Q. Concept of Entrepreneurship: The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake’. This refers to those who “undertake” the risk of new enterprises. An enterprise is created by an entrepreneur. The process of creation is called “entrepreneurship”. Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise. Characteristics of Entrepreneurship: 1. Economic and dynamic activity Entrepreneurship is an economic activity because it involves the creation and operation of an enterprise with a view to creating value or wealth by ensuring optimum utilization of scarce resources. Since this value creation activity is performed continuously in the midst of uncertain business environment, therefore, entrepreneurship is regarded as a dynamic force. 2. Related to innovation: Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an individual to continuously evaluate the existing modes of business operations so that more efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a continuous effort for synergy (optimization of performance) in organizations. 3, Profit potential: “Profit potential is the likely level of return or compensation to the entrepreneur for taking on the risk of developing an idea into an actual business venture.” Without profit potential, the efforts of entrepreneurs would remain only an abstract and a theoretical leisure activity. 4. Risk bearing: The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and implementation of new ideas. New ideas are always tentative and their results may not be instantaneous and positive, An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period (time gap between the conception and implementation of an idea and its results), an entrepreneur has to assume risk, If an entrepreneur does not have the willingness to assume risk, entrepreneurship would never succeed, This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)Entrepreneurial Process: To establish and run an enterprise it is divided into three parts ~ the entrepreneurial job, the promotion, and the operation, Entrepreneurial job is restricted to two steps, i.e., generation of an idea and preparation of feasibility report. In this article, we shall restrict ourselves to only these two aspects of entrepreneurial process. 1 Idea GERMINATION Generation (Recognition) PREPARATION (Rationalisation) INCUBATION (Fantasising) Foasbilty a Study + ILLUMINATION VERIFICATION (Realisation) (Validation) Entrepreneurial Process To generate an idea, the entrepreneurial process has to pass through three stages: a, Germination: This is like seeding process, not like planting seed. It is more like the natural seeding, Most creative ideas can be linked to an individual's interest or curiosity about a specific problem or area of study. b. Preparation: Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a search for answers to the problems. Inventors will go on for setting up laboratories; designers will think of engineering new product ideas and marketers will study consumer buying habits. c. Incubation: This is a stage where the entrepreneurial process enters the subconscious intellectualization. The sub-conscious mind joins the unrelated ideas so as to find a resolution, Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)2. Feasibility study: Feasibility study is done to see if the idea can be commercially viable. It passes through two steps: a. Illumination: After the generation of idea, this is the stage when the idea is thought of as a realistic eres The stage of idea blossoming is critical because ideas by themselves have no meaning. b. Verification: This is the last thing to verify the idea as realistic and useful for application. Verification is concerned about practicality to implement an idea and explore its usefulness to the society and the entrepreneur, Importance of Entrepreneurship: 1. Development of managerial capabilities: An entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of cost and benefits implications, and finally chooses the best alternative. This exercise helps in sharpening the decision making skills of an entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in creating new technologies and products in place of older technologies and products resulting in higher performance. 2. Creation of organizations: Entrepreneurship results into creation of organizations when entrepreneurs assemble and. coordinate physical, human and financial resources and direct them towards achievement of objectives through managerial skills. 3. Improving standards of liv By creating productive organizations, entrepreneurship helps in making a wide variety of goods and services available to the society which results into higher standards of living for the people. Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc. are pointers to the rising living standards of people, and all this is due to the efforts of entrepreneurs, 4, Means of economic development: Entrepreneurship involves creation and use of innovative ideas, maximization of output from given resources, development of managerial skills, ete., and all these factors are so essential for the economic development of a country. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)Factors affecting Entrepreneurship: 1. Personality Factors: Personal factors, becoming core competencies of entrepreneurs, include: (a) Initiative (does things before being asked for) (b) Proactive (identification and utilization of opportunities) (0) Perseverance (working against all odds to overcome obstacles and never complacent with success) (@) Problem-solver (conceives new ideas and achieves innovative solutions) (¢) Persuasion (to customers and financiers for patronization of his business and develops & maintains relationships) (f) Self-confidence (takes and sticks to his decisions) (g) Self-critical (learning from his mistakes and experiences of others) (h) A Planner (collects information, prepares a plan, and monitors performance) (1) Risk-taker (the basic quality). 2. Environmental factors: Environmental factors such as political climate, legal system, economic and social conditions, market situations, etc. contribute significantly towards the growth of entrepreneurship. For example, political stability in a country is absolutely essential for smooth economic activity. Frequent political protests, bands, strikes, etc. hinder economic activity and entreprencurship, Types of Entrepreneurs: 1. Innovative entrepreneurs: These entrepreneurs have the ability to think newer, better and more economical ideas of business organization and management. They are the business leaders and contributors to the economic development of a country. Inventions like the introduction of a small car ‘Nano’ by Ratan Tata, organized retailing by Kishore Biyani, making mobile phones available to the common may by Anil Ambani are the works of innovative entrepreneurs. 2, Imitating entrepreneurs: These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They imitate innovative entrepreneurs because the environment in which they operate is such that it does not permit them to have creative and innovative ideas on their own, Downloaded by Aishwarya Jagtap (agtapaisha20@gmai.com)3. Fabian entrepreneurs: The dictionary meaning of the term ‘Fabian’ is ‘a person seeking victory by delay rather than by a decisive battle’. Fabian entrepreneurs are those individuals who do not show initiative in visualizing and implementing new ideas and innovations wait for some development which would motivate them to initiate unless there is an imr jent threat to their very existence. 4, Drone entrepreneurs: The dictionary meaning of the term ‘drone’ is ‘a person who lives on the labor of others’. Drone entrepreneurs are those individuals who are satisfied with the existing mode and speed of business activity and show no inclination in gaining market leadership. In other words, drone entrepreneurs are die-hard conservatives and even ready to suffer the loss of business. 5, Social Entrepreneur: Social entrepreneurs drive social innovation and transformation in various fields including education, health, human rights, worker ” rights, environment and enterprise development. They undertake poverty alleviation objectives with the zeal of an entrepreneur, business practices and dare to overcome traditional practices and to innovate. Dr Mohammed Yunus of Bangladesh who started Gramin Bank is a case of social entrepreneur, Functions of an Entrepreneur: 1. Innovation: An entrepreneur is basically an innovator who tries to develop new technology, products, markets, etc. Innovation may involve doing new things or doing existing things differently, An entrepreneur uses his creative faculties to do new things and exploit opportunities in the market, He does not believe in status quo and is always in search of change. 2. Assumption of Risk: ‘An entrepreneur, by definition, is risk taker and not risk shirker. He is always prepared for assuming losses that may arise on account of new ideas and projects undertaken by him. This willingness to take risks allows an entrepreneur to take initiatives in doing new things and marching ahead in his efforts. 3. Research: A cntreprencur finalizes an idea only after considering a variety of options, analyzing their strengths and weaknesses by applying analytical techniques, testing their applicability, supplementing them with empirical findings, and then choosing the best alternative. It is then that he applies his ideas in practice. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)4, Development of Management Skills: The work of an entrepreneur involves the use of managerial skills which he develops while planning, organizing, staffing, directing, controlling and coordinating the activities of business. His managerial skills get further strengthened when he engages himself in establishing equilibrium between his organization and its environment. 5. Overcoming Resistance to Change: New innovations are generally opposed by people because it makes them change their existing behavior patterns. An entrepreneur always first tries new ideas at his level It is only after the successful implementation of these ideas that an entrepreneur makes these ideas available to others for their benefit 6. Catalyst of Economic Development: An entrepreneur plays an important role in accelerating the pace of economic development of a countty by discovering new uses of available resources and maximizing their utilization. To better appreciate the concept of an entrepreneur, it is desirable to distinguish him from an entrepreneur and promoter.. Table 4.1: Distinction between Entrepreneur and Intrapreneur: Basis Entrepreneur Intrapreneur + Capacity* Statuse — Owner— Own boss— Ti — An manager— Salaried employee— Decisions own decisions Executes decisions with the concurrence + Reward — Uncertain and unlimited of owner — Fixed rewards and salary Table 4.2: Distinction between Entrepreneur and Promoter: Basis Entrepreneur Promoter + Stage of — From conception to —To bring a business into existence— business* Owning continuation— Owns the May or may not own— Iighly business» Nature enterprise— Includes everything specialized of job — Any business —A consultant or a chartered account + Example and offering services Some Myths about Entrepreneurship: Downloaded by Aishwarya Jagtap (agtapaisna20@gmal.ccOver the years, a few myths about entrepreneurship have developed. These are as under: (© Entrepreneurs, like leaders, are born, not made: The fact does not hold true for the simple reason that entrepreneurship is a discipline comprising of models, processes and case studies. One can learn about entrepreneurship by studying the discipline. (ii) Entrepreneurs are academic and socially misfits: Dhirubai Ambani had no formal education. Bill Gates has been a School drop-out, Therefore, this description does not apply to everyone. Education makes an entrepreneur a true entrepreneur, Mr. Anand Mahindra, Mr Kumar Mangalam Birla, for example, is educated entrepreneurs and that is why they are heroes (ii) To be an entrepreneur, one needs money only Finance is the life-blood of an enterprise to survive and grow. But for a good idea whose time has come, money is not a problem, (iv) To be an entrepreneur, a great idea is the only ingredient: A good or great idea shall remain an idea unless there is proper combination of all the resources including management. (v) One wants to be an entrepreneur as having no boss is great fun: tis not only the boss who is demanding; even an entrepreneur faces demanding vendors, investors, bankers and above all customers. An entrepreneur's life will be much simpler, since he works for himself. The truth is working for others are simpler than working for oneself, One thinks 24 hours a day to make his venture successful and thus, there would be a punishing schedule. 5 Successful Entrepreneurs India has a long convention of successful entrepreneurs, yet with its own distinet flavor. Rather than the Generation X, who are attempting to climb the corporate ladder since Baby Boomers aren’t resigning as right on time as arranged, the individuals who fall under Generation Y have been making their income in inventive ways. And, that means entrepreneurship for them. Still, the harsh truth of any independent company falling flat haunts many entrepreneurs even in the best of times. © Ritesh Agarwal This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapalsha20@gmai.com)Ritesh Agarwal’s entrepreneurial journey is one of the most successful entrepreneur stories in India, After dropping out of college, he launched his first start-up Oravel Stays, which was a budget hotel chain that provided B&B. And that elevated to OYO rooms from when he realized no other service offered a room for a budget traveler. Begun with only 11 rooms in a Gurgaon hotel, OYO rooms is now a hub for elite hotel stays with 65000 rooms in about 5500 properties across India. Kunal Shah Free charge, the popular platform which revolutionized the online recharge framework with three-step revives alongside giving offers of same esteem was the brainchild of Kunal Shah and Sandeep Tandon. The organization was established in 2010 and was as of late procured by Snap deal. Sridhar Vembu Zoho is a household name for corporate now and Sridhar Vembu is the man behind it. He started his joumey with AdvetNet.Inc which was a network equipment seller AdvetNet.Inc was not so popular initially but with the passage of time, it transformed into a revolutionary online program provider and applications provider, and then to Zoho. Now, Zoho gives tough competition to MNCs like Google, Oracle, and Microsoft in providing SAAS services. Azhar Iqbal Azhar Iqbal dropped out in his 4th year of college(seventh semester). He made news by introducing InShorts the one and only app which cuts to the chase delivering only vital details in a news to all those lazy people and even to those who don’t have enough to go through all of them. The app makes sure that each news is conveyed in less than 60 words. Got a minute to spare? Keep up with the world with news in shorts. It started as a Facebook page and now it has made its share of fame so well that it received INR25 Cr in funding three months back. Vijay Shekhar Sharma After passing out from college, he started his first company- ‘XS Communication: college-based startup that ereated Content Management Systems, which was being used by major publications including The Indian Express. While trying to set up (One97 Communications) Paytm. Vijay's investors were not confident about the idea of a mobile- first consumer service that would cater to the masses, while India’s telecom infrastructure Downloaded by Aishwarya Jagtap (agtapaisha20@gmai.com)‘was improving in 2010. He personally put $2 Mn at stake to finally launch the brand. The rest, as they say, is history. Sachin Bansal For every shopaholic in India, Flipkart is the new shopping destination. Sachin Bansal, the mastermind behind the idea, created an internet shopping revolution along with Binny Bansal and Elipkart took birth as the first e-commerce website in India. Nandan Reddy Nandan Reddy along with his mate Sriharsha Majety, changed the way India eats. They both started with Bundle, a logistics aggregator, which connected SMEs to courier service providers. A year later, when the business was doing pretty well, they shifted their focus to the food service industry when Swiggy, the food delivery app rolled out into reality. Since its inception, Swigey has rapidly grown to become a leader in the Indian food delivery sector by consistently shrinking delivery timelines and improving customer experience. Phanindra Sama ier than before and it all started when it RedBus has made booking bus tickets way ea founder, Phanindra Sama could not go home for Diwali due to the notorious Bangalore Traffic. He realized some key issues with the then-existing bus model and found internet as the best medium for solving these issues by putting together information on a platform where customers could access it easily and take better decisions. By April 2014 RedBus launched hotel booking powered by Ibibo Group’s followed by redbus teaming up with Women in Entrepreneurship —Challenges and Opportunities Leading conglomerates are appointing female CEOs; today, there are more women running Fortune 500 businesses than at any time in the past. As per data, there are more than 9 million firms in the USA which are owned by women, employing around 8 million people, and generating around $1.5 trillion in sales. Women are accepting entrepreneurship and are successfully leading businesses, facing and overcoming various challenges, They are properly utilizing various opportunities and prospects for accomplishing their own and their organization’s goals and objectives. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapalsha20@gmail.com)Opportunities and Advantages for Women in Entrepreneurship > A Diverse and Innovative Workforce Diversity —in gender, culture, age, and race — promotes innovation and creativity. Top companies across the world aim to prioritize and benefit from a diverse and innovative workforce. Men and women from different backgrounds bring in varied experiences with them, which shape their approach to business, Strength in Soft Skills and Emotional Intelligence is an Advantage for Women ‘hnical skills and knowledge are essential for success, But soft skills and emotional intelligence are equally important, Emotional intelligence in leadership means self awareness, empathy, and the ability to listen, Although these characteristics are difficult to measure, they can make a major difference. Women can utilize their experiences and soft skill aptitude with emotional intelligence for properly leading their companies + Ability to Create a Woman-friendly Corporate Environment The corporate culture of many companies can work against women. But when a woman leads her own company, she has the ability to establish an environment suitable for other ‘women working in the company. Being an entrepreneur, a woman can live a more authentic life and can create a corporate culture more suitable to her own values. Challenges for Women in Entrepreneurship “Gender Discrimination at Workplace Most of the industries are male dominated. It is more of a challenge when a woman comes in as a leader, and gives men directions. While most corporate believe in gender equality, and agree that the best person, irrespective of gender, should get the job, there have been many instances where a woman having a gender neutral name gets the job. This proves that unconscious organizational gender bias does exist. Women, right from a young age are instructed not to be ‘bossy’, whereas, men are encouraged to be assertive and aggressiv Difficulty in Acquiring Funds Those start-ups who look for investors to help them start their business know how difficult the pitching process can be. It can be even more difficult in ease of women- owned firms, Many investors are skeptic about investing on women-led companies because they may think that women can’t be successful as entrepreneurs, Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)~ Building a Viable Support Network Another major hurdle and challenge for women entrepreneurs is the lack of efficient advisors and mentors. As per data, around 48% of female founders say that a lack of able advisors and mentors limits their professional growth. The majority of the high-level business world is still male dominated and it is very difficult for women entrepreneurs to create their own path and facilitate the introductions and connections into some of the top-notch business networks. Theories of entrepreneurship An entrepreneur is someone who runs a business as a sole owner with the aim of making profit even though they encounter a lot of challenges. Theories of entrepreneurship are very essential as they help to explain what entrepreneurship entails. In this article, you will find valuable information about several theories of entrepreneurship. It also defines theories of entrepreneurship. In this article we have given detailed information on the different theories of entrepreneurship. Read on and lean, Different theories of entrepreneurship 1, Economic theories of entrepreneurship The economic theory is among the main economic theories of entrepreneurship. This theory asserts that the economy and entrepreneurship ate closely linked together, Entrepreneurship and economic growth can only work when the economic conditions are favorable, As such, it is usually hard for entrepreneurs to realize growth when the economy is doing poorly. This theory further states that entrepreneurs find motivation in the presence of economic incentives which include industrial policy, policies of taxation, financial and resource sources, availability of infrastructure, investment opportunities, marketing opportunities, availability of information regarding the conditions of the market and technology among others . 2. Sociological theories of entrepreneurship This is also among the contemporary theories of entrepreneurship. It argues that the success of an entrepreneur is affected by their social culture, They are more likely to achieve growth in particular social settings. Among the social aspects that affect an entrepreneur include the social values, customs, taboos, religious beliefs and other cultural activities. He or she has to conform to the social expectations when carrying out their business, This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)3. Entrepreneurship Innovation theory This is also the top theories of entrepreneurship in Kenya. An entrepreneur does not merely conduct business to better their lives alone. Rather, through their activities, they are able to cause development in the economy and the society at large. The inventor of this theory, Joseph Schumpeter, argued that an entrepreneur grows by being creative and having @ foresight. One of the creative things that an entrepreneur does is introduce a new product. A new product often comes to solve a certain problem in the society or make it more convenient, Another innovative aspect is that in a bid to achieve growth and have more profits, an entreprencur introduces a new production method, tion also comes in when an entrepreneur opens a new market. This is often done after the identification of a growth opportunity or a void in the economy. 4. Psychological theory According to this theory, an entrepreneur experiences growth when the society has several individuals with the necessary psychological characteristics. These characteristics include having a vision, being able to face opposition and having the need to achieve highly. A person can only possess these traits during their upbringing, when they excel, when they are self-reliant and when there is low father dominance. 5. Theory of high achievement/Theory of achievement motivation Not all people are interested in being entrepreneurs. But David McClelland argued that people who aim to become entrepreneurs must have a need for achievement, a need for affiliation and a need for power. These act as the basis upon which an entrepreneurial personality is established. Achievement motivation has a lot of significance in entrepreneurship because it is the one that leads to economic and social development. Entrepreneurs always want to achieve success in their endeavors. The need for power comes from the urge to gain dominance in a certain field and thus cause influence among other people. The need for affiliation comes from the urge to motive of maintain friendships with other people. Opportunities and Challenges for Rural Entrepreneurship in India Introduction Rural entrepreneurship is defined in broader sense “as the enthusiastic willingness of a villager to organize his or her economics activity, whatever it may be (a business, a job, an investment etc) with the help of appropriate technology and practices conceived for a sustainable living.” Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)Need for Rural Entrepreneurship Agriculture continues to be the backbone of rural society. As per this study, seventy percent of holdings are held by small and marginal farmers resulting in overcrowding on the agricultural land and diminishing farm produce. This also results in migration of farm worker in large numbers to the urban areas. In both the cases the population remains under poverty line. Agricultural work force has a share of seventy per cent in the total work force of the country. Cultivators who own farmland come to about sixty-eight percent of this work force while agricultural labor accounts for the remaining thirty two percent, + One also needs to keep in mind that there is a continuous growth of population. Thus, the policy for rural entrepreneurship development has to tackle, the problems by providing other occupation option to the rural youths. + “Youths in the rural areas have little options”, this is what they are given to believe. This is the reason that many of them either work at farm or migrate to urban land. The need is, to plant other option in the minds of rural youth. Entrepreneurship could be the best option. If planted and nurtured in the minds of rural women and youth, It could result is revolutionizing the Indian economy. % It-should be emphasized that the projects undertaken by these entrepreneurs should not be constrained by its location in rural areas. It should enjoy all the advantages of the location. 4 While the government and a large number of NGOs are trying to address the various needs of the unorganized sector, any contribution, however small it is, made by anyone is a breath of fresh air for the people in this sector. “Diversification into non- agricultural uses of available resources such as catering for tourists, blacksmithing, carpentry, spinning, hand crafts and toys etc. Equally entrepreneurial are new uses of land that enable a reduction in the intensity of agricultural production , for example, organic production, dynamic rural entrepreneurs can also be found. They are expanding their activities and markets and they find new markets for their products and services beyond the local boundari This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapalsha20@gmail.com)Opportunities of Rural Entrepreneurship: 1 Support &Motivation to local people: Rural entrepreneurs have a lot of support from the Rural people. Rural village people always encourage and give the motivation to the entrepreneurs, 2. Low establishment cost : When compared to the urban areas, rural entrepreneurs” business establishment cost is very low. There is no need to construct or facilities huge infrastructure and buildings. Competitive advantages / Availability of labor : In India seventy percent of the people are living in the village. Majority of the rural people are depending on the agriculture. The agriculture work is not available throughout the year. That is the reason why rural entrepreneurs have the competitive advantage in easily acquiring unskilled and semiskilled labor Government policies and subsidies: The government of India is continuously monitoring and introducing the new policies for encouraging the rural entrepreneurship. These policies are very flexible, innovative, liberalized and giving continues support to rural entrepreneurs. At the same time government has also announced huge subsidies for promoting the rural entrepreneurship. Availability of raw materials: ‘Most of the times the rural entrepreneurs are depending upon the farm based products as raw materials, which are available through-out the year. These raw materials are available in the rural area that is the reason there is no transportation cost and flotation cost. Cost of production: Rural entrepreneurs cost of production is very low when compared to the urban industries. The factors of production are available with low cost, automatically the cost of production is also low. Because of this rural entrepreneurs can sell their goods and services with cheaper cost Optimum utilization of produces: Optimum utilization of farm produces is only possible through the rural entrepreneurship only. Most of the rural entrepreneurs depend upon the farm produces as raw materials, ‘mployment generation for rural youth: Rural entrepreneurs are providing hundred percent jobs for rural youth. If the rural entrepreneurs are succeeding in this activity the migration of the people to urban from rural will be immediately stopped to a maximum extent, Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)9. Promotion cost: There is no promotion cost for rural entrepreneurs; in fact the competition is very less. Particularly there is no need for advertising and other promotional activities for their products. 10, Potential customer: In this twenty-first century rural villagers are economically strong and also heavily populated. This heavy population can be converted as potential customers. That is the reason all the MNC’s are concentrated in rural villages for their potentiality, Challengers of Rural Entrepreneurship * Distribution and logistics: Infrastructure contains to be a challenge in rural India. ‘Moreover, the lack of an efficient distribution network prevents penetration of products/services into rural India. + Payment collection: The majority of the rural population is still unbanked. Clearly , non- cash collection becomes rather unlikely. Cash collection , on the other hand, are messy and difficult to monitor. Pricing: it is easier to collect in larger amounts as every instance of collection and carrying of cash has associated cost. Disposable income, through , isn’t always high since the bulk of rural India is agriculture and income cycle in agricultural are very erratic and not as predictable as in the case of us salaried individuals. + Scaling across geographies: India is a land of many cultures and tradition , the contrast become that much starker in the case of rural India. Setting up operation on a pan-India level present different types of hurdles in different states ranging from political juggling to downright local factors. Any model where scalability involves scaling on-ground operations is bound to run into myriad issues as we move from one state to the next. + Developing inorganic scale: Developing synthetic scale through partnerships typically results in larger overheads in the rural context. Finding the right partner with reach and presence in villages in difficult to start with, More importantly , there are very few 1s who are strong on these counts across multiple typically requires partnerships play resulting in higher partner management overheads. + Social and cultural challenges: The cyber café model has not worked in many parts of rural India due to socio-cultural issues. One of the reasons for the failure of the kiosk model in Kuppam (HP’s i-community) was the lack of usage by women which was largely due to their discomfort in going to kiosks run by men. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)+ Growth of Mall culture: Because of the globalization and modern economy encouraging the mall culture rather than the traditional shops. Another side rural Indian people income is also increased, because of that these people also attracted to mall culture. + Poor Assistance & Power failure: These two are the major challenges faced by the rural people . India is not a developed country, itis still developing country . Moreover India, don’t have a sufficient power and electricity infrastructure facilities to satisfy the needs of their people, For filling the gap between the demand and unavailability the government of India have been committed to power cut to rural areas, + Lack of technical know How: Rural Indian people they don’t have strong technical educational knowledge. That is the reason these people don’t know how to use latest technology. Still majority of the rural entrepreneurs traditional and old technology. + Infrastructure sickness: The rural India still suffering with lack infrastructure facilities But the same time government also not concentrates for creating the rural infrastructure. This is the pathetic situation of rural India. Unit-2 Economic and Non-Economic Factors Effecting Entrepreneurial Growth 1. Economie System By economic system we mean the legal and institutional framework within which various economic activities are undertaken. Various economic activities like production, consumption, exchange, distribution and economic growth are all guided by institutional framework which includes laws, customs and social institutions of a particular country. At present there are three types of economic system prevalent in this world. These are—capitalism, socialism and mixed economy. In a capitalist system, the major economic decisions, i.e., what to produce, how to produce and for whom to produce are taken by private business enterprise. 2. Macro-Ei ‘conomie Scenario Macro-cconomic scenario of a country determines the prospects of business to a large extent. A healthy environment supported by rapid growth, high rates of saving and investment, stable price level, fiscal stability and favorable balance of payments, always opens a bright prospect of business growth in a country. Downloaded by Aishwarya Jagtap (agtapaishaZ0@gmail.Higher growth rate of income always raises the demand for various goods produced by business enterprise. Stable price level protects the interests of both consumers and business enterprises. Higher rate of savings and investment can push the business activities towards higher destinations. 3. Business Cycle and Stagflatio Economic environment of business is also influenced by ups and downs or eyclical fluctuations in business activity, Prosperity and recessions are the common phases through which the capitalist economy passes through periods. During the thirties, there was a great depression in business activities experienced by most of the countries of the world 4, Financial System: The economic environment of business is also influenced by the efficacy of the financial system, Banks and non-banking financial institutions are an important source of fund for the corporate sector. The level of development of the financial system is having a crucial importance in business. The securities market has again two constituents, i. (a) The new issue market (the primary market) and (b) The stock exchange (the secondary market), The stock exchange arranges the scope to utilize the savings of the people for its utilization in the corporate business enterprises for long term utilization. In India, the number of stock exchanges had increased from 8 in 1975-76 to 23 in 1999-2000. During this period, the total number of listed companies increased from 1,872 to 9,871 and the volume of capital issues increased from Rs, 98 crore to Rs. 68,963 crore during the same period, S. Economic Policies: (a) Industrial policy, (b) Monetary policy, (©) Trade policy and (@) Fis Al these economic policies of the government are playing a significant role in determining the policy economic environment of business of a country. The Government of India has formulated all these four categories of economic policies and has also been making necessary revision and updating of its economic policies at regular interval considering the changes and requirements of the economy. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)Q. Entrepreneurship Development Programs: Meaning, Need and Objectives of EDP! Meaning: As the term itself denotes, EDP is a program meant to develop entrepreneurial abilities among the people. In other words, it refers to inculcation, development, and polishing of entrepreneurial skills into a person needed to establish and successfully run his / her enterprise. Thus, the concept of entrepreneurship development program involves equipping a person with the required skills and knowledge needed for starting and running the enterprise. Definitions of EDPs: According to N, P. Singh (1985), “Entreprencurship Development Program is designed to help an individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively. It is necessary to promote this understanding of motives and their impact on entrepreneurial values and behavior for this purpose.” Now, we can easily define EDP as a planned effort to identify, inculcate, develop, and polish the capabilities and skills as the prerequisites of a person to become and behave as an entrepreneur. Need for EDPs: 4 That, entrepreneurs possess certain competencies or traits. These competencies or traits are the underlying characteristics of the entrepreneurs which result in superior performance and which distinguish successful entrepreneurs from the unsuccessful ones, 4 Then, the important question arises is: where do these traits come from? Or, whether these traits are in born in the entrepreneurs or can be induced and developed? In other words, whether the entrepreneurs are born or made? Behavioral scientists have tried to seek answers to these questions. 4 A well-known behavioral scientist David C. McClelland (1961) at Harvard University made an interesting investigation-cum-experiment into why certain societies displayed great creative powers at particular periods of their history? What was the cause of these creative bursts of energy? He found that ‘the need for achievement (n° ach factor)” was the answer to this question, It was the need for achievement that motivates people to work hard, According to him, money- making was incidental. It was only a measure of achievement, not its motivation, Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)4 In order to answer the next question whether this need for achievement could be induced, he conducted a five-year experimental study in Kakinada, i.e. one of the prosperous districts of Andhra Pradesh in India in collaboration with Small Industries Extension and Training Institute (SIET), Hyderabad. aT is experiment is popularly known as ‘Kakinada Experiment’, Under this experiment, young persons were selected and put through a three-month training program and motivated to see fresh goals. 4 One of the significant conclusions of the experiment was that the traditional beliefs did not seem to inhibit an entrepreneur and that the suitable training can provide the necessary motivation to the entrepreneurs (McClelland & Winter 1969). The achievement motivation had a positive impact on the performance of entrepreneurs. 4 In fact, the ‘Kakinada Experiment’ could be treated as a precursor to the present day EDP inputs on behavioral aspects. In a sense, ‘Kakinada Experiment’ is considered as the seed for the Entrepreneurship Development Programs (EDPs) in India. 4 The fact remains that it was the ‘Kakinada Experiment’ that made people appreciate the need for and importance of the entrepreneurial training, now popularly known as ‘EDPs’, to induce motivation and competence among the young prospective entrepreneurs. Objectives of EDP: a. Develop and strengthen the entrepreneurial quality, i.e, motivation or need for achievement. b, Analyze environmental set up relating to small industry and small business. ¢. Select the product. 4. Formulate proposal for the product. e. Understand the process and procedure involved in setting up a small enterprise. £. Know the sources of help and support available for starting a small scale industry. g. Acquire the necessary managerial skills required to run a small-scale industry. ‘h. Know the pros and cons in becoming an entrepreneur 1. Appreciate the needed entrepreneurial discipline. j. Besides, some of the other important objectives of the EDPs are to: k. Let the entrepreneur himself/herself set or reset objectives for his / her enterprise and strive for their realization. 1. Prepare him / her to accept the uncertainty in running a business. m, Enable him / her to take decisions. n, Enable to communicate clearly and effectively. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)Non-Economic Environment of Business 1. Politico-Legal Environment: In modern times, politico-legal environment is having a paramount importance in business. The politico-legal environment includes three political institutions viz., legislature, executive and judiciary which usually play useful role in shaping, directing, developing and controlling business activities. 2, Demographic Environment: Demographic environment is also an important constituent of business environment. Accordingly, demographic factors like, rise and growth rate of population, age and sex composition of population, rural urban distribution of population, educational levels, religion, ethnicity, caste, language ete. are all relevant to business conditions, Size of population, growth rate of population, age-composition etc. influences the demand pattern for various goods. Again, large labor force and rapid growth of labor supply affect the choice of techniques. Considering the labor supply position and the rate of wages, technologies of business is being finalized. 3. Socio-Cultural Environment: Socio-cultural environment is another important element of non-economic environment of business. These includes people’s attitude to work and wealth, ethical issues, role of family, marriage, religion and education and the social responsibilities of business. All the business firms usually operate in a definite socio-cultural environment and they have to formulate their business policies considering this factor. 4, Technological Environment: Technological environment is an important element in business environment. Technology implies systematic application of scientific or other organized knowledge to practical tasks or activities. Francis Stewart observed, “The technology available to a particular country is all those techniques it knows about (or may with not too much difficulty obtain knowledge about) and could acquire, while the technology in use is that subset of techniques it has acquired.” Thus it is quite important for a business firm to make a compromise between the technology available and the technology in use. As the technology is changing fast thus businessmen should keep a close link on those technological changes for its adoption in their business activities. Downloaded by Aishwarya Jagtap (agtapaisha20@gmai.com)5, Natural Environment: ‘Natural environment also influences business in a diverse way. Industrial activity is no doubt influenced by scientific and technological development but natural endowments are still pl: a dominant role in the establishment and maintenance of industrial activity. In earlier times, the effects of industrial activities on ecology were not so serious. But in recent times, growing industrial activities have not only created serious damage to exhaustible natural resources, viz., minerals and forest resources but also contaminated water and polluted air to a considerable extent. Q. Meaning, characteris ics and problems of small business enterprises. Meaning of Small Business Enterprises: Small business may be defined in various ways e.g. in terms of investment, number of persons employed, volume of output and sales, technique of production ete. Four types of businesses: (1) Small Scale Industries: The investment in plant and machinery is up to Rs. 1 ero (ii) Ancillary Industrial Undertakings: The investment in plant and machinery not to exceed Rs. lerore; and the undertaking must sell not less than 50% of the its output to other industrial undertakings. (iii) Export-Oriented Units: The investment in plant and machinery is up to Rs. 5 crores; and the unit must export at least 30% of its output by the end of three years from the commencement of production. (iv) Tiny Units: The investment in plant and machinery is up-to Rs.25 lakhs. Characteristics of Small Business Enterprises (1) Limited Investment: In a small business enterprise, capital is supplied by an individual or a small group of individuals. As per a census of small scale units in India, mostly small business enterprises are un as sole- proprietorship and partnership. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)(ii) Personal Character/Owner-Management: A small business is identified with its owners; who themselves act as managers. Managers as such have maximum motivation to work; as they themselves happen to be the owners also, at the same time. (iii) Labor-Intensive: Small business enterprises are mostly labor-intensive. The machinery and equipment used are not very sophisticated and are operated manually. (iv) Unorganized Labor: Small business enterprises employ less number of workers as compared with big business enterprises. Workers of these units do not form labor unions and remain unprotected. (v) Local Area of Operation: The area of operations of small units is generally local as they have less capital and less marketing facilities at their disposal. There is a local touch between employer and employees; and between employer and customers though products of some small scale enterprises are exported to many countries of the world. Problems Faced by Small Business Enterprises: These problems could be put into two categories: (1) Financial problem — the central problem (11) Other problems Let us have a brief account of the problems of the small sector, comprised in both these categories (D Financial Problem — The Central Problem: Small scale industries usually do not have sufficient funds to meet their fixed capital and working capital requirements. Institutional lenders are generally reluctant to advance money to small industries since: 1. They are not in a position to offer the guarantee required by financial institutions and 2. Their capacity to repay the loan is little In fact, inadequate finances are the central problem faced by small-scale enterprises. It is the mother of all other problems of the small scale business sector. For example, problems like outdated technology, lack of professional management, problem of advertising etc, all arise for small scale enterprises; because they do not command requisite funds for meeting these purposes. Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)(I) Other Problems: Other problems, of course, of a serious nature faced by small business enterprises are as follows: ( Faulty Plannin; Faulty planning is a major problem of the small business. No proper viability studies-technical or economic-are carried out by the small firms; before they are sponsored, Small firms cannot, afford the preparation of a project report for which a large unit can pay fat fee to a consultant (i) Shortage of Raw-Material and Other Infrastructural Facilities: Small business industries suffer from accurate shortage of basic raw materials. In most of the cases, when raw materials are in short supply, large scale business enterprises grab the entire supply, because of their stronger bargaining position. Small scale enterprises also face lack of other infrastructural facilities like water and power connections. Shortage of power leads to under utilization of plant capacity. (iii) Lack of Latest Technology: Most of the small firms use old or outdated techniques of production. They cannot afford new machines and equipment based on latest technology: mainly because of financial crunch. As such, the cost of production of small firms is higher and the quality of production is rather inferior. (iv) Marketing Problems: Small firms face severe problems in the sphere of marketing of their products. Some major marketing problems of the small business are: 1, Lack of funds and facilities for advertising 2. Competition from the big business counterparts on grounds of higher cost and inferior quality (characteristic of small business). 3. Unwillingness of distribution channels to deal in products of small manufacturing units. 4, Lack of providing after sales services, on the part of the small firms 5. Problem of recoveries or collection, in case goods is sold on credit ete. (v) Lack of Professional Management and Trained Personne! Small business enterprises have owner based management i.e. owners themselves act as managers, They cannot afford the services of professionalized expert managers; because they cannot pay the required handsome remuneration to them, Alongside professional managers, small business cannot employ qualified and trained manpower, again due to financial crunch, This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)Q. Project Management Components or Process At the root of any successful project is a project manager (PM) worth his or her weight in gold. While some people think a project manager’s sole job is to remind everyone about deadlines and set up status meeting, that’s simply not the case. 5 Phases of Project Management * Phase 1: Project Initiation * Phase 2: Project Planning * Phase 3: Project Execution * Phase 4: Project Monitoring + Phase 5: Project Closure © Smart sheet for Project Management Conception Definition Launch or Y Performance Project &lnitiation &Planning Execution & Control Close 1 2 3 4 5 Project Scope & Status & Objectives Post Charter Budget Tracking Mortem Quality Project Work Breakdown KPIs Deliverables Project Punchlist Initiation Schdue oe oa Gantt Chart Tracking Reporting Forecasts ‘Communication Plan Performance Risk Management PHASE 1; PROJECT INITIATION ‘This is the start of the project, and the goal of this phase is to define the project at a broad level. ‘This phase usually begins with a business case. This is when you will research whether the project is feasible and if it should be undertaken. If feasibility testing needs to be done, this is the stage of the project in which that will be completed. Important stakeholders will do their due diligence to help decide if the project is a “go.” Ifit is given the green light, you will need to create a project charter or a project initiation document (PID) that outlines the purpose and requirements of the project. It should include business needs, stakeholders, and the business case. Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)PHASE 2: PROJECT PLANNING This phase is key to successful project management and focuses on developing a roadmap that everyone will follow. This phase typically begins with setting goals. Two of the more popular methods for setting goals are S.M.A.R.T. and CLEAR: s M A Spectic |, Measurable J | ftainable R Realistic S.M.A.R.T. Goals — This method helps ensure that the goals have been thoroughly vetted. It also provides a way to clearly understand the implications of the goal-setting process. Specific — To set specific goals, answer the following questions: who, what, where, when, which, and why. Measurable ~ Create criteria that you can use to measure the success of a goal. Attainable — Identify the most important goals and what it will take to achieve them. Realistic — You should be willing and able to work toward a particular goal. Timely — Create a timeframe to achieve the goal C.L.E.A.R. Goals — A newer method for setting goals that takes into consideration the environment of today’s fast-paced businesses. Collaborative - The goal should encourage employees to work together. Limited - They should be limited in scope and time to keep it manageable. Emotional — Goals should tap into the passion of employees and be something they can form an. emotional connection to. This can optimize the quality of work, Appreciable — Break larger goals into smaller tasks that can be quickly achieved. Definable — As new situations arise, be flexible and refine goals as needed. During this phase, the scope of the project is defined and a project management plan is developed. It involves identifying the cost, quality, available resources, and a realistic timetable. The project plans also includes establishing baselines or performance measures. These are generated using the scope, schedule and cost of a project. A baseline is essential to determine if'a project is on track. This documents arate tee ot age on SEUDOCUL.COM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)At this time, roles and responsibilities are clearly defined, so everyone involved knows what they are accountable for. Here are some of the documents a PM will create during this phase to ensure the project will stay on track: PHASE 3: PROJECT EXE Scope Statement — A document that clearly defines the business need, benefits of the project, objectives, deliverables, and key milestones. A scope statement may change during the project, but it shouldn’t be done without the approval of the project manager and the sponsor. Work Breakdown Schedule (WBS) ~This is a visual representation that breaks down the scope of the project into manageable sections for the team. Milestones — Identify high-level goals that need to be met throughout the project and include them in the Gantt chart. Gantt Chart —A visual timeline that you can use to plan out tasks and visualize your project timeline. Communication Plan — This is of particular importance if your project involves outside stakeholders. Develop the proper messaging around the project and create a schedule of when to communicate with team members based on deliverables and milestones. Risk Management Plan — Identify all foreseeable risks. Common risks include unrealistic time and cost estimates, customer review cycle, budget cuts, changing, requirements, and lack of committed resourees. ‘UTION This is the phase where deliverables are developed and completed. This often feels like the meat of the project since a lot is happening during this time, like status reports and meetings, development updates, and performance reports. A “kick-off” meeting usually marks the start of the Project Execution phase where the teams involved are informed of their responsibilities. Tasks completed during the Execution Phase include: Develop team Assign resources Execute project management plans Procurement management if needed PM directs and manages project execution Set up tracking systems Task assignments are executed Status meetings Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)* Update project schedule * Modify project plans as needed While the project monitoring phase has a different set of requirements, these two phases often occur simultaneously. PHASE 4: PROJECT PERFORMANCE/MONITORING Thi all about measuring project progression and performance and ensuring that everything happening aligns with the project management plan, Project managers will use key performance indicators (KPIs) to determine if the project is on track. A PM will typically pick two to five of these KPIs to measure project performance: + Project Objectives: Measuring if a project is on schedule and budget is an indication if the project will meet stakeholder objectives. * Quality Deliverables: This determines if specific task deliverables are being met. * Effort and Cost Tracking: PMs will account for the effort and cost of resources to see if the budget is on track. This type of tracking informs if.a project will meet its completion date based on current performance. * Project Performance: ‘his monitors changes in the project. It takes into consideration the amount and types of issues that arise and how quickly they are addressed, These ean occur from unforeseen hurdles and scope changes. During this time, PMs may need to adjust schedules and resources to ensure the project is on track. PHASE 5: PROJECT CLOSURE This phase represents the completed project. Contractors hired to work specifically on the project are terminated at this time. Valuable team members are recognized. Some PMs even organize small work events for people who participated in the project to thank them for their efforts. Once a project is complete, a PM will often hold a meeting — sometimes referred to as a “post mortem” —to evaluate what went well in a project and identify project failures. This is especially helpful to understand lessons leamed so that improvements can be made for future projects. Once the project is complete, PMs still have a few tasks to complete. They will need to create a project punch list of things that didn’t get accomplished during the project and work with team members to complete them, Perform a final project budget and prepare a final project report. Finally, they will need to collect all project documents and deliverables and store them in a single place. This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap (agtapaisha20@gmail.com)SMARTSHEET FOR PROJECT MANAGEMENT Smart sheet is a spreadsheet-inspired work management tool with powerful collaboration and communication features. With templates and customization options, it’s easy to build a project management plan that fits the needs of any project. By providing a broad range of views including Gantt, calendar, grid, and dashboards, you can manage projects the way you wa Track project requirements, store documents, create timelines, and organize key details. Since Smart sheet is a cloud-based tool, you can easily share your sheets with internal and external stakeholders to increase transparency and keep everyone on the same page. If you manage hundreds of projects, Smart sheet’s premium Project Portfolio Solution helps project-based businesses and departments increase project throughput, create real-time visibility, and lower project risk, Use Smart sheet’s Project Portfolio Solution to: * Save time by automating new project setup © The project performance with business goals and objectives * Enforce consistent project governance policies © Gain real-time visil lity into project portfolio performance * Perform in-depth analysis of project portfolio using Microsoft Power BI Project managers can use Smart sheet’s Project Portfolio Solution to easily provision standard sets of sheets, reports, and Sights for new projects. Each new project inherits the default sharing permissions set up by the PMO lead to ensure visibility across all projects in their portfolio, Finally, the solution automatically rolls up project metadata into a data mart that can be accessed by Smart sheet Sights or a Microsoft Power BI dashboard for portfolio-level reporting, Features of Micro, Small and Medium Enterprises Development Act, 2006 1. It provides the first ever legal framework for recognition of the concept of enterprise and integrating the three tiers of these enterprises i.e. micro, small and medium. 2. Under this act, the enterprises are categorized broadly in two categories ie. manufacturing and service sector. 3. Defining MSES-MSMED Act, 2006 The Union jnet chaired by the Prime Minister Sheri Narendra Modi has approved change in the basis of classifying Micro, Small and Medium enterprises from ‘investment in plant & machinery/equipment’ to ‘annual turnover’ in February 2018, Downloaded by Aishwarya Jagtap (agtapaisha20@gmai.com)Definition of MSMEs Manufacturing Sector Micro enterprises Annual tumover does not exceed Rs. 5 cr. ‘Small Enterprises | Annual turnover b/w Rs. 5 et. To Rs. 75 et. Medium Enterprises Annual turnover b/w Rs. 75 er. To Rs. 250 er Service Sector Micro Enterprises Annual turnover does not exceed Rs. § cr. ‘Small Enterprises Annual tumover b/w Rs. 5 cr. To Rs. 75 ct. Medium Enterprises Annual tumover b/w Rs. 75 et. To Rs, 250 er. 4, Other Features Includs : (a) establishment of specific funds for the promotion and development of competitiveness of these enterprises.(b) preference in government procurements. to products and services of micro and small enterprises (c) simplification of process of closure of business by all three categories of enterprises. Q. What is the Importance and role of MSMEs in Indian Economy? To generate large scale employment In India, capital is scarce and labor abundant. MSMEs are thought to have lower capital- output and capital-labor ratios than large-scale industries, and therefore, better serve growth and employment objectives. The MSME sector in India has grown significantly since 1960 — with an average annual growth rate of 4.4% in the number of units and 4,62% in employment (currently employing 30 million) ‘Not only do MSMEs generate the highest employment per capita investment, they also go a long way in checking rural-urban migration by providing people living in isolated areas with a sustainable source of employment. To sustain economic growth and increase exports Non-traditional products account for more than 95% of the MSME exports (dominating in the export of sports goods, readymade garments, plastic products ete.). Since these products are mostly handcrafted and hence eco-friendly, there exists a tremendous potential to expand the quantum of MSME led exports. ‘Also, MSMEs act as ancillary industries for Large Scale Industries providing them with raw materials, vital components and backward linkages e.g, large scale cycle This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)manufacturers of Ludhiana rely heavily on the MSMEs of Malerkotla which produce cycle parts. © Making Growth Inclusive MSMES are instruments of inclusive growth which touch upon the lives of the most vulnerable and marginalized. For many families, itis the only source of livelihood. Thus, instead of taking a welfare approach, this sector seeks to empower people to break the cycle of poverty and deprivation. It focuses on people’s skills and agency. However, different segments of the MSME sector are dominated by different social groups. The Twelfth Plan has listed the following as the objectives for the MSME sector * Promoting competitiveness and productivity in the MSME space. * Making the MSME sector innovative, improving technology and depth. * Enabling environment for promotion and development of MSMEs. © Strong presence in exports. © Improved managerial processes in MSMEs. Challenges of MSME ‘© Most of the unregistered MSMEs would predominantly comprise micro enterprises, particularly confined to rural India, operating with obsolete technology, limited access to institutional finance ete. And there is a need to transform the huge unregistered MSME into registered MSME. '* Need to improve the competitiveness of the overall MSME sector. © Access to technology. IPR related issues. © Design as a market driver. ‘© Wasteful usage of resources/manpower. * Energy inefficiency and associated high cost. * Low ICT usage. © Low market penetration. © Quality assurance/certification. ‘* Standardization of products and proper marketing channels to penetrate new markets. ‘* The definition for MSMEs must be updated ~ considering inflation and availability of better technologies since the last change in 2006. Summary Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)The guidelines with regard to investment in plant and machinery or equipment as defined in the MSMED Act, 2006 are: Nature of activity ofthe Enterprise Investment in plant and machinery excluding land and building for enterprises engaged in manufacturing or production, processing or preservation of goods Investment in equipment excluding land and building for enterprises engaged in providing or rendering of services (loans up to Rs 1 crore) exceed Rs1000.00 lakhs. Micro Not exceeding Rs.25.00 Lakhs. Not exceeding Rs.10.00 Lakhs. Small More than Rs.25.00 lakhs but does not |More than Rs.10.00 lakhs but exceed Rs500.00 lakhs. does not exceed Rs.200.00 lakhs. Medium More than Rs.500.00 lakhs but does not | More than Rs200.00 lakhs but does exceed Rs.500.00 lakhs. not Unit-4 A note on Institutional Finance to Entrepreneur, This documentisavaiate tee ofcrargeon GEUDIOCU.COM Downloaded by Aishwarya Jagtap (agtapaisha20@gmal.com)Ans: 1. Industrial Development Bank of India: The IDBI was established on July 1, 1964 by the Government of India under an Act of Parliament as the principal financial institution in the country. Main Functions of IDBI (a) The IDBI provides assistance to the small scale sector through its scheme of refinance and bills rediscounting scheme, (b) The financial assistance has been indirect in the form of refinancing of loans and the State Financial Corporation’s (SFCS). (c) In order to assist the small scale sector, the IDBI has set up Small Industries Development Fund (SIDF) in May 1986. This fund basically aims at providing a focal point to co-ordinate financial and non-financial inputs required for growth of small industries sector. (d) _ Inassociation with Government of India, IDB1 has constituted National Equity Fund (NEF) to prevail equity type of support to tiny and small scale units which are engaged in manufacturing activities. The scheme is administered by IDB1 through nationalized banks. (e) The IDBI has also introduced the single window assistance ‘scheme for grant of term loans, and working capital assistance to tiny, small and medium scale enterprises. (0 The IDB1 has also set up a Voluntary Executive Corporation Cell (VECC) to use the services of experts, professionals for counseling small units and for providing consultancy support in specified areas. 2. Industrial Finance Corporation of India Ltd.: The Industrial Finance Corporation of India was set up by the Government of India under IFC1 Act in July 1948, It is an important financial institution which gives financial assistance to the entrepreneurs through rupee and foreign currency loans, underwriting, direct subscriptions to shares, debentures and guarantees. It also extends other financial facilities like equipment procurement, equipment finance, buyer’s and supplier’s credit, equipment leasing and finance to leasing and hire-purchase companies. The IFCI has devised new promotional schemes such as a. Consultancy fees, subsidy schemes for assisting small scale entrepreneurs in marketing sector. (b) Interest subsidy schemes for women entrepreneurs. (©) Pollution control in small and medium scale enterprises. (@)__ Encouraging the modernization of tiny, small and medium scale industries 3. Industrial Cre and Investment Corporation of India Ltd. (ICICI: Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)The ICICI was established by the Government of India under the Companies Act 1956, with the objective of providing financial assistance to the small and medium scale sectors. The main functions of ICICI are as follows (a) Financial assistance is extended by way of rupee and foreign currency loans, underwriting and direct subscriptions to shar (b) Financial f venture capital are given by ICICI. , debentures and guarantees. ties such as deferred credit, leasing credit, installment sale, asset credit and (©) Italso guarantees loans from other private investment sources, small scale units are the major beneficiary of the ICICI assistance. 4, Life Insurance Corporation of India (LIC): The LIC was established under the LIC Act in 1956, It offers many insurance policies to give social security to various segments of society. As per its investment policy, LIC invests 75% and above in Central and State Government’s securities including government-guaranteed marketable securities and in the socially-oriented sector. The LIC gives loans for activities like housing, rural electrification, modernization of industry, expansion, diversification of industrial ventures, water supply and sanitation etc. 5. Unit Trust of India (UT! The UTI was set up by the Government of India in 1964 under an Act of Parliament. The chief objectives of UTI are to mobilize savings of small investors through sale of units and to channelize these savings towards corporate investment. The UTI has introduced many schemes which aimed at common investors. These schemes are mainly Primary Equity Fund, Retirement Benefit Plan, Grihalaxmi Unit Plan, Unit Scheme 1995 and Columbus India Fund. The UTI also provides financial assistance to corporate sector in the form of term loans and underwriting direct subscriptions to shares and debentures. 6, Small Industries Development Bank of India (SIDB! This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapalsha20@gmai.com)SIDBI was established in 1989 as a subsidiary of IDBI under a Special Act. The main functions of SIDBI are the promotion and development of small scale industries by way of financing. It commenced its operations from 2 April, 1980 with its head office at Luck now. The initial authorized capital of SIDBI was 25 crore, which can be .extended up to 1,000 crores. The functions of SIDBI are as follows (a) To promote small scale industries in semi-urban areas to create more employment opportunities. (b) To undertake technological up gradation and modernization of existing small scale industries, (©) Toexpand the channels for marketing the products of SSI sector on both domestic and international markets. (4) To extend seed capital or soft loan assistance under National Equity Fund Scheme / Mahila Udyam Nidhi Scheme. (e) To great direct assistance and refinance for exports of small scale sector. () To provide financial assistance to SFCs, SIDCs, Commercial Banks, RRBs through existing credit delivery system. (g)_ To provide factoring and leasing service. (h) To provide financial assistance to the institutes, organizations for undertaking EDPs. (1) Special emphasis and the new schemes of assistance for marketing support to the small scale sector. 7. Industrial Reconstruction Bank of India (IRBI): The IRCI was set up in 1971 under the Companies Act to act as an agency to rehabilitate the sick units. But, in the year 1984, the Government of India renamed the IRCI as Industrial Reconstruction Bank of India (IRBI) by an Act of Parliament. Thereafter, it acts as a reconstruction agency to revive, reconstruct and rehabilitate the sick industrial concerns. (1) It provides financial assistance to industrial concems. (2) Itacts as an agency of State Government, Union Government and other financial institutions as per the authorization of the Government. (3) _ Itprovides consultancy and merchant banking services for reconstruction and development of industrial units. (4) Italso helps in providing infrastructural facilities, raw materials, machineries and other tools on the basis of hire-purchase and lease schemes. 8. State Financial Corporation’s (SFC: Downloaded by Aishwarya Jagtap Gagtapaisha20@gmai.com)IFCI provides financial assistance only to large sized industrial undertakings. In order to cater to the needs of the small scale units, the Government of India passed the State Financial Corporations Act in 1951 under which the State Financial Corporation’s (SFCs) were set up. The first SFC was set up in Punjab in 1953. Today, there are 18 SFCs functioning in the country. State Financial Corporations are managed by a Managing Director, Board of Directors and the Executive Committee is headed by a chairman. The functions of SFCs are as follows (a) To advance term loans to small scale and medium scale industrial units. (b) Itunderwrites the issue of stocks, shares, debentures and bonds of industrial units. (©) Itgrants loans to the industrial concerns which is repayable within a period 20 years. (d) It subscribes to debentures floated by industrial concerns. (e) _ Itprovides financial assistance to small road transport operators, tour operators, hoteliers, hospitals, nursing homes, etc. 9. National Bank for Agriculture and Rural Development (NABARD) It is an apex development bank in India for all rural credit having headquarters based in Mumbai (Maharashtra) and other branches are all over the country. It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the eredit flow for elevation of agriculture & rural non farm sector and completed its 25 years on 12 July 2007. It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”. RBI sold its stake in NABARD to the Government of India, which now holds 99% stake. It is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion, Objectives of NABARD (1) The National Bank will be an apex organization in respect of all matters relating to policy, planning operational aspects in the field of credit for promotion of Agriculture, Small Scale Industries, Cottage and Village Industries, Handicrafts and other rural crafts and other allied in rural areas. (2) The Bank will ser short-term for the promotion of activities in the rural areas. as a refinancing institution for institutional eredit such as long-term, (3) The Bank will also provide direct lending to any institution as may be approved by the Central Government. (4) The Bank will have organic links with the Reserve Bank and maintain a close link with in Role and Functions of NABARD This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapalsha20@gmai.com)(1) Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas (2) Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc. (3) Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation (4) Undertakes monitoring and evaluation of projects refinanced by it. (5) NABARD refinances the financial institutions which finances the rural sector. Export and Import Bank of India (EXIM) The Export and Import Bank of India, popularly known as the EXIM Bank was set up in 1982. It is the principal financial institution in India for foreign and international trade. It was previously a branch of the IDBI, but as the foreign trade sector grew, it was made into an independent body. The main function of the Export and Import Bank of India is to provide financial and other assistance to importers and exporters of the country. Functions of the EXIM Bank 1. Finances import and export of goods and services from India 2. Italso finances the import and export of goods and services from countries other than India. 3. It finances the import or export of machines and machinery on lease or hires purchase basis as well 4. Provides refinancing services to banks and other financial institutes for their financing of foreign trade 5. EXIM bank will also provide financial assistance to businesses joining a joint venture in a foreign country. 6. The bank also provides technical and other assistance to importers and exporters. Depending n the country of origin there are a lot of processes and procedures involved in the import-export of goods. The EXIM bank will provide guidance and assistance in administrative matters as well. Downloaded by Aishwarya Jagtap (agtapaisha20@gmai.com)7. Undertakes functions of a merchant bank for the importer or exporter in transactions of foreign trade. 8. Will also underwrite shares/debentures/stocks/bonds of companies engaged in foreign trade. 9. Will offer short-term loans or lines of eredit to foreign banks and governments. 10, EXIM bank can also provide business advisory services and expert knowledge to Indian exporters in respect of multi-funded projects in foreign countries Importance of the EXIM Bank * Other than providing financial assistance, the Export and Import Bank of India bank is always looking for ways to promote the foreign trade sector in India, In the early 1990s, EXIM introduced a program in India known as the Clusters of Excellence. * The aim was to improve the quality standards of our imports and exports. It also has a tie- up with the European Bank for Reconstruction and Development. It has agreed to co- finance programs with them in eastem Europe. + Inorder to promote exports EXIM bank also has schemes such as production equipment, finance program, export marketing finance, vendor development finance, ete, (iv) National Small Industries Corporation (NSIC): The National Small Industries Corporation (NSIC) Ltd. was established by the Government as a Publi Sector Company in 1955, Its main functions are: 1. To arrange for Supply of machinery and equipment. ii, To arrange Provision of financial assistance. iii, To provide Assistance for arrangement of raw materials. iv. To aid establishment of technology transfer centers. v. To make arrangement of marketing assistance. vi. To ensure priority in government purchase program This documents avalate tee ochageon SEUDOCULCOM Downloaded by Aishwarya Jagtap Gagtapaisha20@gmail.com)SSIB - Small Scale Industries Board The Small Scale Industries Board (SSI Board) is the apex advisory body constituted to render advise to the Government on all issues pertaining to the small scale sector. The Board is reconstituted every two years and is headed by the Minister In charge of Small Scale Industries in the Government of India. The Board comprises among others State Industry Ministers, some Members of Parliament, Secretaries of various Departments of Government of India, financial institutions, public sector undertakings, industry associations and eminent experts in the field. The Additional Secretary and Development Commissioner(SSI) is the Member Secretary of the Board. The Board is serviced by the Board and Policy Division in the office of the DC(SSI). Objectives of SSIB 1. To create more employment opportunities with less investment. To remove economic backwardness of rural and less developed regions of the economy. eon To reduce regional imbalances. ‘To mobilize and ensure optimum utilization of unexploited resources of the country. To improve standard of living of people. To ensure equitable distribution of income and wealth. To solve unemployment problem, ea aa To attain self-reliance, Sustainabilit Support and Information Centre (SSIC) The SSIC provides information on the sustainability of material stocks, evidence on resource efficiency, analysis of critical raw material savings, guidance on innovation options for life cycle impact hotspots, sustainable up-scaling scenarios, socio-economic costs and benefits, job creation potential of new technologies, market potential, recyclability benefits of new waste valorization options, etc. Need for Small Industries Development Corporation (SIDCO) In many state governments, for the promotion of small scale industri , a separate corporation has been set up which is known as Small Industries Development Corporation. They undertake all kinds of activities for the promotion of small scale industries. Right from the stage of installation, to the stage of commencing production, these Corporations help small scale industries (SSI) in many ways. 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