5 Explain the theory of high achievement by Mcclelland (Unit 1)

David McClelland's theory is a psychological theory of entrepreneurial supply

centring around the concept of need for achievement .McClelland believes that the
need for achievement is largely for economic development. A society with a
generally high level of n-achievement will produce more energetic entrepreneurs,
who in turn produce more rapid economic growth. Entrepreneur is simply someone
who exercises control over production that is not just for personal consumption.
The entrepreneurs are different individuals with high n-achievement. McClelland
has noted three major ingredients of the behaviour of an entrepreneur. They are:
62 1. Desire to take personal responsibility for decision.

2. Preference for decision involving a moderate degree or risk.

3. Interest in concrete knowledge of the results of decision.

McClelland believes that a society with high level of n-achievement will produce
more entrepreneurs who in turn would assist more rapid economic development

Through his research, McClelland identified the following six characteristics of high
need achievers:

1. High-need achievers have a strong desire to assume personal responsibilities for

performing a task or finding a solution to a problem.

2. High need achievers tend to set moderately difficult goals and take calculated risks?
3. High need achievers have a strong desire for performance feedback?

4. They have need for achievement for attaining personal accomplishment.

5. They look for challenging tasks.

6 Role of culture in entrepreneurial development ( Unit-1)

The success of the entrepreneur depends on the environmental factors such as social,
economic, legal, political and technological factors which influence their activities
thus leading to successful entrepreneurship. Value systems and cultural norms affect
the acceptability and perceived utility of entrepreneurial activity.
What is social entrepreneurship? explain its importance (Unit 2)
Social entrepreneurship is all about recognizing the social problems and achieving a social
change by employing entrepreneurial principles, processes and operations. It is all about
making a research to completely define a particular social problem and then organizing,
creating and managing a social venture to attain the desired change. The change may or may
not include a thorough elimination of a social problem. It may be a lifetime process focusing on
the improvement of the existing circumstances.

While a general and common business entrepreneurship means taking a lead to open up a new
business or diversifying the existing business, social entrepreneurship mainly focuses on creating social
capital without measuring the performance in profit or return in monetary terms. The entrepreneur s in
this field are associated with non-profit sectors and organizations. But this does not eliminate the need
of making profit. After all entrepreneurs need capital to carry on with the process and bring a positive
change in the society.

Along with social problems, social entrepreneurship also focuses on environmental problems. Child
Rights foundations, plants for treatment of waste products and women empowerment foundations are
few examples of social ventures. Social entrepreneurs can be those individuals who are associated with
non-profit and non-government organizations that raise funds through community events and activities.

1. Employment Development
The first major economic value that social entrepreneurship creates is the most obvious one
because it is shared with entrepreneurs and businesses alike: job and employment creation.
Estimates ranges from one to seven percent of people employed in the social
entrepreneurship sector. Secondly, social enterprises provide employment opportunities and
job training to segments of society at an employment disadvantage (long -term unemployed,
disabled, homeless, at-risk youth and gender-discriminated women).

2. Innovation / New Goods and Services

Social enterprises develop and apply innovation important to social and economic
development and develop new goods and services. Issues addressed include some of the
biggest societal problems such as HIV, mental ill-health, illiteracy, crime and drug abuse
which, importantly, are confronted in innovative ways. An example showing that these new
approaches in some cases are transferable to the public sector is the Brazilian social
entrepreneur Veronica Khosa, who developed a home-based care model for AIDS patients
which later changed government health policy.

3. Social Capital
Next to economic capital one of the most important values created by social entrepreneurship
is social capital (usually understood as “the resources which are linked to possession of a
durable network of ... relationships of mutual acquaintance and recognition").

4. Equity Promotion
Social entrepreneurship fosters a more equitable society by addressing social issues and
trying to achieve ongoing sustainable impact through their social mission rather than purely
profit-maximization. In Yunus’s example, the Grameen Bank supports disadvantaged women.
Another case is the American social entrepreneur J.B. Schramm who has helped thousands of
low-income high-school students to get into tertiary education.
Write a note on business process outsourcing as an option available to an entrepreneur
Unit 2
Business process outsourcing, or BPO, is a business practice in which one organization hires another
company to perform a task (i.e., process) that the hiring organization requires for its own business to
successfully operate.BPO has its roots in the manufacturing industry, with manufacturers hiring other
companies to handle specific processes, such as parts of their supply chains, that were unrelated to the
core competencies required to make their end products.

However, organizations in other industries adopted the practice through the years. Now, the use of
BPO has expanded so much that organizations of all kinds -- for-profit businesses, nonprofits, and even
government offices and agencies

What BPO is used for

Organizations engage in business process outsourcing for two main areas of work: back -office
functions and front-office functions.

Organizations can outsource a range of back-office functions (also referred to as internal business
functions) including accounting, IT services, human resources (HR), quality assurance (QA) and
payment processing.

Similarly, they can outsource various front-office functions, such as customer relation services,
marketing and sales.

Elaborate on the initiative taken by government to promote women entrepreneurship (Unit

2)
Empowering women, giving women enough opportunities to show their worth, is the major concern of
the government right now .More women are joining the world of business and entrepreneurship day by
day. All they need is proper inspiration, training and promotions. The Government has also taken a few
steps to ensure that women are properly educated, informed and guided ab out entrepreneurship and
the countless opportunities it has to offer. Here is what the Government is doing to help women start
their own businesses.

1.Trade Related Entrepreneurship Assistance and Development (TREAD) scheme for women
This scheme provides women with proper trade related training, information and counseling along with
extension activities related to trades, products, services etc. Along with that,Government Grant
also provides up to 30% of the total project cost as appraised by lending insti tutions which would
finance the remaining 70% as loan Assistance to applicant women. It mostly helps poor & usually
illiterate/semi-literate women to get started on their business.

2. Mahila Vikas Nidhi

This fund has been set up by SIDBI to help women in rural area start their entrepreneurship easily.
It grants loan to women are given to start their venture in the field like spinning, weaving, knitting,
embroidery products, block printing, handlooms handicrafts, bamboo products etc.

3. Co-operative Schemes
Women co-operatives schemes were formed to help women in agro-based industries like dairy farming,
poultry, animal husbandry, horticulture etc. with full financial support from the Government.

4. Government Yojanas
Swarna Jayanti Gram Swarozgar Yojana and Swaran Jayanti Sekhari Rozgar Yojana were two
important schemes launched by the government to provide reservations for women and encouraging
them to start their ventures.

5. Private Organisations
Several NGOs, voluntary organizations, Self-help groups, institutions and individual enterprises from
rural and urban areas are working to help new women entrepreneurs to set up their business and run it
smoothly.

A few training programs started by the Government for self employment of women are:
Support for Training and Employment Programme of Women (STEP).
Development of Women and Children in Rural Areas (DWCRA).
Small Industry Service Institutes (SISIs)
State Financial Corporations
National Small Industries Corporations
District Industrial Centres (DICs)

Define innovation and explain its broad categories (Unit- 3)

Innovations inevitably fall into one of two paths . Some innovations build on pre-existing
ideas or processes in a linear fashion; think of how cars might receive better engines or
superior tire technology over time. These are the evolutionary innovations. Others
completely overhaul an existing system or introduce something entirel y new. This is
revolutionary innovation. The television, automobile, and internet are examples.
Evolutionary innovation focuses on orientation TOWARDS today’s customers

It can be argued that evolutionary innovators can be highly successful with limited ris k – in
large part, innovation returns come from evolution. Moreover, evolution accounts for the
majority of innovation activities in most firms. Evolutionary innovation only optimizes and
exploits existing businesses and prolongs their trajectories.

Revolutionary innovation (speed or first to market concepts) is only optimal under the
following conditions: high performance products, long product lifecycles, a relatively long
window of market opportunity, relatively high sales, stable margins, and relatively flat
development costs. Only given these conditions, can companies generate sufficient revenue
to offset the increased costs incurred with speed to market and revolutionary innovation.
There are only three scenarios in which first to market revolutionary innovation can
guarantee a sustainable advantage:
(1) if you can secure ironclad patent protection
(2) if you can set a proprietary industry standard
(3) if you can use your lead to establish such a beachhead that even if better options
become available, your customers will find it too much of a hassle to switch.

 Evolution tends to optimize the world as is. Revolution aims at creating the world as
it could be.

 Evolution needs revolution in order to explore further potential to be tapped.

 Revolution needs evolution in order to survive and thrive.

Explain the various steps in preparing a business plan (Unit 3)

A business plan is a well written document that best describes a business. Majorly it
objectives, strategies, sales, marketing and financial forecasts related to business. A
business plan has many functions, from securing external funding, to measuring success
within your business.

Preliminary Investigation : Review the business plan, draw key assumption on which the
plan is based, conduct an environmental SWOT and conduct functional audit

Idea generation: development of new concepts, products or value addition to existing ones.
The various sources are

 Consumer
 Company
 Research and development
 Employees
 Vendors and dealers
 Methods of generating idea

Brainstorming, group discussions, invitation of ideas from professionals, market research,

import ideas from product launched abroad

Environmental scanning

External Scanning: socio-cultural appraisal (norms, values and beliefs of the society ),
technological appraisal ( assessment of existing technical know-how and existing technology
for current product), Economic appraisal (assesses economic environment like consumer
price index, inflation, balance of payments, consumption pattern), Government apprai sal
(legal framework, policies, subsidies etc)

Internal environment : Availability of raw material, machines, finances to meet the

expenses, potential market and others costs involved

Feasibility analysis :to see whether the project will be feasible or not

Market analysis :estimate the demand and market share of the proposed product

Technical or operational analysis : Cost and availability of technology like material

availability, material requirement planning, plant layout, plant location and plant capacity
and machineries required

Financial Analysis :financial issues related to proposed business

Cost of plant and building, cost of production, working capital, provision for contingencies,
Sales and promotion estimates. Based on this info the following proj ections are made
  Breaking point
 Cash flow
 Balance sheet

Drawing functional plan :

 Marketing Plan :marketing strategies using product and promotion mix for
marketing the product
 Production/operational plan: Includes strategies like plant location, physical layout,
Cost of machineries, list of suppliers, cost of manufacturing, inventory
management.
 Organizational/HR plan: Manpower requirement, recruitment and selection,
organization structure, training and development and compensation and benefit.
 Financial Plan: projected report on Break even, cash flow, income statement, ratios
etc.

Explain the role of SIDBI in the development of of SMEs (Unit 4)

 The SIDBI was established as a wholly owned subsidiary of Industrial Development

Bank of India (IDBI) under a special Act of the Parliament 1988 and started its
operations on April 2, 1990. It took over the responsibility of administering Small
Industries Development Fund and National Equity Fund which were earlier
administered by IDBI. It is the Principal Financial Institution for the Promotion,
Financing and Development of the Micro, Small and Medium
Enterprise (MSME) sector

It direct, indirect and micro finance facilities.

 Direct Finance: In the form of Term Loan Assistance, Working Capital Assistance,
Support against Receivables, Foreign Currency Loan, Scheme of Energy Saving for
MSME sector, equity support etc.
 Indirect Finance: The Indirect assistance in the form of Refinance is provided to
Primary Lending Institutions (PLIs), comprising banks, State Level Financial
Institutions, etc. having a wide network of branches all over the country. The main
objective of Refinance Scheme is to increase the resource position of PLIs which
would ultimately facilitate the flow of credit to MSME sector.
 Micro Finance: SIDBI provides micro finance i.e. credit to small entrepreneurs and
businessmen for establish their business.

Role of SIDBI

 SIDBI refinances loans extended by the primary lending institutions to small scale
industrial units, and also provides resources support to them.
  SIDBI discounts and rediscounts bills arising from sale of machinery to or
manufactured by industrial units in the small scale sector.
 To expand the channels for marketing the products of Small Scale Industries (SSI)
sector in domestic and international markets.
 It provides services like leasing, factoring etc. to industrial concerns in the small
scale sector.
 To promote employment oriented industries especially in semi-urban areas to
create more employment opportunities and thereby checking migration of people
to urban areas.
 To initiate steps for technological up-gradation and modernisation of existing units.
 SIDBI facilitates timely flow of credit for both term loans and working capital to SSI
in collaboration with commercial banks.
 SIDBI Co-Promotes state level venture funds in association with respective state
government.
 It grants direct assistance and refinance loans extended by primary lending
institutions for financing exports of products manufactured by small scale units.

Explain the basis of market segmentation (Unit 4)

 1. Geographic Segmentation:

Geographic location is one of the simplest methods of segmenting the market.

People living in one region of the country have purchasing and consuming habit
which differs from those living in other regions. For example, life style products sell
very well in metro cities, e.g., Mumbai, Delhi, Kolkata and Chennai but do not sell in
small towns. Banking needs of people in rural areas differ from those of urban
areas. Even within a city, a bank branch located in the northern part of the city may
attract more clients than a branch located in eastern part of the city.

2. Demographic Segmentation:

 Demographic variables such as age, occupation, education, sex and income are
commonly used for segmenting markets.

3. Psychographic Segmentation:

Under this method consumers are classified into market segments on the basis of
their psychological make-up, i.e., personality, attitude and lifestyle. According to
attitude towards life, people may be classified as traditionalists, achievers, etc.

Rogers has identified five groups of consumer personalities according to the way
they adopt new products:

(а) Innovators:
 These are cosmopolitan people who are eager to try new ideas. They are highly
venturesome and willing to assume the risk of an occasional bad experience with a
new product.

(b) Early Adopters:

These are influential people with whom the average person checks out an
innovation.

(c) Early Majority:

This group tends to deliberate before adopting a new product. Its members are
important in legitimising an innovation but they are seldom leaders.

d) Late Majority:

This group is cautious and adopts new ideas after an innovation has received public
confidence.

(e) Laggards:

These are past-oriented people. They are suspicious of change and innovations. By
the time they adopt a product, it may already have been replaced by a new one.
Understanding of psychographic of consumers enables marketers to better select
potential markets and match the product image with the type of consumer using it.
For example, women making heavy use of bank credit cards are said to lead an
active lifestyle and are concerned with their appearance. They tend to be liberated
and are willing to try new things.

Psychographic classification may, however, be an oversimplification of consumer

personalities and purchase behaviour. So many factors influence consumers that an
early adopter of one product might well be a laggard for some other product and
vice versa.

4. Behaviouristic Segmentation:

In this method consumers are classified into market segments not the basis of their
knowledge, attitude and use of actual products or product attributes.

Any of the following variables might be used for this purpose:

(а) Purchase Occasion:

Buyers may be differentiated on the basis of when they use a product or service. For
example, air travellers might fly for business or vacation. Therefore, one airline might
promote itself as a business flyer while another might target the tourists.
(b) Benefits Sought:

The major benefit sought in a product is used as the basis of classify consumers. High
quality, low price, good taste, speed, sex appeal are examples of benefits. For example,
some air travellers prefer economy class (low price), while others seek executive class
(status and comfort).

(c) User Status:

Potential buyers may be classified as regular users, occasional users and non-users.
Marketers can develop new products or new uses of old products by targeting one or
another of these groups.

5. Volume Segmentation:

Consumers are classified light, medium and heavy users of a product. In some cases, 80 per
cent of the product may be sold to only 20 per cent of the group. Marketers can decide
product features and advertising strategies by finding common characteristics among heavy
users. For example, airlines having ‘Frequent Flyer’ are using user rate as the basis of market
segmentation. Generally, marketers are interested in the heavy user group.

But marketers should pay attention to all the user groups because they represent different
opportunities. The non-users may consist of two types of people— those who do not use
the product and those who might use it. Some may change over time from a non-user to a
user.

Those who do not use due to ignorance may be provided extensive information. Repetitive
advertising may be used to overcome inertia or psychological resistance. In this way non -
users can gradually be converted into users.

6. Product-space Segmentation:

Here the buyers are asked to compare the existing brands according to their perceived
similarity and in relation to their ideal brands. First, the analyst infers the latent attributes
that consumers are using to perceive the brand. Then buyers are classified into groups e ach
having a distinct ideal brand in mind. The distinctive characteristics of each group are
ascertained.

7. Benefit Segmentation:

Consumer behaviour depends more on the benefit sought in product/service than on

demographic factors. Each market segment is identified by the major benefits it is seeking.
Most buyers seek as many benefits as possible. However, the relative importance attached
to individual benefits differs from one group to another. For example, some consumers of
toothpaste give greater importance to freshness while other prefer taste or brightness of
teeth.
Research studies on benefit segmentation reveal that it is easier to take advantage of
existing segment, then to create new segments. As no brand can appeal to all consumers, a
marketer who wants to cover the market fully must offer multiple brands.