

3. Limited Liability Corporation

A limited liability corporation is a legal entity created through state approval, which is treated as
a separate person from its owners. A limited company is said to possess a ‗separate legal
identity‘ from its shareholders. This means a company can sue or be sued, can own assets and
its liabilities will not affect the personal property of its owners.
The capital of limited company is divided into shares. Shares can be of any nominal value 50t,
K1, K2 or any other amount per share. To become a member of a limited company or a
shareholder, a person must buy one or more of the shares. If the shareholders have paid in full
for the shares, their liability is limited to what they have already paid on those shares. If a
company loses all its assets all the shareholders can lose are the amount they paid on the
shares.

Private and Public Companies

There are two classes of companies, the public and the private company. Their main differences
are that the public company is the one which must satisfy the following:

o Its memorandum of association must state that it is a public company and it has registered
as such.
o Minimum membership is two and has no maximum number.
o It is allowed to offer its shares to offer its shares to the public.
o Its name must end with the word ‗public limited company‘ or ‗PLC‘.

A private company is usually, but not always smaller business, and may be formed by one or
more persons. It is defined as a company which is not public. The main difference with public
company is that:

o The number of members is restricted to 50.

o It is not allowed to offer its shares for subscription to the public at large.

Dividend : Shareholders of a limited company obtain their reward in the form of a share of the
profits, known as dividends. The directors consider the amount of profits and decide on the level
of profit to be distributed as dividend and amount of profit to be retained in business as
reserves. It is important to note that the shareholders cannot propose a higher dividend for
themselves than already proposed by the directors

Share Capital

1. Ordinary shares : These are shares which are subordinate to all other classes of shares in
terms of dividend and liquidation distribution. Ordinary shareholders are the owner of the
business and they have voting rights in all affairs of the enterprise. They have powers to
appoint and dismiss the directors. Their entitlement to dividend depends on amount which
has been declared by the directors.

2. Preference shares : These are share which contain the fixed amount of dividend. If the
shares are quoted as 100,000 K1 12% Dividend means that every year the shareholder
should expect K12,000 (12%*K100,000).They carry no voting rights unless they are
participatory preference shares. Preference shares are of two types.

o Cumulative preference shares : These are entitled to fixed amount of divided and if
dividend for the year has not been settled may be due to inadequate profit, any
outstanding dividend is carried forward to be paid in the year of abundant profit.

o Non cumulative preference shares : The share holders in this case lose any outstanding
dividend for the year because there is no right to carry forward unpaid dividend for the
year.

Advantages of a Limited Company

1. Limited liability of members : Member‘s liability is restricted only any amount of unpaid
shares for the company; otherwise there is no requirement to make further contribution out
of personal property for the debts of the business.

2. Ability to raise more capital : Inviting venture capitalists or other potential shareholders is
relatively easy for limited companies than in other forms of businesses. Companies have
better chances of obtaining long term finance from financial institutions.

3. Business continuity : As it is easy to transfer ownership through share transfers, it is also

easy to pass ownership of a company from generation to generation. The limited companies
also are able to maintain but also attract quality employees which result in efficient operation
of the business.

Disadvantages of Limited Company

1. Tax burden
A limited company is subjected to high tax rates and the shareholders are subjected to double
taxation. The company‘s profit is subjected to tax and when shareholders receive dividends they
are also taxed.

2. High setting and operating costs

A limited company has to go through rigorous stages in order to be registered. The company is
required to file its accounts with registrar of companies and tax authorities annually.

***
 MANAGEMENT OF SMALL BUSINESS ENTERPRISES

1. INTRODUCTION

An effective management practice can be developed keeping following things in mind:

a) Today's manager must manage a continuously changing business environment.

b) Coping with a continuously changing business environment can only be
accomplished if the organisation is goal-directed.
c) Only after organisational goals have been identified can orderly plans and
procedure be designed which will facilitate the accomplishment of these goals.
d) All men can be successful managers if they know how to manage, particularly if
they know their goals and objectives.

The individual small firm owner must normally assume a wider responsibility for this
management control than does the head of a particular division of a very large firm. In fact,
the difference in total responsibility has caused many learned business authorities to say
that more ability is needed to be a manager of a substantial small firm than to be a
specialized Manager of a very large firm. For example, the director for finance of a large
automobile manufacturing firm is responsible only for keeping advised on matters of finance.
These would include cash flow, current cash position, advice on security markets, capital
structures of the firm, financial ratios, dividend capability and policy, anticipated cash
demands and so on. The manager for marketing is responsible for decisions and
recommendations only in the area of marketing and distribution activities of the firm. The
manager for production handles problems of production and production schedules. Each of
these senior executive carries heavy responsibilities, but each is concerned with only one
general area of the total firm activities.

These duties and many more must usually be the responsibility of the small firm owner.
Every phase of the business is the owner's responsibility. He or she must be concerned
with matters of daily sales, personnel, inventory control, supply sources, credit policies, new
products, policy changes, market studies, public relations, advertising, location and site
reviews, balance sheet data, income statement relationships, economic trends, all financial
details and many other things. The owner's duties can call for the management of change
as well as the effective control of established procedures.

It is a long established fact in management that early detection of adverse developments

provides speedier correction of them and thus involves a minimum loss of efficiency. With
so many areas to control, it is obvious that the demands upon the small firm owner are most
significant and time consuming, yet effective managerial control is essential.

2. FUNCTIONAL AREAS OF SMALL BUSINESS FIRM

A small business firm is shown in Fig by a circle divided into four quadrants which
represents the four major functional areas, viz., finance, production, marketing and
personnel. There is also a core circle which indicates management by the entrepreneur,
responsible for coordinating these four functions. This model helps in understanding the
areas of concern & responsibility of an entrepreneur.

2.1 Finance : The finance quadrant represents the functional area, responsible for
all financial decisions which are relevant to a Small Business Firm. If we look at this
functional area in terms of a system, we find that there are other critical elements within this
system, viz., financial structure, financial planning and budgeting, assets utilisation, working
capital management, costing, pricing, accounting system and procedures etc. These critical
elements are the various sub-systems and their proper functioning is essential for the overall
performance of the financial system.
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Financial structure involves decisions about the ratio in which debt and equity should be
structured so as to be within the stipulated norms of financial institutions and at the same
time to minimise the cost of finance. Financial planning & budgeting look at future financial
requirements, establishment of departmental budgets and a continuous comparison of the
actual with budgeted results. Optimum utilisation of assets is another critical element for
improving productivity. Efficient and effective utilisation of investment in current assets is
ensured through working capital management. Costing and pricing decisions are important
in minimising costs and ensuring anticipated profits. Without an effective accounting system
and control procedures it may be difficult to find out the financial health of a unit on a day to
day basis.

2.2 Production/Service : This is another important functional area of an enterprise.

Within this system too we have various sub-systems, viz. site selection, plant and machinery
selection and use, product design, production planning and control, purchase and inventory
control, maintenance, quality control, research and development etc.

The selection of the site of an enterprise depends upon a number of factors including
availability of infrastructure, availability of inputs, proximity to sources of raw material and
markets and grant of certain concessions by the Govt. etc. Choice of appropriate plant and
machinery as regards its size, capacity, cost and operating characteristics is another
important factor. Production planning and control regulates the production process in such a
manner that actual behaviour corresponds to the plans so as to maximise production.
Materials manager is responsible for controlling the price, usage, quality and timely
procurement of all materials required. The maintenance of plant & machinery helps in
optimum utilisation of machinery. Quality of products must be ensured through quality
control measures, finally research and development efforts enable a business firm to
innovate and bring about improvement in its products/services and keep pace with
technological changes.

Thus, efficient working of all the critical elements, as discussed above is responsible for the
smooth functioning of production function.

2.3 Marketing : The functional area of marketing has as its different critical elements
demand forecasting, product-mix decisions, market segmentations, distribution and
promotion strategy etc.

Any industrial unit must know in advance the demand and supply position of the products to
be manufactured by it so that it can plan its production and finance accordingly. Demand
 forecasting is necessary in this respect. Choice of an appropriate product-mix enables a
unit to maximise its earning with the available production capacity. A study of market
segments enables a unit to know its consumers better and bring about appropriate
modifications in its product to suit their requirement. The unit can then also develop a
suitable distribution and promotion strategy like offering better after-sales service and
increased guarantee period to improve marketability and demand of its products.

If these critical elements, as discussed above, are functioning well, the overall marketing
system functions efficiently.

2.4 Personnel : This quadrant represents the personnel function of the industrial
unit. Its critical elements or the sub-systems are selection, recruitment and training,
manpower planning, wage and salary administration, labour relations, labour welfare etc.

Choosing the right people, placing them according to the job requirement, training them to
be of better use in the present job or grooming them to take up higher responsibilities is
extremely important. This is looked after through the process of selection, recruitment and
training. Manpower planning enables an organisation to estimate future manpower
requirements, its deployment needs and development. A judicious policy regarding wage
and salary is another critical element. Last but not the least, good labour relations and
labour welfare are important to improve productivity, keep up maintenance, and reduce
wastes.

3. MANAGEMENT

Management has been shown as a core circle in the model since it is the brain of small
business firm and pervades through all the four functional areas. An entrepreneur has to
manage all the four functional areas in an effective way. Various elements (functions) of
management as shown in the model are planning, organising, leading, controlling and
organisational development. These functions are described below:

3.1 Planning : It is basically a process of thinking ahead of product, processes,

inputs and resources needed for achieving the objectives. It is the design of an action
plan for implementation to achieve system objectives. It includes:-

3.1.1. Estimating and predicting future conditions and events i.e. forecasting.
3.1.2. Determining the results to be accomplished i.e. developing objectives.
3.1.3. Determining the action steps necessary to achieve desired results i.e. strategies.
3.1.4. Assigning functions to human resources and machines i.e. job allocation.
3.1.5. Determining the resources (human, material and finances) required to carry out
action steps and achieve the objectives.

3.2 Organising : Organising is defined as the process of developing physical resources,

informational resources and human resources to carry out the functions perceived for
setting up and running the industrial venture.

3.2.1 Identifying the work activities that must be performed and arranging them in
logical groups i.e. developing organisational structure.
3.2.2 Assigning and identifying the work, each must do i.e. job roles.
3.2.3 Establishing necessary conditions to work co-operatively and harmoniously
together i.e. developing relationships.

3.3 Leading : This is essentially a stage when the management actually causes the system
to function at all levels. This means assigning works, guiding the individual, teams and
sub-systems to do their job roles, and implement schemes, programmes and projects in
a most efficient way possible. It includes :

3.3.1 Inspiring, encouraging and impelling people to act individually, as teams, as sub-
systems i.e. motivation.

3.3.2 Creating understanding among people involved and passing information i.e.
communication.
3.3.3 Arriving at conclusions and judgement necessary for people to act i.e. decision
making.

3.4 Controlling : Finally it is necessary to check that the work is being done properly and the
desired result are achieved, and if not, to rectify matters.

This includes the following :

 3.4.1 Establishing the criteria against which the results of processes at individual, team
and sub-systems level are to be judged i.e. develop performance standards.
3.4.2 Recording what has been done and reporting it to those who need to know i.e.
measuring performance,
3.4.3 Determining how well the work was done and results achieved by comparing
them with standards i.e. feedback.
3.4.4 Rectifying mistakes and improving performance i.e. modification and
improvements.

3.5 Organisational development : Observing the potential of organisation to become more

effective, while still maintaining the set of humanistic values, has been, for us, an exciting
and revitalizing experience. It has also raised some serious questions about what is
commonly understood and practiced as the management of industrial organisations. As
organisations develop the desire to grow and change, they discover new concepts, new
ways of thinking, and new ways of exploring the nature of management and organisational
processes. They are not merely exploring or extending old concepts, but rather casting
these aside and becoming free to act on the basis of new view points and new convictions
about what organisational life can be like.

There is a growing body of knowledge concerning the ways in which organisations can
better adapt to the challenges of a modern society, with its new markets, new technologies
and increasing need for change. The entrepreneurs are currently besieged with ideas and
techniques for improving an organisations, effectiveness and its ability to cope with change.
The emerging body of concepts, tools and techniques is now commonly called
organisational development or Organisational Development. It generally involves the use of
concept and data from the behavioural science to attempt to facilitate the process of planned
change.

Organisational development is essentially a systems approach to the total set of functional

and interpersonal role relationships in organisations. An organisation can be viewed as a
system of coordinated human activities, a complex whole consisting of a member of
interacting and interrelated elements or sub-systems. A change in any one part of the
system will have a impact on one or more of the other parts.

One way of viewing organisations from a systems approach is to imagine that the
organisation system consists of three major elements or sub-systems ; i) technical, or task
system, which includes the flow of work, the technology involved, the required task roles and
a number of other technological variables ii) the managerial, or administrative system,
which includes, the organization structure, policies, procedures, rules, the reward &
punishment system, the way in which decisions get made & large number of other elements
designed to facilitate the management processes and finally iii) the human, or personal
cultural system, which is primarily concerned with organisation culture, values and norms
and the satisfaction of personal needs. Also included in the human system are the informal
organisation, the motivational level of members and their individual attitudes. It is interaction
of these three systems that produces the behaviour and role relationships that affect
organizational output. Planned organizational change by its very nature, must consider the
potential impact on all elements of the system when one of its elements or sub-system is
changed.

3.5.1 The values of Organizational Development : There is a set of underlying values

concerning the nature of man and his work in an organisational context which exerts a
powerful influence in the process and technology for developing more fully functioning
organisations. These values might be stated thus :

- Providing opportunities for people to function as human beings rather than as

resources in the production process.
- Providing opportunities for each member of organisation, as well as for the
organisation itself, to develop to his full potential.
- Seeking to increase the effectiveness of the organization in term of all of its
goals.
- Attempting to create an environment in which it is possible to find exciting and
challenging work.
- Providing opportunities for people in organisations to influence the way in which
they relate to work, the organization, and the environment.
- Treating each human being as a person with a complex set of needs, all of which
are important in his work and in his life.

3.5.2 The process of organizational Development : The process of organizational

development consists of data gathering, organisational diagnosis and action interventions.
These steps closely follow the process of planned change first described by Kurt Lewin
 (Quasi Stationary Social Equilibria and the problem of permanent change). The process
involves a number of interacting and interrelated activities.

Data Gathering : The collection and analysis of data are perhaps the most pervasive
activities in Organisational Development process. The first phase involves determining the
nature and availability of data needed and the methods to be used in gathering them. Major
consideration is also given to the techniques and methods used to describe the
organisational system, the relationships between its elements or sub-systems, and ways of
identifying major problems and issues.

Organisational Diagnosis : The primary emphasis during this phase is on the problem
solving process. Problem analysis in organisational development involves a number of
techniques concern with identifying concerns and issues, establishing priorities, and
translating them into aims and objectives. It also involves generating alternative strategies
and developing plans for their implementations. Considerable attention is given to
developing and testing new approaches to organizational problem solving and to preparing
the system for change.

Action Intervention : There is a growing and reasonably sound inventory of intervention

techniques available for the implementation phase of the Organisational Development.
process. These have developed as a response to the common issue that seems to arise
repeatedly in organizations. The inventory is large and varied. Interventions into a given
organizational system can range from sensitivity training and laboratory method, to team
and intergroup building, to any number of other techniques. Action intervention, as a step in
an Organisational Development process can be defined as a planned action following a
diagnostic phase.

3.5.3 The technology of Organizational Development : The technology of

organizational development consists of a rapidly growing collections of techniques and
methods emerging primarily from the behavioural sciences. Unlike other techniques, which
tend to focus on solving current and specific problems, Organisational Development
technology is aimed at developing new organizational learning and new ways of coping and
dealing with problems. The focus is on improving the ways in which the technical,
administrative, and personal cultural systems interact with each other, as well as the way in
which the organization relates to the external environment. Team building is an illustration
of the growing number of interventions that have been successfully applied towards this end
in many different situations.

4. MANAGERIAL EFFECTIVENESS

Inputs do not give outputs automatically. Resources like man, materials and machinery has
to be orchestrated to give an effective output. In spite of the many changes in our society
and in the management environment many managers still stick to their old management
methods. Other managers adopt new methods willy-nilly without considering the impact on
people. The solution, I believe, is for managers to concentrate on freeing the abilities of
people to tap more of their "People power."

Areas for consideration are :

4.1 Identifying the mission

4.2 Management style
4.3 Management climate
4.4 Managerial strategy
4.5 Targets and tactics
4.6 Organisation structure
4.7 Staffing
4.8 Motivation
4.9 Performance evaluation
4.10 Training and development
4.11 Control methods

4.1 Identifying the Mission : The first task of the manager is to identify the mission of his
organisation. By mission it is meant something worthwhile and long term. It is not easy to
identify the mission of the organisation. For commercial organisations making profit or
surplus is an important mission.

There are some non-economic missions also and these should also be specified.

4.2 Check Your Management Style : Both the autocratic and democratic managers can be
effective. The autocratic manager tends to rely mostly on high pressure. So he is generally
most effective in the short range. The democratic manager tends to rely mostly on low
pressure. He is generally most effective in the long range provided he has capable people
working for him.

Recent research shows that the most effective manager is neither autocratic nor democratic
in his style. He is something in between. He adapts his style to fit individuals. He may use
high pressure on one person and low pressure on another not in a manipulative way, but in
an open constructive way.

4.3 Measure Your Management Climate : The perceptions of your people about their jobs
and the various influences inside and outside of your organisation may be quite different
from yours. Yet people act on the basis of their perceptions. They produce more or they
produce less. They are supportive, indifferent or antagonistic. They feel they have some
control over what they do, or they feel victimized. They like you, fear you, or have other
attitudes toward you.

Are such perceptions important to you? I think so. Otherwise you run the risk of getting
proforma compliance or resigned acquiescence.

You can measure your management climate through formal surveys or through informal
contacts with your people during which you seek answers to specific questions.

4.4 Define a Managerial Strategy : As with corporate strategy, the most effective manager
zeroes in on the most important programme or theme that will help him to optimize this
year's results in relation to the future. Perhaps it is an improved organization structure. It
may be better staffing or a new motivational programmes or installation of a new system to
improve efficiency. Obviously a manager has to give some attention to these kinds of things
all of the time. But I am suggesting he should do so in relation to an effort that has primary
priority.

4.5 Plan your Targets and Tactics : People do get things done with only fuzzy objectives
and with mostly reactive seat-of-the-pants actions. Also many people will respond to
objectives and action programs handed to them from above. However, most people
respond best to those things to which they have personal commitment. They like targets in
the form of measurable primary objectives. They like tactics in the form of action programs
that they have developed-provided there is mutual understanding about how individual and
group results will be interpreted.

4.6 Up-date Your Organisation Structure : There is no one best organisation structure for a
firm, agency, divisions or departments. This isn't to say that organization structure is not
critical. However, most people will only perform within the realm, of what they think their
assignments are. And as conditions change internally and externally, they want their
responsibilities up-dated so they can be more effective and operate at higher skill levels.
Whether you centralize or decentralize, for example, is a judgement that you must make in
the light of your strategy, targets and resources.

4.7 Review Your Staffing : Some manager have a blind adherence to promotion from
within. Others won't settle for less than a college graduate for each key position. Others
seek people whom they can overshadow. Others are unwilling to transfer or promote people
outside of their own areas of responsibility. And others refuse to terminate anyone, advance
women or minority people? Not if there's a way to avoid it.

If I've expressed any of your staffing attitudes, I urge you to re-examine them for implications
over both the short and long range.

4.8 Motivate Each Individual : There is impressive evidence that the work itself is the single
greatest motivator of people. Hence, managers should give their people as much
responsibility and decision-making authority as possible. However, people differ. For
example, some people are materialistic interested primarily in money for what it will buy.
Others are fear oriented. Further-more, what motivates a person most today is not
necessarily what motivated him most yesterday.

4.9 Do Performance Evaluation : Most managers don't mind doing performance

evaluations. But they don't like to communicate what they really think to each of their
people. Yet most employees want to know-provided there's more of a constructive then
critical atmosphere so they can better develop themselves for present and future
responsibility.
 4.10 Train and Develop Your People : Less and less will people accept and do only what
they are told. They are no longer beholden to their employers. They want more and more a
sense of dignity and importance.

They want to be productive but they also want the opportunity to think to identify and solves
problems for which there are no standard procedures. And certainly not all of them want to
do things the boss's way.

Planned training and development enables you to communicate recommended methods

efficiently and economically while at the same time clarifying how each individual is to think
and act on his own. This approach may be a far cry from the way you had to learn your
present and previous jobs.

4.11 Control Flexibly : The formal reports that a manager receives are not nearly as
important as the attitude and interpretations that his people have about the reported
information. I suggest, therefore, that you get out of your office regularly if you want to stay
abreast of what's really going on.

To paraphrase an old saying-'numbers don't matter, people do'. In other words, it is people
who give meaning to the numbers.

5. BUILD MORE EFFECTIVE TEAMS

Getting people to work together effectively is the manager's main job. Communication is the
cornerstone and motivation is the mortar that holds it in place.

No manager or supervisor is an Island. He gets his work, goals and purposes done through
his subordinates. His success depends on their productivity, motivation and cooperation.

5.1 Requirements for an Effective Team : The prime requirement for an effective team is
that the whole group and its goals take precedence over the prominence of any single
member. There must be a minimum of conflict, feuding, jealousy, personal aggrandizement-
all of which can obstruct progress.

The team members, in addition, have to support each other, especially when one of their
members runs into snags or difficulties. They have to be receptive to new ideas and
change. And, they should achieve a high degree of satisfactory communication and
exchange of ideas. The effective team is a kind of organic whole which honours the
individualism of each of its members, but acts in concert as a larger, more comprehensive
unit. An effective team has members who can fill the shoes of members who have to be
absent. Absence of any one member does not paralyze activity or progress. Team
members can and are prepared and willing to wear many hats for short periods.

5.2 The Payoffs of an Effective Team : Since the team gives primacy to common goals, it
works and produces more efficiently. This means increased productivity and decrease in
costs of running an organization.

An effective cohesive team takes pride in its performance. It does not tolerate shoddy work
by any of its members, because this reflects badly on the entire group. So an effective team
has a built-in "Quality Control" motivation that insures productivity, both in quality and
quantity. Teams in the right organizational climate will often set even higher standards than
do their managers or outside consultants.

5.3 Team Work Gives Confidence : An integrated team enables members to draw
confidence and courage from each other when solving tough, new problems. As William
J.J.Gorden, founder of Synetics, Inc, Cambridge, Mass, has pointed out, "Until we learn not
to fear what is new, a team will be more effective than single persons. In the group
participants draw courage from the fact that they are not alone. They are walking where
angels wouldn't head, but by holding hands, so to speak, they find the courage."

5.4 Building Loyality : A manager's group is made up of individuals of a variety of

temperaments, skills, talents, backgrounds, and different ways of approaching problem
solving and work. If the manager fails to take this into account when he "Orchestrates the
whole,‖ they may move or pull in different directions. If on the other hand, he can arrange
circumstances so that they pull together, he will have a smoothly functioning, "winning" team
he can be proud of. This takes a lot of understanding of what builds an effective team and
what impedes it. It also requires his day to day attention to the factors that solidify and
maximize team work and loyalty and those that disrupt it.
 5.5 Basics of Team Improvement : The manager of a team must constantly face the
question of how his team could be made more efficient and more effective. There is always
room for improvement. It behaves the manager to analyse operations and problems, gather
facts and observations about the inadequacies and weak spots of teamwork performance.

He must analyse the strengths and weaknesses, the motives, needs and goals of each of
his subordinates. Indeed, an important trait of the team manager is his ability to handle
diverse personalities. Conflicts arise when the subordinate has one image of himself, his
role, his responsibilities, and how he should be handled and the manager another. The
effective manager tried to bring these images into clearer focus.

5.6 Use the 'Loners' too : He must also recognize that some of the real achievers and
innovators in his team work best autonomously. Others are effective implementers of ideas
and get things done, no matters how difficult the challenge. They, however, might need a
clearly structured frame work within which to operate.

Organize the work so that each member is given the chance to function in areas of his
greatest strengths. In teamwork, the effective manager is sensitive to what influence his
people have on one another. In selecting members who are to work together, he is sensitive
to choosing those who would have a constructive effect on each other.

In addition to gaining an insight into subordinate inter-relationships, he must also be aware

of informal leadership patterns, cliques, and special friendships, patterns of status and
personality conflicts. This enables him to : enhance "helpful" relationships by putting
congenial people together; prevent the formation of competitive sub-groups; avoid putting
incompatible subordinates together; arrange conditions in which a subordinate can facilitate
his work by cooperating with other subordinates.

5.7 Effective Communications : Complete, open and non-defensive communication should

prevail among the members. This does not only include information about their jobs and
work problems, but also an openness and self disclosure about each other's personal needs
and problems. One effective way of commenting team spirit is for the manager to
periodically share information and give progress reports. He lets subordinates know where
they stand in relation to the objectives that were set.

5.8 Criticism and Praise: Mistakes should be criticized in private never in front of other
team members. The "offender" would lose face and the cooperation and respect of others in
his team. Hence his value to his team would be materially reduced.

Praise and approval should be voiced publicly. But it is most effective if the subordinate‘s
success can be tied in with the activities of all the others who were involved or who
contributed. A subordinate's success should be shown in terms of the team's goals and
objectives. This does not mean that a goods subordinate should not be given open
publicity. As a matter of fact, the others should be invited to join in to praise his
performance. This provides everybody the subtle incentive to reach beyond their capacity
with their next projects.

The effective manager knows that recognition tends to raise the standards of his people that
next time they will try to match or surpass the good job they did this time. Indeed
recognition coupled with expectation is among the most important management attitudes to
high production. Effective managers have observed that people strive to live upto what is
expected of them. They are willing and eager to push beyond the limits of their known
capabilities. But they must face a challenging task and feel aware that they are expected to
deliver.

The factor of recognition follows logically. The effective employee feeds upon recognition by
his team members and by his manager. It is the reward he naturally seeks.

5.9 He knows How to Delegate : He knows how may and which of his job functions and
decisions can be handled by his team. Delegation often relieves the entrepreneur of
unnecessary pressures on his own job. It makes his subordinates work more meaningful.
The entrepreneur knows how to delegate the right kinds and the right amount of work to his
subordinates.

5.10 Removing Obstacles to Teamwork : One of the toughest problem is to change the
attitudes and behaviour of a subordinate who has lapsed into apathy and difference. Yet,
even here, increase in responsibilities, job enrichment, new project assignments, job
improvement assignments and an eye-ball to eye-ball confrontation, may turn a previously
apathetic member into a useful team player.
 Another recalcitrant subordinate is the "loner" who prefers to work by himself. If he is
productive and inventive, it would be useless to radically change his work pattern and
temperament. Occasionally, however, job rotation and giving him the role of a "resource"
specialist might evoke in him a sense of identification with the team.

A subordinate whose work and ideas have been frequently criticized or rejected is also
prone to develop withdrawal symptoms. One way of bringing him back to the team is by
active encouragement and help when he starts a new project-then step out when he is "fired
up". He also needs plenty of praise for his contributions and when he uses initiative and
overcomes difficulties by his own efforts.

5.11 Soul-Searching : The effective manager periodically does some soul-searching about
whether he provides the climate which promotes team integration and team spirit.

"Do I ram the team concept down their throats, or do I create an atmosphere where the
team spirit evolves?"
"What am I doing to enhance cooperation?"
"Do any of my actions foster conflicts and divisions?
"Do I show both tangibly and intangibly that I have trust and confidence in my
subordinates?"
"Would I be willing to change any of my ways of operating if it would contribute toward group
cohesiveness?"

Answers to these and similar questions may enhance the manager's self-knowledge and
indicate some changes in behaviour and attitude.

Maintaining team effectiveness is not a one time job. It has to be kept in constant repair.
Coaching, training, inspiring has to be the Manager's daily activity. Many things can disrupt
a group's harmony. The effective manager has to be aware of all the daily happenings and
incidents of group interaction to nip any serious trouble in the bud.

5.12 Building Team-Enhancing Factors

 Try to create a climate which is relaxed, informal and comfortable.

 Encourage and provide the time for group discussion and communication.
 Make sure that objectives and goals are well defined, pinpointing and understood
by all team-members.
 Coach team-members on good listening techniques.
 Make allowances for the airing of disagreements and differing points of view.
 Encourage levelling and frank and open criticism.
 Provide an atmosphere where subordinates are free to express their feelings.
 Make sure no one team member assumes a dominating role.

6. ESSENTIAL DATA FOR EFFECTIVE CONTROL OF SMALL BUSINESS:

Interviews with many successful small firm owners reveal that they usually divide their
management information into two categories.

1. Data which they analyse daily, weekly or monthly.

2. Long range data which they check less often or whenever the occasion presents
itself.

6.1 Data Analysed Daily, Weekly or Monthly :

6.1.1 Sales Data and Trends : If sales are increasing steadily and are in accordance with
budgeted income statement plans, they can be looked upon with pleasure. If they are
increasing faster than had been expected, that fact may call for a look at inventory adequacy
to support the increased sales volume. If sales are dropping below expectations, the owner
should find out why, in what departments, in what lines, or if the decline is general. Decision
to be made would involve how to reverse the trend. Would more advertising help? Has
advertising been effective? Is the market changing so that total purchasing power in our
market will remain lower? When did this trend start? Are there any reasons for it?

6.1.2 Cash Position and Cash flow Outlook : Management's concern is with providing
assurance that obligations of the firm can be paid in time within the discount period if
discounts are offered. We have seen the trouble that can result when the cash position is
inadequate. Very few firms have complete cash flow statements, but experienced small firm
owners have pretty good ideas of what cash receipts to expect in the immediate future. If it
is found that the cash position is really hurting. The reasons for it must be found. Perhaps it
is slow collection of receivables. Is a campaign to collect delinquent accounts appropriate?
It may be purchase of enlarged inventories to take advantage of special buys. If so, should
we arrange an additional line of credit to carry the firm until that inventory is sold and funds
replenished?

6.1.3 Production Records : If the factory was expected to produce 8000 units of the
product in January and only 6000 units were produced, decisions must be made to correct
the problems. The problem may be inefficient use of new machines inefficient employees,
faulty maintenance, absenteeism, labour problem, training methods or other things.
Management must find the reasons and take corrective measures to prevent repetition.

6.1.4 Inventory Data and Need for Adjustments : Where departmentalization of a firm is
established, inventories must be checked by departments and/or particular lines of
merchandise. If sales are up, is the inventory adequate to support sales in each department
and in each line? If sales are down, is the decline general or confined to specific
departments? It is dangerous to order general inventory reductions if the sales variations
are limited to certain departments. When sales are off for a particular department, the
inventory of that department may need reduction. When requests for items not carried in the
inventory have been received a few times, a decision to add such items to the inventory may
be appropriate.

6.1.5 Analysis of Accounts Receivable Ledger : Even if the firm does not have a cash
position problem, it should still make a regular analysis of its total accounts receivable. This
will reveal which customers are getting behind in their payments and suggest caution in
further credit to some customers. An aging of accounts receivable is a regularly used current
management device. Decisions which may result from its analysis may include a new
compaign to collect delinquent accounts, cutting of credit for cerltain customers, and a policy
of expanding credit more widely if the accounts receivable turnover is more than 12 times a
year on 30 day credit, terminating open accounts, and resorting only to cash and credit card
sales. Without the facts, any needed collective action cannot be taken.

6.1.6 Policy Violations and Need for Change : If it is found that there is public objection to
some of the policies of the firm, a management decision to change certain policies may be
called for. For example, a grocer has a policy of selling all soft drinks only in nonreturnable
bottles. Public resentment is great, and some customers actually change patronage to other
stores for this single reason. Decision : Bring back returnable bottles to shelves and change
the policy decision against their use. Advertise the new policy change.

6.1.7 Price Policy Questions That May Have Arisen : It may be found that customers are
being driven away because the firm is selling one or two specific items a few paisa higher
than the competitor down the street. Should we lower those prices? Do we value that type
of customer? Is the item purchased in isolation or as part of larger orders? A decision is
important. Another possible decision might be to clear out slow-moving inventory of certain
items at special prices.

6.1.8 Suggested New Products of New Lines : Most merchants keep a record of calls for
merchandise which they do not carry. Not all such calls merit adding the item involved. But
if such requests are repeated, a decision is appropriate on the advisability of adding those
goods to the inventory. If the firm sells dresses in two price lines or in two brands and
receives numbers of requests for another price line or another brand, this may suggest that
the inventory should be expanded to include them. This might be an indication that an
original policy was not suited to the particular market and should possibly be changed.

6.1.9 Coincidence of Weekly Results with the Break - Even Chart : If an accurate break-
even chart has been divided into weekly, monthly and quarterly period as well as the annual
measure of income-expense relationships, the manager-owner will always have in mind a
sales total that will reveal whether sales for any period have placed the operation in the
profit area. Many small firm owners have such a figure in mind even without formal break-
even charts. This is why they can tell you. "This was a good week". Or a good month, or
even a good day.

6.1.10 Public Relation Effectiveness : Measures of good or bad public relations may
appear at any time during any business day, or even at a social gathering. Compliments
may be received over participation in a community project, a special service rendered,
support of a good cause, or innumerable other things. Likewise, complaints may be
received. A manager notes both compliments and complaints to measures total
effectiveness and to help govern future decisions on public relations activities.

We have taken this brief look at some of the key data, managers must have at their
fingertips to help in the many decisions they are regularly called upon to make. These were
the priorities included in the first category of data we mentioned. Not all owners will agree
with this division of priorities, but none will disagree with the importance of each item on the
list. Any owner having all this key information readily available will make better decisions
for the welfare of the firm.

6.2 Data to be Checked Occasionally :

6.2.1 Adequacy of Accounting Data: : If an owner is often faced with a decision requiring
accounting data that is not readily available, the decision to add financial analysis to the
present accounting records will usually be forthcoming. A decision to request a bank loan
which demands supporting data on cash flow would be an example of this. Total accounting
value involves more than routinely recording operations and preparing the basic statements
at the end of a fiscal period. Daily decisions on matters such as the ability to make an
attractive purchase may be dependent upon basic accounting facts.

Expansion plans cannot be properly judged without detailed accounting data. Daily
decisions are enhanced by analytical accounting information. There is no uniformity of
accounting adequacy for all firms. Each owner must decide the extent to which he or she
needs details to govern daily operations.

6.2.2 Personnel Policies : Excessive absenteeism and labour turnover are usually signs
that something is wrong with the personnel policies of the firm. If unskilled labour requiring
little training is being utilized, labour turnover is not as serious as absenteeism, as long as
replacements are always available. The public image of the firm, however, is adversely
affected by either excessive absenteeism or labour turnover. When these facts are true of
the firm, a serious look at policies in effect is called for. Excessive absenteeism requires
investigation into its causes, its legitimacy, and its incidence for particular employees.
Because of their greater dependence upon fewer employees, small firms are usually less
able than larger ones to absorb absenteeism. The ability of workers to fill in for absentees is
usually severely limited in the small firm. For example, if two sales persons are handling the
retail counter, one person would find it extremely difficult to serve all the customers. It is
true that good organization should always anticipate replacements in any position, but
opportunities to do so successfully are fewer in a small firm. After reviewing the facts of any
personnel problem, it may be decided that certain persons must be terminated. Salaries
may justify review to cope with the problems. Personal conflicts between employees may
be uncovered, or other measures may be necessary. The important thing is that the
manager know the facts and speedily apply corrective action.

6.2.3 Outlook for Expansion of Contraction of Operations : Not all small firm owners want
to expand, even if the possibilities for profit exist. Many are satisfied to keep the business at
its present level. The optimists and true entrepreneurs (venture managers) are always
looking for profitable ways to expand the firm to become an ever-enlarging part of the total
scene in their industry. Basic planning and forecasting are continuous activities.
Contracting operations is sometimes dictated by the facts of recent firm history. Market
changes and market opportunities represent the kinds of facts needed to make the proper
decisions about expansion. That is why the efficient manager wants to keep informed on
total markets, competition, available locations, detailed costs, and financing possibilities to
support any necessary decisions. These are truly long range considerations, yet they can
be of utmost importance to the eventual welfare of the firm.

6.2.4 Adjusting Seasonal Variations : It is most important to have a clear picture of just
how important seasonal variations have been in the firm's recent history. Management
decisions must then be made concerning the inevitability of these variations and whether
they can be evened out through special sales, production policies, or other devices.
Changes in buying policies, employee vacation schedules, part time employment and even
inventory control may be indicated. Nothing can be done authoritatively, however, without
detailed facts upon which to base those decisions.
6.2.5 Review of Lease Arrangements : Most retailers and many manufacturers lease their
business facilities. As a result, the continuation of the business at a particular location is
dependent upon renewal of the rental lease. It is very sad to see a successful small firm
forced to move only because of its inability to renew its lease at prices the firm can afford.
Options for renewal may be written into an existing lease. Percentage lease (a flat rental
charge plus a percentage of sales over a stated amount) provide additional rental income for
landlords, if business sales exceed normally expected totals. Effective management always
has one eye on this matter, looks for options, and tries to ensure continued favourable
locations for the firm's operations.

6.2.6 Possible Change in Legal Form of the Firm : With all the new legislations and policy
declarations of the central and state governments to assists small firms, it is important that
the owner know these opportunities. Such possibility as forming a partnership concerned or
private or public limited company, merit serious attention by the entrepreneur.

6.2.7 Additional Assets Needs : Experience in operations may often suggest that a new
piece of equipment, a new showcase, a different type of cash register, or other assets would
materially improve the efficiency of the firm. Daily observation of procedures will clarify such
needs and indicate which acquisitions are necessary.

6.2.8 Adequacy of Risk Coverage : The eternal problem of risks and how best to cope with
them must be continually under review. New types of insurance protection appear often.
The manager may see that the incidence of loss from certain types of risk has increased and
now demands an insurance coverage, whereas in the past the firm had relied upon good
management to absorb that risk. The limits of public liability insurance that the firm carries
may be found inadequate, and a decision to increase such coverage may be in order. New
features, such as those that cover inventory losses, are often written into some insurance
policies. Costs and protection may be affected. Fidelity and surety bonds may become
appropriate, even though they had previously been deemed unnecessary. Minimum losses
in some areas of risk may suggest that they be coped with only by good management in the
future. The facts of current operations will supply details to justify any appropriate decisions.

6.2.9 Efficiency in Purchasing and Need for New Sources : Study of results may reveal
lapsed discounts, availability of new sources at better prices and improved quality, better
transportation arrangements or better firms of sale. These matters must also be noted by
managers as they make decisions for the ongoing firm.

6.2.10 Economic Data and Local Developments : All the information available about
general business trends nationally, regionally and locally should be a concern of
management. Trade associations, chambers of commerce, daily news-papers and business
periodicals are all sources of such information. A manager's ability to make decisions on the
basis of such data may have a great effect on the firm's welfare. Changing styles,
decreased purchasing power in the area, new plant developments and new payrolls, trends
in population growth, end changes in buying habits are some of the items in this category. It
behaves efficient managers to keep themselves apprised of as much information as possible
on these mattes.
***
 Office of the Development Commissioner, (MSME)
Ministry of Micro, Small & Medium Enterprises

Guidelines for Prospective Entrepreneur

I. GENERAL INFORMATION

What can be done for self-employment?

A micro or small or medium enterprise can easily be set up for self-employment. You can
choose an activity depending upon your interest and suitability not only to become self-
employed but also to generate employment for others.

What is a Micro, Small or Medium Enterprise?

The earlier concept of ‗Industries‘ has been changed to ‗Enterprises‘

• Enterprises have been classified broadly into:

(i) Enterprises engaged in the Manufacture / production of Goods pertaining to any
industry; &
(ii) Enterprises engaged in providing / Rendering of services.
 Manufacturing enterprises have been defined in terms of investment in plant and
machinery (excluding land & buildings) and further classified into :
- Micro Enterprises - investment up to Rs.25 lakh.
- Small Enterprises - investment above Rs.25 lakh & up to Rs. 5 crore
- Medium Enterprises - investment above Rs. 5 crore & up to Rs.10 crore.
• Service enterprises have been defined in terms of their investment in equipment
(excluding land & buildings) and further classified into:
- Micro Enterprises – investment up to Rs.10 lakh.
- Small Enterprises – investment above Rs.10 lakh & up to Rs.2 crore.
- Medium Enterprises – investment above Rs. 2 crore & up to Rs. 5 crore

It is not necessary to engage in manufacturing activity for self-employment. One can set up
service enterprises as well .

How do I select an activity for self-employment?

For selecting an activity or enterprise, you will have to consider the following significant issues:
 Where do you want to promote the enterprise?
 What resources are available near the location of the enterprise?
 What kind of market or consumer pattern exists near the site of enterprise?
 What kind of contacts you have to exploit to your advantage for marketing of the product?
 What infrastructure is available at the location of your enterprise?
 How much capital is available?

There are many other considerations including availability of skilled manpower, raw material,
technology etc. before you narrow down your choice for selection of industry or activity.

Who will assist in identifying the activity?

MSME Development Institutes can assist you in identifying the activity based on the Industrial
Potential Survey and product specific market studies. District Industries Centers/State
Directorate of Industries also facilitate in identification of a suitable activity.

What steps are required for identifying the activity?

A preliminary market study of product(s) or service(s) needs to be undertaken to analyse
consumption and availability pattern. If there is a gap in demand and supply, the activity
considered ideal for selection.

Where is market information available?

Market information is available with MSME Development Institutes (MSMEDIs) and DIC's of
respective states/areas. Market Survey reports on various items and Industrial potential surveys
of particular areas provide the information about the market potential of items. Industry and
Trade associations, specialized institutions like PPDC can also provide such information.

How can market potential be ascertained?

Market potential can be ascertained by conducting preliminary study by prospective
entrepreneur to get an in sight of the product/ services to be setup. An entrepreneur can
estimate local demand, demand within the state or country, export market and future prospects
of product(s)/service(s). Visit to wholesale and retail markets, bulk consumers etc. provides
accurate information on market potential.
Is there any agency providing guidance on marketing potential?
MSMEDI and State Governments agencies viz. DICs and SIDCs provide guidance on market
potential. The gap in demand & supply can be established through potential surveys and market
assessments with the help of these agencies.

Where can the enterprise be set up?

The enterprise can be set up in a designated industrial areas, where infrastructure facilities are
available and is near to the market identified. It can also be set up in any other area depending
upon nature of activity and local municipal rules.

What are the inputs required for setting up an enterprise?

The following major inputs are required for setting up an enterprise:
 Land, building or shed
 Machinery and equipments
 Raw Materials
 Power and Water
 Skilled manpower
 Capital

Are there any projects suitable for non-technical and inexperienced entrepreneurs?
There are many projects, which are suitable for non-technical and inexperienced entrepreneurs.
Skilled manpower and technical personnel can be hired according to needs. Entrepreneurs can
also join special short term training programmes. MSMEDI's, DIC's, NSIC etc. provide intensive
consultancy to such first generation entrepreneurs.

How can a new entrepreneur compete with the existing manufacturers?

A prospective entrepreneur can take the advantage of opting for the latest technology and
production process and operate at higher volume of operation. This leads to reduced production
cost and production of quality goods and services. A new entrepreneur can thus provide
improved quality goods and services at lower cost and further tap the market with innovative
marketing approach.

II. FINANCIAL ASSISTANCE

Which are the agencies providing financial assistance?

Financial assistance is available from institutions such as Nationalised Banks, Small Industries
Development Bank of India, Regional Rural Banks, National Small Industries Corporation, State
Financial Corporations etc. depending upon the project requirement and promoters background.
Financial assistance has two components. Loan for fixed capital is used to acquire Plant and
Machinery, land and building. Working capital loan is used to meet day to day operational cost
of the production. State Financial Corporation and National Small Industries Corporation
generally provide working capital. However under a package assistance, State Financial
Corporations also provide a composite loan covering plant and machinery and working capital.

How to choose the most suitable source of funding?

Any of the financial institutions can be approached to get funds keeping in view their specific
schemes. Evaluate and compare the terms and conditions, including rate of interest and
repayment period of loan offered by the different financial institutions. Select the financial
institution, which offers funds at minimum interest rate as per your repayment plan to suit your
project. Choose the Institution which is in close proximity to the project site if other terms and
conditions are similar.

What are the eligibility criteria for getting a loan?

The major eligibility criteria is return on the investment and profitability of the project proposed to
be set up. Any financial institution will support the project if repayment is assured.

How much money the entrepreneur is required to invest out of his own resources?
Some portion of total investment has to be contributed by the Entrepreneur out of own sources.
This is called margin money. Financial Institutions insist on 10 to 25 per cent margin money
depending upon the category of the entrepreneur, risk factor and existing scheme under which
the project will be financed

What to do if an entrepreneur does not have any money of his own?

It is simple. One can arrange for loan for margin money under the scheme being operated by
the State Commissioner/Directorate of Industries or State Bank of India. But this scheme is
generally offered to professionally qualified entrepreneurs. Alternately you may have to prune
down the size of your project in tune with available margin money. The financial institutions will
prefer to support an entrepreneur, who is willing to put his/her own stake to some extent.
What is the procedure for getting a loan?
An entrepreneur should approach the concerned financial institution viz. State Financial
Corporation, NSIC, Bank branches etc. Application in prescribed proformae has to be submitted
along with project report including proof of ownership/availability of land/building, proof of
residence, collateral securities (wherever applicable) etc. The loan is given by the institution if
the application meets the norms.

Can the loan be used to cover all types of investment in the project?
The amount of loan can be used to cover all types of investment required in the project, such as
machinery & equipment, and working capital, land and building. The lending agency for each
component of loan may be same or different.

Is there any agency for funding the land and building costs?
The Banks and State Financial Corporations offer assistance for land/building/shed to certain
extent. However, some qualifying parameters have been laid down by these institutions. In
addition, Housing Development Corporation also provides funds for land /building.

What are the general conditions for availing financial assistance?

The general conditions for getting financial assistance are:
 Eligibility criteria
 Technical /Economic viability
 Promoters contribution
 Capacity to repay loan
 Collateral securities/guarantee

Is loan available from any other source for small projects?

Loan is also offered under some special schemes like P.M.R.Y. which are directed towards
creation of self-employment.

III. PROJECT REPORT

What is a project report?

The project report is a document, which gives an account of the project proposal to ascertain
the prospects of the proposed plan/activity. The project report contains detailed information
about:
 Land & building required
 Manufacturing Capacity per annum
 Manufacturing Process
 Machinery & equipment along with their prices and specifications
 Requirements of raw materials
 Power & Water required.
 Manpower needs
 Marketing
 Cost of the project and production.
 Financial analyses & economic viability of the project.

How is a Project Report Prepared?

A project report is prepared with the help of prescribed guidelines available with MSMEDI's,
DIC's & financial institutions. Information about prices of machinery & equipment, raw material
and other various inputs required for setting up an enterprise need to be collected from the
market.

Is there any standard model for preparing the project report?

A model proforma for preparing the project report is available with MSMEDI's, DIC's & financial
institutions. Every institution has its own model proforma. However contents of all the proforma
are almost similar.

Is a model project report available?

Yes, Model project profiles are available with the MSMEDIs(formerly Small Industries Service
Institute's) & DIC's for the guidance of entrepreneurs.. However, these project profiles have to
be recast in accordance with specific needs of the entrepreneurs and the current prices of
inputs.

Which agency assists in preparation of Project Report?

MSMEDIs, NSIC and State Govt. agencies viz. DICs, SFCs can help you in preparing the
Project Report. You can also prepare the Project Report yourself by collecting detailed
information on various points.
What details are required for preparation of Project Report?
Information in detail is required about the technical process, requirements of plant and
machinery, raw materials, manpower requirement, market information and statutory
representations (like pollution control and public safety) etc. The details of power and water
tariff, land/shed/building and selling prices etc. needs to be collected as prevalent in the market.

Which agencies can be approached for obtaining information for preparation of the
Project Report?
Entrepreneur can approach MSMEDIs and state Govt. agencies viz. Directorate of Industries,
SFCs, DICs and market channels for getting information.

Who can help in selecting production process, equipment etc?

Micro, Small & Medium Enterprises Development Institute‘s (formerly Small Industries Service
Institutes), Design and Development Centers like MSME Technology Development Center‘s
(formerly PPDC's) /Tool Room's, Research and Developmental agencies such as NRDC's and
Regional Research Laboratories can help you in selecting the right production process, suitable
equipment's etc

IV. TRAINING

What basic training is required for setting up an enterprise?

Basic training differs from product to product but will necessary involve sharpening of
entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt.
technical Institutions.

What are the other types of training relevant for a new entrepreneur?
One can acquire entrepreneurial skills by under going Entrepreneurial Development Programme
and Management Development programme.

What is the duration of such courses?

These are short-term courses of 2 week's to 4 week's duration.

Which are the agencies providing such training?

There are a number of Government organisations as well as NGOs who conduct EDPs and
MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NIMSME
Entrepreneurship Development Institutes and other state government developmental agencies.

Is different type of training available for different categories of entrepreneurs?

Need based training courses are available for different categories of entrepreneurs. For
example, Central Footwear Training Institute's provide training for footwear. Tool Room and
Tool Design Institutes provide training in Engineering Industry. Likewise other technical training
is provided by various institutions of centre and state govt.

Are there any preferential criteria for imparting training?

An entrepreneur desirous of setting up of enterprises or his representative is preferred for
attending these training programmes which are offered on a nominal fee. However, there is no
fee charged for imparting training for the entrepreneurs of NE region. Moreover, preference is
accorded to weaker sections such as SC/ST, Women, Ex-servicemen. and Physically
handicapped persons.

Are there any short terms courses available?

Short term technical training courses are conducted by SISIs and other technical institutions,
which vary from 3 to 6 months of duration depending on nature of training. In addition, short-
term training programmes for managers & supervisors are also conducted by MSME's to
upgrade their knowledge and skills.

Does any agency give on the spot training for installation and commissioning of
equipment?
Normally the suppliers of machinery & equipment provide on the spot training as well as
facilities on the spot for installation and commissioning of equipment. However, SISIs also assist
the entrepreneurs for installation and commissioning of machinery equipment at their premises.

Is there any agency providing training for skill upgradation?

Skill development/upgradation courses are offered by SISIs, NSIC, PPDCs etc. in different
disciplines to skilled workers engaged in the micro, small and medium enterprises with a view to
equip them with better and improved technologies of production.
Which are the organisations providing training to improve management of an enterprise?
SISIs, Management Development Institute's, NPC, NSIC etc. offer Management Development
Programmes for acquiring knowledge about the different aspects of the management required
for an operation of industry. Short-term courses of two to four weeks are available on Production
Management, Marketing Management, Financial Management, Export Management, Export
Procedure & Documentation, Packaging for Exports, Cost Reduction, Material Management etc.

Are there institutions providing consultancy for development or setting up of project?

SISIs, DICs and State industrial development corporations can provide consultancy for
development or setting up of project. Suitable technologies are also offered by CSIR
Laboratories, PPDC's, NRDCs, R&D institutions also offer consultancy at nominal charges.

What kind of consultancy is offered by these agencies?

The consultancy provided by these institutions includes identification of suitable product,
market, technologies, Raw Materials, production method, regulatory requirement etc. In fact any
problem can be addressed by these institutions for setting up or running of the enterprise.

Which agencies provide information on plant and machinery, raw materials and other
equipments?
SISIs, DIC, CSIR Laboratories, PPDC's, NRDC, R&D institutions etc. provide information on
plant and machinery, raw materials and other equipments.

How does one tackle pollution control needs of the project?

In case your product is covered under the list of the polluting industries as defined by the state
government, it will be necessary to get specific clearance from the state Pollution Control
Board/Committees. Pollution control equipments/measures will have to be installed by the
enterprise as per need. Such polluting enterprises can only be set up in the designated
industrial areas or locations and may have to link up with the common affluent treatment facility,
if available in the area.

Which institutions provide details of pollution control requirements?

Pollution control board/ Committees and State Directorate of industries provide details of
pollution control requirements. SISIs, and DICs also help in understanding of pollution needs.

Does any agency provide training in pollution control?

MSME's provide training in pollution control for different type of industries as per their local
needs. Pollution Control Boards & Ministry of Environment also support training efforts.

V. MARKETING

How does a new entrepreneur market the product?

This is an era of globalization and liberalization. The manufacturers have to offer goods and
services of desired quality at optimum cost. Select the right market/consumers identified at the
time of planning the unit. Establish Direct marketing channels or a network of dealers as per
requirement of the product based upon initial survey. Highlight strengths of the product.

How does one popularise the new product?

You may create awareness among the buyers or consumers about your product's strong points
in order to convince them of the utility of the product. Publicity in various available forms has to
be arranged within the budgetary constraints. Sell your quality, to gain consumer's confidence.
Review consumer feed back. Resort to live demonstration. MSME /NSIC help in popularising
the product through domestic and international trade fairs/exhibitions.

Are there any specialized agencies which offer marketing assistance?

There are Governmental and non-governmental specialised agencies which provide marketing
assistance. NSIC & KVIC are the devoted govt. agencies for providing marketing assistance to
MSME units.

Is there any other assistance offered by NSIC for marketing MSME Product?
Besides promotion of MSME products through exhibitions, NSIC directly market the MSME
produce in the domestic and overseas market. NSIC also manages a single point registration
scheme for manufacturers for Govt. purchase. Units registered under this scheme get the
benefits of free tender documents and exemption from earnest money deposit and performance
guarantee.

Does any agency help in exhibition of the product?

MSME & NSIC help the micro, small and medium enterprises for exhibiting products of MSME
in the domestic and international exhibition.
Does any agency help in promoting exports?
ITPO, DGFT, FIEO & Chambers of commerce in different countries Ministry of Commerce
provide assistance in promoting exports. Office of the Development Commissioner (MSME),
Government of India provides financial assistance to micro, small and medium scale
entrepreneurs to display their products in overseas fairs and also for sales-cum-study tours
abroad.

Are there any special benefits for exports?

MSME units gets special benefits such as duty draw back, advance licensing for import of
capital goods and raw materials, pre- shipment and post shipment credit against firm export
orders and marketing development assistance. Income tax benefit is available on exports
earning.

VI. PROMOTIONAL SCHEMES

What is the policy of Government for promoting a micro, small and medium enterprises ?
Government accords the highest preference to development of MSME by framing and
implementing suitable policies and promotional schemes. Besides providing developed land and
sheds to the entrepreneurs on actual cost basis with appropriate infrastructure, special schemes
have been designed for specific purposes like quality upgradation, common facilities,
entrepreneurship development and consultancy services at nominal charges.

What is the incentive provided for quality upgradation ?

Government of India has been executing the incentive scheme for providing reimbursement of
charges for acquiring ISO 9000 certification to the extent of 75% of the cost subject to a
maximum of Rs. 75,000/- in each case. ISO 9000 is a mechanism to facilitate adoption of
consistent management practices and production technique as decided by the entrepreneur
himself. This facilitates achievement of desired level of quality while keeping check on
production process and management of the enterprise.
Is there any concession on Excise Duty payable by small units ?
MSME units with a turnover of Rs. 1 crore or less per year have been exempted from payment
of Excise Duty. Moreover there is a general scheme of excise exemption for MSME brought out
by the Ministry of Finance which covers most of the items. Under this, units having turnover of
less than Rs. 3 crores are eligible for concessional rate of Excise Duty. Moreover, there is an
exemption from Excise Duty for MSME units producing branded goods in rural areas.

Is priority there any on providing credit to MSME ?

Credit to micro, small and medium scale sector has been covered under priority sector lending
by banks. Small Industries Development Bank of India (SIDBI) has been established as the
apex institution for financing the MSME. Specific schemes have been designed for
implementation through SIDBI, SFCs, Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5
lakhs are made available by the banks without insisting on collaterals. Further Credit Guarantee
Fund for micro, small and medium enterprises has been set up to provide guarantee for loans to
MSME up to Rs. 25 lakhs extended by Commercial Banks and some Regional Rural Bank.

What are the policies and schemes for promotion of MSME being implemented by State
Governments ?
All the State Governments provide technical and other support services to small units through
their Directorates of Industries, and District Industries Centres. Although the details of the
scheme vary from state to state, the following are the common areas of support.
a. Development and management of industrial estates
b. Suspension/deferment of Sales Tax
c. Power subsidies
d. Capital investment subsidies for new units set up in a particular district
e. Seed Capital/Margin Money Assistance Scheme
f. Priority in allotment of power connection, water connection.
g. Consultancy and technical support

Benefits to Become A Good Entrepreneur ?

Government of India runs a scheme for giving National Awards to micro, small and medium
scale entrepreneurs providing quality products in 11 selected industry groups of consumer
interest. The winners are given trophy, certificate and a cash price of Rs. 25000/- each.

OFFICE OF DEVELOPMENT COMMISSIONER (MSME)

"A" Wing 7th Floor, Nirman Bhawan, New Delhi-110108
(Tel): 23061176 (Fax): 23062315
 NATIONAL SCIENCE & TECHNOLOGY ENTREPRENEURSHIP DEVELOPMENT BOARD
(NSTEDB), DEPARTMENT OF SCIENCE & TECHNOLOGY, GOVT. OF INDIA
Introduction

The National Science & Technology Entrepreneurship Development Board (NSTEDB),

established in 1982 by the Government of India under the aegis of Department of Science &
Technology, is an institutional mechanism to help promote knowledge based and technology
driven enterprises. The Board, having representations from socio-economic and scientific
Departments and Institutions aims to convert "job-seekers" into "job-generators" through
Science & Technology (S&T) interventions.

Major Objectives of NSTEDB:

 To promote and develop high quality entrepreneurship amongst S&T manpower and to
promote self-employment by utilising S&T infrastructure.
 To facilitate and launch various promotional services relating to development of
entrepreneurship.
 To network agencies of the support system, academic institutions and Research &
Development (R&D) organisations to foster entrepreneurship and self-employment using
S&T with special focus on backward areas as well.

The programmes are broadly classified into the following areas:

Training programmes
 Entrepreneurship Awareness Camp (EAC)
 Entrepreneurship Development Programme (EDP)
 Faculty Development Programme (FDP)
 Open Learning Programme in Entrepreneurship (OLPE)
 Technology Based EDP (TEDP)

Institutional mechanisms for entrepreneurship development

 Entrepreneurship Development Cell (EDC)
 Science & Technology Entrepreneurship Development (STED) Project
 Science & Technology Entrepreneurs Park (STEP)
 Technology Business Incubator (TBI)

Information dissemination
 Science Tech Entrepreneur - Magazine(being relaunched as e-zine)
 TIMEIS - Web Portal

For more details/ formats and guidelines on the NSTEDB and related programmes, please visit
our websites
 www.nstedb.com
 www.techno-preneur.net

For more information on NSTEDB :

Shri. H. K. Mittal Email: hkmittal@vsnl.com

Adviser, Member Secretery
National Science & Technology Entrepreneurship Development Board (NSTEDB)
Department of Science & Technology (DST), Technology Bhawan
New Mehrauli Road, New Delhi-110 016 Telefax: 011-26517186, 26590314
Chandigarh man sells water pumps online, gets Google CEO's praise
Vibhor Mohan | TNN | Sep 28, 2015, 12.34 PM IST
HIGHLIGHTS
• KS Bhatia got quoted by Google CEO as an online success story in his speech before PM
Narendra Modi
• Today if you type 'water pumps' anywhere in the world Pumpkart's name pops up
• Even though Bhatia has been in this business for 17 years, it is his online marketplace that is
taking him places

KS Bhatia believes India Post can help

entrepreneurs like him to take things to the next level.

CHANDIGARH: Chandigarh-based entrepreneur KS Bhatia woke up to 50 missed calls on

Sunday. He had been quoted by Google CEO Sundar Pichai as an online success story in his
speech before PM Narendra Modi at the 'Digital India' dinner for top tech CEOs at San Jose,
California, and his online endeavor had got world recognition.

"The online journey started when my 14-year-old son, who is quite an internet wizard, gifted me
this domain (also the idea) on my birthday two years back. He told me that this vertical has not
been touched and it was so true," said jubilant Bhatia, a 45-year-old chemical engineering
graduate, founder and CEO of Pumpkart.com.

"We put in place a team for search engine optimization and invested in Google Adwords and
today if you type 'water pumps' anywhere in the world, including Google UK and Google US,
Pumpkart's name pops up. Seeking our growing presence, even top e-commerce companies
were forced to introduce water pumps in their list of commodities. Other companies created
websites and left it at that," he said.

Looking back at the online success, Bhatia recalled, "We began by stocking pumps but soon
turned into an online marketplace and today we have 200 brands with us. The water pump
market is worth Rs 2,600 crore and nearly 60% of it is unorganized. There are over 400
manufacturers in the country."

Ask him why he clicked in faraway Maharashtra and Tamil Nadu and he explains. "In Tamil
Nadu, the high internet penetration seemed to do the trick for us and out model came in handy
for domestic and agricultural customers. In Maharashtra, it was different and most of the
existing pump manufacturers did not have reach in remote areas. Thirty five percent of the
company's sales are in these two states."

Bhatia believes India Post can help entrepreneurs like him to take things to the next level.
"Logistics is a hurdle that we face and given the well-knit network that India Post has, it can
complement e-commerce in a big way by helping companies reach out in the remote areas."

But despite these problems, he adds, the future of e-commerce looks very bright in India. "We
are only at $17 billion, e-commerce has swelled to $550 billion in China and $350 billion in the
US. So it is a phenomenon that is here to stay," said Bhatia.

Even though Bhatia has been dealing in offline sale of water pumps for 17 years, it was his
online marketplace that is taking him places. "Google India recently did a case study on
Pumpkart.com in May for carving a new niche at world level. Earlier, we were awarded as
regional winner of SME Heroes Challenge 2014 organized by Google India," he said.
Top Comment : A great success story. The business would not have grown if Mr.Bhatia did not
maintain high standards of qality and most important after sales service. With comparison of all
products available online, task of people to select an item to be purchased has become easy.
Ramesh Rvs

"In Chandigarh, a one-man retailer was selling water pumps and he decided to take his
business online and today he is the largest retailer of water pumps in Maharashtra and Tamil
Nadu," said Pichai, appreciating the business model of Bhatia's company Pumpkart.com.

Image courtesy: LinkedIn