Fundamentals of Entrepreneurship F ENTR301

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Fundamentals of Entepreneurship
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© Amity University Press
All Rights Reserved
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No parts of this publication may be reproduced, stored in a retrieval system or transmitted
in any form or by any means, electronic, mechanical, photocopying, recording or otherwise
without the prior permission of the publisher.
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Advisory Committee
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Chairman : Prof. Abhinash Kumar
Members : Prof. Arun Bisaria
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Dr. Priya Mary Mathew
Mr. Alok Awtans
Dr. Coral J Barboza
Dr. Monica Rose
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Mr. Sachit Paliwal
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Subject Matter Expert

Dr. Coral J Barboza
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Published by Amity University Press for exclusive use of Amity Directorate of Distance and Online Education,
Amity University, Noida-201313
Contents
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Page No.
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Module - I: Basic Concepts of Entrepreneurship 01
1.1 Entrepreneur
1.1.1 Concept of Entrepreneur
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1.1.2 Distinction between Entrepreneur and Manager
1.1.3 Entrepreneurial Competencies
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1.1.4 Functions of Entrepreneurs
1.1.5 Types of Entrepreneurs
1.2 Women Entrepreneurs
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1.2.1 Introduction to Women Entrepreneurs
1.2.2 Characteristics of Women Entrepreneurs in Business
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1.2.3 Women and Globalisation
1.2.4 Challenges and Suggesstions of Women Entrepreneurs in India
1.2.5 Development of Women Entrepreneurs - Recent Trends
1.3 Entrepreneurship and Its Role
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1.3.1 Enterprise, Enterpreneur, Enterpreneurship
1.3.2 “Role of Entrepreneurship in Economic Development
1.3.3 Emergence of Entrepreneurial Class in India
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1.3.4 Myths about Entrepreneurship

Case Study
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Module - II: Environmental Monitoring and Importance of Business Idea 69

2.1 Entrepreneurial Development
2.1.1 Entrepreneurial Motivation
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2.1.2 Environmental Factors Affecting Entrepreneurship

2.1.3 Creativity and Innovation
2.1.4 Ways to Entrepreneurs’ Contribution for Sustainable Economy
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2.1.5 Entrepreneurial Development Programme

2.2 Business Idea
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2.2.1 Sources of Business Idea

2.2.2 Screening of Business Idea
2.2.3 Selection of Workable Business Idea
2.2.4 Idea Generation Techniques
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2.2.5 Convenient Frames of Reference for Streamlining the Process of Generation of Ideas
Case Study
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Module - III: Scanning the Environment 125
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3.1 Scanning the Environment
3.1.1 What is Environmental Scanning?
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3.1.2 Factors Involved in Sensing Opportunities
3.1.3 Identifying a Business Opportunity
3.1.4 Develop Business Opportunities using SWOT Analysis
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3.1.5 Develop Business Opportunities using PESTLE Analysis
3.2 Feasibility Analysis
3.2.1 Meaning and Concept of Feasibility Analysis
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3.2.2 Contents of a Feasibility Report
3.2.3 Types of Feasibility Analysis
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3.3 Project Management
3.3.1 Understanding the Project Environment
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3.3.2 Project Schedule, Resource and Budget Planning
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3.3.3 Project Life Cycle Stages
3.3.4 Project Appraisal
Case Study
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Module - IV: Business Plan and Sources of Capital 195

4.1 Business Plan
4.1.1 An Introduction to Business Plan
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4.1.2 Elements of a Business Plan

4.1.3 Components of a Business Plan
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4.1.4 How to Write a Business Plan

4.1.5 Why Some Business Plans Fail: Common Pitfalls to be Avoided
4.2 Sources of Finance
4.2.1 Entrepreneurial Capital
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4.2.2 Equity Financing

4.2.3 Debentures
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4.2.4 Commercial Banks

4.2.5 Institutional Finance
4.2.6 Friends and Family
4.2.7 Angel Financers
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4.2.8 Venture Capital

Case Study
Module - V: Institutional Support for Entrepreneurs 248
5.1 Institutional Support for Entrepreneurs
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5.1.1 Need for Institutional Support to Entrepreneurship Development
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5.1.2 Role of Government in Promoting and Supporting Entrepreneurship
5.1.3 Financial Assistance and Subsidies Offered by the Government
5.1.4 Micro, Small and Medium Enterprises Development Act, 2006
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5.2 Promotional Institutions for Entrepreneurs
5.2.1 District Industries Centers (DICs)
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5.2.2 Ministry of Micro, Small, and Medium Enterprises (MSME)
5.2.3 National Institute for Entrepreneurship and Small Business Development (NIESBUD)
5.2.4 The National Science and Technology Entrepreneurship Development Board (NSTEDB),
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5.2.5 Technology Development Board
5.2.6 Entrepreneurship Development Institute of India (EDII)
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5.2.7 Non-Governmental Institutions
Case Study
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Fundamentals of Entepreneurship 1
Module - I: Basic Concepts of Entrepreneurship

Notes
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Learning Objectives:
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At the end of this module, you will be able to understand:
●● Concept of entrepreneur
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●● Distinction between entrepreneur and manager
●● Entrepreneurial competencies
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●● Functions of entrepreneurs
●● Types of entrepreneurs
●● Introduction to women entrepreneurs
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●● Characteristics of women entrepreneurs in business
●● Women and globalisation
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●● Challenges and suggestions of women entrepreneurs in India
●● Development of women entrepreneurs - recent trends
●● Enterprise, entrepreneur, entrepreneurship
●● Role of entrepreneurship in economic development
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●● Emergence of entrepreneurial class in India
●● Myths about entrepreneurship
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Introduction
The term “entrepreneur” comes from the French word “entreprendre,” which
was coined and popularised by Irish French economist Richard Cantillon. The term
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‘entrepreneur’ is thought to have been coined by a French economist named ‘Jean-

Baptiste Say’ in the nineteenth century. He described an entrepreneur as someone who
starts a business, specifically as a contractor, and acts as a link between capital and
labour.
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Over the last few years, the term entrepreneurship has received a lot of attention,
as many people have discovered that entrepreneurs who run small businesses
contribute significantly to a country’s economic progress. Small firms might possibly
grow into major businesses, thus developing countries have established levies and laws
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to support the development and implementation of small businesses.
The person who manages, organises, and bears the risk of a business or
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enterprise is known as an entrepreneur. In other terms, an entrepreneur is a person

who is committed to discovering something new, converting the unique notion
and vision into profitable chances while accepting the risk that comes with it. The
entrepreneur is the person who comes up with the concept of starting a business,
lives with it, and eventually starts a business. The activities of an entrepreneur in an
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organisation are referred to as entrepreneurship.
Amity Directorate of Distance & Online Education

2 Fundamentals of Entepreneurship
Entrepreneurship is a critical factor that affects a country’s economic growth as well

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as its overall competitiveness. Identifying, evaluating, and implementing new company
ideas are all part of the entrepreneurial process. Establishing new businesses and
organisations is also part of the procedure. The method also incorporates innovation.
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This process creates jobs, raises people’s living standards, and has an impact on a
country’s growth and development.
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It is both a science and an art to be an entrepreneur. It is a science that is based on
the tried-and-true practice of company planning and management. It is an art form that
entails the creation, development, and growth of a firm.
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In a nutshell, the concept of entrepreneurship is as follows:
(i) Decision-making, innovation, implementation, future forecasting, independence, and

success are all aspects of entrepreneurship.
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(ii) Entrepreneurship is a knowledge-based discipline that is the result of a complex set
of socioeconomic, psychological, technological, legal, and other elements.
(iii) It is a dynamic and potentially dangerous process.
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(iv) It entails the combination of capital, technology, and human capital.
(v) Entrepreneurship can be used to both small and large businesses, as well as
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economic and non-economic activities.
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(vi) While individual entrepreneurs may have some characteristics, they will all have their
own distinct characteristics.
(vii) Entrepreneurship is a methodical procedure. It isn’t the result of a series of unrelated
events.
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(viii) It is the systematic and purposeful pursuit of change.

(viii) It is the systematic study of opportunities in the environment followed by a purposeful
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and coordinated search for change.

(ix) Because entrepreneurship is a philosophy and a style of thinking and acting, it can
exist in any scenario, including business, government, education, science, and
technology.
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(x) Entrepreneurship is a form of artistic expression.

(xi) It is the power to develop and construct anything out of almost nothing.
(xii) It’s the ability to perceive opportunities where others see chaos and uncertainty.
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(xiii) Entrepreneurship is a mindset that seeks for possibilities, takes calculated risks, and
reaps the rewards of starting a business.
(xv) It is made up of actions that are involved in the conception, creation, and operation
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of a business.
1.1 Entrepreneur
An entrepreneur is someone who starts an enterprise. He looks for and responds
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to change. An entrepreneur has been defined in a variety of ways. Along with land
labour and capital, economists consider him to be a fourth element of production.

Sociologists believe that certain communities and cultures encourage entrepreneurship,

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such as in India, where Gujaratis and Sindhis are known for their entrepreneurial spirit.
Others believe that entrepreneurs are inventors who come up with innovative product,
market, or technique concepts. To put it another way, an entrepreneur is someone who
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sees an opportunity, gathers the resources needed to take advantage of it, and then
takes advantage of it. Computers, cell phones, washing machines, ATMs, credit cards,
courier service, and ready-to-eat meals are all available. Foods are all instances of
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business concepts that have been turned into products or services.
An entrepreneur is a person who organises and speculates on a business.

Entrepreneurs move economic resources from a low-productivity, low-yielding area to a
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higher-productivity, higher-yielding area.
The term “entrepreneur” is frequently connected with someone who launches a

new small business.
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To understand the origins of the word entrepreneur, consider the French word
‘entrepredre,’ which literally means “between-taker” or “go-between.” Theoretical
development of the concept of entrepreneurship has occurred concurrently with the
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term’s development.
1.1.1 Concept of Entrepreneur

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In a developing economy, an entrepreneur is someone who begins a business,
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takes risks, faces uncertainties, and performs managerial functions such as decision-
making and coordination.
“He is a man who detects and evaluates a new situation in his environment and
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directs the making of such adjustments in the economic systems as he considers

essential,” is a good description of entrepreneur.
An entrepreneur does one or more of the following:

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◌◌ identifies profitable investment opportunities,

◌◌ investigates the feasibility of launching a manufacturing business,
◌◌ secures essential industrial licences,
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◌◌ secures start-up money.

◌◌ provides personal guarantees to the financial institution,
◌◌ guarantees to cover capital deficits, and
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◌◌ provides technical expertise.

In reality, the term “entrepreneur” is applied to all small company owners, traders,
and industrialists. Entrepreneurs are those who make a living by working in the
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manufacturing, distribution, or service industries, among other fields.
As a catalytic agent, the entrepreneur must change the workers’ mindsets so that
they embrace drastic changes in system structure and processes that the company is
considering implementing in order to catch up to competitors. The most crucial step
is to alter essential values, attitudes, and conventions that have been created and
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accepted by workers. In order to emphasise efficiency, quality, speed, innovation,

customer orientation, and empowerment in the organisation, these modifications are

required. An entrepreneur is expected to play a key role in creating the necessary

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knowledge, abilities, and attitudes among employees, as well as improving their
performance.
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Individuals who were ‘undertakers,’ or those who “took on” the risk of starting a
new business, are referred to as entrepreneurs.
It has been noted in many literature evaluations that Frenchmen who used to
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organise and lead military expeditions were referred to as entrepreneurs as early as the
sixteenth century.
Richard Cantillon, a French economist in the early eighteenth century, coined
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the term “entrepreneur” to describe a businessperson. A dealer who purchases the
means of production in order to combine them into marketable items is known as
an entrepreneur. Since then, the term “entrepreneur” has come to mean someone
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who takes the risk of founding a new company or launching a new concept, product,
or service. In the process of economic development, the entrepreneur is the most
significant factor. He is at the centre of the growth process since he is the one who
starts and continues development in a society. The entrepreneur, as a change agent, is
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first and foremost a catalyst for change.
The ability to take the factors of production—land, labour, and capital—and use
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them to manufacture new goods or services is a function unique to entrepreneurs. The
entrepreneur sees possibilities. He is a new company venture creator who also seeks
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to strengthen an organisation unit by implementing productive modifications. The word
entrepreneur comes from the French word ‘enterprendre,’ which literally means “to take
on.” In the early 16th century, it was used to describe commanders of military missions.
However, it was first employed in the context of other types of adventures, such as
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architects and public works contractors, approximately 1790 A.D.
The entrepreneur is “one who owns and manages a business”, according to the
Oxford English Dictionary of 1887. In 1933, the word “entrepreneur” was added to
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the dictionary, and it came to signify “one who conducts an enterprise, especially
a contractor serving as an intermediary between capital and labour.” In this sense,
starting a business is considered entrepreneurship, and the person who starts it—the
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person who organises capital and labour for the goal of production—is an entrepreneur.
This developing class is commonly referred to as the entrepreneurial class.
Views on Entrepreneur
The word ‘entrepreneur’ comes from the French language and originally meant
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a promoter of musical or other forms of entertainment. It was used to describe those

who took part in military excursions in the early 16th century. In the 17th century, it was
expanded to include civil engineering activities such as construction.
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It wasn’t until the early eighteenth century that the term was used to economic
issues. As a result, the evolution of the concept of entrepreneur may be traced back
over four centuries. The term ‘entrepreneur’ is employed in a variety of contexts and
perspectives.
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The three main points of view are as follows:
1. Entrepreneur as a Risk Bearer:

In the early 18th century, ‘Richard Cantillon’ (Irish) was the first to develop the term
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‘entrepreneur’ and his unique risk-bearing function in economics. He described an
entrepreneur as an agent who purchases manufacturing factors at fixed prices in
order to combine them into a product and sell it at variable prices in the future. As a
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result, it is a risky pastime.
2. Entrepreneur as Organizer:
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According to Jean-Baptiste, the term “entrepreneur” was coined by linking the
responsibilities of coordination, organisation, and supervision with the term
“entrepreneur.” According to him, an entrepreneur is someone who creates a product
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by combining the land of one, the labour of another, and the capital of yet another.
He pays interest on money, rent on land, and wages to labourers by selling the
product in the market, and the profit is all that remains. As a result, an entrepreneur
is a planner.
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3. The Entrepreneur as an Innovator:
In 1934, “Joseph A. Schumpeter” assigned the entrepreneur a critical role of
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“innovation.” He viewed economic progress as a dynamic transformation brought
about by entrepreneurs through the implementation of novel combinations of
production factors, i.e., innovations. The consumer model can be seen in families
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roaming aimlessly through bargain stores on Sunday afternoons, unsure where to
spend their money first.
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As previously said, determining what an individual enjoys or requires in his or her
profession is critical if motivation is to occur. When asked what they desire from their
jobs, most people would respond with broad generalisations. People who work in
libraries are more likely to claim they enjoy working with books or with other people.
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Some librarians may have previously stated that they liked their jobs because they
were secure and had status. Others may claim that they enjoy bringing order to
chaos.
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Definitions of an Entrepreneur
Some definitions of an entrepreneur are listed below:
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1725: Richard Cantillon: An entrepreneur is a person who pays a certain price for a
product to resell it at an uncertain price, thereby making decisions about obtaining and
using the resources while consequently admitting the risk of enterprise.
1803: J.B. Say: An entrepreneur is an economic agent who unites all means of
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production- land of one, the labour of another and the capital of yet another and thus
produces a product. By selling the product in the market he pays rent of land, wages to
labour, interest on capital and what remains is his profit. He shifts economic resources
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out of an area of lower and into an area of higher productivity and greater yield.
1934: Schumpeter: According to him entrepreneurs are innovators who use a

process of shattering the status quo of the existing products and services, to set up new
products, new services.
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1961: David McClleland: An entrepreneur is a person with a high need for

achievement [N-Ach]. He is energetic and a moderate risk taker.

1964: Peter Drucker: An entrepreneur searches for change, responds to it and

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exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective
entrepreneur converts a source into a resource.
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1971: Kilby: Emphasizes the role of an imitator entrepreneur who does not
innovate but imitates technologies innovated by others. Are very important in
developing economies.
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1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have
an internal locus of control.
1983: G. Pinchot: Intrapreneur is an entrepreneur within an already established
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organization.
1.1.2 Distinction between Entrepreneur and Manager
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The two sides of the coin are entrepreneurs and professional managers. The
success or failure of the company will be determined by its individual itineraries. The
competitive positioning of a company should include a successful entrepreneurial
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strategy. Management has become a distinct profession as the size of businesses has
grown and the separation of ownership and management in businesses has occurred.
Despite the fact that they both strive for the same goals, they are considered to differ in
different ways. r
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“A professional manager is an individual who
●● belongs to the profession of law, accountancy, medicine, engineering, or

architecture, or
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●● is a member of a recognised professional body or institutional body exercising

supervisory jurisdiction over its members,” according to the Sachar Committee on
Company Law.
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●● holds a degree or diploma in management from a recognised university and

has at least five years of executive experience in a company, corporation, or
government”; or has at least 10 years of experience in the same role and in the
same institutions described in the third category.
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A professional manager is someone who works to plan, organise, lead, and

regulate the efforts of others via the methodical application of classified information and
concepts. He abides by the practise guidelines and code of ethics issued by a reputable
organisation. To be a professional manager, he should have:
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◌◌ a clear understanding of his job needs

◌◌ carry out continuous learning to meet his job requirements
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◌◌ have a performance-oriented relationship with his subordinates, superiors,

and colleagues based on mutual respect to facilitate teamwork for collective
contribution to the organisation
◌◌ have a relationship with customers, suppliers, and other members of the
public based on long-term mutual benefit,
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◌◌ communicate with colleagues to improve the standard contribution

Management Expertise
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The formation of management as a distinct profession has been aided by the
progressive growth in the size of businesses and the separation of ownership and
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management in corporate companies. Professional management can be achieved not
by recruiting professional managers, but by adopting the professional management
style. To deal with the formation of corporate challenges, professional management
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organises managerial functions by setting long-term objectives, formulating policies and
plans, and developing a formal communication network and evaluation system.
Managers and Entrepreneurs
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Managers and entrepreneurs are both responsible for delivering results. Of course,
the outcomes are different. The buck stops with them in their respective result areas.
While they have the ability to delegate, they are ultimately responsible.
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Both must achieve results through the efforts of others, even if they work with
diverse groups of individuals. If they are loners, they will not be productive in the long
run.
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Both are decision-makers, yet their decisions are different due to the differences
in their tasks. Both must work within a set of limits, which are understandably distinct.
Both must follow sound management principles such as planning, staffing, delegating,
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and control in order to be effective in their respective jobs. Depending on the eventual
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goal, the focus of various management techniques may change.
A Management Tool
The managerial approach, which is free of dogmatic, ideological, and political
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trappings, is the key to professional management’s efficiency. It’s a method that looks at
the problem as a ‘whole’ rather than in ‘fractions.’
To achieve predetermined goals, the professional manager brings into operation

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planning, organising, staffing, motivating, controlling, and coordinating the work of

technocrats and professional components. The professional manager must have
a strong drive to succeed, extend, build, and grow. His goal should be to get the
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best results in the shortest amount of time and for the least amount of money. In a
developing economy like ours, a manager who has received management education
and has been exposed to managerial tools and procedures for achieving profit-cum-
growth will be able to supply goods.
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An established profession is defined by its members’ acceptance of the

responsibility to contribute to the growth of standards and the education of future
aspirants. The more eminent a member is, the more readily he understands the
responsibility. ‘His personal contribution to teaching will most likely be little, but it will be
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of excellent quality. This is the challenge that future professional managers will face.
An entrepreneur can be a manager, but a salaried manager cannot become

an entrepreneur. An entrepreneur is highly motivated to run a profitable firm. He is
enthusiastic about growing his firm through innovation, and he is pleased when his
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efforts yield great results. He is the investor, risk-taker, manager, and controller for the
company.

The entrepreneur may select a manager and outsource some of his responsibilities
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to him. However, even after executing his assigned duties, the manager cannot take
the place of the entrepreneur. The entrepreneur establishes a wide corporate policy,
assumes risk, and turns the company into a concern.
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Some of the major differences between manager and entrepreneur are:
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1. Innovation
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An entrepreneur initiates changes in production. These adjustments are forward-
thinking, resulting in increased productivity and profit. The manager is involved in
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mixing the factors of production in order to produce. He is in charge of the continuous
coordination of the manufacturing process, which can be visualised as a continuous
combination of production components.
2. Taking Risks
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An entrepreneur puts a lot of money into providing goods and services. He

is, nonetheless, expected to put up the necessary effort in order to thrive in his
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business. He deals with ambiguity and accepts a reasonable level of risk. However,
the manager must use caution when making decisions. He is a risk-taker who is
expected to pass the risk on to the entrepreneur.
3. Reward
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An entrepreneur is a risk-taker who anticipates a profit as a result of his risk-taking.

However, there is a chance that his unsure but dangerous behaviour will result in a
loss. However, the manager expects a monetary reward for his managerial efforts.
4. Skills
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An entrepreneur is well-versed in the business world. He demands greater

managerial abilities than business understanding. In addition, he requires intuition,
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creative thinking, and innovative skills. A manager, on the other hand, develops his
abilities through professional training, particularly in business schools. He develops
analytical tools, interpersonal relationships, and political skills.
5. Status
An entrepreneur is a job provider, not a job seeker. He has full ownership, control,
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and managerial authority. A manager, on the other hand, is only accountable for
carrying out policies set forth by the owner or entrepreneur, or his nominated agent,

or the board of directors. He is completely controlled by the entrepreneur’s policies

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and programmes.
6. Authority
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An entrepreneur adopts organisational role models. He considers transactions and
deal-making to be the foundation of any basic connection. He is decisive and action-
oriented, and he forces his own vision. He desires independence, goal-oriented, self-
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reliance, and self-motivation. A manager, on the other hand, strives to establish a
hierarchy as a fundamental connection. Furthermore, Manager desires advancement
and believes in corporate rewards. He is, in fact, driven by a desire for power.
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1.1.3 Entrepreneurial Competencies
Models of entrepreneurial competence are based on these varied approaches to
and ideas of competence. Competence is a term with numerous faces and applications.
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Competence research and practise are often motivated by a desire to improve
performance and, as a result, the opportunity for financial benefit or company success
(Spencer and Spencer, 1993). On the other hand, one of the most significant issues in
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the literature on competence is that there are numerous definitions of competence (Van
Overveld and Van Goudoever, 1997; Bron, 1999; Hayton and McEvoy, 2006; Hoffmann,
1999). Furthermore, the terms “skills,” “expertise,” “acumen,” and “competency” are
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all intertwined in the literature and are sometimes used interchangeably (Smith and
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Morse, 2005). Indeed, Hunt (1998) claims that competent behaviour is influenced by
a range of elements such as an individual’s motivation, personality traits, self-concept,
knowledge, or ability, thus it’s somewhat unsurprising that the distinctions and linkages
between these categories are hazy. The usage of the concept competency by a variety
of parties with varying aims adds to the uncertainty (Burgoyne, 1993). As a result, this
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section conducts a literature review of entrepreneurial competence research in order to:

provide an integrated account of contributions relating to entrepreneurial competencies
by different authors working in different countries, different industry sectors, and at
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different times; and develop an agenda for future research and practise in relation to
entrepreneurial competencies.
The term competency has at least two distinct meanings or applications:

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competency refers to an individual’s demonstrated behaviours, and competency refers

to minimal performance standards (Strebler et al., 1997). Competency, as defined by
the American school and pushed by Boyatzis, is a basic personality trait that leads
to successful action and/or excellent job performance. Competence, on the other
hand, has been favoured in the United Kingdom, with the government supporting
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advancements through the Management Charter Initiative from 1988. Competence is

defined as something that a person working in a specific occupation should be able to
accomplish; it is a description of an action, behaviour, or outcome that a person should
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be able to display. (2003) (Cheng and Dainty). Understanding the nature of the idea
of competence and its application in general is a necessary prerequisite for discussing
entrepreneurial competencies.
Entrepreneurial competences have been defined as a distinct set of skills that

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are necessary for successful entrepreneurship. Although there is growing interest

in corporate entrepreneurship and intrapreneurship (e.g. Colombo and Grilli, 2005;
Nuthall, 2006), such entrepreneurship is frequently associated with the creation of

small and new enterprises (e.g. Colombo and Grilli, 2005; Nuthall, 2006). (e.g. Hayton
Notes
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and Kelley, 2006; Sathe, 2003; Zahra et al., 1999). Chaston et al. (1999) looked at
how different modes of behaviour relate to, and impact, organisational capability
in a study of small firms. They discovered that, despite the extensive literature on
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organisational learning, there were few attempts to operationalize the construct through
the use of quantitative techniques, especially in the small firm sector. “Research on
whether there are discernible linkages between business performance, organisational
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learning style, and organisational competency has not yielded clear statistically
significant relationships, and further work is clearly required” (Chaston et al., 1999).
Entrepreneurship researchers distinguish between management and entrepreneurial
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competencies (Lerner and Almor, 2002; Chandler and Hanks, 1994a, b, c). Some
argue that entrepreneurial skills are required to start a business, but managerial skills
are required to expand it, despite the fact that entrepreneurship involves talents in both
areas (Man et al., 2002).
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The putative link between abilities and the formation, survival, and expansion
of a company has piqued interest in entrepreneurial competency (Bird, 1995; Baum,
1994). There is evidence to show that recognising the competences necessary and the
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changing role of the entrepreneur as a business develops will aid in the development
of competence and, as a result, will have implications for successful business growth
(Churchill and Lewis, 1983).
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In summary, entrepreneurial competences are viewed as critical to business
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growth and success, and a better understanding of their nature and significance can
have significant implications for practise. Despite their alleged importance, however, the
study of entrepreneurial abilities in the literature is still in its early phases (Brinckmann,
2008). As a result, this article conducts a review of the literature on entrepreneurial skill
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in order to:
●● Provide an integrated overview of contributions relevant to entrepreneurial

competencies from various writers working in various countries, industries, and at
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various moments in time.

●● Emphasize the necessity of building a common framework of competences as a
foundation for research and programme design.
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●● Create a plan for future research and practise in the area of entrepreneurial skills.
Concept of Entrepreneurial Competencies

The concept of entrepreneurial competency is rooted not just in competency
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and competence research, but also in entrepreneurship research. Unfortunately, this

is another field where definitions are difficult to come by. The terms “entrepreneur,”
“entrepreneurship,” and “entrepreneurial” are all still being debated. It may be relatively
)A
easy to identify outstanding and publicly visible figures like Bill Gates and Steve Jobs
as entrepreneurs, but it is far more difficult to identify the characteristics that lead us
to identify them as entrepreneurs, and even more difficult to identify which students or
new venture founders are, or may be, entrepreneurs. It’s especially crucial to remember
that, while the term “entrepreneurship” is frequently connected with new venture
(c
formation and small business management (Gibb, 1996), not all owner managers or
small enterprises are entrepreneurs. Furthermore, as previously mentioned, there is a

growing interest in corporate entrepreneurship, which is defined as entrepreneurship in

Notes
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larger organisations (Hayton and Kelley, 2006; Sathe, 2003; Zahra et al., 1999).
Nonetheless, if we’re going to look into entrepreneurial skills, we should at least
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try to come up with a meaning for the terms entrepreneur and entrepreneurial. Early
studies attempted to comprehend entrepreneurs by identifying the attributes and
characteristics of a successful entrepreneur. Researchers, on the other hand, had a
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difficult time discovering such a set of qualities and attributes. Only a few entrepreneurs
have all of the traits and characteristics listed in the literature. Lessem’s (1986) answer
was to postulate that there are different types of entrepreneurs, each with their own
set of personality qualities. Because of the limits of trait approaches, entrepreneurship
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research has shifted its focus to competency theories. Individuals with entrepreneurial
abilities are those that start or transform businesses and generate value via the
organisation of resources and opportunity (Bird, 1995). Bird (1995), in her study on
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management competence, agrees with scholars on the necessity of distinguishing
between competency that contributes to success and competence as a minimal or
baseline level. She claims that the skills required to establish or design a new firm
can be thought of as “baseline,” and that extremely effective entrepreneurs are those
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who go beyond launch to build organisations that survive and flourish. Furthermore,
because competencies can be learned, educators and the establishment of learning
opportunities must recognise the value of competences and identify them.
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Entrepreneurial competencies, according to Bird (1995), are fundamental
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characteristics such as specific knowledge, goals, traits, self-images, social positions,
and abilities that result in the birth, survival, and/or expansion of a company.
Entrepreneurial competencies, according to Man et al. (2002), are the entrepreneur’s
overall capacity to perform a job function successfully. Individuals who start and
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transform their enterprises are seen to have entrepreneurial skills. According to

Johnson and Winterton (1999), the abilities and competencies required to run a small
business are qualitatively and quantitatively different from those required in larger
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businesses. This is due, at least in part, to the fact that in a business setting, the
attention is on the person (Hunt and Meech, 1991).
Studying effective leaders, breaking down their behaviours, attitudes, and talents
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into measurable characteristics, and looking for methods to bring them together to
develop individuals who display superior performance is the basis of competency
theory. Oral presentation abilities, interpersonal skills, and the ability to draught and
present a business strategy are all examples of talents needed for entrepreneurial
success (Ronstadt, 1988; Vesper and McMullan, 1988). The value generation process
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of enterprises, according to the resource-based theory of the company, is inextricably

linked to managers’ ability to acquire and develop resources (Grant, 1991; Barney,
1991).
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The quest for long-term individual traits that contribute to success or performance
in a job, and then in an organisation, is a fundamental element of competence research
literature (Thomas and Herrisier, 1991). These traits can include a motivation, a
personality feature, a facet of a person’s self-image or social role, a talent, or a body of
information from which the entrepreneur draws (Boyatzis, 1982). In a study by Bartlett
(c
and Ghoshal (1997), three types of competences were identified: attitudes/traits,

knowledge/experience, and skills/abilities. Competencies are defined by Stuart and

Lindsay (1997) as a person’s abilities, knowledge, and personal traits. Entrepreneurial

Notes
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competencies have also been defined in terms of qualities, abilities, and knowledge
(Lau et al., 1999), and there has been a growing interest in how these skills are utilised
in various situations (Hunger and Wheelen, 1996). Most academics recognise that there
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is a big distinction between entrepreneurial competencies required to start a firm and
those required to manage the business as it grows (Chandler and Hanks, 1994a, b, c;
Chandler and Jansen, 1992; Man et al., 2002).
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Entrepreneurial Competencies and Business Performance
One of the key motivators for entrepreneurial competency study and practise
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is its ostensible link to business performance and growth, and hence to economic
development. Policymakers have been particularly concerned about preventing small
business failure as well as fostering corporate growth. The literature has highlighted
venture expansion as a critical indicator of venture success (Covin and Slevin, 1997;
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Low and MacMillan, 1998).
Competencies are especially important in the context of entrepreneurship since
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they are linked to the start-up, survival, and/or expansion of a business (Bird, 1995;
Baum et al., 2001; Colombo and Grilli, 2005). According to research, an entrepreneur’s
skills play a role in the success and growth of their business (Lerner and Almor, 2002;
Bird, 1995; Cooper et al., 1994). Furthermore, there is evidence that strengthening
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entrepreneurial skills among entrepreneurs helps them to be more profitable and grow
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(Chandler and Jansen, 1992).
Entrepreneurs’ demographic, psychological, and behavioural qualities, as well

as their talents and technical know-how, are frequently regarded as the most relevant
determinants in performance in entrepreneurship and SME studies. The research
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identifies three mechanisms by which competencies can influence performance. First,

more capable entrepreneurs seek out better venture opportunities, where both the
quality of the offer and the fit are equally important. Second, management skills are
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linked to venture strategy; the more skilled entrepreneurs can develop superior plans
that are tailored to their company.
Entrepreneurs and their skills are a key and important resource for businesses,
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according to resource-based theorists. Competence, according to Bird (1995), is

directly related to venture outcomes since it pertains to the quality of action conducted
by entrepreneurs. Chandler and Jansen (1992) operationalize founder abilities reported
in the literature and group them into three categories: traditional entrepreneurial skills,
managerial skills, and technical-functional skills. Their findings demonstrated a link
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between founders’ self-reported abilities and venture performance.
The entrepreneurial stage of the firm’s life-cycle is strongly tied to SMEs’ skills
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(Churchill and Lewis, 1983). Moving from an entrepreneurially run business to a

professionally managed business is one of several stages of business development.
This is when the transition from person level competencies (i.e., those of the
entrepreneur) to firm level competencies can be seen. According to Hofer and Charan
(1984), transitioning from an entrepreneurial to a professionally managed organisation
(c
requires a diverse set of managerial abilities and training.

Several research studies over the last two decades have attempted to define
Notes
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categories of entrepreneurs as well as a variety of different variables in order to better
understand and comprehend the growth process. Entrepreneurial success is defined by
a variety of talents, knowledge, and experience, as outlined by many authors.
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●● Personal background and experience, such as commercial experience, a history
of invention, production and marketing experience, status, entrepreneurial
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experience, and prior interaction with venture capitalists are just a few examples
(Murray, 1996).
●● Basu and Goswami (1999) looked examined the impact of socio-economic factors
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such educational attainment, previous business experience (including family
background in business and years in business), reliance on bank finance, and
informal sources of money during the start-up stage.
●● Freel (1999) looked at the skill gaps in small businesses and found that
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management shortcomings included things like poor planning, financial
evaluation, insufficient delegation, a lack of functional competence and/or support,
management staff turnover, and insufficient marketing.
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●● Cognitive ability, social abilities, and administrative skills and abilities are all
important (Gasse et al., 1997).
●●
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Outgoing personality, approachability, leadership, self-confidence, innovativeness,
and the ability to take risks are examples of personal attributes (Martin and
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Staines, 1994).
●● Viewing the big picture, spotting unique chances, making a total commitment,
feeling a need for control, having a utilitarian view of what is right, welcoming
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uncertainty, using contacts and connections, and embracing competence are

examples of behavioural qualities (Mitton, 1989).
●● Managerial engagement and communication; and how managers split their time
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between different activities (Flore’n, 2006).

In a study conducted by Man et al. (2002), ten domains of entrepreneurial skills,
including opportunity, relational, analytical, innovative, operational, human, strategic,
commitment, learning, and personal strength abilities, were identified. They were shown
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to have direct or indirect effects on the performance.
1.1.4 Functions of Entrepreneurs

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An entrepreneur is a person who seeks out opportunities and organises and

coordinates the production element. He not only recognises commercial prospects,
but also mobilises other resources such as manpower, capital, machinery, supplies,
and processes. According to some economists, an entrepreneur’s role is to establish
)A
coordination. Risk-taking, enterprise control, change innovation, motivation, and other

associated activities are all part of the corporate enterprise. In fact, an entrepreneur
must perform a combination of these tasks while keeping time and the surroundings
in mind. He must, in fact, explore fresh ideas, demands, and possibilities in order
to contribute to technological advancement. A successful entrepreneur perceives
(c
a product’s or service’s potential and develops marketing, production, product

development, and organisational policies. He is in charge of the entire company’s

operations. He has a strong ability to take calculated risks and believes in his own
Notes
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abilities.
An entrepreneur performs all of the necessary duties that are required for
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the operation and expansion of a business. The flow diagram below can help us
understand this.
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Kilby identified thirteen functions of an entrepreneur, several of which overlapped

with managerial responsibilities. Kilby divided these functions into four categories. The
following are some of them:
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A. Relationship of Exchange:
1. Recognizing market possibilities.
2. Taking control of limited resources.
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3. Purchasing inputs.
4. Product marketing and responding to competition.
B. Political Administration:
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1. Dealing with the government (concessions, permits, and taxes)

2. Managing human relations inside the company

3. Managing relationships with customers and suppliers.

Notes
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C. Management Control:
1. Budgeting and financial management
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2. Production management
D. Technology:
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1. Purchasing the factory and supervising its construction.
2. Manufacturing engineering
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3. Improving the process and the quality of the final output.
4. Experimenting with novel manufacturing procedures and goods.
These tasks, according to Kilby, can vary depending on the size, kind, and location
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of a business, and can be enhanced through training and education. To summarise,
entrepreneurs are responsible for the following tasks:
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1. Innovation
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One of the most crucial functions of an entrepreneur is innovation. They examine

the current state of affairs in the organisation and attempt to achieve a new level of
equilibrium by experimenting with novel and productive combinations of existing
resources. They come up with novel concepts and use their management and
innovative talents to make them a reality. They combine productive components, bring
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them together, and contribute to a country’s economic progress.
According to Schumpeter, innovation can take the following forms:

)A
◌◌ introduction of new items;

◌◌ adoption of new manufacturing methods;
◌◌ opening of a new market;
◌◌ conquest of a new source of raw materials; and
(c
◌◌ reorganisation of any industry.

Entrepreneurs, according to Robert Wilken, provide five different sorts of change:

1. Initial Expansion: the manufacturing of commodities from the start.

Notes
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2. Subsequent Expansion: the change in the number of commodities produced
after the initial expansion.
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3. Factor Innovation: a rise in the quantity or productivity of manufacturing
elements.
a) Financial: obtaining funds from new sources or in new forms.
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b) Labour: obtaining labour from a new source or of a different type; upgrading
existing labour.
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c) Material: obtaining old material from a new source or utilising new material.
4. Production Innovations: alterations to the manufacturing process.
a) Technological: the application of a novel manufacturing process.
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b) Organizational: a shift in the structure of interpersonal connections.
5. Market Innovation: Changes in the size or composition of the market are
examples of market innovation.
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a) Product: the creation of a new item or a change in the quality or price of an
existing item.
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Market: the establishment of a new market.
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Imagination and creativity are required for innovation. It’s so basic that a guy
can’t call himself an entrepreneur unless he invents something fresh and unique in his
business.
2. Assumption of Risk
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Putting a concept into action does not ensure success. Entrepreneurs take up
the risk of the business they want to start succeeding or failing. Such dangers are
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uninsurable. If they materialise, the entrepreneur will be responsible for the loss. As a
result, risk-taking or uncertainty-taking is still the most crucial job of an entrepreneur,
which he seeks to minimise by his initiative, talent, and excellent judgement.
3. Idea Generation
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Entrepreneurs do not come up with ideas and put them into action right away.
Environmental scanning and market research might help you come up with new ideas.
It is the responsibility of the entrepreneur to produce as many ideas as possible in
order to identify the greatest business prospects that can be pursued as a commercially
m
viable company endeavour. They consider a number of ideas, put them to the test
using quantitative methodologies, complement them with empirical evidence, and then
choose the best option and put it into practise. The selection of an idea thus entails
)A
the entrepreneurs’ use of research technique, vision, insight, observation, experience,

education, training, and exposure, as well as their vision, insight, observation,
experience, education, training, and exposure. Idea generation entails deciding on a
product and deciding on a project.
(c
4. Organizing and Management

An entrepreneur gathers numerous production resources, appropriately organises

them, and converts them into a productive unit. An entrepreneur is in charge of the
Notes
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following activities in relation to the proposed projects:
●● Analysing the business environment (SWOT Analysis)
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●● Assessing the viability of a business concept
●● Product Line Selection and Market Research: Market research is the systematic
collecting of data about the product that the entrepreneur intends to make, and
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product market research is the next crucial duty of the entrepreneur.
While starting a business, an entrepreneur must conduct continuous market
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research to learn the specifics of the intended product, such as demand for the product,
product line selection, alternative product price, client size, and so on.
●● Researching government regulations, rules, and policies.
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●● Completing federal paperwork.
●● Determination of Objectives: The entrepreneur’s next task is to establish and spell
out the company’s mission, vision, objectives, and goals, all of which should be
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stated clearly. In other words, the entrepreneur should be quite clear about the
venture’s future prospects.
●● Determination of the Venture’s Shape: An entrepreneur’s role in choosing the
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venture’s form is equally crucial. The nature of the product, the amount of
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investment, the nature of the activities, the types of product, the quality of the
product, the quality of human resources, and other factors must all be considered
when deciding on the type of business. Sole proprietorship, partnership, joint
stock company, and cooperative society are the most common types of ownership
groups.
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●● Managing Funds: An entrepreneur’s most critical role is fund raising. All of a

company’s actions are dependent on its finances and how well they are managed.
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It is the entrepreneur’s job to raise financing both internally and externally.

●● Choosing a Location:
◌◌ Obtaining Raw Materials Entrepreneurs must discover low-cost, consistent
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sources of raw materials, which will enable them to lower production costs
and compete more effectively.
●● Machinery Acquisition: The entrepreneurs’ next task is to obtain the necessary
machinery and equipment for the venture’s launch. He should state the following
details before purchasing the machinery:
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(a) Technology information

(b) Machine installed capacity
)A
(c) After-sales service facilities)

●● Manpower Recruitment, Selection, and Placement: While performing this duty, the
entrepreneur must engage in the following activities:
(a) Determining the organization’s labour requirements
(c
(b) Establishing a selection method

(c) Placing the employee

Notes
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‘Financial planning,’ which transforms all other actions into monetary terms, is
another vital responsibility of an entrepreneur. Despite the fact that an entrepreneur is
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more than a manager, he does have some managerial responsibilities. By managing
and controlling the personnel, he manages the day-to-day operations of a business.
5. Decision Making
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According to Arther H. Cole, the entrepreneur is a “decision maker.” He makes
decisions on a variety of issues, including:
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●● The determination of the enterprise’s aims, as well as their modification as
circumstances demand or make it useful;
●● Developing an organisation, including effective relationships with subordinates and
all employees;
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●● Obtaining appropriate financial resources and keeping positive relationships with
current and new investors;
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●● The acquisition of efficient technological equipment, as well as its revision as new
machinery becomes available;
●● The creation of a market for the products, as well as the development of new
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products to meet or anticipate consumer demand; and the maintenance of good
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relations with government officials and the general public.
6. Leading
As an entrepreneur’s business grows, he or she takes on a new responsibility
as a leader. He takes on the role of a visionary leader. The leading function of the
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entrepreneur is to get the most out of his human resources. He needs to instil teamwork
and motivation among his employees. Entrepreneurs must transition from a command-
and-control management style to a coach-and-collaboration style as a leader.
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7. Managing Growth
The entrepreneur must keep track of the company’s progress. It entails tasks
including establishing and designing appropriate growth strategies, coping with crises,
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examining various financing options, and determining the venture’s value.
8. Support for the Social Environment

Social conventions, culture, values, and beliefs define the social environment.
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Changes are difficult to accept in a country’s socioeconomic climate. Entrepreneurs

seek out new sources of materials, new markets, and new opportunities, as well as new
and more profitable organisational structures. This demonstrates their determination,
passion, and energy, and aids in overcoming society’s opposition to change.
)A
9. Economic Development
Entrepreneurs help to accelerate the rate of economic development in both
developed and developing countries. They take advantage of the country’s resources
(land, labour, capital, and technology) and make the best use of them in order to help
(c
the country flourish.

An entrepreneur serves a variety of purposes. He starts a business, takes a risk,

Notes
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and makes a profit. He is a man who is driven by a great desire to succeed. He is self-
assured in his ability to run a business. He takes advantage of chances whenever and
wherever they present themselves.
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As you can see from the examples above, being an entrepreneur is a thrilling
prospect! Entrepreneurs are involved in a wide range of activities and face a wide
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range of obstacles. Entrepreneurial behaviour, in fact, can be described as complicated,
deliberate, and passionate. However, it is critical for you to understand the rewards
and challenges of becoming an entrepreneur right from the outset because of these
attributes.
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Being an entrepreneur Has Its Rewards and Challenges
Rewards:
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◌◌ High degree of autonomy
◌◌ freedom from restrictions
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◌◌ Ability to put a wide range of abilities and talents to work
◌◌ Decision-making freedom – Accountability to just oneself
◌◌ Challenges to face
◌◌ A sense of accomplishment and pride
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◌◌ Potential for larger financial rewards
Challenges:
◌◌ Must be able to deal with change and uncertainty: Uncertainty is a necessary
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component of any business. Every business owner understands that there is

no return without risk. As a result, the existence of uncertainty is an integral
element of our speculative and investment activities. When a result, a
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business owner must embrace uncertainty and deal with it as it arises in order
to be a top leader.
◌◌ Must make difficult economic decisions: Making difficult decisions is one of
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the challenges of being an entrepreneur. However, because opportunities are

frequently disguised as decisions, it’s something that business owners must
get used to if they want to thrive. Of course, the most important decision an
entrepreneur will make is whether or not to start a firm in the first place. This
may include foregoing a steady, full-time salary or reducing the work hours in
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order to pursue the ambition. Or deciding which idea to put into a business
may be the most difficult decision.
◌◌ Must be willing to take chances: When an entrepreneur takes risks that their
)A
competitors are unwilling to take, they can rise to the top of their field. The
entrepreneur’s willingness to take risks demonstrates to his or her team that
he or she is a true business visionary and leader who believes in the potential
payoff on the other side. Risk-taking allows and stimulates innovation, which
can be a key difference for a product or service. Risks that fail aren’t always
(c
bad. They can sometimes teach an entrepreneur the most important business

lesson. Failure aids in the development of future business initiatives and can
Notes
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finally lead to expansion.
◌◌ Requires a wide range of skills and abilities: Entrepreneurial skills are those
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that are commonly associated with being an entrepreneur, yet they may be
developed by anyone. Entrepreneurship typically entails starting and growing
your own successful company, however people with entrepreneurial talents
can also succeed in larger businesses.
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Many researchers have looked into entrepreneurial skills, but none have come up
with solid solutions. Some common skills are:
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◌◌ Personal characteristics
◌◌ Interpersonal abilities
◌◌ Skills in critical and creative thinking.
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◌◌ Practical knowledge and capabilities.
●● Must be at ease with the possibility of failure: Every successful entrepreneur has
had their share of setbacks. Failures aid in the development of an entrepreneurial
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mindset and provide great consequences. It’s like being knocked down in a boxing
ring and getting right back up, ready to fight again. It’s easy to see failure as a
weakness, but accepting failure as a part of the entrepreneurial path is perfectly
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acceptable. Failure can be beneficial if it is viewed as a challenge rather than a
flaw. Every setback is a stumbling block to overcome. Entrepreneurs who succeed
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work hard until they succeed. Nothing can stop anyone from achieving the
aspirations and goals if they are no longer afraid of failure. They will be successful
as soon as they let go of the fear.
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1.1.5 Types of Entrepreneurs

According to researchers that have studied entrepreneurial behaviour, there are
various sorts of entrepreneurs. It’s difficult to categorise entrepreneurs into different
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groups. Entrepreneurial taxonomy can be done in a variety of ways. Entrepreneurs

can be categorised in a variety of ways. Denhof, Clarence Entrepreneurs are classed
according to their level of economic development, while others are categorised
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according to their functions and qualities. Entrepreneurs have less initiative and drive
in the early stages of economic development. They become more innovative and
energetic as development progresses. The many sorts of entrepreneurs are divided into
categories based on a set of criteria. The following are some key classifications:
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(c

Notes
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1. On the Basis of Economic Development: On the basis of economic development,

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Clarence Danhof divided entrepreneurs into four types.

A. Entrepreneurs Who Innovate: This sort of entrepreneurship is defined by
aggressive information gathering and analysis of findings derived from unique
combinations of production elements. This group of entrepreneurs is known
for being bold in their experimenting and for being astute in putting appealing
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opportunities into action.

They are entrepreneurs that have come up with unique and inventive ways
)A
to establish a new business. A forward-thinking entrepreneur recognises an

opportunity to introduce a new technique, product, or market. He could raise
funds to start a business, put together the necessary components, hire top
executives, and get the company up and running. This was Schumpeter’s sort
of entrepreneur. As a result of innovative entrepreneurs, something new is
(c
created. They are important contributions to a country’s economic prosperity.

In developing countries, innovative entrepreneurs are abundant. In wealthy
countries, such entrepreneurs are scarce. Through their ambitious spirit, hope
of gaining money, ability to detect and exploit possibilities, and other factors,
Notes
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innovative entrepreneurs played a vital part in the rise of contemporary
capitalism.
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B. Imitative or Adoptive Entrepreneurs: A second type of entrepreneur is known
as an imitative entrepreneur. Imitative entrepreneurs replicate or utilise
appropriate advancements developed by inventive entrepreneurs. They do not
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make the adjustments themselves. They only copy technology that has been
developed by others. Entrepreneurs like them are especially vital in growing
courtier economies because they contribute greatly to the growth of those
economies. Imitative entrepreneurs are best suited to developing countries
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since people in these countries like to copy technology, information, and
skill that are already available in more sophisticated countries. There is also
a scarcity of imitative entrepreneurs in highly undeveloped countries. People
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who can adapt technologies and products to the specific conditions that these
countries face are required.
C. Fabian Entrepreneur: Fabian entrepreneur is the third type. These
entrepreneurs are introverted and sluggish by nature. This sort of
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entrepreneur has little willingness to implement new modifications or adopt
new production processes developed by the majority of entrepreneurs.
They follow the methods, customs, traditions, and religions that have been
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established. They are uninterested in taking chances and prefer to follow
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in the footsteps of their forefathers. They are usually second-generation
company owners in a family business.
D. Drone entrepreneurs, refuse to replicate or take advantage of possibilities
that come their way. They take a traditional approach and stick to their tried-
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and-true products, production processes, and concepts. They are fighting for
survival rather than growth. Laggards is a term that can be applied to them. In
such circumstances, the company loses market share, its operations become
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unprofitable, and it may be forced out of business.

2. On the Basis of Type of Business: Under this category we can classify entrepreneurs
as described below.
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A. Business Entrepreneurs: These are the people who come up with a novel
product or service idea and then start a company to turn it into a reality. They
use every production component to create a new commercial opportunity.
They could start a large corporation or a tiny business. They are known as
small business entrepreneurs when they start tiny businesses. Entrepreneurs
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are most commonly seen in small commerce and manufacturing businesses.

B. Trading Entrepreneur: These individuals engage in trading activities and are
)A
not involved in manufacturing. They identify their product’s market potential

and drive demand for their product line among buyers. They may engage in
both domestic and international trade. These business owners displayed
their capacity to move forward with a variety of initiatives that benefited their
company.
(c
C. Industrial Entrepreneur: An industrial entrepreneur is a manufacturer that

discovers client needs and develops products or services to meet those
demands. He is a product-oriented individual who begins by creating a
product through an industrial unit, such as the electrical industry, textile

Notes
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industry, or machine tools.
D. Corporate Entrepreneur: These business owners put their innovative skills to
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work organising and managing a corporate venture. A corporate undertaking
is a type of business entity that is registered under a statute or Act, such as
a trust under the Trust Act or a corporation under the Companies Act. These
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businesses operate as a separate legal entity. As a result, he is a person who
plans, develops, and manages a business.
E. Agricultural Entrepreneur: Agricultural entrepreneurs are persons who engage
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in agricultural operations such as crop production through mechanisation,
irrigation, and the application of technology. They encompass agriculture and
related jobs and cover a vast spectrum of the agricultural economy.
3. According to the Technology Used: The use of new technologies in numerous sectors
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of the national economy is critical for corporate growth in the future. On the basis of
their technological utilisation, we can categorise these entrepreneurs as follows:
A. Entrepreneurs in the Technical Field: Technically qualified people have
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entered the world of business as a result of the fall of joint family businesses
and the rise of scientific and technical institutes. These individuals may
start a business to profit from their inventions and discoveries. Technical
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knowledge is their most valuable asset. They raise the necessary funds and
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hire professionals in financial, legal, and marketing, among other fields. Their
success is determined by how they begin manufacturing and the market
acceptance of their items.
B. Non-technical Entrepreneur: Non-technical entrepreneurs are uninterested
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in the technical components of the product or service they sell. They’re only
interested in devising new marketing and promotional techniques for their
product or service.
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C. Professional Entrepreneur: A professional entrepreneur is someone who

is interested in starting a business but not in managing it once it is up and
running. A professional entrepreneur sells his or her previous business for a
profit and begins a new one with a fresh concept. A dynamic entrepreneur is
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one who comes up with new ideas for new projects.

4. According to Motivation: Motivation is the driving factor behind an entrepreneur’s
efforts to attain his objectives. An entrepreneur is driven to achieve or demonstrate
excellence in his or her work. We can categorise entrepreneurs based on their
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motive.
A. Pure entrepreneur is one who is motivated solely by psychological, economic,
and ethical factors. He engages in entrepreneurship for the sake of personal
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fulfilment at work, ego, or status.

B. Induced Entrepreneur: This type of entrepreneur is one who is compelled
to create a business as a result of government policy reforms that provide
help, incentives, concessions, and other benefits. The majority of small-
(c
scale entrepreneurs fall into this category, and they start their businesses
as a result of the financial, technical, and other resources made available
by the government’s numerous agencies to encourage entrepreneurship.
Import restrictions and the granting of production quotas to small units have
Notes
e
prompted many people to create their own small business.
C. Self-Fulfilment Motivated Entrepreneur: Self-fulfilment motivates new
in
entrepreneurs. They are formed as a result of the prospect of developing
and selling new items for customer usage. They are motivated by monetary
incentives.
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5. Industrial units are classified as high growth, medium growth, or low growth, and as
a result, we have ‘Growth Entrepreneurs’ and ‘Super Growth Entrepreneurs.’
A. High-Growth Entrepreneur: He must enter a high-growth industry and select
O
one with long-term growth possibilities. Growth entrepreneurs have the
drive and ability to expand their businesses as quickly as feasible. B. Super-
Growth Entrepreneur: This kind of entrepreneur includes people who have
experienced tremendous growth in their business. High sales turnover, money
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liquidity, and profitability are indicators of growing performance.
6. Entrepreneurial Activity: Entrepreneurs are classed as novice, serial, or portfolio
entrepreneurs based on their entrepreneurial activity.
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A. Novice Entrepreneur: A novice entrepreneur is someone who has just
launched their first business. A novice entrepreneur is someone who has
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never owned a business before, whether as a business creator, an heir to a
firm, or a buyer of a business. In contrast to Carly Starter, a novice can be a
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50-year-old veteran of the sector with over 25 years of experience.
B. A Serial Entrepreneur: A serial entrepreneur is someone who focuses on one
business at a time but eventually starts a number of them. The beginner is
enthralled with the process of getting started. The serial entrepreneur may
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lose interest in the firm once it has been established and consider selling and
moving on. Entrepreneur with a portfolio. A portfolio entrepreneur is someone
who keeps their original business and expands their portfolio by inheriting,
U
creating, or purchasing new firms. A portfolio entrepreneur is someone who

starts and runs multiple enterprises. It could be a risk-spreading technique, or
it could be that the entrepreneur is concurrently enthralled with a number of
chances. In addition, the entrepreneur may see certain synergies between the
ity
two businesses.
7. Other Entrepreneurs:
A. First-Generation Entrepreneurs: This category includes entrepreneurs whose
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parents or family members did not start a firm and instead worked in a
salaried position. India’s rising economy has created a plethora of business
prospects, and deregulation has made it easier to start a company. Also, due
to a shift in the middle class’s thinking, becoming an entrepreneur is now
)A
more acceptable. A first-generation entrepreneur is someone who establishes

a business using an inventive skill. He’s essentially a technologist who
combines many technologies to create a commercial product or service.
B. Modern Entrepreneur: A modern entrepreneur is someone who runs a firm
(c
that fits the current marketing needs and adapts to the changing market
situation.

C. Women Entrepreneurs: Women’s participation in entrepreneurship has

Notes
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increased as a result of progressive policies and other incentives. For the first
time in 1988, a definition of Women Entrepreneurs’ Enterprise was developed,
which defined a Woman Enterprise as an SSI unit/industry-related service
in
or business enterprise managed by one or more women entrepreneurs in
proprietary concerns, or in which she/they individually or jointly have a share
capital of not less than 51% as partners / shareholders/directors of a private
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limited company/members of a cooperative society.
D. Nascent Entrepreneur: A nascent entrepreneur is someone who is
establishing a new business for the first time.
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E. Habitual Entrepreneur A habitual entrepreneur is someone who has previously
owned a firm. A novice or a seasoned entrepreneur can be a fledgling
entrepreneur.
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F. Lifestyle Entrepreneurs: Lifestyle entrepreneurs have created a business that
is tailored to their unique situation and way of life. Their primary goal is to
make money for themselves and their families.
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G Copreneurs: It refers to married couples who run a business together.
Copreneurs are married couples who share ownership, dedication, and
responsibility for a firm. Couples who work together as copreneurs face
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challenges in establishing equality in their relationships. These couples reflect
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the dynamic interaction of the love and work systems.
H. IT Entrepreneurs: IT entrepreneurs are developing a new business model that
will propel them to the top of the industry. They are self-assured, imaginative,
and creative in a competitive global world, and they have carved out a space
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for themselves. They are a daring new breed of entrepreneurs ready to take
on the information technology world.
I. Social Entrepreneur: A social entrepreneur is someone who sees a segment
U
of society that is stuck and comes up with fresh ideas to help it get unstuck.
The entrepreneur’s enthusiasm is very strong, whether it is focused efforts for
child upliftment, fighting for the conservation of Assam’s rainforests, working
for the welfare of the blind, or endeavours to empower women. This massive
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wave of social innovation and entrepreneurship is being driven by freedom,

affluence, exposure, social mobility, and increased individual confidence. After
all, people are fed up with government inefficiency and corporate indifference
and want to alter things, and this is true everywhere.
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J. Forced Entrepreneurs: This group includes yesterday’s moneylenders who

were forced out of their family business due to government legislation, neo-
rich Indians returning from abroad, and educated unemployed seeking self-
)A
employment.
K. Entrepreneurs, both individual and institutional Individual entrepreneurs
predominate in the small-scale sector. In every country, small businesses
outnumber large businesses. Flexibility and quick decision-making are
(c
advantages of such entrepreneurs. However, a single person can only

develop, operate, and control an organisation to a certain extent. After that,
institutionalising entrepreneurship becomes important. Through a corporate

body, the company will need to learn a number of new entrepreneurial skills.
Notes
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To handle the more intricate bed network of decision-making, a group of
entrepreneurs must be established.
in
The primary duty of the entrepreneur stays the same, but the promoters at
the helm of affairs make basic decisions such as the line of business, the
quantity of money used, and so on. As a result, individual and institutional
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entrepreneurs coexist and encourage one another. The corporate sector is the
epitome of formalised entrepreneurship.
L. Inheritance Entrepreneurs: Some people become entrepreneurs after
O
inheriting the family firm. A huge number of family-controlled businesses
exist in India. These houses’ businesses are passed down from generation to
generation.
The chart also explains the various types of entrepreneurs based on key criteria.
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1.2 Women Entrepreneurs
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1.2.1 Introduction to Women Entrepreneurs
According to the general concept, women entrepreneur may be defined as a
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woman or a group of women who initiate, organize and operate a business enterprise
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Women entrepreneurs are individuals who come up with the idea for a business,
start it up, organise and combine production aspects, run the firm, take chances, and
deal with the economic uncertainty that comes with it.
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Definitions of Women Entrepreneurship

Schumpeter – “Women entrepreneurs are those women who innovate, initiate or
adopt a business activity”.
U
Government of India – “A woman entrepreneur is defined as an enterprise owned

and controlled by a woman having a minimum financial interest of 51 percent of the
capital and giving at least 51 percent of the employment generated in the enterprise to
ity
women.”
Frederick Harbison – “Any women or group of women which innovates, initiates or

adopts an economic activity may be called women entrepreneurship”
In a nutshell, women entrepreneurs are those women who come up with the idea
m
for a business, start it up, organise and combine production aspects, run the firm, take
chances, and deal with the economic uncertainty that comes with it.
There has been a surge in women entrepreneurship as a result of economic

)A
success, improved access to education, urbanisation, the spread of liberal and

democratic culture, and societal acknowledgment. In India, special incentives and
initiatives have been established to support the growth of female entrepreneurs. Startup
India and Standup make a unique argument for encouraging women to pursue their
dreams of becoming entrepreneurs.
(c
Women entrepreneurs have gradually but surely emerged as successful

entrepreneurs around the world, gaining many honours in the process. For example,
in 2013, Oprah Winfrey, an American businesswoman, television host, and media

Notes
e
executive, was awarded the Presidential Medal of Freedom for her contributions to
entertainment and social impact.
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Women Entrepreneurship – Areas
Earlier after independence, women entrepreneurs were limited to traditional areas
such as cuisine, fruits, vegetables, pickles, papads, tailoring, and hosiery. Women
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entrepreneurs, on the other hand, have frequently expanded into new fields such as
engineering, beauty parlours, jewellery, handicraft, electrical, electronics, chemical,
and other production. This demonstrates that women’s entrepreneurship foundation
O
has shifted from the old 3Ps - pickle, powder, and papad – to the more modern 3ES –
Engineering, Electrical, and Electronics.
There are numerous industries in the small business sector where women play a
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significant role.
Such industries can be listed as under:
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1. Agriculture and Allied industries – such as sericulture, horticulture, dairying
and animal husbandry etc.
2. Handicrafts, Agarbati, Candle making, Bidi Industry, Hosiery and Textile, Doll
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Making, Jewelry, Pottery, Designing, and other home-based businesses
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3. Industries outside of the home, such as electrical and electronics, food
manufacturing, and so on.
Apart from the aforementioned, the majority of Indian women have excelled in both
the organised and unorganised sectors. For example, Kiran Mazumdar Shaw, Shahnaz
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Hussain, Ekta Kapoor, and Kathi Ben began their businesses on a tiny scale and went
on to achieve great success and make history.
U
Women Entrepreneurs – Functions

A woman entrepreneur must do all of the functions needed in creating a business
as an entrepreneur. Idea generation and screening, project preparation, product
analysis, determining forms of business organisation, completion of promotional
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formalities, obtaining finances, acquiring men, machines, and materials, and business
operation are among these functions.
The following are the five functions of a woman entrepreneur, according to Fredrick
Horbison:
m
◌◌ Investigating the feasibility of beginning a new business.

◌◌ Taking risks and dealing with the economic uncertainties that come with
)A
running a business.
◌◌ The introduction of new ideas or the replication of new ideas.
◌◌ Coordination, administration, and control are the fourth and last steps in the
process.
(c
◌◌ Management and leadership.

It’s worth noting that different academics have established different sets of
functions for women entrepreneurs
A woman entrepreneur must undertake all of the functions necessary for the
Notes
e
establishment of a business. Idea development and screening, determining objectives,
project preparation, project analysis, determining forms of business organisation,
completing promotional formalities, obtaining finances, purchasing men, machines, and
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materials, and running a business are all examples of these responsibilities.
A woman entrepreneur, like a male entrepreneur, has five functions, according to
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Frederick Harbison:
1. Exploring the possibility of launching new businesses,

2. Taking risks and dealing with the economic uncertainties that come with
O
running a business
3. Initiation of new ideas or the introduction of new ideas.
4. Coordination, administration, and oversight, as well as
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5. Overseeing and directing all parts of the business.
The functions listed above can be summarised into main three points, i.e., risk
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taking, organisation, and innovation. These roles aren’t necessarily equally important.
When it comes to starting or developing a business, taking risks and being innovative
are critical. To improve the effectiveness of the undertaking’s operations, organisation is
required.
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Women Entrepreneurs – Role and Importance
Women entrepreneurs are an important element of the global quest for long-
term economic and social progress in today’s changing environment. Women-owned
enterprises are rapidly developing in practically every country’s economy as a result
ni
of growing industry, urbanisation, social regulations, and the expansion of higher

education and awareness.
U
Indian women have come a long way and are now more visible and successful
in many fields, having progressed from the kitchen to higher levels of professional
pursuits. Women entrepreneurs are quickly becoming a force to be reckoned with in the
business world, and they are doing so not merely to make a living, but also to satisfy
ity
their inner desire for creativity and to demonstrate their abilities. Educated women are
making a significant contribution to societal reform, and more women will be entering
into previously male-dominated fields in the future.
Today’s women are pursuing a growing number of professional and technical

m
degrees in order to meet market demand, and they are thriving as designers, interior
decorators, exporters, publishers, and garment manufacturers, as well as seeking
new economic opportunities. Perhaps it is for these reasons that government bodies,
)A
non-governmental organisations, social scientists, researchers, and international

organisations have begun to take an interest in issues concerning women’s
entrepreneurship in India.
Entrepreneurship has gained popularity across the board, and female

entrepreneurship has emerged as a key component. India is one of the world’s fastest-
(c
growing economies, and the value of entrepreneurship is widely recognised.

1.2.2 Characteristics of Women Entrepreneurs in Business

Notes
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The web-dominated world has been a godsend for stay-at-home moms who are
able to generate decent money without leaving their houses. Some of them are content
in
with whatever they do, while others aspire to be successful in their chosen industry.
Women in general, and women entrepreneurs in particular, play a critical role in the
nation’s economic development.
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Let’s have a look at some of the characteristics of women entrepreneurs in
business:
1. Courage
O
One of the most significant attributes of a woman entrepreneur is her courage. Many
people have the desire to establish their own business; nevertheless, only the brave
succeed in their careers.
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2. Clear Vision and a Sound Mind
There may be unusual examples in which such women achieve in their chosen
career, albeit with tremendous hardship, by overcoming all of life’s obstacles. A
si
successful woman maintains her equilibrium and remains cool in all situations, as
well as having a sound mind. She is not bothered or worried by minor setbacks in
her business undertakings. A woman with a sound mind can make the best decisions
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for her business, allowing her to prosper. She has the ability to comprehend societal
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needs and is well-versed in such needs. . A successful woman is continually thinking
outside the box in order to deliver what is needed in the most rewarding way possible.
This assists in gaining even more success. She has a clear vision, which is the
foundation for a great job and, of course, a successful personal life.
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3. Self-Assured and Audacious

One of the most vital attributes for a successful life is self-confidence. A self-assured
lady believes in herself and her abilities. She will be able to easily adapt to changes
U
in the consumer market and continue to prosper in her firm. A courageous lady has
the inner strength to meet and overcome life’s challenges, if any, with an open mind.
4. Dedicated to a Specific Goal
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Despite their family obligations, the majority of successful business women set
specific goals. They put in a lot of effort to achieve their objectives. Women who are
goal-oriented work harder and achieve greater success in their careers.
5. Hard Labour Combined with a Positive Outlook
m
The majority of successful female entrepreneurs have a positive outlook. With her
upbeat attitude, she is capable of turning her ideas into reality. They work hard in the
hopes of succeeding and do not allow dread of failure to creep into their minds. They
)A
remain strong and determined in the face of adversity and work to overcome it. One
of the most important qualities of a successful woman entrepreneur is her ability to
work hard. She is willing to put in the effort necessary to achieve her objectives. She
approaches each task with an open mind and a desire to succeed. She doesn’t work
(c
only for the sake of working or to make a few money.

6. Willing to Take Chances

Notes
e
She is capable of taking risks with confidence and is effective at making the risk
rewarding.
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7. Decisiveness And Assertiveness
With assertiveness, a successful woman entrepreneur makes multiple decisions
on many aspects of her business. She makes clear judgments about the type of
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venture she will pursue and how she will carry it out. She makes decisions in a
straightforward, imaginative, and authoritative manner.
O
8. Work-Life Balance
Spending quality time with her children, spouse, and family members can help her
manage with stress more effectively. She understands how to strike a good work-
life balance, which is one of the keys to a successful business. She takes time for
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her children and supports them in whatever way she can, despite her hectic job
schedule.
9. Create and Expand Their Networks.
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One of the most distinguishing features of a successful woman entrepreneur is
her desire to meet new people and expand her business relationships. She easily
socialises with those she believes will help her grow her business. She will never
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miss out on social gatherings or activities, and she is eager to expand her social
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circle. She is an excellent relationship builder who cultivates mutually beneficial
relationships in society.
10. Good Manager and Organiser
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An important attribute of a woman entrepreneur is her ability to organise and

manage. She is capable of developing / establishing a strong organisation. She
expertly coordinates with her employees and handles the company’s finances and
capital. She occasionally organises modest events such as sales and exhibitions to
U
help her firm grow and achieve its objectives.

11. Qualities of Leadership
A successful female entrepreneur possesses strong leadership skills. She has the
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ability to influence her staff and fosters a positive work atmosphere for them. She
backs them up in any way she can and encourages them to work together to attain
their objectives.
12. Profit-Oriented and Effective Utilization of Time
m
A successful businesswoman is primarily profit-driven and tries to expand her

company. A woman who aspires to be an entrepreneur should work to acquire the
attributes listed above, overcome obstacles with a determined attitude, and she will
)A
have a successful tomorrow.
1.2.3 Women and Globalisation

Economic globalisation is a process that leads to neoliberal economic policy
(c
reforms (such as deregulation and privatisation) as well as increases in capital, goods,

services, and labour mobility (Richards and Gelleny, 2007).

Economic theory on the effects of globalisation on growth and well-being rarely

Notes
e
makes gender disparities. It is commonly expected that women will bear the brunt of
market liberalisation by losing jobs, particularly high-paying jobs. Trade theory, on the
other hand, maintains that more international trade benefits women, particularly in
in
developing nations (Bussmann, 2008).
Quality Of Life, Equality, And Status of Women
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To establish the effects of the globalisation process on women’s quality of life,
equality, and status, it is necessary to first define what is meant by these terms and
which factors are used to measure them.
O
Sudarkasa (1986) discovered two notions of “women’s status” as utilised in social
science in his complete review. The first relates to women’s status in terms of a set of
rights and responsibilities. The second relates to men and women’s respective positions
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within a two-level hierarchy.
The first conception, according to Richards and Gelleny (2007), refers to

international legislation that includes explicit gender protection and guarantees. The
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second notion examines women’s status in relation to men’s standing.
They propose a new definition, in which women’s status is defined as the amount
to which women are able to exercise and benefit from the rights enshrined in a huge
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body of international human rights law, both in absolute and relative terms.
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There appears to be some agreement on the characteristics that constitute a
woman’s quality of life. Any conceptualization or measurement of women’s status,
according to Bradley and Khor (1993), must incorporate three dimensions: economic,
political, and social.
ni
The GDI (Gender-related Development Index) and the GEM (Gender Equality
Index) are two UN-developed indices for measuring quality of life and equality (Gender
U
Empowerment Measure).
The CIRI, Cingranelli-Richards Human Rights Dataset, which includes three

indicators, can also be used to measure women’s economic, political, and social
rights (Richard and Gelleny, 2007). the CIRI economic rights (including women’s
ity
right to equal pay for equal work, free choice of job, paid employment without her
husband’s permission; equality in hiring and promotion practises, secure jobs, not
suffering sexual harassment in the workplace, night work, working in hazardous
jobs, and work in the military or policy); the CIRI political rights (including women’s
m
right to vote, run for political office, elected and appointed government positions); the
CIRI social rights (including women’s right to vote, run for political office, and CIRI
(Center for International Religious Freedom) is a non-profit organisation dedicated to
)A
(same inheritance, getting married on an equal footing with men, travelling abroad,
getting a passport, conferring citizenship to children or husband, starting a divorce
action, properties, acquisitions, management, retaining property brought to marriage,
participating in social, cultural and community activities, an education, freedom to
choose residence or home, not suffering female genital mutilation in their childhood or
(c
adult age, and not suffering forced sterilization).

In general, studies examining the impact of globalisation on women’s quality

Notes
e
of life and status use the following economic variables: participation of women in the
labour market and type of work performed by women, more specifically if they are
becoming more present in agriculture, industry, or services; political variables refer to
in
their representation in political processes, which is measured primarily by their share
in government positions; and social variables refer to their participation in political
processes, which is measured primarily by their share in government positions; and
nl
social variables refer to their participation in political processes
Positive And Negative Perspectives on The Effects of Globalisation On Women
O
Globalisation is a multifaceted process that involves changes in economics,
politics, culture, and ideology. When it comes to examining the consequences of
globalisation on women, there are two schools of thinking (Richards and Genelly, 2007;
Bussmann, 2009; Davids and Van Driel, 2009; UNESCO, 2009; The Levin Institute,
ty
2009; Gray, Kittilson and Sandholtz, 2006; Oostendorp, 2009).
One school of thought, which is generally positive but cautious, contends that
si
involvement in global commerce and financial markets will improve the lives of all
citizens, including women. The other takes a more critical approach, arguing that
economic globalisation would exacerbate current inequities while also creating new
ones.
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In general, the optimistic school believes that in the globalisation era, economic
benefits will come in the form of greater autonomy for women. The first benefit stems
from the fact that there are more job alternatives outside of the home.
Indeed, globalisation has resulted in a tremendous influx of women into the labour
ni
market, thanks to increased openness to Foreign Direct Investment (FDI). Foreign

multinationals (MNCs) usually provide better-paying positions for women, particularly in
low-income nations.
U
In emerging countries, employment in multinational corporations (MNCs) is

increasing as the primary focus is on exporting as a means of achieving economic
growth. MNC jobs in developing countries are generally better paid than identical jobs
in domestic companies (Gray et al, 2006). As a result of increased access to job for
ity
women as a result of globalisation, the gender income gap has narrowed, improving
their ability to live independently.
In many developing nations, the service sector has emerged as the primary source
of FDI (Foreign Direct Investment) activity export. MNCs (multinational corporations)
m
in the service industry are seen as new sources of reasonably well-paid, long-term
employment for women. Women’s accepted economic value rises when their income
rises, and their social status improves.
)A
The spread of women’s education may be aided by MNCs (multinational

corporations) increasing their investment requirements. The introduction of new
technologies in the manufacturing or service industries raises the labour force’s minimal
educational needs. As a result, MNCs create a demand for trained female labour
(c
in their manufacturing plants. Technology diffusion may help “liberate women from
patriarchal extended family bonds, restrictive religious beliefs, and arduous agricultural

work,” resulting in enhanced status through “educational expansion, expanded career

Notes
e
opportunities, and family size reduction” (Marshall, 1985: 219).
Furthermore, MNCs (multinational corporations) in developed countries routinely
in
transfer labour legislation and practises to their abroad subsidiaries, which generally
transcend local discriminatory practises against women and other marginalised
groups. MNCs, for example, routinely disregard local hiring traditions in favour of rules
nl
that embrace minimal occupational health standards, equal pay for equal work, and
affirmative action (Mears, 1995).
In developing countries, the correlation between globalisation and income
O
development is particularly strong. With the loss of the United States’ commercial
hegemony in the wake of globalisation, several developing countries have used scarce
resources to gain a competitive advantage, dramatically raising their inhabitants’
living standards (Cohn, 2000:229). Women who had previously been excluded from
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the labour force have been able to find work that allows them to meet their own basic
requirements as well as contribute to the needs of their families.
The North American Free Trade Agreement (NAFTA) has significant long-term
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employment potential for women, according to the United Nations Development Fund
for Women (2000:42). Women’s jobs saw the greatest growth in new work opportunities
soon following NAFTA. Proponents of globalisation believe that the low wages earned
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in maquilas are an improvement over most women’s former condition of no pay. This
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income is also claimed to boost women’s self-confidence, allowing them to be more
assertive and avoid parental monitoring (Acker, 2004; Bhagwati, 2004; Deo, 2006)
Supporters of neoliberal economic policies also claim that Structural Adjustment

Principles (SAP) increase economic performance by requiring receiving countries
ni
to adopt free market policies. Reduced barriers to the flow of products and capital,
privatisation of domestic economies, inflation management, and a reduction in
government bureaucracy are examples of such policies. The implementation of
U
such policies by previously protectionist countries reduces the role of the state in the
economy, allowing more authority to be transferred to individual citizens. Individuals
are better positioned to benefit from their own talents and acquire power from having
their own jobs in this economic climate (Deo, 2006). As a result, women are in a better
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position to exert greater control over their life choices.
Women will have more options in income-producing jobs as a result of

globalisation; more employment opportunities mean more methods to break free from
unequal relationships; such options provide women with more opportunities to move
m
their work and skills elsewhere. The family is one of the first locations where women
benefit from better career possibilities, as they gain greater personal autonomy and
independence, more influence over household budgets, and a stronger foundation
)A
to ask men to help with household chores. Women’s position and relative power
improve as households grow more reliant on their income. These macroeconomic
transformation processes result in a re-negotiation of family task division by gender
(United Nations Development Program, 1999). “There is a second key effect, their
higher participation in the public realm and possible emergence as public actors, in
(c
addition to the substantially heightened influence of women in the household associated

with paid occupations” (Sassen, 1996:27).

Higher levels of economic development are linked to higher levels of gender

Notes
e
equality at the national level. More open economies, both in terms of trade and financial
flows, appear to have a greater impact on women’s political rights than their economic
rights. “Women profit not merely from a larger economic pie, but also from the fact that
in
their part of the pie grows as the pie grows larger” (Apodaca, 1998:11). Higher levels of
trade and capital flow openness appear to have a greater impact on women’s political
rights than their economic rights.
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Globalization’s economic changes also plant the seeds for cultural improvements
that improve women’s lives. Economic development is only one facet of the narrative.
To reinforce the position of women in society and politics, significant changes in social
O
norms, beliefs, and values are also required. Increased support for women’s equality
creates a more fertile environment for specific policies aimed at achieving equal rights
and opportunities for women. Economic globalisation improves women’s physical
ty
quality of life and raises their self-sufficiency in the home and in their social lives to the
extent that it widens their employment choices and boosts their independent income.
Women are affected differently by trade and foreign direct investment. Trade
si
boosts economic growth, which enhances physical quality of life (as measured by life
expectancy) and educational attainment, but it can also replace jobs in local sectors,
limiting women’s work choices. Foreign direct investment, on the other hand, is more
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likely to result in the creation of new jobs, many of which will be available to women.
Women, without a doubt, are the ones who undertake the most unpaid household
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chores, which creates a double strain. Furthermore, depending on their cultural, social,
and family circumstances, not all women will gain from paid work. What matters most,
though, is that women with autonomous economic resources and possibilities have
more opportunity and agency to advance their collective interests (Gray, Kittilson and
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Sandholtz, 2006)
From a more critical standpoint, globalisation confines women to low-paying,

low-status, and often part-time jobs, reinforcing their subordination and perpetuating
U
most cultures’ inadequate treatment of female labour. Demands from multinational

corporations for lower-cost, more flexible work have pushed the use of low-wage
women in offshore production. Globalization feminises the workforce, confining
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women to the lowest-paying positions. Rather than empowering women, the

reduction of barriers to transnational investments leads to severely substandard jobs
in the underground economy, where women face gender discrimination and sexual
harassment. Women’s efforts to start local micro-businesses are hampered by
multinational enterprises’ competition.
m
Critics dispute the assertion that MNC (multinational corporations) investments

benefit women, pointing to Latin America, the Middle East, and Africa, where the
economic payback for women has been limited, the wage gap between men and
)A
women remains large, and MNC investments have failed to redirect money toward
improving the lives of its citizens.
Those who oppose economic globalisation claim that there is less and less direct
investment in developing countries because MNCs subcontract work to small firms with
(c
a majority of women working at home, which prevents them from forming trade unions
and transfers certain production costs to the household (electricity, spares, etc.); and
even when they establish direct operations in those countries, this hurts women who
cannot produce at mass scale, which hurts women who cannot produce at mass scale,
Notes
e
which hurts women who cannot produce at mass scale, which (Pearson, 2003; Dugger,
2004).
in
Women are negatively impacted by the adjustment and stability policies that
developing countries are forced to apply in order to attract and sustain international
investments and direct investment flows. Limiting budgetary spending, slashing
nl
taxes, and privatising government services are common stability measures, which
have a negative impact on the poor and women because these groups have less
political power over project initiatives that benefit them (Richards and Gelleny, 2007)
Structure adjustments and market liberalisation policies at the national level are
O
particularly harmful to women because they result in reductions in public jobs, which are
disproportionately held by women, as well as reductions in social programmes aimed at
women, and they prevent workforce organisation and association.
ty
MNCs (multinational corporations) have created a competitive climate in
developing countries that encourages a “race to the bottom” in terms of policy. As a
result of the feminization of employment, women’s expectations are lowered, and they
si
are often confined to minor roles in society (Bergeron, 2001; Acker, 2004).
Critics of globalisation also point out that the benefits of trade liberalisation are
not evenly spread, favouring developing-country enterprises that can move across
r
international borders faster and with less effort (Rodrick, 1997; Chen and Carr, 2002).
ve
Female employment in exporting industries such as textiles, electronics,
pharmaceuticals, and computer components has increased as a result of export
promotion and trade liberalisation policies. Globalization of production and the drive
for more flexible work schedules, on the other hand, has resulted in a degradation
ni
of working conditions (Standing, 1999). Some proponents of this critical viewpoint

recognise that the image of women as labourers, however skewed, is generally
discouraging. While some women may gain from the new occupations, their work
U
is highly exploitative, with low wages, horrible working conditions, trade union
suppression, and few possibilities for security or advancement (Wright, 1995).
Furthermore, in an increasingly uncertain economic environment, women are often

ity
the first to suffer during financial crises. They are also impacted by the environmental
harm created by industrial development; they are the ones that suffer the most from all
environmental issues because they support the majority of families. Maquilas, where
corporations find abundant, inexpensive, and submissive labour, mostly female, are
the best example of globalization’s bad impacts. The women who work in maquilas
m
have the following characteristics: they are young, have limited knowledge, come
from marginalised communities, and have little or no work experience. Free trade
encourages the establishment of maquilas, which are backed by the governments of
)A
the nations where they are located.
These countries provide businesses with permissive legislation that disregards

human, labour, and environmental rights, and in some cases, the cost of maquilas
is subsidised by the governments (industrial tax-free areas). Governments benefit
from these work patterns because they provide jobs for low-skilled workers, which
(c
encourages them to support their establishment and the companies that employ them.

Trade liberalisation is also a source of expenses for developing country

Notes
e
governments since it causes them to drop tariffs and force them to find alternative tax
collections and/or cut social programme spending, putting more pressure on women in
their households and limiting their access to education (Pearson, 2003).
in
Those opposed to economic globalisation see the IFM (International Monetary
Fund) and the World Bank’s impositions of structural adjustment policies (SAPs) as
nl
detrimental to women’s standing. As a condition of receiving loans, these institutions
require countries to follow neoliberal policies. Cuts in public jobs and social
services, which are typically required under SAPs (Structural Adjustment Policies),
disproportionately harm women.
O
In the sense that they limit the potential growth capacity of economic activity and
employment, deflationist policies supported at the macroeconomic level are likewise
at odds with equality and wealth accumulation. They are ideologically based on two
ty
principles. First, markets are far more effective than government intervention, which
requires deregulation of all markets, including labour markets, and the construction of
a framework that allows for virtually unlimited capital movement, particularly in financial
si
markets. Second, inflation is viewed as the primary economic problem, resulting in high
interest rates, wage restraint, and government spending cuts.
On a global scale, the combination of both measures has resulted in high

r
unemployment rates, the generalisation of precarious employment, and a continued
ve
reduction of the state’s presence through social expenditure, all of which has increased
the vulnerability of the least favoured groups, particularly women (Galvez and Torres,
2010). Major deregulation and increased labour market flexibility have impacted men
and women differently across countries, but have resulted in a contradictory process:
ni
On the one hand, they have advocated the inclusion of women in paid employment,
but this has been related to a deterioration of working conditions as part of the drive to
lower costs to the bare minimum promoted by deflationist policies (Beneria, 2005).
U
Critics of globalisation have also pointed out that industrialised countries

typically disregard the rules suggested by international credit agencies. To preserve
their national output, developed countries have erected tariff and non-tariff barriers,
particularly in agriculture and the textile industry, which, curiously enough, are the
ity
economic sectors in which emerging countries have a comparative advantage.
1.2.4 Challenges and Suggestions of Women Entrepreneurs in

India
m
In terms of women’s development, there has been a sluggish but steady transition
over the last few decades. Women are thought to be the better half of society. They
were confined to four walls in traditional Indian cultures. They emerge from their four
)A
walls in modern society to engage in a variety of activities, including business. In

today’s period of liberalisation, privatisation, and globalisation, as well as the ongoing
IT revolution, Indian women are being compelled to start their own businesses in
order to acquire a more secure work and a safer family existence. Women-owned
businesses have the ability to contribute significantly to employment creation and
(c
economic growth for both themselves and the country. Both the states and the central
government of India are taking steps to encourage women to work for themselves,

acquire entrepreneurial skills, and support small enterprises. Early stages of women’s
Notes
e
entrepreneurship in India were viewed as an extension of their kitchen activities
(3 Ks: Kitchen, Kids, Knitting) to 3 Ps: Pickles, Powder, and Pappad. However, as
women’s understanding has grown, they’ve begun to shift from the three Ps to the
in
three current Es: engineering, electronics, and energy. Indian women have come a
long way and are now more visible and successful in many fields, having progressed
from the kitchen to higher levels of professional pursuits. Prior to the 1980s, women
nl
were hesitant to participate in entrepreneurial activity. It has now acquired traction as a
result of economic liberalisation and greater attention and support from governments,
international funders, and non-governmental organisations (NGOs). The International
O
Women’s Year boosted the number of women entrepreneurs in India even further. In
addition, during the International Women’s Decade (1975-1985), there was a surge
of female entrepreneurs in various districts of Madhya Pradesh. Many women are
now resorting to self-employment and entering the industrial sector to start their own
ty
businesses. Beauty parlours, agarbathi making, clothing making, leather and paper
based, food and food processing sectors are just a few of the industries created by
women entrepreneurs. Today’s Indian elite women are building a name for themselves
si
in non-traditional professions like as electrical and electronic goods, engineering, and
garment exporting, as well as consulting in other fields.
Challenges
r
In India, women are responsible for a wide range of tasks. They aspire to be
ve
efficient workers who work hard to complete their responsibilities. They want to be
good wives, mothers, and home managers at the same time. She wishes to maintain
her social standing and be respected by the rest of the family. Her commitment toward
all of her responsibilities is a source of conflict in and of itself. The challenges faced
ni
by women entrepreneurs, on the other hand, can be briefly described in the following
areas:
U
1. Finance Challenge: The majority of women rely on self-generated funds at the start-
up phase of their firm, but they require external funds in the midst of their operations,
which they find difficult to obtain, causing them to miss or stray from the path to
success. Mismanagement of finances was detected in more than half of the cases,
ity
resulting in the venture’s termination. As a result, the most critical elements of any
company idea are financial support and financial sustainability.
2. Socio-cultural challenge: Regardless of whether she is a working woman or an
entrepreneur, women in India are expected to fulfil many responsibilities to their
m
families and society. These complex obligations create a hindrance to women’s

advancement and cripple them in the workplace.
3. Marketing challenge: Many small-scale women businesses fail due to a lack of sales
)A
and marketing abilities among women. It has been discovered that small-scale
entrepreneurs, as a result of their high market orientation, establish greater marketing
goals for their products/services, but later find them impossible to accomplish due
to stiff competition, high advertising costs, and a variety of other problems. The
difficulty of transferring their product line from one line to another is an area where
(c
women entrepreneurs struggle to establish themselves as winners, and job mobility

thus becomes a problem for women entrepreneurs.

4. Government Assistance Challenge: Women entrepreneurs were enraged by

Notes
e
government personnel from all small-business-related ministries, such as taxation,
labour, and power, who acted indifferently. When the authorities learn that the
business is operated by a woman, they are less likely to issue a sales tax number
in
or provide an electricity connection. Above all, when interacting with entrepreneurial
assistance groups, they lack knowledge of numerous procedures, legislation, and
sophisticated bureaucratic structures.
nl
5. Production challenge: Because a woman entrepreneur’s managerial potential is
limited, she is unable to handle the total production operations in a manufacturing
firm. Inadequate coordination or unintentional delays in the execution of any task will
O
generate production problems in the industry, resulting in the venture’s closure.
6. Challenges in Human Resources: The efficient management of people in an
organisation is critical to the success of any business. The majority of female
ty
entrepreneurs lack managerial skills and are unable to influence the unfavourable
attitudes of their workforce. Furthermore, the female entrepreneurs admitted to a
lack of expertise and self-confidence in dealing with employees in their businesses.
si
7. Administrative and Regulatory Challenges: Administrative and regulatory issues are
frequently encountered by women businesses. Because of the disproportionate effect
of compliance expenses on small businesses compared to large businesses, micro
r
enterprises of all types may have difficulty meeting administrative and regulatory
obligations. As a result, it’s not unexpected that over half of the support organisations
ve
specialising in female entrepreneur help identified this as a concern for their clients.
At the same time, administrative and regulatory impediments are more severe for
female-owned enterprises than for male-owned businesses of comparable size, with
a few exceptions.
ni
8. Management Skills or Training Challenge: Women entrepreneurs lacked

management skills to a higher extent than small enterprises in general, maybe due
to their reduced likelihood of having prior company experience. Despite the fact that
U
access to business advice and support tends to be a minor rather than major issue
for women entrepreneurs, a large minority of specialised groups believe women are
disadvantaged in this regard. Language barriers caused issues for their clients or
ity
members, with five of them believing that women had particular challenges in this
regard.
9. Male dominance challenge: In the world of entrepreneurship, India is known for its
male domination. In both her personal and professional lives, a woman is ruled by
men. Almost everything she does requires her to seek approval from males. They
m
aren’t treated on an equal footing. Her options are limited. She must always seek the
advice and approval of males.
)A
10. Low risk-bearing capacity: Indian women have been dependant on their husbands
since childhood. Her parents make decisions for her before she marries, and her
husband does the same once they marry. She is shielded the entire time and thus
has a low risk tolerance.
11. Limited mobility: Her time is split between the two realms due to her major household
(c
responsibilities to her family. She has restricted work hours, so she is unable to travel

frequently or be absent for extended periods of time. As a result, her movement is

Notes
e
limited. This has ramifications for business.
12. Lack of confidence: In India, women are usually reliant on their families for every
in
decision, and as a result, they lack self-confidence. As a result, even within the
family, family members have little faith in women’s decision-making ability.
Suggestions:
nl
Certain initiatives have already been taken in India to boost women entrepreneurs.
However, these policies must be re-examined, and some realistic solutions must
O
be implemented to address the issues that women entrepreneurs face. Some of the
measures that could be implemented include:
a) Establishment of separate finance cells for women: Separate finance cells should be
established in various banks and public sector entities that provide subsidiaries and
ty
loans to industries to deal with the financial concerns of women entrepreneurs. Only
women should look after these cells.
b) Raising social awareness through education: India is known for its rich traditional
si
values and ethos, and women are still viewed as human beings whose primary
responsibility is to provide food and raise a family. It is vital to generate positive
change in this direction in the changing sociocultural context around the world.
r
Efforts should be made to improve the level of education of adult and young females.
ve
c) Providing Training Facilities: One of the most important and crucial parts of an
enterprise’s success is the development of the correct kind of personality, attitude,
and skill. Women can be successful entrepreneurs if they are given the correct
training.
ni
◌◌ Organizing part-time training could be one of the training strategies.

◌◌ Providing personality and attitude training to employees.
U
◌◌ Conducting training in a variety of industries.

d) Raw material supply: The performance of an organisation is influenced by the
quality, quantity, and availability of raw materials. It is vital to ensure that women
entrepreneurs have access to raw materials in the proper quality and quantity so that
ity
they may focus entirely on product development and production. The government
should encourage and assist in assuring the availability of high-quality raw materials
in accordance with demand.
m
1.2.5 Development of Women Entrepreneurs – Recent Trends

Women entrepreneurs have dominated the commercial sector for the past 15
years The National Association of Women Business Owners estimates that there are
)A
12.3 million women-owned enterprises in the United States. When you consider that
there were only 402,000 women-owned enterprises in 1972, this number is even more
amazing.
Women entrepreneurs range from small, home-based businesses to powerful

(c
CEOs of some of the world’s most well-known corporations. While women still
encounter some obstacles on the route to entrepreneurship, they are consistently

altering the game by inventing new company models and occupations, ultimately
Notes
e
assisting in the shaping and growth of the economy.
1. The Upward Swing of Women’s Entrepreneurship
in
Since roughly 2000, the number of women-owned enterprises has increased
dramatically. According to the Global Entrepreneurship Monitor, female entrepreneurial
activity climbed by 10% globally in 2016, with 163 million women launching or running
nl
new enterprises in 74 different countries. In addition, according to the Kaufman Index,
230 out of 100,000 women become entrepreneurs per month in 2017.
O
While the number of women entrepreneurs is increasing, experts disagree about
what is causing this rapid development. According to the National Women’s Business
Council, female entrepreneurs are divided into two groups: those who want to take
advantage of a market opportunity and those who go into business for themselves
ty
because the traditional labour force does not provide them with options that meet their
basic economic needs.
Regardless of their motivations for starting a business, more women than ever are
si
finding success in the field. Women entrepreneurs in Maine, for example, recorded the
biggest revenue increase among the 50 states and United States in 2021, with 12.3
million women-owned businesses generating about $1.8 trillion in yearly sales. Maine
r
is at the vanguard when it comes to assisting women in their entrepreneurial ventures.
ve
Because there are few significant companies in Maine, many women have created their
own enterprises, which range from donut shops to accounting firms. Women in Maine,
according to Leigh Kellis, owner of The Holy Donut, have a passion for what they
do and a special ingenuity that makes them successful. When it comes to economic
growth fuelled by women, the state is undoubtedly leading the way.
ni
2. Women Entrepreneurs Make the Most of Their Distinct Abilities

The ability to advertise their enterprises, delegate, and be patient are the top three
U
traits connected with being a woman entrepreneur. It is also discovered that women
have a natural sense of independence: 48% of women are the sole employee of their
firms, compared to 37% of males.
ity
The industries in which women choose to work are a reflection of their strengths.
Fifty percent of women-owned businesses are in the general, professional, and
technical services categories, which include anything from hair salons and healthcare
providers to accountancy and architecture firms.
m
Sallie Krawcheck, an author and entrepreneur, feels that the skills women bring
to the office are precisely what make them exceptional entrepreneurs in any sector.
Krawcheck believes that women are in a better position than ever to leverage these
)A
qualities in the entrepreneurial world, from managing risk and complexity to seeing
things holistically and focusing on the long term. When Alicia Igess opened her own
salon, she drew on these qualities. Igess had just arrived to Atlanta to pursue a
profession as a hair stylist when she was left homeless and without the tools of her
trade due to a freak accident. She had a choice: pack her belongings and return to
(c
Tennessee to be with her long-time friends and family, or stay in Atlanta. Igess now
owns one of Atlanta’s most successful salons.

3. Optimism About the Future Tops Doubt for Women Entrepreneurs

Notes
e
Women entrepreneurs are becoming more enthusiastic about the future, with
the majority predicting that in the next 20 years, women would make significant
in
advancements in the profession. 61 percent of female small company owners are
enthusiastic about today’s business climate, and 40% of women are happier with their
personal financial status than they were a year ago.
nl
According to Bank of America research carried out in 2017, 80 percent of women
company owners believe women will have equal or higher representation in STEM
fields than males over the next two decades, and 61 percent say women will have
O
incomes that are more than or equal to men’s. Even in the short term, more women
small company owners expect their local, national, and worldwide economies will
improve over the next 12 months than in prior years.
ty
Many forces, according to entrepreneur Sallie Krawcheck, are currently paving
the way for women entrepreneurs to succeed today and in the future. She sees a
developing network of tools and organisations ready to assist women entrepreneurs,
with everything from coaching and networking to teaching and funding ideas.
si
Furthermore, there is a growing acknowledgment that start-ups with female leadership
outperform those with entirely male leadership.
r
4. The Inevitable Difficulty of Obtaining Credit and Capital
ve
While today’s female entrepreneurs see a bright future ahead of them, they still
face a number of obstacles, the most significant of which is their ability to raise the
funds they need to establish or grow their businesses. One of the key causes for the
disproportionally high failure rate among women-owned enterprises is their inability
ni
to obtain financing and funding. In 2014, women received only 16 percent of all
conventional small company loans, while only 2% of all venture capital offerings were
made to women in 2016. To get their enterprises off the ground, more women have
U
turned to personal finance sources like credit cards and savings, and many are hesitant
to ask for loans for fear of being turned down.
To address this issue, more women than ever are turning to crowdfunding to
raise the funds they need to launch their businesses. Women, it turns out, are more
ity
effective at crowdfunding than males, with their campaigns performing better across
all industries, even the traditionally male-dominated technology business. Additionally,
women-specific business grants are becoming more common.
m
5. For Business, More Women Cite Opportunity Motives

Even in factor-driven economies, roughly 20% more women than men claim
opportunity as the key motivation for starting a business. This is amplified in the
)A
innovation-driven group, where women are three and a half times more likely than
males to mention opportunity motives over necessity motives.
The higher TEA is linked to improved opportunity perception. In addition, the

analysis demonstrates that across all 74 economies, women entrepreneurs had a 5%
higher chance of being innovative than men.
(c

6. Women Are More Likely Than Men to Never Establish a Business

Notes
e
Despite the fact that the number of women who want to start a business is close
to that of males, the disparity grows among business owners, showing that women are
in
less likely to start a firm and also more likely to depart at an early stage or in the middle
of a transition (4 out of 10 in factor-driven economies). In innovation-driven economies,
when there are two exits for every ten enterprises run by women, this tendency
nl
improves marginally.
Women’s business failure is linked to lower growth aspirations and coping with
their projected roles as primary carers for their family.
O
7. Women Are Drawn to Community-Based Projects
More than half of women-led enterprises in industrialised economies are focused
around government, health, education, and social services. Women are drawn to
ty
sectors that rely on human capital, according to the survey, maybe because of women’s
natural emotional attractiveness.
si
8. As the Economy Develops, Entrepreneurial Activity Decreases
Surprisingly, as economic development improved, women’s entrepreneurial
participation decreased, resulting in a greater gender disparity.
r
While developing countries had higher levels of entrepreneurial activity, fewer
ve
businesses were likely to mature. Innovation-driven economies were perceived as more
favourable to long-term company sustainability, but they grew at a slower rate than
men-owned enterprises. Women in innovation-driven economies, on the other hand,
had a lower opinion of their own talents than women in developing nations.
ni
“Even in a developed economy, women business owners are less likely to explore
and expand their products or services because they think they can’t do it, or because
they don’t have access to the right training, education, advisory networks, mentorships,
U
and community programmes,” says Laurel Delaney, founder of Women Entrepreneurs

Grow Global and author of the bestselling book “Exporting: The Definitive Guide to
Selling Abroad Profitably.” Women find it difficult to access marketplaces, perform
ity
marketing, and form relationships because of this perceived deficit.”
9. Entrepreneurial Activity Declines as Education Level Increases

As one’s degree of education rises, so does their participation in entrepreneurship,
implying that general education is less necessary for developing entrepreneurial
m
abilities or competencies.
The rise of entrepreneurial activities in the most unexpected of locales

)A
demonstrates this reality. Micro-enterprises and small businesses, largely managed

by women, were discovered to be thriving in a South Sudanese refugee camp. The
massive gamechanger, technology, is shattering barriers across countries and cultures,
and connecting organisations with the ideal client to hook them without incurring
excessive costs.
(c

1.3 Entrepreneurship and its Role

Notes
e
1.3.1 Enterprise, Entrepreneur, Entrepreneurship
in
The scientific procedures and language, not the object or the subject, are what
determine economics. The works of Richard Cantillon and Jean-Baptiste Say gave
birth to the concepts of enterprise, entrepreneur, and entrepreneurship. Jean-Baptiste
nl
Say is credited with introducing the concept of entrepreneur into economic philosophy,
according to Murray Rothbard. Joseph Schumpeter, as well as the entire Austrian
economic school, which includes Ludwig von Mises and Friedrich von Hayek, among
O
other notable economists, developed the concept of entrepreneurship, emphasising
not only the vital and creative role and impact of the entrepreneur in the economy as
forecaster, project appraiser, and risk taker, but also his moral qualities of judgement
and perseverance, as well as his knowledge of the political, economic, and social world.
ty
Traditional macro and microeconomic theories diminished interest in enterprise,
entrepreneur, and entrepreneurship in theoretical frameworks during the second half of
the twentieth century, but the paradigm of entrepreneurship has governed international
si
competition and competitiveness for the last three decades. The terms enterprise,
entrepreneur, and entrepreneurship are used in this paper to refer to the common
language in economics, the way of viewing reality, or the system of economic thought,
r
not only in science, but throughout society, that are most standard and widely held at
a given time through the educational system (mostly through the higher economic and
ve
entrepreneurial education).
For some eloquent and significant thinkers, an entrepreneur is a person who

“pays a certain price for a product in order to resell it at an uncertain price, thus making
ni
decisions about obtaining and using resources while admitting the risk of enterprise”;
“is the economic agent who transformed demand into supply for profits” (without using
the word entrepreneur in the book “An Inquiry into the Nature and Causes of the Wealth
U
of Nations”)”; “is the economic agent who transformed demand into; “is an economic
agent who produces a commodity and, to achieve this goal, he unites all means of
production, from land to labour and capital, and thus, paying rent of land, wages
to labour, interest on capital, after selling the production’s results in the market, he
ity
obtains his own profit (each entrepreneur shifts economic resources out of an area of
lower productivity and greater yield)”; “uses a process of shattering the status quo of
existing products and services (“creative destruction”), emphasis on innovation to set
up new products, new services (from new products, to new production methods, from
new markets, to new forms of organisation)”; “is an innovator, a calculating inventor,
m
an over-optimistic promoter”; “is an innovator, a calculating inventor, an over-optimistic

promoter”; “is an innovator, a calculating inventor, an over; “is a tough, pragmatic
person driven by needs of independence and achievement, and is willing to submit to
)A
authority”; “imitates technologies innovated by others, being important in developing

economies”, “takes initiative, accepts risk of failure, and has an external locus of
control”, “is an intrapreneur sometimes (an entrpreneur)”; “is an intrapreneur sometimes
(an entrpreneur)”; “is an intrapreneur sometimes.
(c
The entrepreneur isn’t just a capitalist or an innovator; he’s also someone who isn’t
frightened of taking risks and getting things done; he’s a specialist in making judgmental

decisions about the allocation of scarce resources with an economic goal in mind and in
Notes
e
the face of uncertainty.
The ability to seize opportunities, deal with uncertainty, gather necessary
in
resources, act in anticipation of future problems, needs, or change, outperform
competitors in the marketplace (head-to-head confrontation), and organise business
processes to pursue specific goals is central to the entrepreneur. In comparison to
nl
a small business owner, the “typical” entrepreneur’s definition specifies and limits
everything to the following three main traits or major variances. - an entrepreneur
has an enthusiastic vision and detects a previously untapped opportunity to make
substantial profits, typically by forming a new business firm for this purpose; - an
O
entrepreneur takes prompt responsibility and initiative in bringing together the
necessary factors of production to exploit this opportunity, typically by forming a new
business firm for this purpose; - an entrepreneur has inspiration, motivation, sensibility,
ty
and creates quickly.
From a person who assumes the risk associated with uncertainty (e.g. Richard
Cantillon, Frank Knight, George Lennox Sharman Shackle), to a person who supplies
si
financial capital (e.g. Adam Smith, Eugen von Bohm-Bawerk, Arthur Cecil Pigou),
to an innovator (e.g. Gustav von Schmoller, Werner Sombart, Joseph Schumpeter),
Herbert and Link identify the following twelve typological classes or species of
r
entrepreneurs in their standard work “The Entrepreneur From a factor of production
employer (e.g., Amasa Walker, Francis Walker) to a contractor (e.g., Jeremy Bentham),
ve
from a “arbitrageur” (e.g., Leon Walras, Israel Kirzner) to a resource allocator among
alternative uses (e.g., Leon Walras, Israel Kirzner) (e.g. Henry Schultz).
The traditional approach to studies distinguishing between entrepreneurs and

ni
non-entrepreneurs has highlighted that entrepreneur are a fairly homogeneous group

of people. Following the distinctions amongst entrepreneurs during the last two
decades, this issue has altered. Administrative and independent entrepreneurs, social
and institutional entrepreneurs, business and academic entrepreneurs, opportunistic
U
and craft entrepreneurs, right type entrepreneurs for right type enterprises and
e-entrepreneurs, managerial and innovative entrepreneurs, fast progressive and
slow progressive entrepreneurs, innovative, modest risk takers and growth oriented
ity
entrepreneurs, solo self-employed individuals, tethered entrepreneurs, tethered

entrepreneurs, tethered entrepreneurs, tethered entrepreneurs, tethered entrepreneurs,
tethered entrepreneurs.
Entrepreneurial distinctions are more appropriate for modern definitions than their
m
commonalities, hence modern or contemporary repreneurship research focuses on

differences among entrepreneurs rather than disparities between entrepreneurs and
non-entrepreneurs.
)A
Because of their capacity to detect commercial possibilities and come up with

fresh ideas, modern entrepreneurs are the lifeblood of the business world. “Eight
themes characterise the distinction between entrepreneur and non-entrepreneur,”
according to William Gartner (1990): “the entrepreneur, invention, organisation creation,
producing value, profit or non-profit, growth, uniqueness, and the owner-manager.” “The
(c
entrepreneur exhibits typical or exceptional optimism in his decision-making processes,”

according to C. Woo, A. Cooper, and W. Dunkelberg (1991).

“The entrepreneur is about liking his journey, not his destination,” says Tom
Notes
e
O’Malia (1997), “and the entrepreneurial mind set can work in all sizes and types of
businesses.” “The entrepreneur can be understood in at least four ways,” writes
Nafziger Wayne (1997, 2006), “
in
(1) as the coordinator of other production resources - land, labour, and capital;
(2) as the decision maker in uncertain situations;
nl
(3) as the inventor; and
(4) as the gap filler and input completer.”
O
“The entrepreneur is a person prone to overconfidence and over generalisations,”
according to L., Busenitz, and J. Barney (1997).
“The entrepreneur is the individual (or team) who identifies the opportunity,
ty
gathers the necessary resources, creates, and is ultimately responsible for the
performance of the organisation,” write R.B. Carton, C.W. Hofer, and M.D. Meeks
(1998). “Entrepreneurship is the means by which new organisations are formed with
their resulting job and wealth creation.” “The entrepreneur involves two phenomena,”
si
according to Scott Shane and Sankaran Venkataraman (2000): “the presence of
attractive possibilities and the presence of enterprising individuals.”
r
According to Michael D. Ensley, James W. Carland, and Joann Carland (2000),
lead entrepreneurs exist among macro-entrepreneurial firms, and their strategic or
ve
entrepreneurial vision is “the ability to see what is not there,” and their self-confidence
sets them apart from other entrepreneurial team members. “The entrepreneur focuses
especially on creative and requires a specific set of attributes, including the ability to
prioritise ideas over data, to be itinerant, and to study continuously,” according to John
ni
Howkins (2001). “An entrepreneur is an innovative, risk-taking creator who might also
be an imaginative manager and whose actions both disrupt and organise our market
economy,” writes Robert L. Formaini (2001).
U
According to J.A. Katz and D.A. Shepherd (2004), “corporate entrepreneurship”

includes not just new venture formation within corporations, but also strategic renewal
of existing organisations. “The fundamental issue of any entrepreneur is the ability
ity
to recognise the degree of risk and to regulate it, not to escape it,” writes Bratoi
Koprinarov (2005). According to Hao Zhao and Scott E. Seibert (2006), entrepreneur
scores better on conscientiousness and openness to experience than manager, but
lower on neuroticism and agreeableness. The entrepreneur, according to Teresa da
Silva Lopes and Mark Cas son (2007), is both a self-made guy (with a strong desire to
m
achieve) and a hired organisation manager (with above average leadership qualities,
who is not afraid of challenges and who possesses an inner drive to compete and win).
Just as business entrepreneurs drive innovation in commerce, social entrepreneurs
)A
drive social transformation, according to Ashoka (the global association of the world’s
greatest social entrepreneurs).
1.3.2 Role of Entrepreneurship in Economic Development

(c
In different economies, entrepreneurs play different roles. It varies from economy

to economy depending on material resources, industry climate, and political system

responsiveness. Entrepreneurs may contribute more in economies with favourable

Notes
e
opportunity conditions than in economies with less favourable opportunity conditions.
In his seminal work An Enquiry into the Nature and Causes of the Wealth of
in
Nations, published in 1776, Adam Smith, the foremost classical economist, ascribed
no weight to entrepreneurial role in economic progress. The rate of capital formation,
according to Smith, is a key predictor of economic development.
nl
The ability of people in any society to save and invest more was thus a major issue
in economic progress. According to him, the ability to save is dictated by an increase in
production due to increased dexterity among all workers as a result of division of labour.
O
Every person, according to Smith, is the best judge of his own interests and should be
allowed to follow his own goals. According to him, each person is guided in pursuing
his or her passion by a “invisible hand.” He was a staunch supporter of the laissez-faire
economic doctrine.
ty
David Ricardo recognised only three sources of production in his theory of
economic development: machinery, capital, and labour, among whom the entire
produce is allocated as rent, profit, and wages, respectively. Ricardo saw profit as a
si
valuable asset in capital accumulation. Profit, he claims, leads to wealth preservation,
which leads to capital formation.
r
Thus, entrepreneurship has no place in either of the classical theories of
economic development. Furthermore, economic progress appears to be self-sustaining
ve
and self-regulatory. As a result, classical economists had a chilly attitude toward
entrepreneurship’s role in economic development. “The firm is a dark entity, and the
entrepreneur is even shadowed or at least dubious when he is not murky,” they said.
The economic history of today’s industrialised countries, such as the United States,
ni
Russia, and Japan, tends to reinforce the notion that the economy is an outcome of
entrepreneurship.
Due to the sheer critical role played by entrepreneurs in the growth of Western
U
countries, people in developing countries are more aware of the importance of

entrepreneurship for economic development. People are now realising that increasing
entrepreneurship in the country, both qualitatively and quantitatively, is critical to fulfilling
ity
the country’s economic growth goals. Only active and motivated entrepreneurs can fully
exploit the country’s available resources — labour, technology, and capital.
Because of his role in introducing innovations, Schumpeter (1934) saw the

entrepreneur as an important figure in economic progress. Entrepreneurship, according
m
to Parson and Smelser (1956), is one of two required criteria for economic progress,
the other being increasing capital output. Entrepreneurs are included among the
primary drivers of invention by Harbison (1965), and Sayigh (1962) simply views
entrepreneurship as an essential dynamic force. It is also claimed that development
)A
does not emerge naturally as a result of favourable economic conditions: a catalyst or

agent is always required, and this necessitates entrepreneurial skills. It is because of
this talent that he sees opportunities that others either don’t see or don’t care about.
Essentially, the entrepreneur looks for change, recognises a need, and then gathers the
necessary labour, materials, and capital to respond to the opportunity he finds.
(c
The clearest examples of such able entrepreneurs are Sony President Akio Morita,
who used the company’s products to build the Walkman Personal Stereo, and India’s
Gulshan Kumar of T Series, who skimmed the audio-cassette starving large Indian
Notes
e
market.
Entrepreneurship’s role in economic development varies by economy, based on
in
its material resources, industrial climate, and governmental system’s responsiveness
to the entrepreneurial function. In economies with favourable opportunity conditions,
entrepreneurs contribute more than in economies with less favourable opportunity
nl
conditions. In terms of opportunity conditions, underdeveloped countries are less
conducive to the formation of innovative entrepreneurs due to a lack of capital,
a shortage of trained labour, and the absence of minimum social and economic
overheads. Entrepreneurship does not arise from an industrial foundation in these
O
areas, nor does it have well-developed institutions to support and foster it. As a result,
entrepreneurs in such areas may not be “innovators,” but rather “imitators,” who copy
the innovations of “innovative” entrepreneurs in developed areas (Brozen 1954-55).
ty
According to McClelland’s (1961) idea of personality component of
entrepreneurship, in these places, certain people with strong accomplishment
motivation come forward to act entrepreneurially in order to break the stagnant inertia,
si
since they are dissatisfied with their current social standing.
Entrepreneurs in underdeveloped countries are forced to start their businesses

on a modest scale due to a lack of capital and the challenge of an imperfect market.
r
Because imitation involves fewer resources than innovation, it has been determined
ve
that such areas should have a higher number of imitative entrepreneurs. It is also
believed that extensive replication of inventions launched in wealthy regions might lead
to rapid economic development in impoverished areas. However, this does not imply
that such imitation necessitates a lower level of talent on the part of entrepreneurs.
ni
Berna says: “It often involves what has aptly been called “subjective innovation,”
that is, the ability to do things that have not been done before by the particular
industrialists, even though the problem may have been solved in the same way
U
by others.” These imitative entrepreneurs are the main spring of development of

underdeveloped regions. Small-scale industries, without a doubt, generate immediate
large-scale employment, enable a more equitable distribution of national wealth, and
facilitate the effective mobilisation of capital and skill that would otherwise go unused.
ity
The Indian government’s construction of Entrepreneurship Development Institutes

and other similar institutions over the last few decades is a testament to her firm
understanding of the critical role that entrepreneurship plays in the country’s economic
development.
m
The importance of entrepreneurship in an economy’s economic development can

now be expressed in a more systematic and orderly manner:
1. Promotes Capital Formation

)A
Entrepreneurs encourage capital formation by tapping into the public’s unspent

funds. For the establishment of their businesses, they use both their own and
borrowed resources. Such entrepreneurial actions result in value addition and wealth
generation, which is critical for the country’s industrial and economic development.
(c
2. Large-Scale Employment Opportunities are Created

-Entrepreneurs provide large-scale, rapid employment to the unemployed, which is

a persistent problem in developing countries. With the establishment of more and

Notes
e
more units by entrepreneurs, various work prospects for others are created on a
small and large scale. As time passes, these businesses expand, creating direct
and indirect employment opportunities for a growing number of people. In this
in
way, entrepreneurs contribute significantly to the reduction of unemployment in the
country, paving the way for the country’s economic progress. The nation’s concern
is growing unemployment, particularly among the educated. Only 5 to 10% of the
nl
unemployed can be accommodated by the current job prospects. Entrepreneurs
create jobs in two ways: directly and indirectly. They provide jobs to millions of
people directly through self-employment as an entrepreneur and indirectly through
O
the establishment of numerous manufacturing units. As a result, entrepreneurship is
the most effective means of combating unemployment.
3. Encourages Balanced Regional Development
ty
By establishing industries in less developed and backward areas, entrepreneurs
aid in the reduction of regional imbalances. The development of industries and
businesses in these locations has resulted in a slew of public advantages, including
transportation, health, education, and entertainment. The establishment of more
si
industries leads to the growth of backward regions, promoting balanced regional
development. When new entrepreneurs grow at a faster rate, they are pushed
to establish their businesses in smaller communities outside of big cities due to
r
increased competition in and around cities. This contributes to the development of
ve
backward areas.
4. Reduces Economic Power Concentration
Economic power is a by-product of industrial and commercial activities. Normally, as
ni
a result of industrial development, economic power is concentrated in the hands of

a few persons, resulting in the establishment of monopolies. To address this issue, a
significant number of businesses must be formed, which will help to lessen economic
power concentration among the population.
U
5. Creating and Distributing Wealth

It promotes the equitable redistribution of wealth and income in the national interest
to a larger number of individuals and geographic areas, benefiting a wider range of
ity
people. Entrepreneurial actions also spawn more activities, resulting in a multiplier

impact in the economy.
6. Increasing the Gross Domestic Product (GDP) and the Per Capita Income
m
Entrepreneurs are constantly on the lookout for new business prospects. They seek
out and seize opportunities, support efficient capital and skill mobilisation, introduce
new products and services, and establish markets for economic growth. In this way,
they contribute to the growth of a country’s gross national product and per capita
)A
income. Economic growth is defined as an increase in a country’s gross national

product and per capita income. To meet the rising demand for goods and services,
an increasing number of entrepreneurs are needed. As a result, entrepreneurship
boosts national income.
(c
7. The Standard of Living Has Improved

The improvement of the people’s standard of living is a hallmark of the country’s

economic development. Entrepreneurs play a critical role in raising people’s living

Notes
e
standards by implementing cutting-edge technologies in the mass manufacturing of
a wide range of goods and services at a lower cost. This allows individuals to obtain
higher-quality goods at lower rates, resulting in an increase in their standard of living.
in
8. Promotes a Country’s Export Trade
Entrepreneurs assist in the promotion of a country’s export trade, which is a crucial
nl
component of economic development. They create goods and services on a large
scale in order to generate a substantial amount of foreign exchange from export in
order to cover import duties. As a result, import substitution and export promotion are
O
essential for economic independence and growth.
9. Backward and Forward Linkages are Induced
-Entrepreneurs prefer to work in a fast-paced setting where they may maximise
ty
revenues through innovation. When a business is developed in accordance with
evolving technology, it creates backward and forward linkages, which help the
country’s economic progress.
si
10. Boosts Overall Development
Entrepreneurs operate as a catalyst for change, resulting in a chain reaction. The
process of industrialization begins once an enterprise is founded. This unit will
r
generate demand for a variety of units that it requires, as well as a slew of other units
ve
that rely on its output. As a result of the increased demand and the establishment
of more and more units, an area’s overall development occurs. As a result, the
entrepreneurs expand their entrepreneurial operations, creating an atmosphere of
enthusiasm and providing momentum for the area’s general development.
ni
11. Creating Innovation

An entrepreneur is someone who is continually looking for ways to improve things.
He brings fresh concepts and new combinations of factors in addition to mixing the
U
factors of production. He is constantly attempting to create more and newer methods

of producing goods and services. Through invention, an entrepreneur contributes to
economic development.
ity
Entrepreneurs start new businesses for a variety of reasons. Entrepreneurs’ ground-

breaking contributions in the form of new goods and services result in new jobs, which
can create a cascading impact or virtuous circle in the economy. Further economic
development is aided by the stimulation of linked firms or sectors that support the
new initiative. In the 1990s, for example, a few IT businesses established the Indian
m
IT industry as a backend programming hub. The sector quickly gained momentum in

its own programmers’ realm. But, more crucially, it benefited millions more people in
other industries. Businesses in related industries, such as contact centres, network
)A
maintenance businesses, and hardware vendors, grew significantly. Education

and training institutes bred a new generation of IT employees capable of higher-
paying professions. As employees relocated to job hubs in search of better lives,
infrastructure development agencies and even real estate businesses benefited
from this boom.
(c
Similarly, future development initiatives in developing countries would include strong

logistics, capital expenditure ranging from buildings to paper clips, and a skilled

workforce. Entrepreneurs enable benefits throughout a broad range of the economy,

Notes
e
from highly qualified programmers to construction workers.
12. Entrepreneurs Contribute to Social Change as Well
in
Entrepreneurs break away from convention and indirectly encourage freedom by
lowering reliance on old systems and technologies through their one-of-a-kind
offerings of innovative goods and services. Overall, this leads to a higher quality of life,
nl
higher morale, and greater economic independence. For example, in a water-scarce
location, people may be forced to stop working in order to collect water. This will have
an effect on their business, productivity, and earnings. Consider a revolutionary, low-
O
cost, flow-based pump that can automatically fill people’s home water containers.
People will be able to focus on their essential tasks without having to bother about
fundamental necessities like bringing water, thanks to such an installation. Economic
growth occurs when people have more time to dedicate to their jobs. Smart phones
ty
and their smart apps, for example, have transformed work and play all around the
world. Smart phones aren’t just for wealthy individuals or wealthy countries. As
China’s smart phone market and smartphone industry demonstrate, technological
entrepreneurship will have far-reaching, long-term effects on humanity. Furthermore,
si
because of the globalisation of technology, entrepreneurs in developing countries
now have access to the same tools as their counterparts in wealthier nations. They
also benefit from a cheaper cost of living, allowing a young individual entrepreneur
r
from a developing country to compete with a multi-million-dollar existing product
ve
from a wealthy country.
13. Personal Development
Millions of good employments have been generated as a result of entrepreneurship.
ni
Jobs in a start-up environment frequently require innovation and teamwork, which

leads to personal growth. Those who have been exposed to entrepreneurship
have more confidence and independence. Young entrepreneurs can take on more
responsibility, work flexible schedules, and solve problems using creative solutions
U
because they are not hampered by the hierarchy and limits of huge businesses.
The independence that comes with becoming an entrepreneur is not without its
drawbacks. Entrepreneurs frequently work long hours and put their personal assets
ity
at risk in order to grow their company.

14. Entrepreneurship puts New Business Ideas into Practice
As a result, employment that promote personal development are created.
Entrepreneurs can also address societal issues with their inventive and disruptive
m
solutions. It’s a worthwhile endeavour to contemplate, but if it’s not for you, consider
how you might pass on its values to the next generation and enrol in a course.
How Can We Motivate and Educate Our Children? As a result, it is apparent that
)A
entrepreneurship is a driver of economic development. Overall, the importance of

entrepreneurship in a country’s economic development can best be described as “an
economy is the outcome, and entrepreneurship is the cause.”
1.3.3 Emergence of Entrepreneurial Class in India

(c
India’s first post-independence economic development strategy was mostly based

on the Mahalanobis model, which prioritised the investment goods industries sector

above the services and consumer goods sectors. The Mahalanobis model, for example,
Notes
e
placed a high focus on mining and manufacturing (for capital goods production) as well
as infrastructural development (including electricity generation and transportation).
in
Since independence, India has gone through several entrepreneurial periods. In
the late 1950s and early 1960s, the entire economy was transitioning from an agro-
based to an industrialised economy, which resulted in a slow pace of development.
nl
Soon after, the government stepped in to help the aspiring businesses.
In the late 1960s and early 1970s, a slew of SSIs popped up. In this area, a large-
scale push to promote entrepreneurship was launched. In 1980, India was finally able
O
to liberalise imports, starting with small and medium-sized businesses. In addition,
economic reforms were implemented in 1990. It was a source of disillusionment for
aspiring Indian entrepreneurs, and by the year 2000, the entrepreneurial landscape had
drastically changed.
ty
Entrepreneurship in India: The Emergence of Indian Entrepreneurs
Many more Indian entrepreneurs are making their mark in the economic world
si
today. Surprisingly, they haven’t changed much since they initially emerged almost two
decades ago. The Indian economy was severely hampered in the 1980s by a heinous
socialistic philosophy, in which enterprises were operated under a rigorous licence raj
and unscrupulous bureaucratic oversight. r
ve
It all started when India’s first Prime Minister, Jawaharlal Nehru, attempted to
model the Indian economy after the Soviet Union’s socialist economic system. He was
convinced that the government should regulate every aspect of the Indian economy
in order to achieve planned economic growth. His concept was to grant licences to
ni
a select few people who were chosen based on their qualifications and the current
market economies of operation. Although Nehru had good intentions, the method he
carried out his plan was ineffective. Nehru was adamant that they should concentrate
U
their efforts on nation building rather than selling things or competing with one another,
because he considered that neither contributed directly to the cause. Nehru made sure
that every entrepreneur acquired a “certified country building” licence from the relevant
licence officer to ensure that the notion of nation building was effectively enforced by
ity
all business owners. He also proposed a law whereby only two to three enterprises in
the same field may be awarded a licence, severely limiting the prospect of generating
competition.
Furthermore, Nehru advocated for industries to be spread across India rather

m
being concentrated in a few industrial hubs, since he believed this would ensure a more
balanced industrial growth. As a result, he enacted legislation requiring entrepreneurs
to get a site permission (licence) before to launching their business. Nehru advocated
)A
for enterprises to seek permits to enhance their production capacity in order to avoid
capitalistic monopolies. To combat another major issue, money laundering within
firms, Nehru made it essential for excise and licencing officers to visit and audit every
company once a year to provide quality assurance. All of these stringent laws have its
drawbacks. Not only did every entrepreneur require many licences, but the government
(c
officers in charge of regulating all licencing issues were underpaid and resorted to
bribery and corruption as a result. As a result, business owners were forced to pay
bribes in order to obtain the necessary permits.

The situation had deteriorated to the point where even business owners needed
Notes
e
a government permission to meet with foreign business delegates in other nations.
Entrepreneurs flocked to concepts that generally included controlling manufacturing or
importing licences at the time. This type of business environment provided no incentive
in
to invest time in technical innovation to reduce manufacturing costs or even to offer
higher-quality products and services, because one could achieve far better results by
persuading a customs or excise officer to classify a product into a lower-duty category.
nl
During the licence raj, the vast majority of highly qualified young Indian graduates had
no family ties and had no desire to influence excise officers.
The government was preoccupied with channelling resources into the most
O
efficient uses possible. Government and private sector investments were made, with
the government participating in important sectors (such as national defence) as well
as those in which private capital would be unavailable due to time lags or the scale
ty
of investment necessary (such as infrastructure). The private sector was expected
to contribute to India’s economic growth in the ways that government planners had
envisioned. The government not only determined where businesses might invest
in terms of location, but it also determined what enterprises could create, sell, and at
si
what rates they could charge. These were worrisome indicators for any entrepreneurial
activity, as well as the sluggish rate of economic growth that resulted as a result.
r
The government built public sector firms in fields like power generation and
distribution, petroleum products, steel, coal, and engineering items in the late 1950s
ve
and 1960s. It nationalised the banking and insurance sectors in the late 1960s. It
supplied modern agricultural inputs (such as farm machinery, irrigation, high yielding
types of seeds, and chemical fertilisers) to farmers at heavily subsidised costs to ease
food and other agricultural output shortages. As a result of the government’s active
ni
and dominant participation in economic activities, a protected, highly regulated, public

sector-dominated economic environment has emerged.
Along with the government’s economic dominance, India soon encountered

U
not just some major issues in its overall development strategy, but also a scarcity of
entrepreneurial firms. Because of the complicated system of government regulations,
including price ceilings, and the resulting corruption, decisions were made arbitrarily
ity
and transactions were opaque. The regulated economic environment included price
controls as one example. Control of private capital (both income and wealth) by Indian
people in India and foreign nationals doing business in India is another example of a
bad policy.
m
After major economic reforms, India’s corporate practises began to improve in

1991, realising that the old economy was in critical straits. Economic changes to
transition away from a centrally planned development strategy and toward one based
on market-based resource allocations. By abolishing the previous socialist licencing raj
)A
structure, the Indian government implemented a variety of policy reforms, projects, and
undertakings to help entrepreneurs realise their commercial objectives. Following major
economic reforms, India’s corporate practises began to improve in 1991. Entrepreneurs
were given tax breaks, incentives, and government assistance. This prompted
them to begin concentrating on expanding their markets and obtaining new clients.
(c
Economic changes shifted away from a centrally planned development strategy and
toward resource allocations based on market forces. India’s improved exchange rate

management rekindled investor and entrepreneur confidence, resulting in increased

Notes
e
funding in practically all sectors.
Since the licence raj was abolished, the economy has exploded. For example, the
in
Indian economy has maintained a yearly average growth rate of about 6%, with the
gross domestic product (GDP) hovering around 9.2% during 2006 and 2007. India’s
GDP has risen from 21% to 33% in the last decade, and the country’s foreign exchange
nl
reserves have surpassed $200 billion. Domestic markets have also expanded
significantly in order to foster innovation. Many national and international firms have
noticed India’s tremendous economic success, and have not only taken advantage of
its pool of high-quality scientific personnel, but have also created numerous research
O
and development centres (R&D) throughout the country. Many young engineering
graduates have been encouraged by today’s favourable market conditions, believing
that they have the technical expertise and abilities to attract new consumers. These
ty
young Indian entrepreneurs are not your normal businessperson. They are the offspring
of a number of businesspeople. This new breed of meritorious entrepreneurs has
focused their efforts on novel ways to technologically meet the true needs of millions
of people as exceptional graduates of IITs, National Institutes of Technology, Indian
si
Institute of Science, and the IIMs.
In India, entrepreneurship has exploded in recent years. The following were the
motivators for this aspiring Indian entrepreneur:
r
ve
◌◌ Entrepreneurial education;
◌◌ Entrepreneurial financing; and
◌◌ Networking among potential entrepreneurs and their experienced
counterparts.
ni
◌◌ Globalization and its Technological Impact

◌◌ E-commerce and the Internet; and
U
◌◌ India’s Social, Economic, and Political Changes
Indian Entrepreneurs: First and Foremost

Among Equals Indian engineers who immigrated to the United States in the
ity
1980s discovered the country to be a refuge for entrepreneurial endeavours and have
become highly successful in their industries. They created high-tech product companies
in Silicon Valley that were largely focused on solving major market concerns at the
time. After establishing fortunes in their respective market segments, the majority
of these Indian entrepreneurs began assisting Indian entrepreneurs with start-up
m
businesses. Indian American entrepreneurs’ fast success has resulted in a flood of

angel investments in India. Each member painstakingly investigates and pools their
own resources for each prospective investment, forming angel confederacies like the
)A
Silicon Valley’s Band of Angels. These angel investors, who are known for developing
and establishing well-known companies such as Symantec, Logitech, National
Semiconductor, Sun Microsystems, Hewlett Packard, and Intuit, among others, prefer
to invest their time and money in young, cutting-edge start-ups. The rate at which new
start-ups are being founded in India has benefited from this trend.
(c
In a range of useful activities, Indians invented inventions and made significant

discoveries. Their creative thinking inspired them to try new and helpful things, as well

as improve on old ones. They had a great need for autonomy, as well as a desire to do
Notes
e
something useful with their time and to have their own identity. Economic autonomy or
self-sufficiency was also deeply established and fuelled the entrepreneurism fire.
in
For most entrepreneurs, India provides a one-of-a-kind incubation environment
that sets it apart from other Western democracies. In a country where over half of the
population is under 35 years old, it is clear that India has a sizable working class. Indian
nl
companies employ innovative techniques to ensure that their services or products
reach international customers on schedule. The battle to keep to the stated timeline is
what sets an Indian entrepreneur apart from his or her western competitors. Indians
are raised in a chaotic environment and learn to handle their life in such difficult
O
circumstances. Indian entrepreneurs are taught to persevere in the face of adversity.
The huge RELIANCE INDUSTRIES (Ambani’s), INFOSYS (Narayan Murthy),

SHAHNAAZ HERBAL, TATASONS, BIRLAGROUP, HCL (ShivNader), SUZLON
ty
(RajanTanti), and other companies provide testament to the rising Indian Entrepreneur
and Entrepreneurism.
In India, companies such as ITC e-choupal and Aravind Eye Care have sprung
si
up. In terms of business, the majority of these initiatives are well into their second
generation. Other organisations in India, such as SEWA, AWAKE, Nandi Foundation,
and Jaipur Foot, were founded by India’s awakened and empowered individuals.
r
ve
In India, Social Entrepreneurship Is Taking Off:
The term “social entrepreneurship” was coined many years ago, but it has
only recently entered corporate jargon. With the empowerment and knowledge of
developing-world residents, a new revolution has begun, notably among the world’s
ni
youth. The emergence of Social Entrepreneurship — a type of entrepreneurship in

which profits are not the end goal, but rather a means to achieve the end goal of social
upliftment and empowerment – is at the heart of this change.
U
1.3.4 Myths about Entrepreneurship

Around one out of every 18 persons in the globe owns a business. Some people
ity
start businesses to seek opportunities, while others do it out of need, such as many
entrepreneurs in poor countries, since it’s the most promising way to make a livelihood
in their area. Every would-be entrepreneur can benefit from understanding what the role
requires, regardless of their location or motive.
m
The many myths and misunderstandings that surround entrepreneurship are a

good place to start; refuting them can assist start-up leaders figure out what’s genuinely
required to succeed with their young business. The following list shows why some of
the most frequent beliefs about entrepreneurs are incorrect.
)A
1. Entrepreneurs are born with the will to succeed.

Many people believe that entrepreneurs are born with specific innate talents and
that only those with certain talents can be entrepreneurs. The truth is that practically
anyone who can gain the requisite skills can become an entrepreneur. True, some
(c
people acclimate to the demands of the job faster than others, but there’s no rule
that says only certain people can start businesses. Entrepreneurs can be gregarious

extroverts or quiet introverts; they can be “big picture” thinkers or detail-oriented

Notes
e
when it comes to executing a business plan. Entrepreneurship is an acquired skill
rather than a natural talent.
in
2. All that is required is a decent idea.
Many people also assume that all it takes to achieve the American dream is to
come up with one brilliant business concept. While the idea isn’t wholly incorrect,
nl
it is deceptive. Even the most brilliant ideas, especially those with the potential to
revolutionise an entire industry, require adequate execution to become a reality.
Ideas are crucial, but so are talent, leadership, communication, and a variety of other
O
elements.
3. Starting a new business ensures independence.
Many people are drawn to the possibility of starting their own business because
ty
it allows them to break free from the standard 40-hour work week. Many people
discover that, while leaving behind their old schedules and creative restrictions, they
are replaced with new demands. Sure, there will be more freedom in some ways, but
entrepreneurship frequently necessitates significant sacrifices. It has the potential
si
to dominate every waking moment of your life; the job doesn’t stop when the clock
strikes 5 p.m.
4. Quickly launching a business lead to prosperity.
r
ve
Some entrepreneurs make the mistake of thinking that starting a business will put
them on the fast route to making a lot of money — quickly. While some businesses
succeed right away, others take a little longer to get there. One of the most difficult
challenges for an entrepreneur is to properly time the company’s expansion and to
maintain growth.
ni
5. Employees are only motivated by money.

The belief that money is the best method to encourage employees is a misconception
U
associated with the “get rich quick” concept. According to recent statistics, Millennials,
who are increasingly becoming the majority in the workplace, would rather earn
less at a job they enjoy than earn more at a job they despise. To overcome this
misunderstanding, the entrepreneur must build not simply a revenue-generating
ity
business plan, but also a company culture that engages people.

6. Either a business succeeds or fails.
It’s easy to develop an all-or-nothing attitude toward entrepreneurship because just a
m
few startups who explode out of the gate receive the majority of the press. The high
failure rate for new enterprises may appear to support this theory. Entrepreneurs
must understand, however, that getting a business off the ground and keeping it
afloat requires a lot of patience and forethought. Some businesses that flounder or
)A
have slow growth rates at first go on to enjoy substantial growth later on.
7. The entrepreneur has all accountability.
Another myth about starting a business is that it is entirely dependent on the
entrepreneur. This may be true in the beginning, but adopting this concept too
(c
seriously is the surest way to burn out. Collaboration and delegating are important
aspects of a company’s health. Nobody can accomplish it all by themselves.

8. There is a “silver bullet” solution to success.

Notes
e
Many successful businesspeople give the impression that they’ve discovered some
type of secret formula for success. This, however, ignores the entrepreneur’s previous
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failed business ventures, their old-fashioned hard work and patience, or any of the
many other elements that go into building a strong company. The truth is that there
is no single key to success. Entrepreneurial success, if anything, necessitates a
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combination of many ideas, people, and resources that must all come together at the
right moment and in the right location.
9. Businesses require the leadership of someone having an MBA.
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When it comes to entrepreneurs and business degrees, conflating value with
necessity is a mistake. On the one hand, a formal education has incalculable
advantages. Entrepreneurs, on the other hand, are not required to hold an MBA
or other business degree by the market. Some company founders, for example,
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have degrees in engineering and use their in-depth technical knowledge to uncover
technology gaps and design solutions. Other successful start-up founders do not
have a college diploma.
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10. Quitting is a last resort for losers.
One final misunderstanding is that entrepreneurs must put everything on the line –
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no matter what. But the reality is that not every idea will turn into a viable business.
Successful entrepreneurs frequently cycle through and test a variety of concepts
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before settling on one that sticks. Quitting may appear to be a failure, but it’s actually
a frequent aspect of the entrepreneur’s journey and can teach you a lot. It’s crucial
to know when to walk away and move on to the next idea.
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1.4 Case Study
1.4.1 Case Study

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Women Entrepreneurship in India: A Case Study of Jaishree Kabra of Kothari Silk

Mills
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Introduction
A lot of adapted analogues of entrepreneurship that would fit into the rural
development context, argued here, is the broader one, the one which defines
entrepreneurship as: “a force that mobilizes added assets to accommodate unmet
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bazaar demand”, “the adeptness to actualize and body something from about nothing”,
“the action of creating amount by affairs calm an altered amalgamation of assets to
accomplishment an opportunity”. This is why entrepreneurship is advised to be a
prime mover in development and why nations, regions and communities that actively
)A
advance entrepreneurship development, authenticate abundant college advance ante

and appropriately college levels of development than nations, regions and communities
whose institutions, backroom and adeptness arrest entrepreneurship. An ambitious
economy, whether on the national, bounded or association level, differs decidedly from
(c
a non-entrepreneurial abridgement in abounding respects, not alone by its economy

anatomy and its economy vigorousness, but as well by the amusing animation and
superior of activity which it offers with a consistent affability to people.

Objectives and Methodology

Notes
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The primary purpose of the paper is to study the journey of one-woman
entrepreneur and the challenges faced by her in the garment sector in the city of Surat,
in
India. For the purpose of the study primary and secondary sources of data was used.
For the primary source, personal interview was conducted with the woman entrepreneur
in garment industry in the city of Surat, India. For Secondary sources and information
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form Journals, articles newspaper, internet, books and concerned organization have
been used. After the interview, the analysis of the case was done in respect to different
factors like Social, Economic, Competitive, Facilitating and Locational Mobility of the
entrepreneur.
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A Case of Jaishree Kabra of Kothari Silk Mills
Introduction: We are fascinated by the lives and personalities of creative individuals
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and our incessant fascination with the entrepreneur is no exception. Discontinuous
innovation makes existing products and processes obsolete; it also generates
significant investments as other enterprises seek to imitate the ideas. Entrepreneurs
capitalize on the huge investments and technological developments of established firms
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to create profitable ventures. These large organizations have been responsible for both
technological innovations and transfers of technology outcomes. Also, where resources
are scarce, entrepreneurial efforts that result in new production techniques can lead to
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greater productivity per resource unit. When entrepreneurs marched forward, people
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followed them because of faith in their individualistic extraordinary qualities, a situation
that quickly gave way to incipient institutions, necessary for the optimum utilization
of the charisma. The textile sector in India is one of the world’s largest, it has more
installed spindles to make spun yarn than any other country except China and has the
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most looms in place to weave fabric. The Indian textile Industry comprises three inter
related but competing sectors- the organized mill sector, the “decentralized” handloom
and the power loom sectors (Gurrusamy & et al. 2012). Jaishree’s Kothari Silk Mills fall
under the Power loom Sector, thus responsible for substantial capital formation and job
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creation and substantially increasing local standard of living of the workforce.
Background: Ms. Jaishree was born in a small remote village –Piparia, near Itarsi,
Madhya Pradesh, India, in Marwari business family. She completed her studies up
ity
to 8th grade at Burhanpur, Maharashtra and then further studies were done at Surat,
where her family had shifted for business purposes. She completed her graduation from
SNDT, Surat in Food and Nutrition. After marriage, almost for 9 to 10 years she was
a home maker, catering to the household chores and living an active social life. Her
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husband dealing in textiles in the Surat market and her brother also in a similar related
activity, made her think seriously about dabbling in the fashion segment. This was more
out of an urge to do something more active and creative rather than being a staid home
maker.
)A
Career Opportunity, Innovation and Diversification: Jaishree have shown her

tenacity and courage to set up the enterprise not by compulsion or by chance but
through conscious choice and pragmatic interest. With an active support from her
husband, she joined her brothers design studio Kothari Silk Mills, Surat set up for
(c
inhouse sampling and ensuring complete market secrecy. The studio started with
5 people in the year 2008 has now grown and blossomed into a professional look

corporate style and ably managed employing more than 100 skilled and unskilled
Notes
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personnel.
Women entrepreneurs have a tremendous potential in empowering and
in
transforming society, thus synthesizing social progress and economic development.
Jaishree’s dynamic and adaptive team generates 20 to 25 samples every day and
churns out 2 to 3 catalogues every month, each catalogue having 12 to 18 designs.
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They claim that none of their designs are ever repeated. At any given time 6 to 7 teams
are working on separate mandates. Each such team comprises of sketchers, punchers
and fashion designers. The sketcher puts the ideas on paper, the puncher converts the
image on paper into electronic format on computer and the designer then assembles
O
all the creative ideas on the computer into a coherent design for printing. All this work
is related to just one product, dress material, basically for Punjabi suits. In market
parlance it is known as SKD (salwar kameez dupatta set). Women are now proving
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to the world that their role in the society is no more limited to that of a consumer but
they can also play a major role as an enabler to bring those products and services to
the consumer, which has been very ably proved by Jaishree’s Design Studio, a part of
Kothari Silk Mills.
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Planning: The Head of the Department gives the direction for themes to be
developed based on the market surveys, previous trends and experiences, personal
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visits to the retail outlets as well as wholesalers. For example, May /June could be the
theme for the impending Idd festival ; immediately after that it would be for Karvachauth
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festival (a big buying occasion in North India) and then the wedding season. Most of
the planning and execution of the designing mandates take 2 to 3 months so they plan
their designing activities 3 months in advance. According to Jaishree, Fashion is like a
fresh vegetable, it needs to be innovatively treated and creatively executed. Perpetual
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development is the key. Fashion repeats in a cyclic manner, the catalogues are
prepared and distributed to the intermediaries, mostly located in Northern India market,
as also to export markets such as Bangladesh, Dubai, UK, etc. Not much marketing
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activity is undertaken in Surat. The group is fully equipped with updated technological
knowledge, which has resulted its foray into online marketing since last 12 months or
so, and the response is overwhelming.
ity
The online channel now contributes almost 25% of their turnover. On an average
25000 SKD suits are sold every day from this business house, ranging in the price
brand of Rs 350 to Rs 700, per suit (wholesale rate) which translates into a price
band of Rs 1200 to Rs 2000 per suit at the retail level. Before this design studio was
commissioned, only 12 to 15 % of their design requirements could be catered to in-
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house, rest had to be outsourced. Now almost 90% of their design requirements are
fulfilled in house. The last 5 years may not have given a rise in the number of units sold
per day but they have moved up the value chain and creativity and now the market
)A
looks up to them as trendsetters. The design studio and the business house do not
participate in any fashion show or similar marketing events. The 3500 sq. ft. design
studio employing 100 people has given a spring board to their business volumes where
they are able to double their turnover every second year.
On-Line Marketing: Entrepreneurship plays a major role in the harnessing of

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knowledge and the conversion of this harnessed power into future goods and services
through industrial innovation, an enviable achievement of Kothari Design Studio. With

the tremendous growth of technology and the demand for their products, the enterprise
Notes
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has started on-line marketing, resulting in more far-reaching access. The tie up with a
web content developer, where the developer also handles the logistics and accounts
part of the business, has helped the business house in an astounding manner.
in
Challenges: Jaishree feels that there are no problems in life or in business. They
are all challenges, which need to be addressed. Not having a background in fashion
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was a challenge but her strong business community upbringing, rock solid support from
family and educational background allowed her to learn the ropes very fast. In the initial
phase there was a period of self-doubt, of leaving everything after completion, but the
first taste of success made her dig in her heels and perseverance. Skilled and unskilled
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labour issues are adroitly handled by her. She controls and coordinates this issue, by
keeping a second line, a standby, and ready. As of now she has not faced any labour
issue. For trained and skilled manpower, they have employed students from different
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fashion designing institute, as designers. Each person needs about 6 months of in-
house training before they start delivering. In the initial stages of growth of the design
studio, this skilled manpower moved off to competitors within 6 months. However,
since last 2 years, they’re more stable, and now almost 60% of their workforce is with
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them for 5 years or more. People are allowed, incentivized and motivated to upgrade
themselves in the hierarchy. Formal education although desirable, lack of education is
not a hindrance for a good designer to excel. However, in spite of all these acceptance
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of challenges, one area where she feels the trust in the society needs to develop on
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women entrepreneurs are, their capabilities to maintain the business financials.
Jaishree’s finance are managed and handled by her husband and her brother. This is
one glass ceiling she would love to break one day.
Women Empowerment: Jaishree is contributing a significant component to

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increased production quality, productivity and marketing effectiveness and contributing

to job creation amongst women. Another important aspect of Jaishree is that she has
proactively encouraged females to take up employment in her enterprise, here they
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feel safe and there is a family like atmosphere. Women entrepreneurs bring ethics in
business and human approach in socio economic relation, which is seen in Jaishree’s
enterprise too. Matter of fact, male-owned businesses have a workforce that is often
more than 85% men. However, women are more likely to employ personnel that is more
ity
gender balanced, that comprises nearly 52% of female and 48% male. Same is the
case in Kothari Design Studio, managed by Jaishree where she has the workforce in
which more than 51% are females and 49% are males. In the male dominated business
of textile, females coming from all social sectors feel safe to work with Jaishree.
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Practices in the Enterprise: Textile Industry has the flexibility to respond quickly to
market changes and opportunities and rapidly absorb innovation and creativity. This
has resulted in systematic HR department which follows- motivational programme,
)A
TQM, training programs, personal counselling etc., undertaken for the benefit of the
employees. There may be no corporate structure or similar benefits for the employees
but performance appraisal is conducted periodically. Performance review takes place
every month, but in crucial times even every day review is undergone.
Products: The SKD suits are all non-synthetic. Cotton, viscose, silk, etc. Fabrics
(c
procured from Benares, Bhiwandi and Surat is used. The further processing, cutting

and packing is done in -house. The products address the fashion requirements of the
Notes
e
mass market and the target is to double the turn over every year.
Future Planning: Ms. Jaishree has an amazing ability to multitask and balance
in
both personal and professional life with her focused and goal-oriented approach and
future planning. By striking a proper balance between personal and professional life,
Kothari design studio is planning the diversification into Garmenting (kurtis section)
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which is being seriously pursued. A new team for designing and sampling is being
constituted. The manufacturing part of this diversification may be either outsourced or
in-house. The business is now co-owned by Ms. Jaishree and her brother. Her husband
has now taken the liberty of shifting his focus to real estate in Surat and at Jodhpur.
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This probably is the most satisfying part of the journey of Entrepreneurship taken by
Jaishree.
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Analysis of the Case
On the basis of analysis of the case developed on Jaishree Kabra, discussion
(through scheduled interview), the Conceptual framework & the Challenges faced by
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the women entrepreneur are as follows:
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ity
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Conclusion
Notes
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Increased opportunities for women have provided them with skills which have
resulted in more opportunities to pursue economic independence. Entrepreneurship
in
match between the entrepreneur’s time span of comfort and the time span demands
of the endeavour will contribute to the potential success or failure of the endeavour,
as well as indicate when measures of success should be taken in an entrepreneurship
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with clear vision. Entrepreneurs, who hope to secure a niche, face difficult problems:
they often fail because the costs of serving a specialized segment exceed the benefits
to customers. They should carefully analyses the incremental costs of serving a niche
and take into account their lack of scale and the difficulty of marketing to a small
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diffused segment. Strategies of industrialization often depend upon the emergence &
development of entrepreneurial skills and appropriate environment.
Summary
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●● An entrepreneur is someone who starts an enterprise. He looks for and responds
to change. An entrepreneur has been defined in a variety of ways. Along with land
labour and capital, economists consider him to be a fourth element of production.
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●● In reality, the term “entrepreneur” is applied to all small company owners, traders,
and industrialists.
●● r
The word entrepreneur comes from the French word ‘enterprendre,’ which literally
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means “to take on.”
●● In 1934, “Joseph A. Schumpeter” assigned the entrepreneur a critical role of
“innovation.” He viewed economic progress as a dynamic transformation brought
about by entrepreneurs through the implementation of novel combinations of
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production factors, i.e., innovations. The consumer model can be seen in families
roaming aimlessly through bargain stores on Sunday afternoons, unsure where to
spend their money first.
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●● A professional manager is someone who works to plan, organise, lead, and

regulate the efforts of others via the methodical application of classified
information and concepts. He abides by the practise guidelines and code of ethics
issued by a reputable organisation.
ity
●● An entrepreneur can be a manager, but a salaried manager cannot become an

entrepreneur. An entrepreneur is highly motivated to run a profitable firm. He is
enthusiastic about growing his firm through innovation, and he is pleased when his
efforts yield great results. He is the investor, risk-taker, manager, and controller for
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the company.
●● Models of entrepreneurial competence are based on these varied approaches
to and ideas of competence. Competence is a term with numerous faces and
)A
applications.
●● The term competency has at least two distinct meanings or applications:
competency refers to an individual’s demonstrated behaviours, and competency
refers to minimal performance standards (Strebler et al., 1997).
(c
●● The concept of entrepreneurial competency is rooted not just in competency and

competence research, but also in entrepreneurship research. Unfortunately, this is
another field where definitions are difficult to come by.
●● Entrepreneurial competencies, according to Bird (1995), are fundamental

Notes
e
characteristics such as specific knowledge, goals, traits, self-images, social
positions, and abilities that result in the birth, survival, and/or expansion of a
company.
in
●● One of the key motivators for entrepreneurial competency study and practise is
its ostensible link to business performance and growth, and hence to economic
nl
development.
●● Several research studies over the last two decades have attempted to define
categories of entrepreneurs as well as a variety of different variables in order to
O
better understand and comprehend the growth process. Entrepreneurial success
is defined by a variety of talents, knowledge, and experience, as outlined by many
authors.
●● According to some economists, an entrepreneur’s role is to establish coordination.
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Risk-taking, enterprise control, change innovation, motivation, and other
associated activities are all part of the corporate enterprise.
●● Environmental scanning and market research might help you come up with new
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ideas. It is the responsibility of the entrepreneur to produce as many ideas as
possible in order to identify the greatest business prospects that can be pursued
as a commercially viable company endeavour.
●●
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Entrepreneurs have less initiative and drive in the early stages of economic
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development. They become more innovative and energetic as development
progresses. The many sorts of entrepreneurs are divided into categories based on
a set of criteria.
●● An industrial entrepreneur is a manufacturer that discovers client needs and
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develops products or services to meet those demands. He is a product-oriented

individual who begins by creating a product through an industrial unit, such as the
electrical industry, textile industry, or machine tools.
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●● Agricultural entrepreneurs are persons who engage in agricultural operations

such as crop production through mechanisation, irrigation, and the application
of technology. They encompass agriculture and related jobs and cover a vast
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spectrum of the agricultural economy.

●● A professional entrepreneur is someone who is interested in starting a business
but not in managing it once it is up and running. A professional entrepreneur
sells his or her previous business for a profit and begins a new one with a fresh
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concept.
●● Entrepreneurs are classed as novice, serial, or portfolio entrepreneurs based on
their entrepreneurial activity.
)A
●● A modern entrepreneur is someone who runs a firm that fits the current marketing
needs and adapts to the changing market situation.
●● Copreneurs are married couples who share ownership, dedication, and
responsibility for a firm. Couples who work together as copreneurs face challenges
(c
in establishing equality in their relationships. These couples reflect the dynamic

interaction of the love and work systems.

●● A social entrepreneur is someone who sees a segment of society that is stuck and
Notes
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comes up with fresh ideas to help it get unstuck. The entrepreneur’s enthusiasm
is very strong, whether it is focused efforts for child upliftment, fighting for the
conservation of Assam’s rainforests, working for the welfare of the blind, or
in
endeavours to empower women.
●● Women entrepreneurs are individuals who come up with the idea for a business,
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start it up, organise and combine production aspects, run the firm, take chances,
and deal with the economic uncertainty that comes with it.
●● There are numerous industries in the small business sector where women play a
O
significant role.
◌◌ Agriculture and Allied industries – such as sericulture, horticulture, dairying
and animal husbandry etc.
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◌◌ Handicrafts, Agarbati, Candle making, Bidi Industry, Hosiery and Textile, Doll
Making, Jewelry, Pottery, Designing, and other home-based businesses
◌◌ Industries outside of the home, such as electrical and electronics, food
manufacturing, and so on.
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●● A woman entrepreneur must do all of the functions needed in creating a business
as an entrepreneur. Idea generation and screening, project preparation, product
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analysis, determining forms of business organisation, completion of promotional
formalities, obtaining finances, acquiring men, machines, and materials, and
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business operation are among these functions.
●● Women entrepreneurs are an important element of the global quest for long-term
economic and social progress in today’s changing environment.
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●● The web-dominated world has been a godsend for stay-at-home moms who are
able to generate decent money without leaving their houses. Some of them are
content with whatever they do, while others aspire to be successful in their chosen
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industry. Women in general, and women entrepreneurs in particular, play a critical

role in the nation’s economic development.
●● Economic globalisation is a process that leads to neoliberal economic policy
reforms (such as deregulation and privatisation) as well as increases in capital,
ity
goods, services, and labour mobility (Richards and Gelleny, 2007).

●● To establish the effects of the globalisation process on women’s quality of life,
equality, and status, it is necessary to first define what is meant by these terms
and which factors are used to measure them.
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●● The North American Free Trade Agreement (NAFTA) has significant long-term
employment potential for women, according to the United Nations Development
Fund for Women.
)A
●● Globalization’s economic changes also plant the seeds for cultural improvements
that improve women’s lives. Economic development is only one facet of the
narrative. To reinforce the position of women in society and politics, significant
changes in social norms, beliefs, and values are also required.
(c
●● In terms of women’s development, there has been a sluggish but steady transition
over the last few decades. Women are thought to be the better half of society.

●● In India, women are responsible for a wide range of tasks. They aspire to be
Notes
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efficient workers who work hard to complete their responsibilities. They want to
be good wives, mothers, and home managers at the same time. She wishes to
maintain her social standing and be respected by the rest of the family.
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●● Women entrepreneurs have dominated the commercial sector for the past 15
years. With almost 9 million female-led firms reported in the United States in 2016,
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the number of female-owned small businesses expanded 1.5 times faster than the
total national average for new ventures.
●● The ability to advertise their enterprises, delegate, and be patient are the top three
O
traits connected with being a woman entrepreneur. The study also discovered
that women have a natural sense of independence: 48% of women are the sole
employee of their firms, compared to 37% of males.
●● Women entrepreneurs are becoming more enthusiastic about the future, with
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the majority predicting that in the next 20 years, women would make significant
advancements in the profession. 61 percent of female small company owners are
enthusiastic about today’s business climate, and 40% of women are happier with
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their personal financial status than they were a year ago.
●● The higher TEA is linked to improved opportunity perception. In addition, the
analysis demonstrates that across all 74 economies, women entrepreneurs had a
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5% higher chance of being innovative than men.
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●● Surprisingly, as economic development improved, women’s entrepreneurial
participation decreased, resulting in a greater gender disparity.
●● The works of Richard Cantillon and Jean-Baptiste Say gave birth to the concepts
of enterprise, entrepreneur, and entrepreneurship.
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●● Entrepreneurial distinctions are more appropriate for modern definitions than their
commonalities, hence modern or contemporary repreneurship research focuses
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on differences among entrepreneurs rather than disparities between entrepreneurs

and non-entrepreneurs.
●● In different economies, entrepreneurs play different roles. It varies from economy
to economy depending on material resources, industry climate, and political
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system responsiveness. Entrepreneurs may contribute more in economies

with favourable opportunity conditions than in economies with less favourable
opportunity conditions.
●● India’s first post-independence economic development strategy was mostly based
m
on the Mahalanobis model, which prioritised the investment goods industries

sector above the services and consumer goods sectors. The Mahalanobis model,
for example, placed a high focus on mining and manufacturing (for capital goods
)A
production) as well as infrastructural development (including electricity generation

and transportation).
●● The huge RELIANCE INDUSTRIES (Ambani’s), INFOSYS (Narayan Murthy),
SHAHNAAZ HERBAL, TATASONS, BIRLAGROUP, HCL (ShivNader), SUZLON
(RajanTanti), and other companies provide testament to the rising Indian
(c
Entrepreneur and Entrepreneurism.

●● The term “social entrepreneurship” was coined many years ago, but it has only
Notes
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recently entered corporate jargon. With the empowerment and knowledge of
developing-world residents, a new revolution has begun, notably among the
world’s youth.
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●● The many myths and misunderstandings that surround entrepreneurship are
a good place to start; refuting them can assist start-up leaders figure out what’s
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genuinely required to succeed with their young business. The following list shows
why some of the most frequent beliefs about entrepreneurs are incorrect.
Glossary
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●● Enterprise: Enterprise has two meanings. Firstly, it is another term for a business.
Secondly, the term describes an individual who takes the initiative and risk to set
up a business.
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●● Entrepreneur: An individual who sets up a business, creates a new idea and who
is willing to take a loss in order to make money.
●● Entrepreneurial: The adjective form of ‘entrepreneur’ referring to a person who
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takes a financial risk in hope of making profit.
●● Entrepreneurship: Refers to the execution of new ideas.
●● r
Intrapreneur: An intrapreneur works inside a company to develop an innovative
idea or project that will enhance the company’s future.
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●● Product/ Market Fit: This term is used when a company is in a market where
customers are buying its products/services at the right speed and the right price.
●● Turnover: A business’ total sales income for a year.
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●● Vision: A business’ long-term goal

●● Women entrepreneurship: Women entrepreneurship has been initiated and
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founded by a woman who moves it with its innovative ideas and who is actively
involved in its management
●● Globalisation: Globalisation is the spread of products, technology, information,
and jobs across national borders and cultures. In economic terms, it describes an
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interdependence of nations around the globe fostered through free trade.
Check your Understanding

1. Which of these is not a type of entrepreneurship?
m
a. Small business entrepreneurship

b. Scalable entrepreneurship
)A
c. Large scale entrepreneurship

d. Intrapreneurship
2. The word entrepreneur derived from
a. Entreprena
(c
b. Enereprise
c. Entaprena
d. Entreprendre
Notes
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3. The word Entrepreneur was introduced by
a. Richard Cantillon
in
b. Mukesh Ambani
c. Jean-Baptiste
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d. Steve Jobs
4. According to Schumpeter, innovative entrepreneurs would:
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a. Thrive in the market
b. Not survive and disappear from the market.
c. Get absorbed within larger innovative businesses
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d. Get absorbed within non-innovative businesses
5. Which of these is not a challenge for the entrepreneur?
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a. Managing the cash flow of their business
b. Recruiting new employees
c. Choosing the product or service to sell in the market
d.
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Formulating rules and regulations relating to conducting entrepreneurship in
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their country
6. Which of these theories involve taking a moderate amount of risk as a function of skill
and not chance?
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a. Need for achievement

b. Need for affiliation
c. Need for authority
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d. Need for independence

7. An entrepreneur who is the owner of more than one business is called:
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a. Portfolio Entrepreneur
b. Intrapreneur
c. Corporate Entrepreneur
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d. None of the above

8. Which Entrepreneur is not intended in innovative-
a. Portfolio Entrepreneurs
)A
b. Novice Entrepreneur
c. Imitative Entrepreneur
(c
9. Agriculture entrepreneurship related to –

a. Non agriculture activities

b. Agriculture activities
Notes
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c. Both
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10. An entrepreneur who start with an idea not for making profit but for social welfare
a. Social entrepreneur
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b. Imitative Entrepreneur
c. Drone entrepreneur
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d. Novice Entrepreneur
11. An entrepreneur enter in to business to improved quality product by their invention
and discoveries comes under
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a. Technical entrepreneur
b. Professional entrepreneur
c. Novice Entrepreneur
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d. all of the above
Exercises
1. What do you mean by entrepreneur?
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2. Differentiate between entrepreneur and manager.
3. What do you understand by entrepreneurial competencies?
4. Give some functions of entrepreneurs.
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5. Explain the types of entrepreneurs.

6. Discuss women entrepreneurs.
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7. Explain “women and globalisation”

8. What are the challenges faced by women entrepreneurs in India? Give some
suggestions.
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9. Explain the terms enterprise and entrepreneurship.

10. What is the role of entrepreneurship in economic development?
11. What are some of the myths of about entrepreneurship?
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Learning Activities
1. Interview an entrepreneur, ask him/her the keys to successful entrepreneurship. Also
)A
ask him/her whether he/she attributes the success of his business to luck or hard
work.
2. Conduct a survey in your colony by asking people if they face any particular problem
and see if you can find a solution to that problem.
(c
Check your Understanding – Answers

1. (d)

2. (d)
Notes
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3. (c)
4. (c)
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5. (d)
6. (b)
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7. (a)
8. (c)
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9. (b)
10. (a)
11. (a)
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Further Readings and Bibliography
1. Langowitz N and Minniti, M (2007). ‘The Entrepreneurial Propensity of Women’
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Entrepreneurial Theory and Practice.
2. Desai, V: (1996) Dynamics of Entrepreneurial & Development & Management
Himalaya publishing House - Fourth Edition, Reprint.
3. r
Rani D. L. (1996), Women Entrepreneurs, New Delhi, APH Publishing House.
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Module - II: Environmental Monitoring and Importance

Notes
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of Business Idea
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●● Entrepreneurial motivation
●● Environmental factors affecting entrepreneurship
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●● Creativity and innovation
●● Ways to entrepreneurs’ contribution for sustainable economy
●● Entrepreneurial development programme
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●● Sources of business idea
●● Screening of business idea
●● Selection of workable business idea
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●● Idea generation techniques
●● Convenient frames of reference for streamlining the process of generation of ideas
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Introduction
The success of the company is influenced by a variety of factors. Understanding
the external environment in which a company operates is essential for staying ahead
of the competition, making the best decisions for the future of the company, and
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minimising losses. There is a need for an environmental scan to learn about the issues
that directly and indirectly effect an organisation. Learn about environmental scanning
tactics and why they’re crucial to a company’s success.
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Environmental scanning is the continuous examination of an organization’s internal

and external environments. It’s used to assess the company’s possible opportunities,
dangers, market trends, and lessons learned. Identifying these characteristics allows
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to respond correctly by developing plans to battle potential risks before they have
an impact on the business, as well as make the best judgments possible depending
on changing circumstances. Identifying these characteristics enables to respond
effectively by developing plans to combat possible threats before they have an impact
on the organisation, making optimal decisions based on changing market landscapes,
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and developing strategies that fit the marketplace expectations in your industry.
Environmental scanning is beneficial to businesses of all sizes, from tiny, family-owned
businesses to multinational organisations.
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A successful business venture always begins with a smart business concept.

Successful entrepreneurs are innovators or problem solvers who come up with
new ideas to cover market gaps or approach an existing situation from a different
perspective to create a better and less expensive way to do things.
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Following the conception of a company idea, the following step is to consider the
viability and feasibility of the business idea.

“What exists in the mind as a representation (as of something comprehended)

Notes
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or as a formulation (as of a plan),” according to Webster’s dictionary. The major thing
one is thinking about or intends to accomplish is a concept, which is the content of
cognition. A concept can be applied to a mental image. A mental image or formulation of
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something seen, known, or imagined, a pure abstraction, or something that exists in a
person’s mind are all examples of ideas.
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An entrepreneur, according to renowned economist Joseph Schumpeter, is a
person who is willing and capable of turning a new idea or invention into a successful
innovation. Business ideas are those that provide value for the investor, client, and may
generate a revenue model for a company.
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2.1 Entrepreneurial Development
Entrepreneurship is one of the earliest established processes in human society
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from a historical perspective. It has been a driving force since the first human beings
began to form their own communities and specialise labours, and the role and
importance of entrepreneurship has grown over time. (37, Carland 1997.) Around the
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turn of the century, a French economist coined the phrases entrepreneurship and
entrepreneur, but because these are such vast topics, most authors struggle to define
them, and many of them believe that there is no uniform definition of these two terms.
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As a result, each writer on the subject of entrepreneurship and entrepreneur has their
own definitions. (Dollinger 1995.)
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Entrepreneurship is a far larger idea than just starting a new company. Creativity
and innovation are two entrepreneurship concepts. It is concerned with innovation in
terms of opportunities and risks, new ways to problem-solving, having a strategic plan
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in place to anticipate opportunities and risks, and limiting potential dangers. Planning
and developing a plan is also an important aspect of the entrepreneurship notion,
as it aids in the development of a successful firm. The role of the entrepreneur, who
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bears full responsibility for the management of the business, is a critical aspect in
entrepreneurship.
Not long ago, the topic of entrepreneurship was considered an academic field
of study. Our economy, on the other hand, was built on entrepreneurship. (2007,
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Kuratko & Welsch.) Entrepreneurial development has grown increasingly important

as a cornerstone to economic development, with the goals of job creation, industrial
development, and regional expansion all reliant on it. Entrepreneurship and
entrepreneurs have altered the course of markets and economies. (Ahmad, p. 203.)
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Entrepreneurship has a critical role in the formation and expansion of businesses, as

well as in the economic development and prosperity of countries. (Hisrich, Peter, and
Shepherd, 2008, p. 6) Entrepreneurship has also been viewed as a global revolution,
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with the strength of this revolution being compared to that of the Industrial Revolution in
the twentieth century.
2.1.1 Entrepreneurial Motivation

Traditional motivations for becoming an entrepreneur include financial gain.
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However, according to current study, a person’s motivation for entrepreneurial activity

does not have to be solely for economic reasons; it can also be for social or lifestyle

reasons. People have varying reasons, abilities, and desires to seize opportunities
Notes
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and start their own businesses. They have diverse perceptions of opportunity
considerations, risk-taking behaviour, and decision-making processes based on their
different motivations. (Shane & Locke & Collins, 219, Shane & Locke & Collins, 219,
in
Shane & Locke & Collins, 2 Behind every successful entrepreneur, there are some
questions that pique people’s interest: where do the constant motivations originate from
and how do they assist them reach their objectives? Internal and external motivation
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factors are the two main types of motivational factors.
Pull factors
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Pull factors are good motives for a person to become an entrepreneur. A person
enters self-employment because he or she sees an opportunity, whether it is for a
better working environment, more self-expression, or even financial freedom. Some
of the pull factors that lead entrepreneurs to start their own new firm include the
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potential to present a fresh business idea to the market or the possibility to develop
a new business. As pull factors in entrepreneurship, elements such as a need for
achievement, independence, financial freedom, and a constant love for creating
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something great are discussed. (Nel, Maritz, and Thongprovati, 2010).
Desire to succeed
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One of the most compelling motivations for becoming an entrepreneur is the desire
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to succeed and solve a major problem. Take Bill Gates for example; when he founded
Microsoft, he set out with the most audacious goal ever: putting a computer on every
desk and in every home. Actually, he had everything based on his family situation at
the moment, except his unfulfilled goal. His tremendous determination to complete
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his purpose provided him with the bravery, strength, and enthusiasm to work tirelessly
for decades. He now runs a corporation with over 80000 people spread across 100
countries.
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Individuals with a higher need for achievement are more likely than those with
a lower need for achievement to engage in activities that demand individual skill
and effort, a high level of responsibility for outcomes, a moderate level of risk, and
unambiguous feedback on performance. As a result, those with a high demand for
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achievement are more inclined to choose an entrepreneurial career than other types of
jobs. (McClelland & Company, 1962.)
The overall conclusion of Collins, Locke, and Hanges’ first and only meta-analysis
of a need for achievement and entrepreneurship studies, which looked at 63 “need for
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achievement and entrepreneurship studies” in 2000, is that the need for achievement is
significantly related to starting a business, and that it differs between entrepreneurs and
others. There is a link between the desire to succeed and the desire to start a business.
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The need for achievement could be a valuable tool for distinguishing between firm
founders and the general population, and it could be used to explain entrepreneurial
behaviour. (According to Johnson, 1990.)
Desire for Financial and Personal Independence

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Independence entails taking responsibility for one’s own life rather than relying on
others’ efforts, as well as using one’s own judgement rather than mindlessly following

others’ assertions. According to the study, the desire for independence is the key
Notes
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motivator for many people to start their own business. Entrepreneurs, on the other
hand, are likely to have greater freedom than other people. People who say no to the
question “Do you want to make a living by relying on others?” are more likely to start
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their own firm and have a strong desire to succeed as an entrepreneur. They are eager
to do it despite the fact that the business they established was quite little. They don’t
want to listen to others, they don’t want to operate within any constraints, such as
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requesting permission before doing something, and, most significantly, they don’t want
to devote their time and energy to others’ dreams on a daily basis. Because they clearly
knew something, and were even compelled to do things they didn’t enjoy, one of the
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most crucial motivator elements for entrepreneurs is the desire to be autonomous and
work for themselves. (260, Shane et al., 2000.)
There are a variety of studies that might prove that entrepreneurs have a better
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level of independence than others. Hisrich (1985) discovered that one of the primary
motives for beginning a business is the need for independence, based on interviews
with some female business owners in the United States. Entrepreneurs had significantly
higher levels of independence than the general population, according to Aboud and
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Hornaday’s (1971) survey of 60 entrepreneurs. In 1997, Aldridge conducted a similar
study with 63 founders, finding that entrepreneurs scored much higher on personality
indicators of independence than the general population. (Hornaday & Abound, 1971).
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The desire for financial independence is one of the characteristics that has been
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demonstrated by numerous studies to be a crucial factor in motivating many people to
start their own business. To be practical, money cannot fix all problems, but we must
believe that it can make life easier in some way. The desire for money demonstrates
that people need to enhance and protect their personal and family income in order
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to maintain a respectable standard of living. As a result, people who are inspired to

become entrepreneurs frequently have a larger desire to make more money, particularly
money that they can control and limit themselves. Without having what they desired, life
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would be meaningless to them. The only way they can have what they want is to start
their own business, control their own career, and have financial independence, even if it
comes with dangers. (Source: Kiyosaki, 2012.)
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A Strong Desire to do Something Exceptional

The harsh reality is that nine out of ten new businesses fail. The love for what they
are doing is one of the driving motivations for the last 10% of company entrepreneurs
to keep going and survive the tough times. Steve Jobs, Apple’s founder, stated “Work
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will occupy a significant portion of your life, and the only way to be fully pleased
is to do work that you believe is excellent. And loving what you do is the only way to
produce outstanding job”. This is the passion that drives Apple, the world’s most well-
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known, leading, and innovative corporation, and it comes from Steve Jobs, the great
entrepreneur of the last five decades.
Every successful entrepreneur needs a driving force to propel them ahead. The
most significant feature of most great entrepreneurs, and Steve Jobs is one of them,
is that they have a lifelong passion for what they do. Because no one can survive for
(c
decades without enduring love, because there will undoubtedly be challenges along the
way, and this is where love will play a pivotal part. And only those who enjoy their work
will make it to the finish. It’s all about unconditional love, no matter what it takes.
Push Factors
Notes
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Push factors are perceived as “necessity” factors, and they serve as a disincentive
for someone to start their own firm. Push entrepreneurs are individuals who begin self-
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employment in order to overcome impoverished negative environmental effects such as
unemployment, job market instability, a potential market gap, dissatisfactions caused by
workplace competitive situations, a lack of job opportunities, or even a desire to change
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their lifestyle. These work-related push factors are the primary motivators for these
individuals to prepare for a career as an entrepreneur.
Unemployment
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One of the most important reasons for someone to become self-employed is a lack
of employment options and career prospects. Even if there are many job prospects in
today’s job market, the challenge is just as great. When a person loses their work, they
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have two options: find another job or get self-employed. On the other hand, events such
as dissatisfaction with one’s existing job, company, position, or job function are some of
the motivators for those daring enough to start their own business and take control of
their lives. (According to Cromie and Hayes, 1991.)
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Some people experience inconsistencies in their income, which fluctuates between
low, high, and nothing. It could be due to the field, company, or economy in general, but
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this is also one of the motivating elements for people to start their own firm and pursue
a career as an entrepreneur. And the only thing they want is some financial security.
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Of course, even if they start a business, their income may be uncertain, but at the very
least, they will have more control over it. This relates to Knight’s position, expressed
in 1921, that an individual must choose between unemployment, self-employment, and
employment.
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Opportunity
There are certain people who can easily start a business as soon as they find a
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profitable opportunity that requires minimal investment and has a low-risk component.
There are numerous prospects in the industry that encourage them to seize the
moment and create their own company. These are individuals who identified a need for
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a service or product that they believed they could fill, and who, in most cases, had prior
experience in the field. Another example of an opportunity is their industry connections,
contacts, resources, and knowledge, which provided them with a new business idea
or opportunity. The market with factor-driven economies, the market with efficiency-
driven economies, and the market with innovation-driven economies are the three
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types of markets. Entrepreneurs frequently compete on the use of unskilled labour and
natural resources in a market with a factor-driven economy. Because they all sell basic
things, pricing is the key competing factor in this situation. As a result, we can conclude
)A
that starting a business in this type of industry is pretty simple because it is not
extremely dangerous and does not require a high level of skill. That is why numerous
entrepreneurs exist in countries where the economy is based on factors.
To Live Better in Competitive Society

(c
Individuals who have been fired from their employment, or who are unable to
execute their work owing to a lack of education, language skills, or criminal records, are

examples of “pushed entrepreneurs.” These entrepreneurial groups are fuelled by the

Notes
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realities of society, by a fast-changing society that is full of challenges and competition.
This set of entrepreneurs is going to do something to keep up with current trends
because they are afraid of being left behind by society, even though they do not enjoy
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struggling every day to make things happen. Of course, the majority of business owners
love the process. (According to Block and Sandner, 2009).
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On the other hand, for some people who have been unable to obtain work and
have no other means of support, becoming an entrepreneur may be their only
alternative. In other words, persons who are desperate for a job may have a better
chance of beginning their own firm. And it’s possible that this is the most essential
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motivator for some of the most successful entrepreneurs to emerge from the market. Of
course, not everyone who is desperate will start a business, but some will, and they will
have taken the first step toward becoming an entrepreneur in order to alter their lives,
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even if the chances are slim. (According to Block and Sandner, 2009).
2.1.2 Environmental Factors Affecting Entrepreneurship
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The environment refers to the situations, circumstances, and other factors that
influence a person’s life. It is made up of the individuals and forces that have an impact
on the success and survival of persons and organisations.
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The formation and growth of entrepreneurship is not a natural process, but rather
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a result of a combination of external circumstances. These factors may influence the
emergence of entrepreneurship in both positive and bad ways. Negative influences
provide barriers to entrepreneurship growth and development, whereas positive
influences create supportive and favourable environments for entrepreneurship growth
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and development.
Availability of Venture Capital

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If a new enterprise is to be launched, some type of venture finance is normally

required. One source of venture capital in an environment where entrepreneurial activity
is well established is the existing successful entrepreneurs in the area.
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As management and financial outlets, they are frequently sensitive to other

emerging companies. Many persons who invest in venture capital began their careers
as entrepreneurs.
According to Cooper (1970), stock owned by the founders in the firms for which
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they previously worked is an essential source of beginning capital for many firms.
Stock options meant for leaders in the US electronics industry can make it financially
possible for them to leave the company and start their own business. Because of the
unusual circumstances in Austin, venture finance was not a significant environmental
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factor. Because most businesses do not require a lot of capital, the majority of them
were founded with internal funds. The initial investment required was simply tens of
thousands of dollars.
If local banks or other local sources refuse to offer loan money because they
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lack experience in funding technological enterprises, as Hoffman (1972) points out,

entrepreneurs will look elsewhere. This lack of experience stems from the region’s
economic history, and it has a significant impact on lending regulations and practises.
According to Cooper (1970), most new businesses are funded locally since the
Notes
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founders are unfamiliar with potential investors in other places. Local investors were
more inclined to understand and sympathise with technologically-oriented companies.
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Potential local investors could simply research the aspiring entrepreneur’s
background. Frequently, they knew the person personally.
Investors might stay in touch with the new company.
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It was unnecessary to make detailed presentations and proposals to local
investors.
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1. The Presence of Seasoned Entrepreneurs as well as Incubators
Several scholars believe that entrepreneurial action leads to additional
entrepreneurial activity. “Technical entrepreneurship in a specific field appears to be
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highly tied to the incubation organisations (existing enterprises) already there,” Cooper
(1970) claims. It is doubtful that any new, technologically-based enterprises will be
established in a region unless such incubation groups exist.” If the initial technological
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companies succeed, the climate changes and additional entrepreneurs are attracted.
“The simple knowledge that previous entrepreneurs in the region have succeeded
at new venture initiation pulls entrepreneurs to the area and encourages potential
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entrepreneurs currently in the area,” writes Naumes (1978).
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Successful entrepreneurs, in particular, can draw on their previous triumphs and
failures to gain experience and expertise. They can learn the formula for success by
studying their forefathers.
Spin-off firms can tap into a talent pool that already exists. If the risks involved
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with the new firm are controlled and easily assessed, that talent is more inclined to quit
stable positions in the region. The question of whether small or larger organisations are
better incubators for new start-ups is a point of contention. On the one hand, it may
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be claimed that working for a small business exposes a potential entrepreneur to the
complete spectrum of difficulties and decisions that he or she will face as part of their
start-up. On the other side, it may be claimed that working for some huge corporations
causes employees to develop entrepreneurial aspirations.
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The incubation organisation is vital to the aspiring entrepreneur because it

allows him to gain administrative experience to enhance his technical knowledge and
familiarise himself with customers and suppliers while on someone else’s payroll. His
networks are connected to the incubation organization’s environment, so when he starts
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a business, it tends to be in the same location.
2. Labour Force with Technical Skills

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Another key environmental component that encourages entrepreneurial activity is

a technically skilled work force. The hearing aid industry provided a technical base in
the Twin Cities of the United States; numerous technicians and engineers worked in the
area (Draheim 1972).
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The establishment of new enterprises is aided by labour skilled in a certain field of

the new venture. A study of small businesses in the electronics industry by the Stanford

Research Institute (SRI) in 1962 determined that “availability of the sort of labour
Notes
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necessary in the industry is one of the most critical elements in choosing the location of
electronics enterprises.”
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Because a new company is seen as a high-risk place to work, skilled labour is
hesitant to relocate. The new company must locate where there is already a labour
pool.
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3. Supplier Accessibility
Despite the fact that various authors (Cooper 1970, Shapero 1972,
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Schollhammer and Kunloff 1979) have mentioned the relevance of supplier access to
entrepreneurship, no published research to back this up has been identified.
In certain cases, having easy access to suppliers may have influenced the decision
to start a business. However, one assumes that this is the exception rather than the
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rule, and that supplier accessibility is rarely a deciding factor. Depending on the
bulkiness of raw materials and the level of personal care desired from suppliers, this
issue is likely to be highly specialised to specific industries.
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This aspect tends to be more important when the entrepreneurial activity is local
rather than national or international, or when clients are concentrated geographically. It
should also be based on how much and how often clients require personal interaction.
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4. Customer Accessibility or New Market Opportunities
When the entrepreneurial activity is local rather than national or worldwide in
scope, or when customers are geographically confined, this component is especially
relevant. It should also be based on how much and how often clients require personal
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interaction.
Due to its inadequacy in terms of lesser means and efficiency, the new
entrepreneur found it difficult to penetrate a new or inaccessible market. Entry into a
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new market is often hampered by socio-political and cultural hurdles. A market structure
could be a significant barrier to entry for entrepreneurs. As a result, environmental
assistance for entering a new market or finding new clients is crucial for any country’s
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entrepreneurship.
5. Government Policies That Are Beneficial

Rates of taxation, licencing rules, and other government actions can all have a
favourable or bad impact on entrepreneurship.
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Several academics look at the political influence element, pointing out that state
and local taxation and licencing laws might make one region more appealing than
)A
another.
According to Cooper (1973), this legislation has an impact on the capacity to

get “seed” financing for new ventures. Mahar and Coddington (1965) point out that
business taxes must be related to the services supplied, but they argue that if low costs
were the main factor, taxes would be lower. Certain parts of the United States, such
(c
as Boston. Because California and Massachusetts have high taxes, Palo Alto and Los
Angeles would never have grown as entrepreneurial hubs.

The area’s disadvantageous business tax structures, according to Vesper and

Notes
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Albaum (1979), are a barrier to new start-ups. Taxation laws, according to Galvin
(1978), frequently defer rather than advance the choice to start a new business.
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6. Universities’ proximity
Universities are a common source of technical spin-off enterprises; however, this
is the exception rather than the rule. If it does exist, it is due to the administration’s
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active support or passive acceptance of faculty entrepreneurial activity, as well as the
establishment of contract research, contract research centres, or laboratories (Shapeno
1972).
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Universities, according to Cooper, have clearly played a role in attracting capable
young men and women to specific regions, as well as offering local businesses
a competitive advantage in hiring and retaining these individuals. They also offer
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consultation services and possibilities for professional personnel to further their
education.
There is also evidence that a university spin-off has a higher chance of success
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than a typical new business endeavour. Their connections with university research labs
and the government organisations that fund them are one advantage.
Allison (1965) acknowledges that institutions with strong engineering and science
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capabilities, as well as policies that support entrepreneurship, can help to boost new
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business creation. Academic institutions, on the other hand, may be only a helping
element rather than a need.
Dallas, for example, lacked “natural attraction” in terms of climate or intellectual

institutions, but was able to build an industrial community by linking its research
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institutes to the rest of the city, The existence of a university was shown to be negligible
in Hennings’ (1979) empirical research of organisational births.
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7. Availability of Land or Facilities

Mahar and Coddington (1965) stress the need of low-cost facilities for newly
founded businesses because they have limited money. If incubator space is not
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available in older buildings, they advocate the development of shell-type facilities with
easily moveable partitions.
They argue that high-quality industrial space is also necessary since businesses
do not want to be concerned about “water, power, sewage, roads, or zoning.” Recent
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studies in a variety of nations have found that land availability and related factors can
have a detrimental influence. Because of increased labour costs, environmental laws,
high corporate taxes, and generous unemployment compensation rates, California-
based high-technology corporations are not building new plants in the state, according
)A
to Quirt (1978).
Uncertainty about energy sources, the lack of industrial revenue bonds, and
skyrocketing housing costs all influence plant location selections.
(c
8. Transportation Accessibility
Several scholars highlight accessibility to transportation and transportation costs

as key environmental concerns. It has an impact on the establishment and growth

Notes
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of businesses and industries. Mahar and Coddington (1965) stress the importance
of airline transportation, while Schary (1979) claims that industry type, competition,
general and specific location, firm size, product, markets, energy, and regulation
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all influence the importance of transportation to businesses in different parts of the
world. It demonstrates that transportation, along with other factors, plays a key role
in influencing business decisions. However, the type of the industry or business has
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a significant impact. Cooper (1973) points out that while shipping costs may not be
critical for many high-tech products, the capacity to collaborate closely with customers
is occasionally required.
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9. Receptive Population
According to Cooper (1970), the public response to new stock issues can
“significantly alter the availability of venture capital, a key factor for success.” Attitudes
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toward business and entrepreneurship in society.
Individual judgments are undoubtedly influenced. According to Manhar and
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Coddington (1965), it is impossible for a company to succeed in an unfriendly
environment. They define a supportive atmosphere as “an attitude that understands that
small businesses contribute significantly to the area’s economic success” (1965).
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A receptive public would support the law, labour and material supply, finance,
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distribution, and sale of goods and services, as well as the firm’s and product’s
advertising.
10. Supporting Service Availability

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Support services are non-core operations that are critical to the success and
survival of new businesses. As a result, this element frequently affects a company after
it has been formed. Accountants, tax experts, lawyers, and consultants who specialise
in new enterprises and small firms provide these services.
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According to Naumes (1978), these consultants are familiar with the issues that
arise while launching a new business. He also believes that they assist entrepreneurs in
overcoming many of the initial stumbling obstacles to launching a successful new firm.
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The availability of support services ensures that new initiatives will be more successful
in the future.
11. Desirable Living Situations

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The most significant criteria for the establishment and development of

entrepreneurial endeavours are cultural, climatological, and recreational amenities. If
a community is to attract and retain the technical professional workforce, which is the
)A
most productive factor in high-tech industries, it must become an exciting and appealing
place to live. The highly-trained workforce is relatively young, mobile, in high demand,
and has a variety of places to work and live; they will not stay in a town that lacks a
variety of amenities that are accessible elsewhere (Shapero, 1972).
Primary and secondary schools are particularly important, according to Mahar and
(c
Coddington (1965), because qualified adults demand adequate educational facilities for
their children.

Model for Measuring Environmental Impact

Notes
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To understand the importance of environmental support for the establishment of
entrepreneurship in any society, the impact of the environment on entrepreneurship
in
development and growth must be objectively studied.
Bruno and Tyebjee (1982) proposed a model to explain how the environment
affects entrepreneurial activity. They believe that there are three categories of outcomes
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that can be quantified in terms of entrepreneurial activity: start-up, performance, and
residual. The model depicts the impact of the environment on entrepreneurial activities
and their outcomes.
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The number of start-ups, the equity and legal structure of start-ups/new
enterprises, and the scale of start-ups are all examples of start-up outcomes. They
keep track of how the climate affects new entrepreneurs.
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The availability of resources and the cost of doing business influence prospective
entrepreneurs’ decision to pursue the endeavour. Environmental elements also
influence the scale, number, and size of the projects. The results of an entrepreneur’s
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performance are a record of how they perform in various situations. Return on
investment (ROI), return on investment (ROI), return on sales (ROS), growth and
market share, ability to acquire new consumers, and the formation of a market position
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are indications of performance outcomes. Failure of the company is, of course, a poor
performance consequence.
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In the later stages of a company’s life cycle, residual outcomes arise. Residual
outcomes include changes in the capital structure, particularly the withdrawal of
venture funds from the equity base. Another is the issue of shares “becoming public”
on the stock exchange. The third category is mergers and acquisitions. Finally, residual
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entrepreneurial activity is evidenced by new start-ups by the firm’s principle as well as

the development of new products, markets, or technologies.
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Environmental factors have been divided into two groups and linked to the three
levels of result. The first category contains the resources required to establish a
business. Factors that influence the cost of conducting business make up the second
group. The availability of resources will have an impact on both the start-up and the
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long-term outcomes. The expected cost of conducting business, specifically the

decision to establish a business, will influence start-up outcomes, and the actual cost of
doing business will influence performance outcomes.
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2.1.3 Creativity and Innovation

Societies and the entire world are affected by the economic and social implications
of today’s global concerns. Many governmental and philanthropic efforts fail to bring
)A
about the social change that people around the world need, and important social sector
organisations are generally regarded as ineffective in addressing social issues (Fields,
2016). Many entrepreneurs consider creativity and innovation to be key components;
yet, there is still a lack of awareness of the factors that influence these elements, as
well as the management of associated processes (Finkle, 2013). An economic transition
(c
has recently been established. The economy is changing away from knowledge-based
activities and toward creative, innovative, entrepreneurial, and imaginative activities.

As a result of greater globalisation and technology advancements, more business

Notes
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opportunities have emerged, but the marketplace has also gotten more crowded,
resulting in higher rivalry (Jain, 2019; Edralin et al., 2019). Entrepreneurial creativity
also enables the entrepreneur to take advantage of these opportunities in ways that
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will provide the company a competitive advantage. It can act as a springboard for
innovation and business growth, as well as having a good impact on society as a
whole (Ballor and Claar, 2019). From small local enterprises to large corporations,
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entrepreneurship can be found in all shapes and sizes of businesses.
Finding business ideas, such as what to manufacture to satisfy customers,

identifying investment opportunities, deciding how to capitalise on those opportunities,
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formulating corporate goals and objectives, and conducting market research in
both urban and rural areas are all examples of creativity and innovation. Creating an
enterprise, beginning real business operations, selling and promoting an organization’s
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products and services, planning and managing human and material capital for the
achievement of the enterprise’s goals, risk and uncertainty management, creativity, and
diversification are all tasks that must be completed (Gontur et al., 2016).
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The Concept of Creativity, Innovation, and Entrepreneurship
The heart and soul of business are described as creativity and innovation. It
comprises aiming to do duties in a specific manner or engaging in a variety of activities
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in order to provide the entrepreneur with a unique combination of value. The advantage
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of creativity and innovation is that it enables state entrepreneurship to actively seek
out possibilities to try new things or accomplish old things in new ways. As a result,
whatever new paths are forced by market conditions and consumer preferences,
creativity and innovation inspire and drive exceptional entrepreneurship in managing
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organisational operations, delighting consumers, and maximising the value of all

stakeholders. In the context of entrepreneurship, this is referred to as value creation
(Korsgaard and Anderson, 2011). Innovation is the process of putting creative
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inspiration into action.
As a result, innovation is a competitive advantage for all organisations to thrive,

as well as a means of predicting and addressing consumer requirements, as well as
a method of employing technology. New connections, experiences obtained from
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excursions to various fields or locales, and active and collegial networks all stimulate
innovation. According to Schumpeter, the philosophy of innovation, defined as the
utilisation of an idea to create a new commercial product or service, is the driving force
behind the creation of new demand and, as a result, new income (1934). Established
m
markets will be disrupted, and new ones will be created, which will be destroyed by
even newer products or services, as entrepreneurs bring novel products to market and
inventiveness produces new demand.
)A
Coming up with fresh ideas and technology are the outcomes of creativity (Klein,
2008). The ability to invent or somehow bring something new into life, whether it’s a
new approach to a problem, a new method or device, or a new object or form of art,
is defined as creativity. Sart (2013), on the other hand, defines creativity as something
distinctive and beneficial. Creativity is the act of recognising something that everyone
(c
else sees, but connecting it in unique ways. The familiar is giving way to the unknown in
terms of creativity. Culture, according to Weigel et al. (2014), stifles creativity.

There are three important features of entrepreneurs in terms of economics

Notes
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and structure. This entails taking chances, inventing, and developing profitable new
company initiatives. Entrepreneurship is a multifaceted concept that encompasses
many different aspects. Scholars have been obliged to think about entrepreneurship in
in
a variety of ways and from diverse angles due to its multi-dimensional nature. It’s also
worth mentioning that entrepreneurship has changed its definition and evolved as an
ideology over time. For example, entrepreneurship was historically used to characterise
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a person’s capacity to manage large-scale production initiatives (Bélanger et al., 2016).
In this manner, the emphasis is placed on the individual’s capacity to manage projects
with limited resources and his willingness to take risks in order to benefit. As a result,
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during the Middle Ages, a typical entrepreneur was someone in charge of directing
massive architectural projects like the fortification of cathedrals, abbeys, and public
buildings. People’s perceptions of entrepreneurship changed as they began to equate it
with risks in the 17th century.
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An entrepreneur was defined at the time as a person who was engaged by the
government to supply a certain product or execute a service, and who profited or lost
money as a result of the contract. An entrepreneur, according to Aydin (2015), is a risk-
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taker who can buy items at one price and sell them at a different price. According to this
viewpoint, farmers, merchants, craftsmen, and other individual proprietors exemplified
entrepreneurs during this period.
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Later in the 18th century, entrepreneurs were seen as venture capitalists. In the
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nineteenth and twentieth centuries, entrepreneurship was viewed primarily through the
prism of economics, and it was not distinguished from management. As a result, an
entrepreneur is defined as a person who conducts and controls a business for personal
gain and pays prices for goods used by the firm, as well as property, resources, and
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personal services offered. This person is willing to take the risk of making a profit or
losing money as a result of unpredictable and unforeseeable circumstances (Gholami
and Karimi, 2014). In the twentieth and twenty-first centuries, the concept of innovation
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was included to the definition of entrepreneurship.
Entrepreneurs are now seen as persons having the ability to use innovation
to disrupt industrial systems (Antonites and Van Vuuren, 2014). A businessperson
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who creates (builds), develops, and manages a business operation in order to

profit or benefit from it is known as an entrepreneur. Fedorowicz et al. (2008) define
entrepreneurship as a person who employs risk-taking, creativity, innovation, and the
capacity to plan and schedule activities to put ideas into action in order to accomplish a
specified goal.
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Business Creativity and Innovation

In order to succeed in any type of business, you need to be innovative and
)A
creative. To address a management problem, you’ll need to think beyond the box.
Creativity is defined as a person’s capacity to come up with new and unique ideas
in order to accomplish a goal. Innovation is the process of using creativity to find a
solution to a problem (Neely and Hii, 1998). This simply means that creativity can
be used to solve problems. It is the use of a new technique, concept, product, or
(c
method to improve the efficacy or performance of a system. It stimulates creativity by

encouraging people to look at an issue from a fresh angle. It entails disassembling and
reconstructing our knowledge of a subject in order to gain a fresh perspective and new
insights. The two most crucial factors are people and method (Neely and Hii, 1998). It is
Notes
e
concerned with supporting a person or an organisation in finding a solution to a problem
(Ibbotson, 2008). People are the resource that reacts. This imaginative strategy is used
by creative people to come up with fresh ideas and issues, approach challenges from
in
different perspectives, and construct theories about the situation (Neely and Hii, 1998;
Roopsing and Nokphromph, 2017). Businesses stay solvent and thrive thanks to the
entrepreneurial spirit.
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Creative and innovative firms, according to Nnadi (2014b), flourish by fostering
creative issue solving, moving innovation forward, enhancing problem-solving,
increasing efficiency, and giving a company a competitive advantage. Business
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change, transition, performance, management, and overall sustainability all benefit
from innovation. It’s also a way to empower, engage, and motivate individuals to create
significant changes to structures, cultures, people, things, and processes. It adds to
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increased productivity, scope, and engagement in organisations, as well as faster
corporate growth and more value (Nnadi, 2014b).
Entrepreneurship Initiatives’ Contribution to Increased Creativity and Innovation
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Job creation is a massive undertaking. In Sub-Saharan Africa and South Asia
alone, 28 million jobs will be needed each year to accommodate the growing number
of young people joining the workforce. This will demand considerable wage and
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entrepreneurial employment increases. Increasing business productivity and growth
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is also crucial in the long run for producing more and better jobs (WBG, 2020). The
importance of a vibrant private sector in creating jobs and resolving developmental
challenges is well recognised within the World Bank Group and among our client
countries. Countries, for example, invest millions of dollars in SME development
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projects, but there are a number of roadblocks to overcome, and policy decisions must
be evidence-based in order to succeed (WBG, 2020).
As a result, entrepreneurship is a critical function for innovation. According to

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Nnadi (2014b), innovation is both a technique for entrepreneurs to endow current

resources with more wealth-generating potential and a method for creating new wealth-
producing resources. Because it is perceptual and conceptual, entrepreneurs should
enquire, listen, and go out and look for it. They look at people and data to come up
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with a solution that meets the opportunity. In other locations, a Schumpeterian view of
entrepreneurship includes creativity as a criterion, with the desire to accomplish things
that have never been done before as one of its distinctive qualities. This most recent
method is a one-of-a-kind response to three distinct scenarios. The first quality of a
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creative response is that it can never be grasped practically. Second, it has an impact
on the path and outcome of future events. Third, it is concerned with staff quality.
Entrepreneurship promotes innovation and creativity while also fostering innovation

)A
and creativity, thanks to the feedback loop provided by creativity. According to (Acs and
Audretsch, 2005), innovation is the process of putting ideas into practise. It comprises
the establishment and usage of new markets and business models, as well as the
development of new supply sources, technologies, and goods. Entrepreneurship, on the
other hand, has been defined as the process of identifying and exploiting possibilities,
(c
and it is often regarded as the most effective strategy to boost innovation and creativity.
Indeed, believes that entrepreneurship is all about creativity and innovation as a
concept, indicating that entrepreneurial activities can nurture these qualities.
Ballor and Claar (2019) cited three lines of evidence to back up their assertion that
Notes
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entrepreneurial efforts can aid in innovation and creativity. According to the first strand
of literature, entrepreneurship is defined as a creative and dynamic function of actors
such as small business owners and managers, or department heads. In this thread,
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there is no connection between entrepreneurship and creativity. The second line of
research distinguishes between innovative and non-innovative businesses. The last
strand examines family businesses and distinguishes between less creative and more
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inventive entrepreneurship (Babu, Krishna et al., 2013),
The desire for change in an organisation is known as innovation. Growth is linked

to every dynamic organisation, and technical development is the most typical form of
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change in this regard. The shift may be in the sphere of organisational development
with new management. Both of these factors have a substantial impact on the
manufacturing process. Every technological progress must be handled with caution,
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or it will become obsolete and ineffectual (unfit) in serving people’s socioeconomic
demands. The effective handling of technological change will help a company expand
and flourish physically. Entrepreneurs’ efforts to transform their businesses open
up opportunities for invention and innovation. To put it another way, technological
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progress, imagination, and innovation are all positively linked. Although the majority
of breakthroughs lead to technological advancement, not all advancements are
innovations. For example, purchasing a new machine is a technological transfer rather
than an invention. So, what is innovation, exactly? r
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Innovation, according to Fillis and Rentschler (2010), is the introduction or
transformation of a new concept into a product, service, or organisational or process
change. It’s an important aspect of business strategy and a continuous renewal process
that engages everyone in the company. According to Okpara (2007), creativity is the
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process of putting the best ideas into action, and it starts with a creative thought that
leads to a series of unique events. It’s all about giving customers something new to
value. The ability of an entrepreneur to innovate is vital to his or her success; most
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entrepreneurs will fail if they lack originality and invention. New financial markets, new
items, new distribution techniques, and new management practises are all examples
of entrepreneurial innovation. To ensure successful innovation, the entrepreneur must
ensure that his or her research and development unit is well-trained, equipped, and
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capable of doing creative activities like basic and applied research.
Creativity and Innovation, as well as Entrepreneurial Development, form the

theoretical and conceptual framework.
m
The research focuses on theory and research on innovation and entrepreneurship

development to gain a deeper understanding of creativity, innovation, and
entrepreneurial growth. The process of creating a perspective is an important aspect of
the creative process. Creativity is a semi-structured process. Intuition and creativity are
)A
two examples of creative abilities that can be enhanced. Given the multitude of factors
that influence market success, it’s debatable if innovation is a critical component of
entrepreneurship. Pure or unadulterated creativity is not enough to assure the success
of innovation; it must be combined with general business knowledge, first sense, or
foresight (Barnard and Herbst, 2018).
(c
The research was guided by the conceptual understanding of creativity and

innovation, as well as entrepreneurial growth as a framework-specific philosophy. The

rationale is to figure out how the construct elements interact with one another. The
Notes
e
conceptual perspective of creativity and innovation was concluded by establishing
a link between creativity and innovation for entrepreneurial development and theory
and research on entrepreneurship development, which has been conceptualised and
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explained as a method for solving entrepreneurial problems and achieving long-term
economic growth.
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The entire point of creativity and innovation is to use it as a management tool
for entrepreneurship development and as a critical motivator for economic success
and regional sustainability. Entrepreneurs’ inventive ideas and ability, together with
government backing, can serve as the foundation and required circumstances for long-
O
term development and economic prosperity. As a result, this notion is being positioned
as a strategic method to addressing entrepreneurial difficulties and encouraging
entrepreneurship growth.
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More interestingly, in a study by Becker, Knudsen, and colleagues (2012),
they looked at Schumpeter’s concept of innovation in the context of first and second
entrepreneurship theory. He also discovered Joseph Alois Schumpeter’s thesis that
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inventions are history’s only fundamental challenge and that entrepreneurship replaces
today’s Pareto optimum with tomorrow’s new item. When modern capitalism is in a
serious crisis and has lost its energy as a result of the recent subprime and euro-debt
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crises, Joseph Schumpeter’s words entrepreneurship is Innovation have never seemed
more appropriate. As a result, including the innovation and entrepreneurship theory into
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this study will encourage entrepreneurs to be more creative and innovative.
However, by injecting and evaluating necessary aspects such as resources,

technology, strategy, culture, and government/management backing, this can be
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accomplished efficiently. Most businesses rely on research engineers for innovative

ideas, risk reduction, competitive advantage, empowerment, and capacity growth. This
will reduce business failures and promote entrepreneurship around the world. As a
result, the concept and practise have been adopted. This is seen in the figure below.
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ity
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)A
(c

2.1.4 Ways to Entrepreneurs’ Contribution for Sustainable

Economy Notes
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Concerns about the planet’s long-term sustainability have become a more
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prominent topic in industry and academia, most notably with the United Nations book
“The Future We Want,” one of the outputs of the Rio + 20 conference on sustainable
development held in 2012. (Rahdari, Sepasi, & Moradi, 2016). The awareness is
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growing that if we are to achieve progress on major environmental challenges like
global climate change and ecosystem degradation, we must make significant changes
in the way civilization produces energy and uses natural resources (Hall, Daneke, &
Lenox, 2010). With this as a backdrop, entrepreneurial action is being increasingly
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regarded as a critical vehicle for ensuring the long-term growth of society’s concerns
(Dean & McMullen, 2007; Patzelt & Shepherd, 2011).
In the economic literature, the role of entrepreneurship as a vehicle for economic
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and societal development is not new. Several authors have already looked into the
relationship between global problem solving and entrepreneurship (Drucker, 1985;
Matos & Hall, 2007; Schumpeter, 1934, 1942). In this context, entrepreneurship
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has been cited as a key pathway to more sustainable products and services, and
new ventures are being developed as a solution to a variety of environmental and
social issues. For example, Cohen and Winn (2007) demonstrated that four types of
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market imperfections contributed to environmental pollution and saw it as a source of
significant entrepreneurial opportunities to lay the groundwork for an emerging model
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of sustainable entrepreneurship aimed at slowing the degradation of the earth’s
ecosystems and even gradually improving them.
Similarly, York and Venkataraman (2010) presented entrepreneurship as a

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solution to environmental degradation rather than a cause. They created a paradigm

that recognises entrepreneurship’s ability to supplement regulation, corporate social
responsibility, and activism in addressing environmental issues. Several prestigious
journals in this field, including the Harvard Business Review, Journal of Business
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Venturing, and MIT Sloan Management Review, have recently promoted the idea
that entrepreneurship could be a solution for a variety of environmental and social
concerns (e.g. Hall et al., 2010; Senge, Lichtenstein, Kaeufer, Bradbury, & Carroll,
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2007; Wheeler et al., 2005), as well as in international organisations’ documents, such

as the UE Strategy (2020). Entrepreneurship is increasingly being acknowledged as a
key avenue for transforming products and services to be more sustainable, as well as
launching new projects to solve diverse social and environmental issues. As a result,
the purpose of this paper is to review the limited literature on the interaction between
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entrepreneurship and the economic, social, and environmental pillars of sustainable

development.
)A
Entrepreneurship’s Economic Impact: Entrepreneurship and Economic Growth

Macroeconomists have long recognised that modern national economic growth
cannot be described solely by increases in the use of capital and labour (Solow, 1957).
Some endogenous growth theorists, including as Romer (1986) and Lucas (1988),
among others, critique the neoclassical production function’s core concept and contend
(c
that knowledge, along with capital and labour, was an essential production element. As
a result, the role of entrepreneurs in discovering and utilising possibilities in the dynamic

economy to generate growth has received some attention (Holcombe, 1998). The shift
Notes
e
from a managed to an entrepreneurial economy has increased the importance of small
businesses (Audretsch & Thurik, 2000; Loveman & Sengenberger, 1991). Theoretical
and empirical evidence on the relationship between entrepreneurship and growth in
in
low- and middle-income countries is complex, according to Prieger et al. (2016). In
order to explore the “growth penalty,” they calculated the influence of entrepreneurship
on economic growth in both developed and developing countries. They discovered that
nl
poor countries have a higher proportion of people running embryonic small businesses
than developed countries. They also demonstrated that even a little rise in the rate of
entrepreneurship in underdeveloped nations has a favourable impact on economic
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growth. In industrialised countries, on the other hand, there is no discernible growth
penalty.
Furthermore, Ferreira, Fayolle, Fernandes, and Raposo (2016) used an
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unbalanced panel of 43 countries to examine the effects of entrepreneurship types,
classified as Schumpeterian entrepreneurship (innovation-based) and Kirznerian
entrepreneurship (opportunity-based), on economic growth across three different types
of economies (factor-driven economy, efficiency-driven economy, and innovation-driven
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economy) over the period 2009–2013. They discovered that neither Schumpeterian
nor Kirznerian entrepreneurship has statistically significant effects on GDP growth
in the overall model for GEM economies. However, there is evidence of a favourable
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association between opportunity entrepreneurship and growth in efficiency-driven
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economies. Neither sort of entrepreneurship has a substantial impact on growth in the
innovation-driven economies. As a result, opportunity-related entrepreneurship can be
identified as a critical mechanism for converting new knowledge into economic growth
(Audretsch, Bonte, & Keilbach, 2008). Wong et al. (2005), among others, came to the
ni
same conclusion, implying that opportunity entrepreneurship rates indicate the creation
of information and technology, which could boost economic growth.
Entrepreneurship and Human Development: The Social Impact of

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Entrepreneurship
Entrepreneurship is important for economic growth and development, according
to development economists. Furthermore, they have concentrated on the economic
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effects of entrepreneurship (GDP, productivity, employment, etc.) rather than on

human development (Naudè, 2011). As a result, just because entrepreneurship is
a determinant factor of economic progress does not mean it contributes directly to
human development. The impact of entrepreneurship on human development has been
overlooked in economic research (Gries & Naudé, 2011). The authors cite three major
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reasons for this omission:
●● the lack of a satisfactory framework for thinking about entrepreneurship in

)A
development,
●● the complex and multidimensional measurement of human development, and
●● prior management and economic studies have focused on subjects such as how,
who, and what equations, rather than the impact of entrepreneurship.
(c
One of the goals of this research is to close this gap.

Naudé and Gries (2011) employed an appropriate framework of the Capability

Notes
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Approach (CA) pioneered by Amartya Sen and others among the previous studies
on this topic. They claimed that entrepreneurship was at the forefront of developing
human skills such as the ability to labour, earn incomes, and accumulate riches.
in
Similarly, according to the United Nations Development Report (1998), when a family
becomes more entrepreneurial and economically empowered, it gains self-respect, a
sense of community connection, and self-fulfilment. All of these are aspects of human
nl
growth. Furthermore, Bell, Khor, and Kochhar (1993) and Zumeta (1996) claimed that
because private firms know what degrees and specialities are needed by the private
sector’s output, they support universities to generate those specialisations. In the end,
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graduates from those universities had little trouble finding work. In the same vein, Itri et
al. (2015) demonstrated how entrepreneurship might aid in the resolution of the present
health-care crisis by developing goods and services that improve health quality while
lowering prices. They also demonstrated that in the United States, entrepreneurship
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is driving many of the complex issues that physicians are today confronted with, such
as an increase in the proportion of patients with chronic diseases, childhood and adult
obesity, and an ageing population.
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The Impact of Entrepreneurship on the Environment: Entrepreneurship and the
Environment
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Established businesses are increasingly being influenced by environmental
awareness and market factors to improve their environmental performance. Cohen
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and Winn (2007), for example, demonstrated that four types of market imperfections
(inefficient firms, externalities, flawed pricing mechanisms, and information
asymmetries) contribute to environmental degradation while also providing significant
opportunities for the introduction of innovative technologies and business models
ni
in various sectors. These prospects, they said, lay the groundwork for a new type
of sustainable entrepreneurship that allows creators to earn entrepreneurial rents
while also improving local and global social and environmental situations. They
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have demonstrated that sustainable entrepreneurship has the potential to slow the
degradation of the earth’s ecosystems and potentially improve them over time.
This chance has become a commodity in international trade and has created
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a diverse market. The connection between entrepreneurship and environmental

deterioration is viewed as a zero-sum game in which nature always loses (Carson,
Lear, & Wilson, 2003; Flannery, 2005). In a similar vein, Ben Youssef et al. (2017)
discovered that both formal and informal entrepreneurship in Africa positively
contribute to environmental pollution, based on research of the relationship between
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entrepreneurship and environmental sustainability for 17 African countries.
Others, such as York and Venkataraman (2010), saw entrepreneurship as

)A
a solution to environmental deterioration rather than a cause. They developed a

paradigm that recognises entrepreneurship’s ability to supplement regulation, corporate
social responsibility, and activism in addressing environmental issues. Shepherd
and Patzelt (2011) further claim that entrepreneurial action can help to conserve
the ecosystem, combat climate change, reduce environmental degradation and
(c
deforestation, enhance agricultural practises and freshwater supplies, and maintain

biodiversity. Furthermore, Stl, Bonnedahl, and Eriksson (2013) used an approach
developed by the Swedish Board of Farm to experimentally assess climate mitigation

in agriculture production (SBA). The goal of this initiative was to identify and promote
Notes
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agricultural farming practises that would reduce GHG emissions. They discovered
that institutional entrepreneurship could be a viable option for bringing about change
in the Agri-field and lowering GHG emissions. Omri (2017) investigated the role of
in
entrepreneurship in environmental development using data from 69 countries divided
into four homogeneous income-based panels: high-income, upper-middle-income,
lower-middle-income, and low-income nations. He discovered that its impact on
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environmental pollution is lower in high-income countries than in other country samples,
and that this activity in high-income countries degrades the environment at first but then
improves it after a certain point, resulting in an inverted U-shaped relationship between
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entrepreneurship and environmental pollution.
Entrepreneurs’ Contributions to Economic Development

Recently, there has been a lot of discussion regarding the future of labour. Many
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of us are anxious about the influence new technologies will have on our industry, and
this worry fuels many of these debates. We have a tendency to reduce these debates
to binary arguments, such as how smart computers will better our lives or how this or
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that invention would render human labour obsolete, resulting in a jobless dystopia. Both
findings strike me as a little flimsy. These worries are legitimate, but they oversimplify a
more complicated phenomenon.
1. r
Putting money into items and services that consumers want.
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What drives someone to start a new company? Entrepreneurs, according to
classic models, start new enterprises in response to unmet market requirements
and desires. That is, there is a chance to offer a product or service that does not
exist or is not otherwise offered. To distinguish these individuals from others who
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establish enterprises due to a lack of better job opportunities, economists refer to

them as “opportunity” entrepreneurs. When it comes to stimulating economic growth
in a region, so-called “opportunity” entrepreneurs, who create new businesses in
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response to market requirements, are crucial participants. They make it possible for
people to get the commodities and services they need to be productive. This isn’t
to dismiss “necessity” entrepreneurs who start businesses because they don’t have
any other choices. Both can and do help to boost the economy.
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2. Creating opportunities for employment.

Employees are required for new firms. They generate jobs, which raise and support
communities by improving the quality of life and overall standard of living.
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3. Regional economic cooperation and trade.

Small, entrepreneur-led enterprises can now expand into regional and worldwide
marketplaces because to technological advancements. When new businesses
)A
export goods and services to adjacent regions, they directly contribute to the
productivity and profitability of the region. This boost in revenue strengthens an
economy and improves a population’s general well-being. Economies that trade with
one another are virtually always better off than those that do not. Aside from politics,
regional and international trade encourages investment in regional transportation
(c
and infrastructure, which helps economies grow. This has never been truer than it
is today, as we live in a global economy that is becoming increasingly integrated.

Foreign markets play a vital significance even in a large and advanced economy like
Notes
e
the United States. According to some estimations, foreign commerce accounts for
more than 90% of our economic growth.
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What is innovation, and how does it contribute to economic growth? What are
the conditions under which entrepreneurs innovate? The number of new goods
produced, the percentage of high-tech jobs, and the size of the talent pool available
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to tech industry employers are all variables included in a commonly accepted
definition of innovation. Our concept of innovation has widened in recent years to
include the creation of new service offerings, business structures, pricing schemes,
and routes to market. While startups and young tech companies play an important
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role in employment creation, their contribution to total productivity is less obvious
and less discussed. I’ve broken down a few examples below to help you better grasp
how innovation helps to economic development.
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4. Efficiency is aided by new technologies.
Any industrialised country’s ability to turn ideas into new products and services that
people want is the source of its wealth. New technology and their innovative uses,
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in general, are driving economic growth. Historically, periods of fast innovation have
been accompanied with periods of high economic expansion. The greatest natural
resource of all: the human mind, provides the impetus for invention. Developing
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innovative products and solutions necessitates a well-educated people and a
collaborative working environment. Education improves workforce creativity and
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quality of life in addition to being excellent for business.
5. Dealing with environmental issues.
When it comes to addressing the immense environmental concerns we face today,
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such as battling climate change, cutting global greenhouse gas emissions, and
maintaining biodiversity in the environment, innovation is (and will continue to be)
critical. Commerce comes to a halt when there is no power for long periods of
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time. We cannot survive without water. Access to these advancements (such as

irrigation technology, energy, and urban infrastructure) is more reliable, which boosts
productivity and boosts economic development.
6. Innovation has an impact on socioeconomic goals.
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Innovative business techniques increase efficiency while reducing waste. Agriculture

innovation is especially important for solving socioeconomic issues (in addition to
encouraging economic growth). In the United States, for example, our healthcare
system wastes billions of dollars each year owing to inefficiencies and anticompetitive
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behaviours. Hopefully, fresh ideas and inventions will solve these issues in the
future, leading to more improvements. Americans’ overall health and quality of life
will benefit as a result of this, as would our economy if our excessive healthcare bills
)A
are reduced as well.

7. Where there is competition, innovation occurs.
In terms of innovation, entrepreneurship, and economic development, there is
a positive feedback loop. In an economy, new and growing firms are the primary
(c
sources of job creation and innovative activity, two characteristics that generally
result in improved living standards for all.

However, it’s critical to remember that entrepreneurship and innovation are reliant
Notes
e
on participation and access. Entrepreneurs require access to education and a level
playing field on which to compete in order to bring innovative ideas to life. In this line,
the responsibility of government leaders and public policy is to create conditions that
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encourage more entrepreneurs to start firms by enacting regulations that support the
growth of those businesses. When entrepreneurial activity is unevenly distributed
socioeconomically, demographically, and geographically, economic growth suffers.
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Entrepreneurs have great power under the appropriate circumstances: they help
regional areas develop economically, and they also serve society by helping to create
inventive solutions to issues and challenges.
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2.1.5 Entrepreneurial Development Program
Entrepreneurial Development Program (EDP) is a programme designed to
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assist individuals in strengthening their entrepreneurial motivations and acquiring the
competencies and abilities required to successfully perform an entrepreneurial position.
“Entrepreneurship Development Program is designed to assist an individual in
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strengthening his entrepreneurial motive and acquiring skills and capabilities necessary
for effectively playing his entrepreneurial role,” says N. P. Singh. “For this purpose, it is
necessary to promote this understanding of motives and their impact on entrepreneurial
values and behaviour.”
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EDP can also be characterised as a pre-defined process that identifies, instils,
designs, and refines an individual’s abilities and proficiencies in order for him to start
his own business. In recent years, EDP has evolved into a professional activity that
promotes the growth of both publicly financed and privately owned firms. The goal of
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the programme is to help people develop entrepreneurial skills.
The Entrepreneurial Development Program (EDP) has the following goals:

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◌◌ To teach people how to follow the law.

◌◌ To develop and strengthen entrepreneurial qualities, such as motivation or a
desire to succeed.
◌◌ To grow small and medium-sized businesses in order to create jobs and
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expand the scope of industrial ownership.

◌◌ To industrialise rural and underdeveloped areas of society.
◌◌ To comprehend the advantages and disadvantages of becoming an
entrepreneur.
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◌◌ To look at the environment as it relates to small businesses and industries.

◌◌ To create a design project for a product that will be manufactured.
)A
◌◌ To expand the number of entrepreneurs available to support rapid industrial

development.
◌◌ Individuals should be prepared to face the uncertainty that comes with running
a business.
◌◌ To improve the performance of small-scale industries by developing
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managerial skills among small entrepreneurs.

◌◌ To provide lucrative job possibilities for educated young men and women.

◌◌ To increase the number of sources of entrepreneurship.

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Entrepreneurial Development Program (EDP) Phases:
All EDPs are divided into three phases, which are depicted below:
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1) Pre-Training Phase: This is the initial phase in which entrepreneurship development
programmes are introduced. In the phase arc outlined below, a wide range of actions
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are carried out:
i. Identifying an appropriate place, such as a district, where operations can
begin.
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ii. Appointment of a course coordinator or project manager to oversee the EDP’s
work.
iii. Establishment of fundamental infrastructural facilities in support of the
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programme.
iv. Conducting an environmental scan or an industrial survey to identify new
business opportunities.
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v. Creating various program-related plans, such as:
Promotional activities using electronic or print media, posters, leaflets, and
other means.
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Making contact with corporate specialists, government agencies, and
non-governmental organisations (NGOs) that could be involved in the
programme, either directly or indirectly.
Printing application forms and distributing them with instructions in various
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areas.
Forming a selection committee for candidate screening.
Creating a budget and obtaining management approval, as well as
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organising other program-related activities.

Organizing and agreeing on the need-based parts of the training program’s
syllabus, as well as contacting guest faculty for the training session.
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vi. Seeking aid from various organisations such as DICs, banks, SISI, NSIC, DM,
and others.
vii. Organizing industry motivating initiatives to boost application numbers.
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2) Training Phase: The primary goal of any EDP is to provide training and guidance to
aspiring entrepreneurs in order to help them start a business. The entrepreneurial
development programme normally lasts 4-6 weeks and is usually a full-time course.
The programme design explains the objectives, training inputs, and the focal point.
)A
It is commonly assumed that trainees lack sufficient information about the change
for which a new programme is being developed. At the completion of the training
programme, each student should assess themselves in order to have a clear picture
of his or her future goals.
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3) Post-Training Phase: This phase is also known as the post-training phase.

Candidates who have successfully finished their programme are offered post-
training help at this phase. This stage is critical because, after completing the
training programme, most entrepreneurs confront significant challenges in putting

Notes
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their business plans into action. As a result, training organisations aim to extend
their support to trainees through various counselling sessions. Members such as the
State Financial Corporation, commercial banks, training institutions, and the District
in
Industries Centre came together to help businesses achieve the following objectives:
◌◌ To provide significant assistance to trainees in order for them to accomplish
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their business plans.
◌◌ Analyse the trainees’ progress during the project’s implementation.
◌◌ To assess the post-training strategy.
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◌◌ With the support of various promotional and financial institutions, provide
escort services to trainees.
These follow-up action sessions are usually held every three years after the
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training is completed, and the instruments utilised for the follow-up are as follows:
◌◌ Questionnaires sent through mail.

◌◌ Follow-up by phone
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◌◌ The trainer will make personal touch with each student.
◌◌ Meetings with the team
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In India, a variety of government and commercial entities offer aid to entrepreneurs.
Small Industries Development Organisation (SIDO), Commercial Banks, National
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Alliance of Young Entrepreneurs (NAYE), National Institute for Entrepreneurship and
Small Business Development (NIESBUD), Entrepreneurship Development Institute of
India (EDI), India Investment Centre (LIC), Small-scale Industrial Development Bank of
India (SIDBI), and Technical Consultancy Organisation are just a few of them (TCO).
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Entrepreneurial Development Program (EDP) Importance:

1) Creation of Job Possibilities: Entrepreneurial development programmes in emerging
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and underdeveloped countries create job opportunities. It helps and encourages

people to start their own businesses and work for themselves. By establishing a
number of businesses, EDP also creates a large number of work chances for others.
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2) Provides Adequate Capital: Starting a business requires a significant amount

of capital. Various EDP agencies provide this financial support. EDPs direct
development banks like ICICI, IDBI, IFCI, SIDCs, and others to take the lead in
encouraging entrepreneurship.
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3) Effective Use of Local Resources: New entrepreneurs make the most use of the
available local resources. This efficient use of resources contributes to the growth
of a specific area or region at a low cost. Entrepreneurs are guided, educated, and
taught by EDPs how to effectively exploit local resources.
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4) Increased Per Capital Income: By establishing a business, entrepreneurs are able to

organise the factors of production and use them in the most productive way possible.
Increased productivity, employment, and income generation are all benefits of this
development. As a result, the economy’s total productivity and per capita income
(c
have increased.
5) Higher Living Standards: EDPs give entrepreneurs with the most up-to-date

technologies and innovative processes, allowing them to produce huge quantities of

Notes
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things at a lesser cost. This also allows entrepreneurs to take advantage of available
resources and create high-quality goods. This inevitably results in a higher standard
of living.
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6) Economic Independence: EDPs help entrepreneurs create a wide range of things in
huge volumes at low prices. It also assists an entrepreneur in developing replacements
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for imported products, reducing the country’s reliance on other countries. It also
saves the country’s foreign exchange.
7) Preventing Industrial Slums: Industrial slums are a concern in almost all developed
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industrial locations. This causes overcrowding of public facilities and has a negative
impact on people’s health. EDPs provides young entrepreneurs with a variety of
subsidies, incentives, infrastructural support, and financial grants to help them start
their firms, thereby minimising the growth of industrial slums.
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8) Reducing Social Stress: The bulk of the society’s youth and educated people are
experiencing social unrest and tension. This social strain makes it difficult for them
to select the correct career path. The majority of students are dissatisfied with their
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inability to find work after completing their studies. EDPs aid people in such situations
by offering suitable direction, assistance, training, and support for starting new
companies and firms. As a result, social tension is decreased as self-employment
options are created. r
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9) Assisting with the overall process. Development: EDPs encourage entrepreneurship,
which contributes to society’s overall development by generating new products,
innovative services, low-cost consumer goods, job opportunities, higher living
standards, and overall productivity. This contributes to the economy’s and country’s
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overall development.
2.2 Business Idea

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A business plan is a written document that explains the company’s goals and a
strategy for achieving them. It is a written description of the future of your company.
While many first-time entrepreneurs mistake a business plan for a preamble

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to a constitution, there is a significant distinction. A business plan is more than just a

summary of the company’s operations. It’s a written document that explains what the
company will look like in the future.
Simply put, a business plan is a document that outlines your long and short-
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term business objectives, the business strategies you’ll employ to achieve them, the
problems and competition you’ll face, and how to solve and overcome them, the people
you’ll hire, the organisational structure, marketing and positioning strategies, and the
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financial resources you’ll need.
2.2.1 Sources of Business Idea

Business ideas are concepts that, when applied, can generate revenue.
Entrepreneurs must first generate ideas from many sources that will lead to the
(c
establishment of a well-planned firm. A business concept is a response by an individual,

a group of individuals, or an organisation with the goal of addressing a problem or

meeting perceived needs in the environment (market, community, etc.). This chapter
Notes
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has shown how to use practical methods for recognising and combining business ideas
from both inside and outside the company.
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The first step toward becoming an entrepreneur is to come up with a company
idea. Through its unique business idea, the world’s largest corporation became a
wealthy corporation. For example, Steve Jobs co-founded Apple Computer, Dhirubhai
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Ambani started Reliance Industries, Vijay Shekhar Sharma founded Paytm, and
Deep Kalra founded Makemytrip.com. These are only a few of the best instances of a
fantastic business idea succeeding in its industry. As a result, any business organisation
must begin with a strong idea. Various sources can be used to produce or find business
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ideas. The following are the top 12 sources of business ideas for entrepreneurs, while
this is by no means an exhaustive or exclusive list:
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1) Personal Experience and Insight
Individuals with work experience can better comprehend shifting trends and
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demands in their respective and linked industries, as well as gain unique insights into
a variety of operational and management difficulties ranging from customer issues
to competitive resources. These experiences may affect their capacity to recognise
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flaws or inefficiencies in present processes, sparking suggestions for new, better,

and more profitable methods to meet unmet requirements. An innovative individual
may notice an opportunity at work that may be explored and embraced, and when he
or she believes the moment is right to switch over and start his or her own business,
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he or she does so. The main element here is to appraise his or her potential as well
as to have faith in his or her ability to start a new firm based on previous experiences.
An experienced manager in a leading textile company, for example, might decide to
establish a business stitching uniforms for schoolchildren.
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2) Relatives, Family Members, And Close Friends

A close friend, family member, or relative who is successful in his or her own business
or as a successful manager in a reputable organisation could be another source
)A
of business ideas. If the individual in question has a significant influence on your

thinking and conduct, you may be inspired to come up with a fantastic business plan
for your own firm. For example, a close buddy of a person’s works for a transportation
company and does well. As a result, you may be inspired to start your own travel
agency.
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3) Personal Purpose
As a potential entrepreneur, you can use your abilities and experiences to generate
company ideas, but before putting the idea into action, you should ask yourself the
Notes
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following questions: How passionate am I about my business?
◌◌ What efficiency or abilities do I have?
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◌◌ What do I need to improve my abilities?
◌◌ Will my product/service be accepted by the customers?
Aside from that, you should figure out what kind of business you’re going to create.
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Your determination will demonstrate your commitment to the venture.
4) Professional Advisors & Consultants
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If a person wants to start a business but lacks specific skills and experience, he or
she can hire a consultant who has the necessary knowledge and experience in that
field. Professional advice will undoubtedly assist the individual in succeeding in their
chosen field. For example, a person wishes to open a McDonald’s franchise in his
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hometown, but his or her employment experience is in shoe sales. As a result, he
or she can consult Professional Advisors who are knowledgeable about McDonald’s
franchising and, more importantly, what fresh ideas they can offer to franchisees
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while keeping in mind the business environment of the native location where the firm
will be formed.
5) Sales Force & Business Executives
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The Sales Force and Business Executives work directly with dealers and customers.
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As the owner of the business, you will receive accurate information from them via
their daily reports. To remain competitive in the long run, one must come up with new
ideas for innovation and adaptation.
6) Distribution Channels
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Distribution channels, like the Sales Force and Company Executive, play a significant
part in the development of a new business idea. Agents, merchants, and dealers
provide feedback on the product’s demand and future prospects. These inputs are
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quite useful for coming up with new business concepts. For example, a store may
provide information showing the demand for cold drinks is declining, resulting in a
new business idea for flavoured milk.
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7) Feedback from Customers

The customer’s demands and desires are another component of starting a new firm.
As a result, business ideas come from the demands and needs of customers. You can
now conduct a survey informally or professionally, using questionnaires, interviews,
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or observation, as you see fit. As they freely discuss their difficulties and challenges
with you, the bond you form with your potential consumers during the survey leads
to new business ideas. Show them that you care by giving various solutions by being
)A
a good listener and observer. The more information they are willing to provide with
you, the better your prospects of creating a successful company are.
8) Print media (newspapers, magazines, books, and the internet):
Newspapers, magazines, books, and the internet all contribute to the dissemination
(c
of great business ideas. They provide information about previous and present
business opportunities trends. As a result, the entrepreneur must keep a close eye
on various media sources. Newspaper and magazine advertisements and trade

details may urge you to look for an excellent opportunity to start a new veloure. If
Notes
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you discover a large need for competitive examination preparation or coaching, for
example, you can open a library that stocks competition literature and publications.
The Internet, which offers hundreds of ideas, has developed as the most recent
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information technology. You can now receive the best concept that works according
to your hobbies and area with just a click of a button on your computer or mobile
device.
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9) Trade Shows and Exhibitions
Exhibitions and trade shows are excellent suppliers of business ideas. You can meet
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a lot of business visionaries and future entrepreneurs here who have good business
ideas. By attending these exhibitions and trade shows on a regular basis, you will
have the opportunity to meet major distributors, wholesalers, suppliers, business
partners, and salespeople. The following are some insights that might provide you
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with a lot of inspiration at exhibits and trade shows:
◌◌ Who are the business owners who are doing well?
◌◌ What are the most current new products and services?
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◌◌ What kind of progress is made as a result of technological advancement?
What new product and service developments are there?
◌◌
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What products and services does the government subsidise or exclude from
taxes?
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◌◌ What is the mindset of distributors, wholesalers, and salespeople who attend
exhibitions and trade shows on a regular basis?
While going over all of these issues, you can come up with an idea that has minor
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risks and no chance of failing at the outset. As a result, trade shows and exhibitions
can be a fantastic source of company ideas.
10) Existing Product Research and Development
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The entrepreneur can do research and development on the existing products with
which he or she is working. Another alternative is to create a new product or service
that has never been seen before in the market. Alternatively, inventive adjustments
to an existing product can lead to the creation of a new product or a new design with
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a compelling promotion scheme, perhaps opening up a new market for the product.
“Profits from current products are ephemeral in nature,” says Schumpeter.
A change is immediately followed by another. A fresh innovation brings a profit to a
certain business. This profit is quickly depleted as others copy the idea. Profits are
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so volatile and transient. However, it should be remembered that when one source of
innovational profit vanishes, a new one may emerge. As a result, innovative earnings
have a proclivity to vanish and reap again.” Aside from that, continuous modification
)A
provides a fresh business concept for launching a new firm with a new product.
11) Session of Brainstorming
Brainstorming is a great way to come up with new business ideas. The goal
of brainstorming is to come up with as many ideas and possibilities as possible.
(c
Brainstorming is a technique for generating fresh ideas and business solutions in

a group setting. A brainstorming session is when a group of people gets together
in one area to conduct discussions and share their experiences with the business
or enterprise they’re running. They also discuss their business’s philosophy and
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progress. Members of the group typically come from many fields such as human
resources, marketing, production, and quality control, finance, costing, stock
handling, and taxation, to name a few.
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During brainstorming meetings, accurate information on the broad topic area of
discussion is circulated among the group members.
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First, all of the thoughts are jotted down, and then the check-list is made.
After assessing all of the ideas, whether they are relevant or not, the best concept that
is appropriate for the current environmental conditions is picked and implemented.
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For a brainstorming activity to be fruitful, the session should be held in a suitable
setting where participants can freely express their thoughts. Every group member
should be treated equally, and every suggestion should be heard.
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12) Market Trends in the Recent Past
Today’s world is one of social media, where we can receive tinier, smaller, or larger
pieces of knowledge on market trends. This is a huge source of business ideas in
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and of itself. You must keep track of current events and market trends since they
will help you come up with new ideas that will expand your business opportunities
and potential. For example, on Instagram and Facebook, we may see a variety of
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advertisements from various companies, many of which feature new products.
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2.2.2 Screening of Business Ideas
Assume that the entrepreneur now has a number of prospective company ideas
that he or she has gathered from various sources. The next step is to decide which
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ideas to pursue and which to discard or put on the back burner. The process of
screening business ideas enters the picture at this point. Business concept screening
entails assessing all potential ideas against a set of criteria before eliminating as many
as possible from consideration. The premise is that, due to a variety of restrictions, such
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as resource, time, or expertise limits, it would be best for an entrepreneur to focus on

one idea and see it through. When all of the focus is on developing one viable idea
rather than pursuing numerous company ideas at the same time, there is a better
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chance of success. During the idea screening process, there are a few things to keep in
mind:
(i) Appropriate for the Entrepreneur

The business idea must be compatible with the entrepreneur’s interests, passions,
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intentions, personality, and available resources. A genuine opportunity, according to

Murphy, has three characteristics:
◌◌ It is compatible with the entrepreneur’s personality, as well as his abilities,
)A
training, and proclivities.

◌◌ He has access to it.
◌◌ It provides him with the opportunity for rapid growth and a significant return on
investment.
(c
For example, if an entrepreneur has extensive expertise and experience in the

chemical industry but picks a project in the plastic industry, his potential will be
unjustified. As a result, the business concept must be suitable for the entrepreneur.
(ii) National Interest must be considered

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The business concept must be both national in scope and compliant with government
regulations. In this context, a number of questions can be raised:
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◌◌ Is the project reflective of national interests and priorities?
◌◌ Are the project’s goals in violation of government regulations?
◌◌ Is it possible to handle a foreign currency requirement?
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◌◌ Is the business licence required difficult to obtain or readily available?
For example, if the business requires a large amount of fuel or any other dangerous
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substance, the entrepreneur must be conversant with the government’s rules and
regulations concerning that substance.
(iii) Capital Requirements Analysis
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Because monies are the backbone of any business, every firm/project requires
capital for proper funding. The following questions must be answered in order to
assess this:
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◌◌ Is the entrepreneur well-funded enough to meet the financing needs?
◌◌ Does the entrepreneur have sufficient funds to meet a foreign capital
requirement?
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Is the business’s working capital requirement conveniently accessible?
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◌◌ What is the capital structure of the project made up of?
◌◌ Is it a viable option for the project?
(iv) Raw Material Requirement Assessment
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The raw resources needed for the project must be evaluated appropriately. It is
necessary to seek answers to the following questions.
◌◌ Is it possible to get the raw materials needed for the project at a fair price?
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◌◌ Will there be any difficulty obtaining the raw materials if they must be
imported?
◌◌ Is the project’s power supply reasonable to obtain from external and captive
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power sources?
◌◌ Is there a lack of key inputs, such as power, foreign exchange, or important
raw materials, in the project?
(v) The Market’s Competency
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The greater the market, the more opportunities there will be to boost sales and
customers. The market’s potential is determined by the amount of money invested
and the rate of return on that money.
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The following aspects must be thoroughly investigated in order to determine the

market’s competency:
◌◌ Size of the market and the level of competition
◌◌ Markets for export and import
(c
◌◌ Product potential and cost-effectiveness

◌◌ Volume of sales and an effective distribution channel

◌◌ Customers’ purchasing habits

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◌◌ Barriers to entry into the market Factors in the external environment that are
beneficial to the business
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(vi) Cost structure rationality
The cost structure of the business idea should be balanced in order to produce a
sufficient profit. In this sense, the following must be considered:
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◌◌ Raw material prices
◌◌ the price of labour
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◌◌ Cost of freight and transportation
◌◌ Overheads in manufacturing or at work
◌◌ Expenses for office and administrative support
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◌◌ Fixed Cost Operating Cost Implicit Cost Selling & Distribution Cost
(vii) Risk and Uncertainty Analysis
Every company is exposed to risk and uncertainty. As a result, the entrepreneur must
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analyse the level of risk and uncertainty associated with the business idea, if any.
The following elements should be considered when assessing risk and uncertainty:
◌◌ The business cycle fluctuates.
◌◌ Technological progress
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◌◌ Competition from alternative product imports has a high level of opponents.
◌◌ Interventions by the government in pricing and distribution
◌◌ Changes in the customer’s taste and preferences
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The aforementioned features are not exhaustive, and many more can be added
depending on the sort of business idea and the entrepreneur’s expertise. Let us now
consider the significance of the screening procedure.
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The Importance of Business Idea Screening

The following are some of the reasons why concept screening is important:
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1) Aids in establishing the aim: The main value of the idea screening concept is that it
aids entrepreneurs in determining the goal of their business venture. Following the
screening of the idea, the entrepreneur is in a position to develop the idea’s aim and
goals, which he or she can then pursue.
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2) Aids in the definition of enterprise competency: The purpose of concept screening

is to determine which ideas are superior to others. The entrepreneur is obliged to
identify and examine the strong and weak parts of its suggested company idea in
order to correctly assess the strengths and weaknesses of each business idea.
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3) More efficient use of available resources: Given the scarcity of resources in nature,
efficient use of these resources is essential. The majority of entrepreneurs are
working with limited funds, time, personnel, or other resources. By weeding out
unrealistic ideas, resources will be allocated to the best-suited proposal.
(c
4) To identify business issues, difficulties, and opportunities: The idea screening

process can also help uncover concerns and challenges that an entrepreneur may

face, such as market potential, government policy changes, economic fluctuations,

Notes
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and so on. Apart from that, the screening procedure clarifies what opportunities an
entrepreneur has for his or her business proposal.
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5) Aids in accurate risk assessment: Screening is also useful in identifying the risk
connected with a company proposal. A better risk assessment increases the likelihood
of success when implementing a company plan. As we all know, minimising risk
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allows us to increase profit.
2.2.3 Selection of Workable Business Ideas
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The difficulty now is how to choose a viable business idea after the business ideas
have been scanned and approved. The following guidelines can be used as a starting
point:
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i) The business concept must be based on a business need: It is possible that the
business idea is excellent and meets all of the entrepreneur’s desires, but if it does
not meet the business needs, all of the effort will be for naught. As a result, your
business idea must meet a business need, and only then can it be considered viable.
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ii) The business concept must be viable: Another feature of a viable company idea
is that it is grounded in reality. A concept isn’t deemed a good one unless it can
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be put into action. If a product cannot be made or built, an impressively written,
beautifully designed, and impeccably researched business plan for a product cannot
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be deemed a good business idea.
iii) The business idea is clear in its objectives: A company idea’s deadline and finish
date are critical to its success. For example, imagine the company idea involves
seasonal products; if these products are not developed in a timely manner, the task
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of launching the product during the current season will be lost, and the entrepreneur
will have to postpone the project until the following season.
iv) For an excellent company idea, a strong support team is required: A company’s
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success is predicated not just on a brilliant business plan, but also on the execution
team’s performance. The most important thing is the idea, but a solid team will
help the business idea succeed. The entrepreneur must evaluate the team working
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behind the scenes while executing the business plan. Only by working together as a
team can the management of a complex firm gain the upper hand.
v) Effective communication within the implementation team: Effective communication
leads to improved coordination, which has a good impact on the operation and
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implementation of the business idea. Understanding the goals of the business idea
and then steering it in the appropriate direction is essential. As a result, the task team
must be able to comprehend the business strategy both verbally and in writing.
)A
vi) Competitor competencies must be considered: Knowing about the competitors is

another factor that the entrepreneur must consider while assessing the viability of
a business idea. He or she should be aware of who his or her potential competitors
are and what hazards and challenges they will pose to him or her. What is that firm’s
market share in the industry, and how may he/she get a competitive advantage? He
(c
or she must examine the opponents’ marketing activities, as well as their online and
offline ratings, for this purpose. The cost of goods and services, as well as the quality

of such goods and services. It will give new businesses insight into how to achieve a
Notes
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proper response from potential clients.
vii) Industrial & marketing professional advice: The entrepreneur must maintain contact
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with industry and marketing specialists, as they will be able to provide an inside
perspective on the business and its progress. This will assist in lowering business risk
as well as lowering costs. Because a new business idea may simply estimate current
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scenario demand expectations while ignoring some important future elements, this
exercise of consulting specialists will assist reduce errors from the start.
viii) Regular review and follow-up: A stagnant and stiff company idea is a bad notion. As
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we all know, the future is full with uncertainty, thus regular reviews and follow-ups are
necessary for variance correction.
2.2.4 Idea Generation Techniques
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The key to creativity is ideas. There isn’t much to execute without them, and
because execution is the key to learning, fresh ideas are required for any improvement.
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It’s self-evident that ideas alone will not lead to innovation; you must be able to
create a systematic procedure for handling those ideas. The aim of ideation isn’t just to
generate a lot of them; it’s also to pay attention to their quality.
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We agree that coming up with more of those high-quality ideas can be tough at
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times. When we’re supposed to be creating something new, it’s easy to fall back into old
habits and routines. The process of generating, developing, and transmitting abstract,
tangible, or visual ideas is referred to as idea generation.
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)A
It’s the first step in the idea management process, and it’s all about coming up with
solutions to issues and opportunities, whether they’re perceived or real.
As previously said, ideas are the first step toward development. New ideas
are necessary for us to evolve as individuals. Individually, new ideas can assist you
(c
in moving forward if you are stuck with a task or are unable to address a particular
difficulty.

Maybe you’re looking for fresh techniques to break through a creative block or a
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better answer to a problem? Perhaps you require fresh ideas in order to thoroughly
investigate a new opportunity?
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When it comes to your company, the best method to unearth creative, tacit
knowledge is to generate and collect new ideas from your personnel. You can:
◌◌ Stay current
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◌◌ Make positive change in your organisation by being able to generate and
develop new ideas.
Perhaps your company’s goal is to increase your and your team’s efficiency, or
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you’re looking for innovative ways to improve your product?
The goal of fresh ideas, regardless of your goals or the types of ideas you’re
looking for, is to improve the way you function. On a bigger scale, economies rely
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on innovation to spur growth and improve living standards. New technology and
businesses are created as a result of innovation, and new employment are created as a
result.
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So, while ideas aren’t the only factor in innovation, they are a significant
component of the equation because one would not exist without the other.
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Techniques And Tools for Producing Ideas
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It’s likely that you’d organise a brainstorming session. However, it has been
demonstrated that brainstorming not only takes longer and produces fewer ideas, but
also produces worse ideas than if the same individuals tried to come up with ideas on
their own. There are a number of other reasons why brainstorming may not be the most
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effective method for generating ideas. Even more time will be spent on scheduling,
organising, and documenting the session in a useful fashion.
There are a few things you can do to increase your brainstorming skills, but that’s
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beside the point. The point is that brainstorming should not be your default mode.
There are, however, some more beneficial strategies to question traditional thinking
that are worth a try. Because you’ll need a variety of ideas, it’s a good idea to have a
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few approaches in mind for coming up with them. Most of these ideation techniques can
be utilised for more successful brainstorming, but they can also be employed for other
types of brainstorming.
●● Idea Challenge
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An idea challenge is a concentrated type of innovation in which you present a

problem or opportunity in the hopes of finding innovative answers.
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The goal of an idea challenge is to participate in ideation and develop ideas for a
set amount of time around a pre-defined theme.
It enables you to formulate a specific question and target it at a specific audience in

order to acquire new ideas and insights.
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It’s critical to clarify what you want to achieve with an idea challenge before you
start one.

Because there are two types of concept difficulties, problem centric and solution
Notes
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centric methods, you should decide whether you want to discover challenges or
generate potential solutions for them first. When planning an idea challenge, you can
choose from a variety of parameters to obtain the results you want, such as theme,
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audience, duties, time, or media.
Keep in mind that the ideal strategy for generating a large number of fresh ideas
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is to use an idea challenge. If you simply involve a few specialists in your ideation
process, it may not be the most successful technique to produce ideas, as it has been
shown to be more useful for engaging broad audiences.
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Although the idea challenge allows you to generate a large number of ideas
quickly, careful planning takes time and may not be worth the effort if you lack the
means to carry it out correctly. It also requires the correct timing to succeed.
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●● Mind Mapping
It’s a method of conveying information. The links between the various elements or
bits of information are shown below. Lines and arrows are commonly used to depict
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relationships or connections. It’s a method of visually presenting data.
Let’s say you’re looking for a name for your new application. You’ll begin by writing
the main topic in the centre of a piece of paper, which will also serve as the name of
your new application. r
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Arrows will be pointing out from the centre point. These arrows will point to the most
important considerations to make when coming up with a name, such as guidelines,
visualisation, productivity, and so on. There will be more arrows pointing out from every
crucial component now. The main component will be described in detail using these
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arrows. ‘Guidelines,’ for example, will discuss how the name should be able to represent
what the programme performs, how to follow the naming strategy, and so on.
●● Reverse Thinking
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As the name implies, this strategy requires us to think in the opposite direction.
Instead of addressing the problem at hand, we focus on the polar opposite.
Let’s say you want to learn “how to grow your following on social media networks.”
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Instead, you’ll say to yourself, “How will I not increase my followers on social networking
platform?” if you use this strategy. You’ll hear things like “not updating often,” “providing
low-quality content,” and so on in response to this query. All you have to do now is
reverse your replies.
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As a result, if you want to grow your social media following, you should provide
high-quality content on a frequent basis. This strategy for coming up with ideas is based
on the assumption that it’s easier to come up with negative suggestions.
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●● Brainstorming
This method is quantitative, which means you generate a big number of ideas. In
this scenario, a group of people come up with a new possible solution to the problem.
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For instance, suppose you and a few co-workers are trying to come up with a
tagline for your product. When everyone of you contributes an idea, this is referred
known as brainstorming. r
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●● Scamper
The acronym for SCAMPER
S -Substitute
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C – Combine
A – Adapt
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M – Modify
P – Put to another use
R – Reverse
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E – Eliminate
This method was created by Bob Eberle. Each letter of the acronym aids us in
thinking and asking questions, resulting in the generation of ideas.
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)A
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If you’re a clothing manufacturer, for example, you could ‘substitute’ your current
material with a more sustainable, environmentally friendly choice. You might also
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recycle the leftover material to ‘put it to other uses.’
●● Synectic
This method was created by George M. Prince and Willian J. J. Gordon. In this
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technique, we disassemble something and then reassemble it. This assists us in

gaining a better knowledge of how things function.
●● Role-Playing
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The players take on parts to play in this technique. These aren’t the kinds of roles
they usually portray. It offers a sense of levity and encourages creative thinking.
You may, for example, play the part of a consumer and talk about your
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expectations and what you want from items. This can help you come up with some
good ideas.
●● Storyboarding
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The method of creating storyboards to generate ideas is referred to as this

technique. To better explain the concepts, storyboards use drawings, illustrations, and
other material.
Consider the following scenario: you’re working on a commercial idea. A storyboard

(c
can be used to represent the various scenes. This aids in better visualisation and allows
you to make modifications as needed.

●● Brainwriting
Notes
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A group of people writes their ideas on a piece of paper in this technique. The
paper is provided to a different individual after the allocated time for writing has passed.
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This person now reads the ideas on the paper they were given and adds their
own to the mix. This process is repeated until all of the papers have been filled with
everyone’s suggestions. Then there’s a discussion about each of the ideas.
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●● Forced Relationship
This method aids in the generation of original ideas. Here, you picture combining
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two unrelated objects together to see what new idea you can come up with. Consider
a calculator and a pencil, which are unrelated to one another. Now try to fit them all
together. You might come up with some novel ideas, like as a calculator with a touch
screen and a pencil for writing on it, and so on.
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●● Collaboration
This is a self-explanatory strategy. You work together with others to come up with
new ideas. Your ideas will be more original if you collaborate with a wide collection of
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people.
This occurs because each individual contributes a unique perspective to the table.
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If you want to increase the sale of a specific product, for example, you might want to
work with industry experts, specialists, or people who work in fields other than sales.
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●● The Five W’s
The five W’s are Who, What, Where, When, and Why. Answering these five W’s
allows us to get a fairly holistic view of the subject at hand. It’s also a quick technique to
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generate answers and ideas.

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Consider the following scenario: you wish to develop a new product or service. You
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can accomplish so by asking questions such as who would use the product, why people
would buy it, what it would do, and so on.

●● Listening
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When you’re trying to come up with new ideas, people might be a valuable
resource. Even people who aren’t your employees or customers are capable of being
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resourceful. As a result, you must always listen beyond your small circle. Socializing
with people in your close social circle, as well as those from outside of it, can be
extremely beneficial.
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●● Accidental Genius
This method of idea generation argues that writing can aid in the generation of
good ideas. Writing is thought to be a catalyst for new thoughts in this context. This
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method requires you to write freely and without editing.
So, whatever problem you’re working on, just start writing the solution without
worrying about whether it’s correct or incorrect.
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●● Visualization
We tackle the problem visually in this way. This is due to the fact that visualising
makes things easier to comprehend. As a result, we have an easier time coming up with
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ideas and solutions.
Let’s say you wish to upgrade your production unit’s setup.

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You can snap photos of your existing configuration and work on it. You can get a
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better idea by looking at the photographs. You will be able to alter the setup in order to
boost productivity and save time.
●● Removing Assumptions
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A lot of assumptions are made about how things work. This method needs us to
make a list of all assumptions and then remove them one by one.
These assumptions act as catalysts for us to generate new ideas. Assume you
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wish to start a new school with cutting-edge features. To begin, make a list of all of the
assumptions you have about a school.
◌◌ Physical classrooms should be available.

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◌◌ A set curriculum that has been decided ahead of time

◌◌ A greater emphasis on theoretical understanding
How to Succeed at Idea Generation

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There are a few more guidelines that can help you get more out of your ideation
approaches before you engage other individuals to use these tools and strategies for
producing new ideas.
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●● Identify the issue or opportunity

Although it may seem self-evident, the more precisely you can define your current
or perceived problem or opportunity, the greater your chances of really coming up with
valuable ideas are.
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Before you begin, attempt to acquire as much information as possible about the
problem in order to get to the bottom of it. Determine what you already know about it
and what additional knowledge is required.
●● Involve the appropriate individuals

Notes
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It’s critical to include the proper people in your brainstorming process if you want
it to be as productive as possible. Engage those who are knowledgeable about the
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subject and really interested in making a difference in your company.
If you want to engage a broader number of individuals to produce ideas, make sure
they’re interested and knowledgeable about the topic.
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●● Define the parameters
Making it clear that any concept is a good idea may stifle creativity, so make sure
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your objectives are both ambitious and detailed. Setting restrictions is one approach to
generate more truly creative suggestions from your audience.
People are likely to suggest solutions like spending less on office equipment or
buying cheaper coffee if your overall goal is to save money. However, if you ask, “What
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could we do to save 70% on costs?” you’ll get a quite different set of responses.
People tend to come up with tiny suggestions for change with little or no
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imagination when they are not restricted. People must utilise their imagination to obtain
a desired conclusion when explaining the problem in greater depth and setting more
ambitious goals. The goal of coming up with fresh ideas is to improve what already
existing as well as to create something new.
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People frequently use existing answers or mental models rather than trying to
come up with fresh ones when trying to solve a problem or approach a new opportunity.
The problem with this technique is that it prevents you from exploring alternative options
and reduces the number of viable options.
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Coming up with brand new ideas can help you take a fresh look at your problem
or opportunity. It allows you to broaden your range of thoughts beyond your existing
way of thinking, resulting in additional ideas. There are a variety of strategies and
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techniques that may be employed to disrupt that established attitude and generate
more high-quality ideas. The ones mentioned in this post can be used as a starting
point for your brainstorming sessions or for coming up with new ideas on your own.
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2.2.5 Convenient Frames of Reference for Streamlining the Process

of Generation of Ideas
Idea Fields can be described as: Convenient frames of reference for streamlining
the process of generation of ideas. By becoming more aware of different ‘idea fields,’
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the process of generating ideas can be expedited. This will assist the entrepreneur in
broadening his or her thinking while also arranging his or her ideas into useful frames of
reference. Idea fields, as defined below, are helpful frames of reference for expediting
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the process of idea generation:
1. Concepts based on natural resources

Natural resources can be used to develop ideas. Forest resources, agricultural,
horticulture, mineral, marine or aqua mineral, animal husbandry, wind, solar, and
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human resources may all be desired for a product or service. A second experiment
with a field could result in a slew of excellent product concepts. For example, if a
person is brainstorming ideas in the subject of forest resources, he might consider
forest products, wood-based products, and bio-fertilizers, among other things.

Notes
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Similarly, if it’s horticulture, he’ll share a variety of food preservation techniques,
such as canning, freezing juices, squashes, pulp, jam, pickles, and so on.
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2. Concepts based on existing products or services
Many entrepreneurs make a steady and consistent effort to improve the products
and services that are currently on the market. When black and white computer
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screens became popular, many business owners began to consider introducing
colour displays.
When you consider existing products and services, you may come up with a number
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of ways to improve them, give a cheaper substitute, or lower the price. It can also
assist in determining whether similar initiatives can be built, whether products can
be developed from trash or current units, and whether packaging and other services
can be provided for existing items. When an automobile unit is formed in a region,
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for example, efforts can be undertaken to see if a few parts or components for the
automobile can be produced on a modest scale. Similarly, where a perfumery begins
to operate, there is opportunity to produce and provide aromatic plants. Alternatively,
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essential oil can be repurchased from current units and finished products (such as
cosmetics) can be produced. These types of backward and forward connections
between existing corporate activities might be a good source of fresh ideas.
3. Market-driven concepts r
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One crucial approach for creating ideas, as we all know, is to conduct market
research. This type of research yields useful information regarding supply, demand,
and consumer preferences, among other things. Occasionally, data from normal
market surveys is obtained. Whatever the source of market intelligence, it is a
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promising sector for the production of ideas.

4. Trading Related Concepts
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Local trade, imports and exports, and e-commerce have all helped to expand
the scope of trading. Simply said, trade is the act of purchasing commodities and
services and reselling them to consumers for a profit. Trading has two advantages
over other types of business: it is easier to start a trading firm and it is less dangerous.
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An entrepreneur who wants to get into trading should be knowledgeable of current

economic developments. With the opening of the Markey to international companies,
big department stores, chain stores, and umbrella markets have become ubiquitous—
competition has become fierce, and new entrants will need to acquire the skills,
competencies, and knowledge required to launch, manage, and expand business
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opportunities in order to survive in the market. Furthermore, in order for a business

to be successful, it must meet the needs of a sufficient number of customers in order
to create profits. A trade entry price based on this principle is more likely to succeed
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than a business that is founded without thoroughly researching customer wants.

5. Concepts for the Service Sector
Thanks to the expanding knowledge society and improvements in information
technology, the service industry is presently the fastest growing field on the planet. As
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a result, new opportunities might be recognised by comprehending the connections

between various business activities. For example, an entrepreneur might consider
numerous service-based units with existing industrial firms, such as transportation,
workshop, maintenance, security, catering, recruitment, training, and communication.

Notes
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Similarly, he can receive ideas for commercial connections such as photocopying,
courier services, printing, bookkeeping, computer centres, telecom centres, and
advertising. Many services exist to assist organisations in meeting their day-to-day
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needs, such as bill collection, water supply, water tank cleaning, and transport.
6. The Entrepreneur’s Creative Efforts
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Entrepreneurship is defined as the ability to create and construct something from
almost nothing. Entrepreneurship can be defined as a creative and innovative
response to the environment, as well as the capacity to detect, initiate, and exploit
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an economic opportunity where others see turmoil, contradiction, and confusion.
7. Additional Considerations
Choosing a Product/Service Concept. An entrepreneur may have other aspects in
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mind when choosing a project. These include things like job creation, community
development, environmental protection, poverty reduction, women’s empowerment,
and so on. If the majority of entrepreneurs follow these guidelines, the consequence
will be long-term growth. It should be highlighted that sustainable development is an
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economic growth process that meets the demands of the current generation without
jeopardising the ability of future generations to meet their own needs.
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Case Study
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Introduction
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It is believed that when a country becomes more developed measured in terms of
per capita income, the population living in the urban areas will be larger. Nowadays,
it is the least developed countries that have a faster rate of urbanization. According
to Todaro (2000), the rapid growth of cities in developing countries is one of the most
nl
significant of all post war demographic phenomena and the one that promises to
loom even larger in the future. He further stated that, with regard to particular cities,
current rate of urban population growth range from under 1% per annum in two of the
O
world’s largest cities, New York and Tokyo, to over 6% per annum in many African
cities including Nairobi, Lagos, and Accra. However, the rapid growth of urban poverty
and deepening inequalities in cities are the main concerns. Solutions to today’s urban
problems, call for good urban governance and appropriate strategies and intervention
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to ensure local development, whether the issues concern the infrastructure, housing,
service provision, environmental quality or violence (UN, 2001).
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Considering the first city bias, the largest or the first city receives a larger share of
the investment and incentives for private investment in relation to the country’s second
city and the second city in relation to medium and small sized tows. Furthermore,
Hansen (1990) has strengthened this assertion as large cities and particularly national
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capitals of developing countries are given preference in the allocation of investment
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that support industry, create employment opportunities, provide health, education and
social services, and offer amenities to attract better domestic and foreign investment.
This leads to concentration of population in large cities, mainly by migration, which
has created sever urban management problem such as more pressure on the services
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provided and infrastructure, high unemployment rate, slum and shanty areas, etc. To
ensure a balanced population distribution and managed cities, the new perspective is
to increase and emphases on small towns. Emphasis on small towns helps to control
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migration to congested cities and to enhance their contribution to the development

of the rural communities. This paper deals with the role small urban centres have in
improving rural livelihood. It shows how the small towns serve as input and output
markets for rural households. It also deals with the public and administrative services
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that rural households receive in the small towns.
Literature Review
The Concept of Rural-Urban Towns and Rural Livelihood

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Small urban towns may be defined differently under deferent contexts. The
demographic and economic criteria are used to define urban and rural areas although
the criteria can vary widely between different nations (Tacoli, 1998). In Ethiopia,
)A
demographic and economic criteria are used to define rural and urban areas. According
to the Ethiopian Urban Plans Proclamation No. 574/2008 Article 2/8, ‘‘Urban centre’’
means any locality with established municipality or having a population size of 2,000
or above inhabitants of which 50% of its labour force is primarily engaged in non-
agricultural activities. On the other hand, settlements whose economic base is
(c
dominantly agriculture are considered to be rural areas.

For the sake of administration and management, urban towns in Tigray are divided
Notes
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into three: Infant/emerging, Town and Metropolitan (Proclamation 107/1998 Article
9/1). According to this proclamation, an emerging town is a town with no less than
2000 population provided that it is recognized as a town by the regional government.
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The growing town can have the status of municipal administration according to
the regulation to be enacted by the regional government executive committee
(Proclamation 107/1998 Article 29/1). Thus, the above definitions of emerging and
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growing towns comply with the description and purpose of this research project. This
means the emerging/infant and growing towns are considered in this research as small
urban centres.
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Another important concept in this research is household livelihood. A livelihood
comprises the capabilities, assets (including both material and social resources) and
activities for a means of living (Scoones, 2009). Livelihoods include specifically, natural,
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physical, human, financial and social assets. Human capital emphasises the importance
of labour, health, education, and skill assets required to achieve household livelihood
(Ellis, 2000 in Boli 2005) in Educated and trained and healthy labour is important to
increase productivity and thereby improve livelihoods. Financial capital refers to
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the amount of money and financial assets such as loan, deposits, shares etc., and
household possessions, which can be converted into other assets though the purchase
of household consumable items or the conversion into other items such as livestock,
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commercial items or fixed assets (Boli, 2005). It can be also used to buy agricultural
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inputs.
Rural-urban linkages or relationship are vital for integrated rural-urban

development. This linkage takes different forms. According to the United Nations (UN)
(2005), however, rural-urban linkages refer to the flow of people, capital and goods,
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ideas, innovation and information between rural and urban areas. Nevertheless, lack
of integration of Urban and rural development plans is one of the problems of rural-
urban linkage. One of the reasons for the separation of the development plans is that
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urban areas are generally recognized as engines of economic growth as well as the
focus of most development policies (UN, 2005). As a result, capital cities and large
urban agglomerations became the focus of government to address urban-based
economic growth and the reduction of urban poverty while the potential of small towns
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for economic growth, reducing poverty and mitigating rural-urban migration from larger
cities has often been neglected (UN, 2005).
The Role of Small Urban Towns in Improving Rural Livelihood

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Small urban towns provide access to markets for agricultural and non-agricultural
goods produced by rural households, improved access to inputs needed for agricultural
production and better access to consumer goods and employment and investment
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opportunities to both kinds of residents and attract temporary and permanent migrants
from the rural areas (Kammeier, 2003; Dercon and Hoddinott 2005). According to
Dercon and Hoddinott (2005), urban markets are important sources of demand for rural
products and rural residents are sources of demand goods sold in urban areas. They
further stated that small and intermediate urban towns provide improved access to
(c
public services such as health, education and administrative services to rural residents.
Small urban towns serve as market centres for the production and/or distribution of
goods and services to the rural area. The location of service supply points supplying

a variety of services, agricultural inputs and consumer goods to the rural areas plays
Notes
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a crucial role in rural development (Tacoli, 1998). Tacoli also wrote that proximity to
urban markets improves farmers’ access to the inputs and services required to increase
agricultural productivity. The urban towns serve as centres for agricultural inputs
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such as fertilizer and farming tools which are important for agricultural intensification.
Small urban towns serve as markets for agricultural and non-agricultural products for
the small urban town population and function as nodes in a wider marketing network,
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channelling demand from outside the small urban towns (Satterthwaite and Tacoli,
2003; Kammeier 2003). They serve as market centres for rural agricultural products
either as direct consumers or as transit markets. They are major markets for agricultural
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inputs and sales of crops and livestock for rural households (John & Stefan 2005). This
market opportunity motivates farmers to improve agricultural productivity and thereby
their income (Kammeier, 2003).
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Access to markets is a prerequisite to increase rural agricultural incomes, and the
proximity of local small urban towns to production areas is assumed to be a key factor.
Whether small urban towns develop as markets for rural producers, among others,
depends on a number of factors such as accessibility and affordability of transport and
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roads infrastructure; the presence of local urban demand which is much influenced
by population and income levels and links with a wider network of markets and the
relations between producers and traders (Satterthwaite and Tacoli, 2003). Traders are
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the main link with urban markets. They often provide a vital link for small and diversified
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production flows that are not sufficiently profitable to attract large-scale trading
organizations. According to Pedersen (2000), Traders are a vital link between farm and
non-farm activities and between local markets and national and international markets.
They often provide credit and technological advice to producers.
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Small towns provide public services such as education, health and administrative
services to rural areas (Bryceson, 1999; Kammeier 2003; Satterthwaite & Tacoli 2003).
Higher-level health and educational rural services are located in small urban towns.
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The health and educational services include clinics/health centres and high schools for
both rural and urban population. Furthermore, the services rural people receive from
small urban towns include agricultural extension, credit services, postal and telephone
services, transportation services, etc. Access to improved road infrastructure results
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more access to transportation services and reduced transportation cost (Dercon and
Hoddinott, 2005). This means the connection of the small urban towns with the rural
areas is assumed to reduce costs and improve access to a variety of services. The
basic services have a major impact on livelihoods of the rural people for they improve
individuals’ and households’ capabilities. For instance, educational service skills
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knowledge and information are generally seen as a prerequisite for households to be

able to take advantage of many new livelihood opportunities. Access to education is
generally required for the formation of human capital (Boli, 2005). Moreover, credit
)A
enables individuals and households to widen their income earning options.
According to Mendola (2010), the mobility of people for temporary or permanent

labour purposes is a routine part of agricultural activity. People migrate to smaller
towns from rural areas for search of education and health services and employment
(c
opportunities (Braun 2007). Migration is the source of remittance which can play a
very important role in supplementing incomes in receiving households (Dercon and
Hoddinott, 2005; Braun 2007). Therefore, one of the key potential roles of small urban

towns is that of attracting rural migrants from their surrounding rural through demand for
Notes
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off-farm labour and thereby increase local opportunities for income diversification and
decrease the pressure on larger urban towns (Satterthwaite and Tacoli, 2003). Off-farm
activities help as a means of employment or additional income for the farmers who lack
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land or have inadequate land, or suffer from seasonal income fluctuations. The migrants
can be both the seasonal workers and those who want to change their settlement from
rural to urban. An essential pre-condition for migrants moving to small urban towns
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is the availability of employment in different activities such as trade, services and
construction. Migration is increasingly recognized as an essential component of the
livelihoods of most households.
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Result and Discussions
The respondents considered in the survey were household head respondents and
focus groups. The households are sample representatives from the rural Tabias in the
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study area while the focus group members are rural Tabia and Village chairpersons,
small urban town administration, clinic/health centre, and agricultural office and high
school representatives.
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For the sake of fair representation, 28% of the total household respondents are
female. With regard to age, the majority of the households were between 30 and 51
(61.3%) years. As far as educational level is concerned the majority (51.6%) of the
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respondents are illiterates. On the other hand, education is vital human capital required
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to improve rural household livelihood. The average household size of the total sample
of the study is 5.6 persons which is similar to the national household size. The average
land holding size of the total sample size of the study is 0.77 hectare and the land
holding size is small for the households. In addition to this, there is large number of
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landless farmers. The survey result indicates that farm income is positively related with
land size. The household head farm income increases with the increase of land holding
size. This indicates that the productivity of the land is almost similar with the exception
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of certain individual variations.

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The economic base of the rural people is mainly land. The average annual farm
income for the rural households, as indicated figure 2, around Feresmay, Rama and
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Maykinetal is Birr 2,425, 2,151 and 3,538 respectively. Nevertheless, majority (86.89%)
of the households are food unsecured due to lack of adequate land size and low

productivity. 47% of the households said that their farm income covers for less than
Notes
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six months’ time while 43% of them said that their farm income covers six to eleven
months. Thus, the rural household income depends on diversified sources such as farm
and off-farm income, income from safety net, food aid and from other sources. To fill
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the income deficit, 44% of the respondents use safety net whereas, 22% of them use
off-farm income. The safety net and off-farm income sources seem play a significant
role to cover the food deficit of the households. But how sustainable are they? Except
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the off-farm income, the safety net income source cannot be sustained because the
purpose of safety net is to heal food deficit resulted from certain shocks. Therefore, the
main means of ensuring sustained food security are farm and off-farm income sources.
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To this end, the small urban towns contribute to increase the off-farm income of farmers
and provide more job opportunity for the rural households.
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All small urban towns in the study area have periodic weekly markets mostly for
rural agricultural and non-agricultural products. Most rural households (86.2%) obtain
their major agricultural inputs such as selected seed, new breed, fertilizer, pesticide,
herbicide and agricultural tools from their respective nearby towns. This similar with the
study of Satterthwaite and Tacoli (2003) that says small urban centres serve as market
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for agricultural produce. The small urban towns are also centres for all household
goods. The focus group discussants also confirmed Small urban towns are the centres
for all agricultural inputs and household goods. The response of the focus groups
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substantiates that the small urban towns are serving as market centres for agricultural
inputs and services as well as household goods and services. The urban towns are
serving as market intermediaries between the rural people and the higher level towns
and among the rural households. This is in accordance of the statement of Demse
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(2006) that small towns play a key bridging role between rural farming and larger urban
centres. Nonetheless, government supports are more concentrated on larger towns
(UN, 2005).
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Small rural towns constitute an important market outlet for rural farm and non-farm
products. It is certainly true that access to markets is essential for rural households.

For instance, the small urban towns are market centres for the products of more than
Notes
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90% of the households (Table 1). The focus group discussants also replied that almost
all rural products are sold in the small towns. They have indicated that there is no
demand problem for almost all agricultural products. Residents of small urban towns
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greatly depend on the farm and rural based non-farm products of the rural producers.
Small and medium-scale traders also play a crucial role in collecting and channelling
agricultural and non-agricultural products from diverse and often geographically
nl
dispersed rural areas. The buyers of the rural products include consumers in the urban
towns and the rural area as well as the retailers, wholesalers and transit traders. The
primary buyers of agricultural products are consumers in the small urban towns and
O
farmers who have no land or inadequate land in rural areas. The buyers at the second
level are consumers, wholesalers, retailers in the small urban towns and those traders
from other distant towns. Certain fruits from rural areas are also sold to wholesalers and
retailers in the respective small urban towns and other higher-level towns. For instance,
ty
the buyers of most livestock (Figure 3), hides and skin are traders either from the small
towns or outside of the small towns.
r si
ve
ni
U
ity
The annual potential supply of livestock as calculated by the researchers is cattle

147,680 (2,840*52 weeks), goat 111,800, sheep 39,000 and hen 62,400. The main
supply sources of the livestock are all rural households around the small urban towns.
In addition to the livestock, milk is sold both in the rural and small urban towns.
m
Most of the population in rural areas depend on small urban towns for educational,
health, credit, infrastructural, telephone, electricity and administrative services. For
example, all rural households depend on the small urban towns for high school (9th
)A
-10th) educational services. This shows each small urban town provides high school
educational services to seven rural Tabias and itself. Health is another vital household
asset that improves household livelihood. Adequate health service creates healthy and
productive workforce. All the rural communities get health service from health centres
in the urban towns. For instance, a total of 31, 294 (14, 428 male and 16, 866 female)
(c
patients from rural areas got medical services in the clinics/health centres located in
urban towns within one year.

Formal credit systems are providing a significant support to individuals and groups
Notes
e
of households of the rural people to fill their financial need. The two main formal
financial sources for rural households are package and Dedebit Credit and Saving
Institution. 50% of the rural households around Feresmay and Rama use package as
in
a source of credit; but, only 27% of households around Maykinetal use package as a
source of credit. The mean credit amount per year is computed to be Birr 2,278, 1893
and 1358 for rural households around Feresmay, Rama and Maykinetal respectively.
nl
However, there is unwise utilization of borrowed money among borrowers. Some
borrowers use the money for non-value-added activities such as for consumption and
ceremonial purposes. Defaults are also another problem to the institution and the
O
borrowers.
One of the key potential roles of small urban towns is attracting rural migrants
from rural areas. People migrate for off-farm labour as well as the need for urban
ty
settlement. This increases opportunities for rural household income diversification and
at the same time decrease pressure on larger urban towns whose unemployment rate
is greater than 20% (ILO, 2009). Remittances from rural-migrants are a vital part of rural
household income and main blend for the continued links between the migrants and
si
their home areas (Bah M. et al 2003). As the survey indicates, there are 3,283 rural
households who live in their own houses and 1,800 households who live in rented
houses in the small urban towns while their economic activity is mainly agriculture. In
r
addition to this, there are farmers doing business in the small towns. For instance, in
ve
the small town of Feresmay, there are 621 farmers engaged in trading activities living in
rural areas.
Conclusion
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The finding shows that small urban towns are market centres for almost all
rural products. They channel industrial products of higher-level towns to rural buyers
and the rural products to the higher-level town buyers. This in accordance with the
U
study of Tacoli (2004) that exchanges of goods between urban and rural areas are
an essential element of rural-urban linkages. The buyers are urban residents, rural
households, wholesalers, retailers and transit traders. The small urban towns serve
as intermediaries between the rural and the higher-level towns. Small urban towns are
ity
market centres for goods and services required by rural areas either as agricultural
inputs or household consumable and non-consumable goods. The rural people buy
industrial goods from the traders in the small urban towns or transit traders. Agricultural
inputs such as fertilizer, herbicides, pesticides, farming tools, etc are distributed
to farmers from the urban towns. The finding also indicates that there is no demand
m
problem for the rural products rather than shortage of supply. This means farmers have
good market opportunity for their products which encourages their productivity and
improve their income and thereby their livelihoods.
)A
The small urban town are market centres for rural products. Residents of these
towns are the primary consumers of agricultural products. Agricultural products of
the rural areas are sold either directly to consumers in the rural areas and towns, to
wholesalers and retailers or to transit traders in who sale to higher level towns. The
(c
periodic weekly markets help sellers and buyers from both rural and urban areas to
transact in the urban towns. Mining products such as stone and sand from the rural
areas are sold in the urban towns for construction purpose.

The small urban towns play an important role in providing government

Notes
e
administrative services such as court, police, training, marriage contract, meeting,
conference, extension supervisory, and food aid distribution services because they
have better facilities and accommodation than the rural Tabias. They provide high
in
school (9th – 10th) educational services and health services at clinic/health centre level
because these services are located in the small urban towns to serve both the urban
and rural people. The credit service agencies and institutions are located in the urban
nl
towns. The money borrowed by rural households is mainly used to buy agricultural
inputs. Nevertheless, there are two controversies with regard to access to credit
services. On one hand there a complaint that the borrowed money is small. On the
O
other hand, there is unwise use of the fund because some borrowers use the money for
non-value-added activities such as for consumption and ceremonial purposes.
Migrants in small the small urban centres are both job seekers in the small urban
towns and those who want to change their settlement. Small urban towns create non-
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farm employment opportunities for rural farmers temporarily and permanently. For
instance, many farmers are engaged in different trade activities permanently and in
construction as well as other activities temporarily. This indicates the small urban
si
towns have good potential for containing migration and generating non-farm income
to rural households. However, the extent of job opportunity created and the degree of
the containment of migration depends on the size and degree of development of the
small towns. If the growth of the small urban towns is not accelerated, people will
r
bypass them and migrate to larger towns because they will neither have the capacity
ve
to accommodate the migrants nor attract them to work or settle in the towns. The small
urban towns have better road and transportation access to higher level towns than the
rural areas. The towns have access to infrastructures such as roads, electricity and
telephone services. The availability of the infrastructure is very important to facilitate the
ni
exchange of rural and urban products and services among the rural and urban people.
For Ethiopia with about 84% of its population’s livelihood is dependent on

agriculture and where most of its towns are small towns, small town development
U
and integrated rural-urban linkage strategy at lowest echelon has to be one of the
priorities. For instance, except Mekelle the capital of the National Regional State of
Tigray the populating of all towns in the region is less than 100,000. Unlike the time of
the industrial revolution in Europe, the Sub-Saharan size of towns is growing without
ity
adequate industrialisation. For instance, in Europe, the economic transformation and

expansion stimulated migration to cities since new industries created new massive
jobs because the process of industrialisation and urbanisation were parallel, (Beall
and Fox 2009). As a result, 95% of the workforce of the richest countries is engaged
m
in industry and services while over 50% of the workforce of the Sub-Saharan Africa
and South Asia is engaged in agriculture due to low industrial development in urban
areas (Beall and Fox 2009). Therefore, Improvement and growth of the urban towns is
important for the integrated rural-urban development and to contain migration. This in
)A
turn, requires formulating a policy that can guide responsible stakeholders to integrate
their development plans at all levels so as to solve the problems of rural-urban linkages
and thereby improves the livelihoods of both the rural and urban households.
Summary
(c
●● Entrepreneurship is a far larger idea than just starting a new company. Creativity
and innovation are two entrepreneurship concepts. It is concerned with innovation

in terms of opportunities and risks, new ways to problem-solving, having a

Notes
e
strategic plan in place to anticipate opportunities and risks, and limiting potential
dangers.
in
●● Traditional motivations for becoming an entrepreneur include financial gain.
However, according to current study, a person’s motivation for entrepreneurial
activity does not have to be solely for economic reasons; it can also be for social
nl
or lifestyle reasons.
●● Pull factors are good motives for a person to become an entrepreneur. A person
enters self-employment because he or she sees an opportunity, whether it is for a
O
better working environment, more self-expression, or even financial freedom.
●● Independence entails taking responsibility for one’s own life rather than relying
on others’ efforts, as well as using one’s own judgement rather than mindlessly
following others’ assertions.
ty
●● The desire for financial independence is one of the characteristics that has been
demonstrated by numerous studies to be a crucial factor in motivating many
people to start their own business.
si
●● Push factors are perceived as “necessity” factors, and they serve as a disincentive
for someone to start their own firm. Push entrepreneurs are individuals who begin
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self-employment in order to overcome impoverished negative environmental
effects such as unemployment, job market instability, a potential market gap,
ve
dissatisfactions caused by workplace competitive situations, a lack of job
opportunities, or even a desire to change their lifestyle.
●● There are certain people who can easily start a business as soon as they find
a profitable opportunity that requires minimal investment and has a low-risk
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component.
●● Individuals who have been fired from their employment, or who are unable to
U
execute their work owing to a lack of education, language skills, or criminal

records, are examples of “pushed entrepreneurs.”
●● The environment refers to the situations, circumstances, and other factors that
influence a person’s life. It is made up of the individuals and forces that have an
ity
impact on the success and survival of persons and organisations.

●● When the entrepreneurial activity is local rather than national or worldwide
in scope, or when customers are geographically confined, this component is
especially relevant. It should also be based on how much and how often clients
m
require personal interaction.

●● They argue that high-quality industrial space is also necessary since businesses
do not want to be concerned about “water, power, sewage, roads, or zoning.”
)A
●● To understand the importance of environmental support for the establishment

of entrepreneurship in any society, the impact of the environment on
entrepreneurship development and growth must be objectively studied.
●● Societies and the entire world are affected by the economic and social implications
(c
of today’s global concerns. Many governmental and philanthropic efforts fail to

bring about the social change that people around the world need, and important

social sector organisations are generally regarded as ineffective in addressing

Notes
e
social issues (Fields, 2016).
●● There are three important features of entrepreneurs in terms of economics and
in
structure. This entails taking chances, inventing, and developing profitable new
company initiatives.
●● Creativity is defined as a person’s capacity to come up with new and unique ideas
nl
in order to accomplish a goal. Innovation is the process of using creativity to find a
solution to a problem (Neely and Hii, 1998).
●● Entrepreneurship promotes innovation and creativity while also fostering
O
innovation and creativity, thanks to the feedback loop provided by creativity.
●● However, by injecting and evaluating necessary aspects such as resources,
technology, strategy, culture, and government/management backing, this can be
ty
accomplished efficiently.
●● Entrepreneurship is important for economic growth and development, according to
development economists. Furthermore, they have concentrated on the economic
si
effects of entrepreneurship (GDP, productivity, employment, etc.) rather than on
human development (Naudè, 2011).
●● Established businesses are increasingly being influenced by environmental
r
awareness and market factors to improve their environmental performance.
ve
Several forms of economic studies have looked into the relationship between
environmental quality and entrepreneurship.
●● Entrepreneurial Development Program (EDP) is a programme designed to assist
individuals in strengthening their entrepreneurial motivations and acquiring the
ni
competencies and abilities required to successfully perform an entrepreneurial

position.
●● All EDPs are divided into three phases
U
◌◌ Pre-training Phase
◌◌ Training Phase
◌◌ Post-training Phase
ity
●● Business ideas are concepts that, when applied, can generate revenue.
Entrepreneurs must first generate ideas from many sources that will lead to the
establishment of a well-planned firm.
●● Individuals with work experience can better comprehend shifting trends and
m
demands in their respective and linked industries, as well as gain unique insights
into a variety of operational and management difficulties ranging from customer
issues to competitive resources.
)A
●● Newspapers, magazines, books, and the internet all contribute to the

dissemination of great business ideas. They provide information about previous
and present business opportunities trends. As a result, the entrepreneur must
keep a close eye on various media sources.
(c
●● The entrepreneur can do research and development on the existing products

with which he or she is working. Another alternative is to create a new product or
service that has never been seen before in the market.
●● Business concept screening entails assessing all potential ideas against a set of
Notes
e
criteria before eliminating as many as possible from consideration. The premise is
that, due to a variety of restrictions, such as resource, time, or expertise limits, it
would be best for an entrepreneur to focus on one idea and see it through.
in
●● The business idea must be compatible with the entrepreneur’s interests, passions,
intentions, personality, and available resources.
nl
●● The difficulty now is how to choose a viable business idea after the business ideas
have been scanned and approved.
●● It’s self-evident that ideas alone will not lead to innovation; you must be able to
O
create a systematic procedure for handling those ideas. The aim of ideation isn’t
just to generate a lot of them; it’s also to pay attention to their quality.
●● Brainstorming method is quantitative, which means you generate a big number of
ty
ideas. In this scenario, a group of people come up with a new possible solution to
the problem.
●● SCAMPER was created by Bob Eberle. Each letter of the acronym aids us in
si
thinking and asking questions, resulting in the generation of ideas.
●● The five W’s are Who, What, Where, When, and Why. Answering these five
W’s allows us to get a fairly holistic view of the subject at hand. It’s also a quick
technique to generate answers and ideas. r
ve
●● Idea Fields can be described as: Convenient frames of reference for streamlining
the process of generation of ideas. By becoming more aware of different ‘idea
fields,’ the process of generating ideas can be expedited.
●● Trading has two advantages over other types of business: it is easier to start a
ni
trading firm and it is less dangerous. An entrepreneur who wants to get into trading
should be knowledgeable of current economic developments.
●● Entrepreneurship is defined as the ability to create and construct something from
U
almost nothing. Entrepreneurship can be defined as a creative and innovative

response to the environment, as well as the capacity to detect, initiate, and exploit
an economic opportunity where others see turmoil, contradiction, and confusion.
ity
Glossary
●● Business Plan: A written document describing in detail how a business will assume
to achieve its objectives and direct itself, both operationally and financially. The
document will be updated regularly.
m
●● Business Idea: A successful company will begin with a compelling business idea.
Typically, the idea will involve a product or service being exchanged for money.
)A
●● Expenditure: Money paid or cost

●● Idea: In terms of business, an idea can relate to a new concept of product or
service that will typically be exchanged for money.
●● Idea Generation: Idea generation, also known as ideation, is the process of
(c
generating, developing and communicating new business ideas.

●● Innovation: Innovation is the development of new ideas or better solutions that

Notes
e
meet new requirements.
●● Brainstorming: Brainstorming is a technique for coming up with new ideas or
in
creative solutions to a specific problem or around a specific theme. This group
creativity technique is often used to break out of traditional thinking patterns.
●● Idea Management: Idea management is a structured process of gathering,
nl
developing, and implementing promising new ideas for the purposes of innovation.
●● Innovation Process: Innovation process is a systematic and structured approach
for generating, prioritizing, evaluating and validating new ideas, as well as putting
O
them into practice.
ty
1. Why should an entrepreneur do a feasibility study for starting a new venture?
a. To identify possible sources of funds
b. To see if there are possible barriers to success
si
c. To estimate the expected sales
d. To explore potential customers
2. r
Which of the following shows the process of creating something new:
ve
a. Business model
b. Modelling
c. Creative flexibility
ni
d. Innovation
3. EDP (Entrepreneurship Development Programmes) is required to help:
U
a. Existing entrepreneurs
b. First generation entrepreneurs
c. Future generation entrepreneurs
ity

4. What is the process by which individuals pursue opportunities without regard to
resources they currently control:
a. Start-up management
m
b. Entrepreneurship
c. Financial analysis
)A
d. Feasibility planning
5. Which one of the following describes unemployment?
a. The number of people who voluntarily choose not to work.
(c
b. The number of people who are jobless and are actively seeking work.
c. The number of people who are not actively seeking work.

d. The number of people actively seeking work who find work.

Notes
e
6. A business plan is important for all of the following reasons EXCEPT:
a. a business plan forces a firm’s founders to systematically think through each
in
aspect of their new venture.
b. a business plan provides lenders and investors assurance that they will earn a
decent return.
nl
c. a business plan provides an investor with something to react to.
d. a business plan is a selling document that enables a company to present itself
O
to potential suppliers and business partners.
7. A new venture’s business plan is important because ______.
a. It helps to persuade others to commit funding to the venture.
ty
b. Can help demonstrate the viability of the venture.
c. Provides a guide for business activities by defining objectives.
si
d. All the above.
8. _____________ can be defined as a specifically evolved work plan dense to achieve
a specific objective within a specific period of time
a. Idea generation r
ve
b. Opportunity Scanning
c. Project
d. Strategy
ni
9. Following is not involved in EDP

a. Identification of entrepreneurs for training
U
b. Selection of entrepreneurs for training

c. Developing entrepreneurial capabilities
d. Arranging infrastructural facilities
ity
10. EDPs course contents contain ___________.

a. General introduction to entrepreneurs.
b. Motivation training.
m
c. Managerial skills.
d. All the above
)A
Exercises
1. What do you understand by entrepreneurial motivation?
2. What are some of the environmental factors affecting entrepreneurship?
3. What is the role of creativity and innovation in entrepreneurship development?
(c
4. How do entrepreneurs contribute towards a sustainable economy?

5. Explain Entrepreneurial Development Programme.

Notes
e
6. What do you mean by business ideas?
7. Explain the sources of business ideas.
in
8. How is screening of business ideas beneficial?
9. Explain the idea generation techniques.
nl
10. What do you understand by idea fields? Explain in detail.
Leaning Activities
O
1. Think of an innovative product and conduct a survey in your colony and analyse
whether it will be accepted in your neighbourhood. (For example, new Idea for waste
disposal)
ty
2. Aditi started her boutique business near an industrial area and she was not getting
clients as she had expected. What are the factors which have been ignored before
starting the boutique? Suggest the various factors that she has to look into before
venturing into business.
si
1. c.
2. b.
r
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3. d.
4. b.
5. b.
ni
6. b.
7. c.
U
8. c.
9. d.
10. d.
ity

1. Baporikar, N. (2007) Entrepreneurship Development & Project
ManagementHimalaya Publication House.
m
2. Gordon E. & Natarajan K.: (2007) Entrepreneurship Development – Himalaya

Publication House, Second Revised edition.
)A
3. Desai, V: (1996) Dynamics of Entrepreneurial & Development & Management

Himalaya publishing House - Fourth Edition, Reprint.
(c

Module - III: Scanning the Environment

Notes
e
in
●● What is environmental scanning?
nl
●● Factors involved in sensing opportunities
●● Identifying a business opportunity
O
●● Develop business opportunities using SWOT analysis
●● Develop business opportunities using PESTLE analysis
●● Meaning and concept of feasibility analysis
ty
●● Contents of a feasibility report
●● Types of feasibility analysis
si
●● Understanding the project environment
●● Project schedule, resource and budget planning
●● Project life cycle stages
●● Project appraisal
r
ve
Introduction
Environmental scanning is a process that systematically surveys and interprets
ni
relevant data to identify external opportunities and threats that could influence future
decisions. It is closely related to a S.W.O.T. analysis and should be used as part of the
strategic planning process.
U
Components of external scanning that could be considered include:
Trends: What trends are occurring in the marketplace or industry that could affect
the organization either positively or negatively?
ity
Competition: What is your competition doing that provides them an advantage?

Where can you exploit your competition’s weaknesses?
Environmental scanning is a method of collecting and analysing data in order to

detect external opportunities and dangers that may have an impact on future actions.
m
It’s similar to a S.W.O.T. study and should be included in the strategic planning process.
What are your competitors doing that gives them an advantage over you? Where
can you take advantage of your competitors’ flaws?
)A
What technological advancements might have an impact on your organisation in

the future? Are there any new technologies that could help your company become more
productive?
(c
Customers: What is the state of your customer base? What factors are influencing
your capacity to give excellent customer service?
What is going on in the economy that could have an impact on future business?
What is the state of the labour market in the areas where you operate? How can
Notes
e
you ensure that high-demand staff are available at all times?
Legislative/political arena: What effect will the election results have on your
in
company? Is there any pending legislation that will have an impact on your business?
To make the environmental scan helpful, each organization must determine which
external elements have the most impact.
nl
The next step is to perform an internal audit of the company. Examine the
company’s vision, goal, and long-term strategy. Examine the organization’s advantages
and disadvantages. Think about where the business is now and where it wants to be in
O
five or ten years. Leaders of the company should be interviewed or surveyed.
An organization should build plans to respond to impacts once it has accumulated

information about the external environment, its competitors, and itself. When conducting
ty
an environmental scan, a variety of methods should be used to collect data, including
reviewing publications, conducting focus groups, interviewing leaders inside and
outside the organization, and administering surveys.
si
Environmental scanning is an important component of strategic planning as
it provides information on factors that will affect the organization in the future. The
knowledge acquired will enable leadership to respond to external influences in a
proactive manner. r
ve
3.1 Scanning the Environment
Environmental scanning is the ongoing tracking of trends and occurrences in an
organization’s internal and external environment that bear on its success, currently and
ni
in the future. The results are extremely useful in shaping goals and strategies. In this
module, we will study this in detail.
U
3.1.1 What is Environmental Scanning?

Some people have been scouting ahead for opportunities and risks for the group
since the beginning of social organisation. On the top of the mainmast of ancient sailing
ity
ships, there was a crow’s nest from which one could look out at the sea and find safe
way through uncharted waters. Civilization is believed to be going into new waters
today, ranging from global financial crises and climate change to artificial biology and
nanotechnology; as a result, we need to notice change and understand its ramifications
m
more than ever before.
As plans are based on predictions, and forecasts are based on future assumptions,
monitoring the horizon for unexpected developments that can question past
)A
assumptions or provide new perspectives on future risks or possibilities is always

sensible. Environmental scanning devices detect “weak signals” that indicate plans
should be changed and provide early notice about critical changes.
Environmental scanning is something that all futurists do–some are more

structured and systematic than others, but they all strive to discern between what is
(c
constant, what changes, and what changes frequently.

Most futurists used the term “environmental scanning” in the 1960s and 1970s,
Notes
e
but as the environmental movement evolved, some speculated that the term might
only refer to systems that monitor changes in the natural environment as a result of
human actions. Some have dubbed them Future Scanning Systems, Early Warning
in
Systems, and Future Intelligence Systems to prevent misunderstanding. The output of
such systems is increasingly being referred to as “Collective Intelligence.” In 2007, MIT
established the Center for Collective Intelligence. They prefer to characterise collective
nl
intelligence as an emergent feature resulting from synergy among data/info/knowledge,
software/hardware, and human minds (experts) that learns from feedback to provide
just-in-time knowledge for better decisions than these elements operating alone. The
O
goal of ambient scanning should be to facilitate this emergent characteristic.
Whatever word or concept is used, no system can completely eliminate all

uncertainty; the goal of a scanning system is to detect early signs of potentially
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significant future events in order to obtain as much lead time as possible.
The following is a generic model for the construction of a scanning or early warning
system.
si
The scanning team receives feedback and new requirements, which is an
important part of the process. Without management feedback, information goes
unidirectionally through the system, and the system does not learn how to perform
r
better and create the most useful knowledge while avoiding information overload.
ve
In addition to being part of standard searching, once an item is added into the
database, it becomes available in a variety of ways. It can be included in summary
pages, recent scanned items, and/or emailed as a headline to people who ask for new
item headlines. Managers will be able to see new advancements in the system through
ni
this window.
This technique allows individuals (who are willing) to click on the headline, read the
entire piece, and then offer their opinions, in addition to the staff who scans all of the
U
sources. A management might say, for example, that the issue should be discussed at
the monthly meeting or that it has been opposed by another development.
Each piece of information or record in the system comprises the following fields
ity
that can be changed by pre-selected individuals:
1. Assumptions and Risks in the Technological, Economical, Environmental, Political,

and Social Domains
2. Leading Indicator: What would alert you to the possibility of change in this item?
m
3. Information source: where did the data come from?

4. How to get to the source of the information: If a person, their office phone number or
)A
e-mail address, and anything else important to know, such as that she attends the
strategic institute’s annual meeting and is open to conversation at their meetings.
5. Other remarks: anything that should be included that doesn’t fit into any of the other
fields.
(c
6. Significance or importance: Included even if it’s self-evident, so it’ll show up in a

database search later if the item is relevant in a pattern analysis for an early warning
report.
7. The item’s potential ramifications or impacts: we can’t predict the future, but we can
Notes
e
make educated estimates. What is the scope of the item’s potential consequences?
On the item, you could do a Futures Wheel (individually or in a group).
in
8. Current and future status: What is the current status of this item; for example, early
social movements, laboratory testing, sales volume, percentage of the general
public involved, or any other means to indicate current status. Situation in the future
nl
(Will there be some event planned in the future relevant to the item; e.g., date to be
addressed at next WTO meeting, date of conference, date a UN treaty is to go into
force, date of election, etc.)
O
9. Actors: Who are the people who have an impact on the indicator? The actor would
be the research lab that will undertake the research if it is a new line item in an
R&D budget. If it’s an act of environmental terrorism, the perpetrator would be the
organisation. If possible, include the network(s) in which the actors are involved.
ty
Most software will automatically enter the date the information was entered as well
as the scanner’s name.
When developing environmental scanning systems, the following approaches
si
should be considered:
1. Using Delphis, listservs, and other types of collaboration software, expert panels
r
can be constructed to “watch out” for developments on the horizon that may be
necessary to adopt or accomplish goals. It’s possibly worth exploring a slew of
ve
new technologies that are similar in terms of encouraging active engagement (e.g.,
Delphi). Facilitated discourse mapped face-to-face gatherings, world cafés, and even
prediction markets are all contenders (see chapter on this method in this series).
ni
2. Database literature reviews give policymakers, planners, and strategists access to a

wide range of information.
3. Google Alerts is a great way to keep up with what’s going on in the world. http://
U
www.googlealert.com allows you to pre-select search terms that will be delivered to

your e-mail address on a daily basis. Web crawlers can look for sites that have new
versions, which can serve as an early warning system or alert to new information.
4. Press releases are available to the public on many websites on the Internet. You
ity
should be aware of which ones are appropriate for your needs, as they identify issue-
related information and emerging trends.
5. Scan hard-copy literature reviews of selected publications to discover key incipient
changes; however, electronic versions are progressively replacing them.
m
6. Expert essays could look into long-term difficulties and make policy and strategy
recommendations. These writings might make use of modern tools like issue maps.
)A
7. Tracking key people (who knows the most, and how do you keep track of their fresh
ideas) and monitoring key conferencing on your special interests, in person or by
streaming or archival video.
Environmental scanning can be viewed as the primary source of information
for futures research. In one way or another, all futurists do it. It also feeds the issue
(c
management and strategic planning processes. The issues management process

involves four stages, according to William Renfro, President of the Issues Management
Notes
e
Association:
1. Scan the horizon (and beyond) of the corporation’s [or nation’s] existing and projected
in
operating and peripheral settings for potential future challenges.
2. Investigating the history, future, and potential consequences of these concerns
3. Assessing challenges that compete for anticipatory operations and action plans
nl
4. Strategy development for these anticipatory operations
Renfro continues, “ “These many stages are frequently viewed as part of a cycle,
O
which is usually an annual one that corresponds to the strategic planning cycle. These
stages are distinct enough that they are evaluated separately first and then in the
context of a cycle, despite the fact that they are frequently executed in an interlocked
cycle.”
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There are thousands of general and specialised databases that policymakers,
planners, and strategists can utilise to discover issues and trends of interest. The
most widely used databases are Internet-based subscription services. Subscriptions
si
may include all or chosen files, and they are frequently made up of individual files that
focus on specific topics. Public access to some of these databases is provided through
university, college, and public libraries.
r
The databases listed below are some of the most useful for environmental
ve
scanning:
LexisNexis offers full-text databases of documents and other materials from

newspapers, business and general interest magazines, company reports, public
ni
records, and tax and regulatory publications, among other sources.
Nexis.com provides full text access to three billion papers in several languages on
more than 1,200 topics. It is a comprehensive collection of current and archived news,
U
company and financial information, public records, and legal papers from domestic and
foreign sources.
Current Issues provides access to non-commercially published “grey literature.”

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More than 8,000 full-text reports, conference proceedings, official documents,

organisational newsletters, fact sheets, and briefing papers produced by advocacy
groups, private think tanks, professional and trade associations, government agencies,
university research centres, and international organisations are indexed. The database,
which is intended for academic use, includes editorials from major newspapers as
m
well as opinion polls from the Roper Centre for Public Opinion Research on a variety
of topics, including crime and justice, economy, education, environment, government,
health, international relations, population, science and technology, and science and
)A
culture.
Country Analysis gives you access to information on 190 nations, 157 industries,
and consumer trends from across the world. It contains information on rising markets in
Africa, the Middle East, Asia, and Latin America that is difficult to come by.
(c
The Dow Jones and Reuters newswires, the Wall Street Journal, and nearly 8,000
other sources are all available in full form on Factiva. Local and regional newspapers,
trade publications, business newswires, press release wires, media transcripts, news
photos, business-rich websites, investment analyst reports, market research reports,

Notes
e
country and regional profiles, company profiles, and historical market data are among
the resources available in the database. There are almost 900 non-English sources
from 118 countries.
in
ABI Inform contains citations, abstracts, and/or full text from over 1,000
professional periodicals, academic journals, and trade magazines from across the
nl
world. It includes firm histories, competitive intelligence, business situations, trends,
corporate plans and tactics, management approaches, and new product creation,
among other topics. Outside of the United States, twenty-five percent of the journals are
published.
O
The Public Affairs Information Service (PAIS) cites articles on current public
issues such as economics, finance, law, education, the military, political science,
public administration, international law and relations, the environment, science and
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technology, demography, and public health, as well as general press reports and
commentary on public affairs.
The citations in Science Citation Expanded, Social Sciences Citation Index, and
si
Arts & Humanities Citation Index are all accessible through ISI Web of Science. It
allows users to search for current and retrospective multidisciplinary information in over
10,000 research journals from around the world, including anthropology, history, foreign
r
relations, information and library science, law, linguistics, philosophy, psychology,
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political science, public health, social issues, social work sociology, substance studies,
and women studies. This programme offers a unique search approach that allows users
to move ahead, backward, and through the literature, searching across all disciplines
and historical periods to find all relevant information.
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3.1.2 Factors Involved in Sensing Opportunities

An entrepreneur uses his heightened skills of observation, analysis, and synthesis
U
to find an opening in order to recognise an entrepreneurial opportunity. The most

important factors that are involved in this process are:
(i) Ability to perceive and preserve basic ideas which could be used
ity
commercially.
(ii) Ability to harness different sources of information.
(iii) Creativity and vision.
m
Ability to Perceive and Preserve Basic Idea

The process of perceiving an opportunity is generally triggered by the discovery
of an idea. However, not every concept result in a chance. We can presume that an
)A
opportunity is an idea that is based on what customers want for the purpose of clarity.
The following are some of the basic ideas that originate from various sources:
(a) Obstacles. When a concept revolves around a human concern, the solution is almost
always a business opportunity. The safety razor is the best illustration. Men struggled
(c
to shave fast and without getting nicked with a sharp shaving knife. This difficulty
sparked an idea that led to the creation of the safety razor.

(b) Adjustment. Any change, whether social, legal, or technological, has the potential
Notes
e
to open up new economic opportunities. Such opportunities abound, as seen by the
proliferation of cybercafés and computer institutes.
in
c) Inventive ideas. Inventing new objects of value as well as innovative and creative
techniques that add value to existing products or services are examples of inventions.
The transition from audio and video cassette players to CD players is an example of
nl
invention-created opportunity.
d) Competitiveness. An entrepreneur must introduce new ideas in order to stay ahead
of the competition.
O
Ability to Harness Different Sources of Information
Sensing opportunities necessitates the use of information from a variety of sources.
The data gathered from various sources must be examined and exploited in order to
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identify the best opportunity. An English inventor, Trader Baylis, created a portable radio
that was powered by clockwork rather than batteries. On the BBC’s ‘Tomorrow’s World’
show, he demonstrated his innovation. While thousands of people watched the show
si
and then forgot about it, Christopher Stains, an accountant, recognised a potential in
the idea. He was confident that the concept had a lot of promise, so he bought the
inventor’s international development rights. He reasoned that the radio would be a hit
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in undeveloped countries where people couldn’t afford batteries. The endeavour turned
out to be a big success. While watching the news of the invention on television, Stains
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gathered data on the number of radio users in developing countries from other sources.
Vision and Creativity

Entrepreneurial inventiveness is one of the most noticeable behavioural attributes.
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He should be able to come up with original ideas. Henry Ford is the perfect example of
a visionary and a creative genius. He promised to construct a car for the common man
that would be affordable to anyone with a moderate income. The renowned automobile
U
‘Model T’ was created as a result of this vision and creative drive. He realised his idea
with the help of a talented group of engineers. Problem-solving is something those
creative individuals strive for.
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These are only a few of the environmental and contextual aspects to consider
while creating a project management or execution strategy. The value of adequately
comprehending the project environment and context should never be underestimated,
as it can help even the most technically well-defined initiatives avoid being
disorganised.
m
3.1.3 Identifying a Business Opportunity

)A
By studying and assessing or identifying business opportunities, an entrepreneur

takes the initiative to begin business activity. He is also exposed to the risks that
come with it. The true entrepreneur is more concerned with opportunity than with risk.
Entrepreneurs look for economic and business opportunities and are always prepared
to take advantage of them.
(c

An entrepreneur is someone who identifies a business opportunity and attempts

Notes
e
to capitalise on it by introducing a new product, a new manufacturing method, a new
market, a new raw material source, or a new combination of production elements.
in
Thus, in terms of identifying business possibilities, an entrepreneur is someone
who is always aware of changes, reacts to them, and seizes their benefits as an
opportunity.
nl
As a result, any entrepreneurial venture’s business prospect is explored only if it
has the potential for commercial viability.
For example, the nature of competition, marketing strategy, price policy, future
O
prices in relation to product quality, market size, future development prospects, and
product sale arrangements, among other things.
Thus, the following two characteristics can be used to determine if an
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entrepreneurial initiative is a business opportunity or not.
Whether or not demand exceeds available supply in the market.
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Identification of Business Opportunities Goals
In terms of the goals for identifying business opportunities, it can be said that the
r
entrepreneur is always attempting to establish new industries, and that his qualities,
such as imagination and creativity, also increase employment opportunities, produce
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new products, and develop economic sources by lowering costs, improving products,
and innovating.
He works hard to quickly materialise profitable ideas while carefully weighing the
dangers.
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He not only succeeds in launching new enterprises, but he also succeeds in

recognising commercial prospects.
U
As a result, the following are the goals of the business opportunity identification
process:
1. An entrepreneur identifies opportunities in the context of potential sectors and

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determines his own function, scope of work, and relationships based on the
opportunities.
2. To keep an eye on the potential market for the product or service being produced.
3. To appoint a high-level group of executives to launch entrepreneurial projects.
m
4. In the context of the industrial development process, to examine financial resources

by creating financial forecasts.
)A
5. To look at the possibility of expanding into new areas.

6. Determine the industries’ labour, capital, and material requirements.
7. To investigate the short- and long-term development prospects in various economic
sectors.
(c
8. A desire for technical knowledge, awareness of new opportunities, and acceptance

of change are all important.

9. Examine the options for repurposing existent resources to meet corporate objectives.
Notes
e
10. To discover sectors that are not dependent on local resources but could be
economically viable in light of future needs.
in
Sustaining growth and profitability in today’s corporate environment is never a
given. Product and service life cycles are becoming shorter as a result of technological
and scientific advancements, business models are changing, and new competitors from
nl
outside the industry are entering the market. This continual insecurity necessitates the
pursuit of new business prospects. We’ll go over eight methods for identifying market
prospects for business growth in this article.
O
To begin, create a framework to aid in the search for possibilities. To do so, you’ll
need to know your company’s business direction as well as its resources, assets, and
capabilities.
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The next phase is to analyse the market, examining consumer needs and
how they are being met by companies today, once you have a strong knowledge of
the company’s goals and areas of competence. To find market prospects, the entire
si
business model must be assessed, including consumers and firms, as well as other
aspects such as brand value propositions, direct and indirect competitors, supply
chains, existing legislation, and the general environment. Let’s take a closer look at how
to evaluate these variables.
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There are eight different types of analysis that can be used to find market
opportunities.
1. Segmentation of customers
You must first establish consumer segments that share common traits in order to
ni
comprehend your demand. Age, gender, place of residence, educational level,

occupation, and level of income are examples of “hard” variables, while lifestyle,
attitude, values, and purchase impulses are examples of “soft” variables.
U
Hard variables might aid in the estimation of a company’s potential consumer base.
A nappies/diapers manufacturer, for example, should know how many children under
the age of three live in a certain country, as well as the birth rate. Price, prestige,
ity
convenience, durability, and design are examples of soft factors that can be used to
identify reasons that contribute to purchasing decisions.
Aguas Danone, an Argentine bottled water company, is an example of how
segmentation can assist uncover market potential. The company’s sales were
m
declining a few years ago, and they were seeking for a new product. Non-alcoholic
beverage consumption is driven by two factors, according to Aguas Danone: health
and flavour. Bottled water was thought to be healthy, but it didn’t have a pleasant
taste. Soft drinks and juices were tasty, but they were thought to be rich in calories.
)A
The business realised there was a need for healthy drinks that were both tasty and
flavourful. As a result, they had a lot of success with their flavoured bottled waters, Ser.
Since its inception in 2002, Aguas Danone has been the market leader in Argentina
for Reduced Sugar Flavoured Bottled Water, according to Euromonitor International
data, beating out giants like Coca-Cola and Nestlé. Reduced Sugar Flavoured
(c
Bottled Water still had a 57 percent off-trade value share in 2016, according to Aguas
Danone.

2. Evaluation of the purchasing situation

Notes
e
In order to find expansion chances, it’s also necessary to look into purchase
circumstances. When evaluating purchase analysis, consider the following questions:
in
◌◌ When do customers buy our product or service?
◌◌ Is it available when they require it?
◌◌ Where do people buy things and how do they pay for them?
nl
Examining distribution routes, payment methods, and all other factors that influence
purchasing decisions will help you understand how people buy and how to position
your product appropriately. Providing fresh shopping options may attract new clients.
O
Vending machines serving refreshments such as yoghurt and individual juices, for
example, have been installed in the passageways of Santiago de Chile’s subway,
encouraging on-the-go eating.
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Another point to consider is the acceptance of various payment methods. For
example, in the United States, Amazon recently launched Amazon Cash, which
allows those without credit cards to shop online by adding money to their Amazon
si
accounts.
3. Analyse direct competition
It is critical to examine supply in addition to demand and purchasing scenarios. When
r
evaluating prospects, it’s critical to understand the existing companies in the market
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where you’re competing or planning to compete. In this scenario, pertinent questions
include:
◌◌ What are the products and brands in our business that are growing at a faster
rate, and why?
ni
◌◌ What is their unique selling proposition?

◌◌ What is our competitive advantage over them?
U
For example, SKY airline, which competed in the Chilean market against a well-
known brand like LAN, saw a chance to differentiate itself with a low-cost model
that had never existed in Chile before. SKY cut costs by eliminating complementary
food and beverages for all passengers on flights, lowering ticket rates as a result.
ity
According to Euromonitor International, this enabled the firm raise its share of carried
passengers from 10% in 2008 to 20% in 2017.
4. Analysis of indirect competition
Analysing replacement industries might also uncover opportunities. Airlines, for
m
example, may seek for opportunities in customer categories traditionally served by

alternative modes of transportation as a result of lower prices. Air carriers should
investigate how many people use long-distance buses and trains, which routes are
)A
the most popular, how much passengers pay for their tickets, what the occupation
rate of long-distance buses and trains is, and what it takes to persuade a current bus
or train passenger to switch to flying. This form of study aids in the establishment of
competitive advantages over indirect competitors as well as the identification of extra
growth potential.
(c
5. Complementary products and services evaluation

Companies should keep an eye on the performance of related items from other
companies. For example, a packaging company should keep track of sales of

Notes
e
products it might package, while a coffee machine manufacturer should learn about
the progress of different types of coffee sales. When making investing selections,
trends in complementary markets should be considered.
in
6. Review of related industries
In other circumstances, a company’s goal is to expand a specific business model or
nl
philosophy rather than to continue functioning inside a specific industrial sector. For
example, the Easy Group, a British conglomerate, began maximising the occupancy
rate of flights operated by the airline Easy Jet. Easy Group realised that selling a
O
seat at a cheaper price was preferable to not selling it at all. Easy Jet chose a rate
management methodology based on the occupancy rate of flights and the amount
of time until the flight’s departure date. It was able to enhance occupancy rates
using this business model. When Easy Cinema was formed, the same approach
ty
was used to movies, and then to buses for Easy Bus. In any case, learning about the
competitors before entering a new business is critical: market sizes, market shares,
growth rates, unit prices, per capita sales, and brand positioning.
si
7. Examining foreign markets
Exploring other countries may bring to extra prospects when a company operates
in a mature or saturated market. For a variety of causes, including differences in
r
economic growth and local customs, markets in various nations grow at different
ve
rates. Knowing the evolution of a product’s per capita consumption in a certain
country might serve as an indicator of the product’s life cycle maturity. It will be
easier to determine the business potential if you have information about the size of
the market and rivals in other nations.
ni
You can look into what happens in more developed countries in terms of consumption
habits in addition to product sales. For instance:
What is the percentage of people who pay with their smartphones?
U
What is the market share of private labels in a particular industry?

The answers to those questions in more developed countries can be used to gauge
the indices’ potential in their own country. On the other side, keeping an eye on
ity
what’s going on in other nations may lead to the development of new products or
services that aren’t yet available in your current market.
8. Examine the environment
m
Market opportunities can also be discovered through analysing environmental

changes, such as technological and scientific advancements that create new
company prospects. For example, as the Internet and smartphone usage have
grown, organisations with new business models such as Airbnb and Uber have
)A
emerged. According to Euromonitor International, the global proportion of mobile

internet subscriptions to mobile phone subscriptions increased from 20% in 2011 to
53% in 2016. In 2011, only 17 percent of homes in the world had a smartphone; by
2016, that number had risen to 45 percent. Artificial intelligence, robotization, internet
of things, biotechnology, and renewable energy sources, in addition to mobile and
(c
the Internet, offer several commercial options.

Changes in a country’s regulatory system might also open doors to new

Notes
e
possibilities. Chile has required companies to include labels on products that are rich
in calories, salt, sugars, and saturated fats since June 2016. This need could be an
opportunity for healthy products that aren’t affected by the new labels to grow. Product
in
sales in Chile are expected to be affected depending on the product type, according to
Euromonitor International. More market research on category and product sales in Chile
could aid in identifying categories where new items without labels can grow.
nl
Other environmental changes, such as climate change, geopolitical shifts, and
changes in financial markets, have an impact on market opportunities. Market research
should be used to obtain insight into the local business environment, guaranteeing that
O
your plan will thrive in a new or developing market.
The eight categories of study that will assist your company uncover new market
prospects include consumer segmentation, purchasing decisions, direct and indirect
ty
competitors, complementary products and services, industry, overseas markets,
and environmental analysis. Using a variety of analyses will assist your company
in gaining a comprehensive perspective of opportunities and in developing long-term
si
strategic business plans. Companies must act fast after opportunities have been
discovered in order to develop a strategy. A value proposition must be developed,
the commercialization chain must be planned, and costs, revenues, cash flows,
r
and financing requirements must be estimated. Not all of the market opportunities
discovered will succeed, but testing with them will provide insight into their potential.
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Pilot testing new products, services, or business models in controlled locations can
help to reduce the costs of failed prospects. One of the dangers of pilot testing is that
your plan will be revealed to the competition. This risk must be weighed against the
ni
danger and cost of failing to launch a new product on a global basis. Many experiments
will fail during pilot testing, but some will succeed and be developed on a bigger scale.
Coca-Cola, for example, introduced Coca-Cola Life under the Low-Calorie

U
Cola Carbonates category in 2013. It was an experimental programme that began

in Argentina and Chile and expanded to the United Kingdom, Sweden, Australia,
Switzerland, Japan, and New Zealand. In several of these markets, Coca-Cola Life
sales did not expand as much as predicted. According to Euromonitor International,
ity
Coca-Cola Life had a value share of less than 2% in Australia and less than 4% in
the United Kingdom in 2016. As a result, Coca-Cola pulled the plug on the brand in
those two countries. Similar steps have been announced in other nations, such as the
withdrawal of a product line from the market or a reduction in production. So, a failure
m
on a worldwide scale would have had larger costs in terms of spending and brand
image, Coca-Cola used pilot testing to determine the success of Coca-Cola Life.
Identification of Business Opportunities Challenges

)A
In terms of the obstacles to promoting entrepreneur endeavours, it is worth noting

that, since the beginning of economic liberalisation, companies have been pushed
to accept international products while also contending with the difficulty of keeping
production costs low. To confront this problem, you must be low.
(c
Thousands of individuals have lost their jobs as a result of liberalisation

and globalisation, and thousands of industries have closed owing to a lack of
competitiveness.
What are the Decision-Making Techniques?

Notes
e
With industrial disease, the criteria of industries and labour force regulations have
also changed.
in
In such difficult circumstances, new promoters and entrepreneurs must make
the critical decision of what type of entrepreneurial projects or businesses should be
promoted and launched.
nl
In addition, the following challenges or issues must be addressed.
1. Initial Crisis
O
An unstable or crucial time or state of affairs that an entrepreneur must endure is
referred to as the initial crisis.
When an entrepreneur promotes an entrepreneurial enterprise during this time, he
ty
is completely convinced that, based on his abilities and traits, he will be able to sell his
products or services and profit.
si
However, entrepreneur activity is really difficult because.
1. He develops or creates new products and services,

2. he introduces a new delivery system for existing products and services,
3.
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he develops new markets for existing products or services, and
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4. he develops a new environment for existing products or services or creates
opportunities for them to combine.
When an entrepreneur is influenced by a notion, he analyses it and enters a new
ni
environment in order to encourage entrepreneurial initiatives.
2. Entrepreneurial Venture Promotion

U
The entrepreneur must execute a variety of actions and functions in order to

promote an entrepreneurial enterprise. As a result, he works tirelessly to structure the
industry.
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3. Financial Problems
Financial crisis or lack of entrepreneurial capital is also a barrier to an
entrepreneur’s ability to promote an entrepreneurial enterprise, because substantial
cash or capital are necessary to start any new venture, and at the lowest possible cost.
m
4. New Product Development

It’s also a difficulty to figure out how to present the new product.
)A
5. Harmful Competition
Whether the enterprise will be successful or not is also a difficulty, because some
people engage in healthy competition while others engage in unhealthy competition,
(c
such as refusing to cooperate, selling items at prices below cost, threatening the firm’s
closure, and so on.

6. Leadership and Decision-Making

Notes
e
Finally, as the scale of the industry or business develops large enough, an issue
with delegation of decision-making abilities and leadership, among other things, arises.
in
What is the term for the process of power delegation or leadership?
What are the Characteristics of Effective Entrepreneurial Leadership?
nl
As a result, there are numerous hurdles and issues in promoting an entrepreneurial
enterprise. Many factors must be examined in order to solve problems, including future
demand, capital availability, alternative sources of production, future profit potential, and
O
so on.
Following that, while examining business chances, it should be decided what

commodities will be produced. This is because entrepreneurs must not only protect the
ty
current of the firm, but they must also work to ensure that the future is bright.
In each entrepreneurial enterprise, the role of the entrepreneur is to make the

company capable today so that it can construct a better tomorrow.
si
Entrepreneurs must operate in a fast-paced economic climate. As a result, in a
changing and developing environment, it is necessary to maintain the business fresh.
r
Furthermore, an entrepreneur has taken advantage of business chances by
discovering them, incorporating new ways into the firm, conducting fresh research for
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business marketing, and searching for new markets, among other things.
3.1.4 Develop Business Opportunities using SWOT Analysis

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A SWOT analysis assesses an organization’s internal strengths and weaknesses,

as well as external opportunities and threats. Internal analysis is used to discover the
organization’s resources, capabilities, core competencies, and competitive advantages.
By looking at competitors’ resources, the industry environment, and the overall
U
environment, the external analysis finds market opportunities and dangers (see Figure
given below). The goal of a SWOT analysis is for an organisation to use the knowledge
it has about its internal and external environments to determine its strategy. This article
ity
includes a set of templates for doing a SWOT analysis as well as practical advice on
how to make strategic decisions.
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)A
(c
Figure: SWOT Analysis Main Components

Internal Strengths and Weaknesses Analysis

Notes
e
The organization’s internal study is crucial in determining the source of competitive
advantage. It identifies the resources that must be produced and maintained in order to
in
stay competitive. To create earnings above the industry average, competitive advantage
must be unique to the company. The strategic management process begins with a
thorough examination of the organization’s internal resources and capabilities, which
nl
serve as the source of the organization’s core competences, which in turn provide a
competitive advantage.
The actual and intangible inputs required to develop a product or service are
O
referred to as resources. Raw materials, buildings, machinery, and equipment are
examples of tangible resources. Financing, technology, human capital, supplier
networks, sales force structures, distribution networks, patents, trademarks, customer
base, brand equity, and business reputation are examples of intangible resources.
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Resources can be pooled and developed into capabilities, which can then be
transformed into core competencies.
The ability of a company to make efficient use of internal resources and combine
si
them into competitive goods and processes is defined as its capability. Developing
innovative technology products, shortening time to market, generating more efficient
distribution methods and retail outlets, attracting the consumer’s attention through
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marketing, and managing customer relationships to gain long-term brand loyalty are all
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examples of strategic competencies.
Core competencies are formed from capabilities, and if they are industry-specific,
they will provide the company with a long-term competitive edge. Competitors have
less visibility into how a business converts its skills into core competencies, making
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competences difficult to understand and copy. The firm’s resources (summarised in

Figure given below) are divided into the functional categories of financial, managerial,
infrastructural, suppliers, production, distribution, marketing, and innovation resources
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in an internal study of strengths and weaknesses.

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m
)A
(c

The extent to which an organisation has access to capital is characterised as

Notes
e
financial resources. Organizations with a strong brand and a good reputation are more
likely to be able to obtain financing at a lower cost. The cost of capital is lower for
well-established businesses and higher for those with a high chance of failure. Other
in
sources of funding come from a well-balanced business portfolio with a solid mix of
cash-generating items to compensate for expensive products in the early stages of
their life cycle. Some businesses may choose high gearing since interest on capital
nl
is anticipated to eat into profits. A company’s cash flow status is critical for acquiring
resources that will allow it to continue operating and growing in the long run.
Managerial resources shape an organization’s capabilities in terms of function
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planning, control, and leadership. For example, football teams have always relied on
the strengths of a single excellent player, such as Pele and Maradona, to achieve
success. Commercial football clubs have switched their strategy from relying on high-
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performing individuals to relying on dynamic teams. High-profile football clubs like
AC Milan and Manchester United place a premium on cultivating and replenishing a
pool of highly competent players as well as a managerial style that emphasises team
performance.
si
Infrastructure resources are the company’s backbone, allowing operations to run
smoothly while also supplying data to help enhance present procedures. Computerized
r
systems for finance, accounts, procurement, internal procedures, production, stores,
marketing, sales, logistics, and customer relationship management are examples of
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infrastructure resources. The research can be taken a step further by assessing the
systems’ platforms, such as computer-based, mobile, and cloud platforms, which may
improve usability across the organization’s departments and personnel. Suppliers
and the type of their products and services will have an impact on an organization’s
ni
competitive edge. Suppliers are rated and evaluated using a variety of methodologies
and procedures. The core deliverables of the product range, quality, availability, lead
times, and service responsiveness are used to make an effective assessment.
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To manufacture high-quality products, manufacturing resources such as plant,

machinery, automation, and technical assistance are required. Another issue to
consider is manufacturing flexibility, which allows for product development and
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innovation. Modular manufacturing and production outsourcing are two other variables
that would allow for product innovation and change.
Distribution channels can be examined to determine the logistical, partner, and

distribution chain management strengths and shortcomings. Other areas of evaluation
m
include channel member motivation, product, pricing, and motivation concerns in

marketing channels.
Research, product development, product life cycle management, pricing policies,

)A
distribution channel design, advertising, public relations, sales, and product promotion
are all evaluated in terms of their success in terms of industry knowledge.
The goodwill produced from the organization’s and its brands’ reputations is known
as brand equity. For various brand names, market perceptions of quality and reliability,
and the organization’s reputation among stakeholders such as suppliers, financers,
(c
prospective employees, channel members, and customers, strengths and weaknesses

are extracted. The goal of the analysis is to establish brands that stand out from the

competition, minimising the number of replacements in the marketplace. Innovation

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resources are an aspect of an organization’s culture that fosters new ideas and
technology capabilities while also having the ability to innovate. Copyrights, patents,
trademarks, and economically sensitive company plans are examples of measurable
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innovation resources.
The Difficulties of Internal Analysis
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When it comes to completing the internal strengths and weaknesses part of a
SWOT analysis, management practitioners frequently make the error of including all of
the categories in which the business is thought to be most resilient or most vulnerable.
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They end up with a huge list of variables that are tough to analyse and translate into
strategic action. While the creation of such a list is suitable in some circumstances, its
contribution to the development of corporate strategy is limited.
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The best advice for management practitioners is to identify the elements that have
a direct impact on the final source of competitive advantage that a firm is attempting
to accomplish. For example, while having high levels of cleanliness and hygiene in a
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back-office operation is desirable in and of itself, it is unlikely to contribute much to the
source of competitive advantage that the company seeks. High standards of cleanliness
and sanitation, on the other hand, are required in industries such as catering,
pharmaceutical manufacturing, and hospital institutions, where client health and safety
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could be jeopardised. Hygiene cannot be defined as a strength under these situations,
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but rather as a basic requirement. In a perfect world, an internal analysis would be
based on an organization’s characteristics in relation to its competitors. The traits are
evaluated in terms of how they help or hinder the organization’s ability to achieve a
competitive position.
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External Opportunities and Threats Analysis

An external environment analysis’ goal is to assist organisations in recognising
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important trends and their future ramifications. The external environment is made up of
characteristics that are outside an organization’s control but must be analysed in order
to realign corporate strategy to changing business circumstances. An external study
reveals potential risks and expansion opportunities.
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In the environment, commercial opportunities develop that can be used to

gain a competitive edge. Mobile money transactions, for example, are expected
to surpass $1 trillion by 2015. The global market is ready for the service to become
broadly distributed, thanks to the widespread adoption of tablets and smartphones,
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faster transmission speeds, and a favourable legal environment. The percentage

commission on each mobile transaction and fees for storing monetary values in
digital wallets are the revenue opportunities. Mobile carriers have a lot of options for
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new revenue sources and business models. China Mobile, Vodafone, Airtel, América
Móvil, Telefónica, and Orange, the top six operators, are preparing for the battle.
Banks, financial intermediaries, and a slew of new digital transaction companies are
gearing up for the next big thing. Threats are events in the external environment that
obstruct an organization’s ability to compete. Online readership of books, newspapers,
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and magazines, for example, is rapidly catching up with and likely to surpass print
readership. Smartphones and tablets are anticipated to outsell desktop and laptop
computers. The external challenge posed by mobile technology means that publishing
businesses like Wiley, Pearson, Reed Elsevier, and Cengage would have to reengineer
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their print products for digital consumption on mobile platforms.
The external analysis of threats and opportunities is divided into three categories
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(see Figure given below). The competitor environment analysis focuses on competing
rivals’ organisational resources and conditions that are anticipated to affect future
market shares, revenues, and profits. Porter’s framework of elements impacting
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an industry’s dynamics and structure is used to analyse the industrial environment.
Frameworks from the political, economic, social, and technological (PEST) and its
derivatives are used to analyse the general environment. The vision, mission, and
strategic planning of the organisation are determined by the strategies that emerge from
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the three areas of analysis.
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Competitor environment is a branch of research that focuses on gathering

and analysing information about competitors. Looking at each rival and acquiring
(c
information on resources, capabilities, core competencies, and competitive advantage

is part of the technique. As each piece is identified, the opportunities and risks to the
company become clear. As a result, Nokia will need to understand as much as possible

about its primary competitors, including Samsung, Apple, LG, RIM, HTC Motorola,
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Huawei, and Sony Ericsson, in order to keep up with and surpass the speed of product
innovation. The assessment of elements that have a direct impact on the organization’s
revenue stream and necessitate a strategic reaction is known as industry environment
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analysis. The goal is to minimise undesirable consequences while maximising
beneficial chances. Porter’s five forces of competition are as follows: the intensity of
competitive rivalry, the threat of new entrants, buyer power, supplier power, and the
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threat of product replacements. These five factors influence the company model,
income streams, and profitability of competitors.
The broader characteristics of society and business that have implications
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for the organisation and its industry are examined in a general environment study.
Political, economic, sociological, technological, ecological, demographical, ethical,
and regulatory viewpoints are commonly used to examine the dimensions. These are
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based on the classic PEST framework and its variants. Within the aspects of Porter’s
five-force model, the general environment analysis often highlights the primary forces
that drive change. The changing dynamics of industrial forces could determine whether
the organisation conducting the analysis sees the development as an opportunity
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or a threat. Opportunities and risks, in contrast to the model, are business-specific
rather than industry-specific. In particular, a threat to one industry’s organisation
may represent an opportunity for another. Traditional tour operators offering all-
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inclusive packages to prospective clients, for example, have no restrictions thanks to
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advancements in information and communication technologies. Although this may
appear to be a challenge to current companies, it opens the door for new types of
intermediaries to participate in the tourism business.
Figure given below shows an example of an analysis based on a sample set of

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external environment dimensions and applied to a grocery chain.

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Figure: Sample of external environment dimensions. Analysis of opportunities

and threats for a supermarket chain

External Analysis Sources

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Organizations assemble a picture of the external environment from a range of
sources, including industry-specific journals, news articles, academic papers, market
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research reports, commercial publications, and trade exhibits. Informal communication
or structured research with suppliers, customers, potential consumers, and the general
public can be used to gather information. Employees and industry personnel in direct
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contact with the market have a wealth of knowledge about the competitive landscape,
competitor behaviour, and potential trends. Customer service personnel, salespeople,
procurement executives, public relations, and communications firms all connect with the
outside world and can provide useful information.
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Matrix of Tows
Weihrich’s TOWS Matrix is a variation of the SWOT Analysis (see Figure given
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below). The matrix identifies possible tactical options for exploiting opportunities or
protecting against threats by leveraging current strengths and reducing weaknesses.
The TOWS Matrix is a framework for developing tactical strategies based on four
distinct stances.
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Figure: TOWS Matrix
In the first quadrant, the WO strategy aims to leverage opportunities originating

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from the external environment while also addressing internal deficiencies that impede
growth. An electronics firm, for example, may be aware of the growing demand for
tablets but lack the necessary technology to produce displays. Joint ventures with
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companies that have the technology and possibly the patents for interactive screens,
which are on the cutting edge of innovation, could be one strategy. Another alternative
is to outsource the role to companies with experience in this area. If nothing is done,
competitors will have the opportunity to develop the market.
(c
In the second quadrant, the SO approach is ideal since it allows a business to

maximise both strengths and opportunities. In 2013, Apple declared a healthy cash
position of $140 billion, which was more than double the size of Facebook’s market

value. Apple utilises a strategy of developing its supply chain with extra money. To
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accommodate demand, more manufacturers have been contracted. To increase
efficiency and reduce time to market, more money is being put into process optimization
and logistics management.
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The ST strategy focuses on the company’s internal strengths, which can be used
to address threats from competitors, the industry, and the outside world. A corporation
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with significant market strength, on the other hand, would have to tread carefully when
dealing with external challenges. In such cases, the legal system has a tendency to
react violently. In 2013, Microsoft was fined €561 million ($731 million) for failing to
comply with a regulatory request by failing to provide users with the option of selecting
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their preferred web browser when using the Windows platform. Several fines have been
levied against the world’s largest software company in the United States and Europe. In
ten years, the EU has fined Microsoft a total of €2.2 billion for claims of non-competitive
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strategic behaviour.
When a company must minimise both its weaknesses and threats, the WT
strategy in the fourth quadrant is the worst-case scenario. External forces, on the other
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hand, may not be avoidable, as in the case of the tobacco business. Philip Morris
International, China National Tobacco, Japan Tobacco International, Imperial Tobacco
Group, and British American Tobacco rely on a persistent pre-emptive strategy to
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combat tough restrictions and lawsuits in many countries in order to stay in business.
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3.1.5 Develop Business Opportunities using PESTLE Analysis
The term PEST stands for political, economic, social, and technological change.
PEST analysis is a popular and effective method for assessing strategic risk. It
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identifies the changes in the external macro environment and their consequences on a
company’s competitive position.
The external environment consists of variables beyond a company’s control, yet

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they must be analysed in order to realign corporate strategy with changing business
situations. Firms are part of a larger ecosystem in which they function. They are subject
to a wide range of exogenous circumstances, any of which can have a significant
impact on the firm’s competitive position. Strategists try to comprehend external
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elements and assess how company models will need to change in order to adapt to
their surroundings. Preemptive strategy is used to reduce the effects of external
circumstances, and opportunities are taken advantage of as a result of new competitive
positions that may be generated as a result of the process.
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Overview of the Concept

PESTEL or PESTLE (which adds environmental and legal components), STEEPLE
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(which adds an ethics dimension to the PEST analysis tool), and STEEPLED (which
adds a corporate social responsibility perspective to the PEST analysis tool) (which
adds the analysis of demographic factors). With increased awareness of environmental
or ecological issues, another version of the PEST framework, specifically the STEER
analytical tool, which adds regulatory aspects, has been implemented.
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PEST analysis and its variants are part of the strategic management process’s
“assessment stage.” The procedure begins with a thorough examination of the firm’s

surroundings. The “OT” portion of the SWOT analysis is the external environmental
Notes
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analysis (internal strengths and weaknesses, external opportunities and threats). When
PEST and SWOT are used in conjunction with Porter’s five forces model, the benefits
are amplified even further (encompassing the external effects of suppliers, consumer
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demand, new entrants, substitute product, and competitive rivalry).
A PEST study includes elements that potentially have significant fundamental
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value to a company. The study might be done for the entire company, its business units,
individual items, or a new venture or partnership.
The components of a PEST analysis, when they are used, and the strategic tools
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that are used in combination with them during the strategic management process are
summarised in Figure given below.
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Figure: Summary of PEST components, application, and complementary strategic

tools
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Political Factors
In a PEST analysis, the extent to which policymakers are likely to intervene in the
commercial environment is a critical factor. Factors to consider include trade, taxation,
labour, and environmental laws. Commercial constraints and political stability are
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other important elements that might decide whether a company succeeds or fails. The
European Union’s ban on tobacco advertising, for example, was disastrous for the
Formula One industry, which sought refuge in other parts of the world, like Dubai and
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Abu Dhabi. Because of censorship laws, Google had to leave China. The Arab Spring,
which culminated in a broad upheaval, has led many companies to reconsider their
approach for entering Middle Eastern and North African markets. The British prime
minister’s intention to hold a referendum on whether to stay in or leave the European
Union has substantial ramifications for investors who have previously made investment
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decisions based on freedom of movement principles.

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Figure: Political Factors in PEST analysis
Political factors can be classified at three different levels: supranational, national,
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and subnational. The supranational level is becoming increasingly important as
economic activities become more worldwide. In recent years, the globe has witnessed
a gradual progression of countries arranging themselves into economic blocs,
progressing toward political unity, albeit at the sacrifice of their sovereignty. A good
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example is the United States of America. The European Union has gradually pushed to
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take on more authorities and decision-making authority from its member states, albeit to
a lesser level. The ASEAN bloc is attempting to strengthen its position by enticing the
South East Asian powers, Japan and China, to join. A political analysis of the country
in which a corporation operates provides, at best, a myopic view as geopolitical factors
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consolidate into major political blocks. Businesses may need to broaden their horizons
and look outside their borders in order to stay informed about what is occurring on
a global scale. In the first instance, companies may join lobbying groups in order to
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influence policymaking in their favour. Even if only a small amount of influence may be
exerted, transnational political surveillance gives the necessary business intelligence to
establish the appropriate strategies for adapting to changes in the political environment
that are likely to occur in the near future.
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Fiscal policy, national incentives for enterprise, planning and permitting, procedures
for licencing and approval of new products, processes, and services, perceived levels of
corruption and transparency, and government priorities for supporting defined sectors of
the economy are just a few examples of national policy areas that can have a significant
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impact on a firm’s strategy. When the above political elements are taken into account, it
is clear that businesses would benefit by examining and evaluating the political climate
in which they currently operate or will operate in the future. In order to ensure that a
)A
firm’s strategy is in sync with the policy environment, constant monitoring of any or all of
the following aspects becomes critical. Changes in the political atmosphere can have a
significant impact on the structure and operations of a market or business.
Economic Factors
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Economic considerations have the greatest impact on a market’s or industry’s

profitability and overall appeal (see Figure given below).

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Figure: Economic factors in PEST analysis
The Gross Domestic Product (GDP) per capita is the most often used indicator of
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economic success for a national economy or a specific industry sector. This is typically
quantified in terms of Purchasing Power Parity (PPP) to allow for fair comparisons
between countries. Time series and multilinear regression analysis approaches are
commonly used to forecast projected performance changes over a set period of time.
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GDP per capita is a particularly helpful metric, particularly for industries with strong
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income elasticities. Jewellery, building, entertainment, tourism, betting, cosmetics,
and different luxury items are all examples of such sectors. Demand in some other
businesses is more resistant to GDP variations. Staple meals, health services, and
basic commodities are common examples.
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While GDP per capita is a valuable metric, it only gives a partial picture of
the economic elements that may affect a company. Inflation not only reduces a
consumer’s purchasing power, but it also has a negative influence on the prices of
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raw materials and other inputs that a company needs to provide goods or services.
Higher or lower prices for the purchase or sale of goods and services, on the other
hand. Consumers’ discretionary income suffers as a result of higher taxes. From the
standpoint of an investor, a high unemployment rate is a two-edged sword: on the one
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hand, it reduces households’ disposable income, but on the other hand, it gives them
access to a cheaper labour market. Additionally, increases in bank interest rates affect
both consumers and investors. When bank interest rates rise, people are more likely
to preserve a portion of their discretionary income rather than spend it on consumer
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products. They are also less likely to borrow money from banks and financial institutions
to purchase capital goods like cars, real estate, and appliances. Investors are also more
inclined to borrow less and invest a portion of their speculative income in guilt-edged
)A
securities rather than continuing to develop their portfolios. This is primarily due to a
rise in their capital costs.
Changes in economic conditions will have varying effects on various industries.

Firms must be able to recognise a clear behavioural connection between economic
and industrial trends. Not just between industries, but also between the economic
(c
performances of different countries, there are clear interdependencies in some

circumstances. In recent years, the European Union has seen a slew of failing

economies line up for bailouts as a viral recession swept across all European shores,
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with Cyprus, Greece, Ireland, Portugal, and Spain among the worst-affected countries.
Other countries have been affected by the domino effect. The London FTSE 100 index,
the French CAC, and the German Dax all dropped 63, 64, and 112 points, respectively,
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after news that Cyprus had become the fifth Eurozone country to seek aid. The loss
was even more pronounced in Milan and Madrid, with the former losing 549 points and
the latter 252 points.
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All of these economic aspects highlight the need of maintaining constant
surveillance of crucial economic issues that affect an industry. Walking through the
economic maze and making sense of how events are likely to unfold is not an easy
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endeavour. Firms may choose to limit their analysis to only those elements that have a
vital impact on their operations rather than the entire spectrum in this case.
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Social Factors
Work habits and attitudes, consumer tastes and preferences, and the specific
type, form, and amount of demand for a product or service are all influenced by social
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trends. Monitoring social trends allows a company to reposition its products or services
to meet shifting client expectations. Figure given below shows some instances of social
elements that influence a company’s competitive position.
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Figure: Social factors in PEST Analysis

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Air travel was traditionally associated with high-income consumers who valued
comfort and quality service in the previous century. Air travel has evolved into a
commodity that is available to people of all social backgrounds. Ryanair has defied
conventional wisdom and repackaged air travel as a no-frills service, reflecting
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customers’ basic desire to move safely and conveniently from one location to another.
Plasmon has changed its products and released a variety of the Plasmon Biscuits
aimed for adults, based on changes in their consumers’ tastes. Customers’ increased
health concern has created a market for healthy cuisine across the developed world.
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Higher education has provided firms with a healthier pipeline of potential

employees, but it has also provided them with a pool of more demanding customers.
Customers’ preferences and needs have gotten more diverse, as telecom and financial
companies have realised. Companies have switched from a product-oriented to a
(c
consumer-oriented business model. Customer centricity is, in fact, spreading across

a wide range of businesses. The focus of market segmentation is shifting away from
traditional demographics and toward lifestyle.
Insurance companies are creating policies tailored to the needs of busy

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professionals, small business owners, and families. Banks have tailored solutions for
students, employees, self-employed people, and those with a high net worth.
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Changes in a population’s demographic features can have an impact on many
aspects of the economy. The majority of developed countries are dealing with the
effects of an ageing population, since the baby boomer generation has reached
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retirement age. The need for medicines, healthcare, and support services increases
as the population ages, whereas demand for things associated with the younger
generation decreases (such as education). The older generation, on average, has
more free time and is more financially secure, resulting in the ideal consumer spending
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combination.
An assessment of social factors allows a company to forecast what pressures

various stakeholders will exert on government policy decisions, which will have an
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influence on the company.
Technological Factors
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The rapid pace of technological progress is fuelled by innovation, which is fuelled
by entrepreneurs who aim to push the limits of what is currently possible. Technology
becomes obsolete as new boundaries are crossed, and any competitive advantage is
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short-lived. Technological advancements can either spell the end of some industries or
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open the door to new ones. Figure given below shows some instances of technological
factors that influence a company’s competitive position.
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Figure: Technological factors in PEST analysis
Many intermediaries have been eliminated as a result of the proliferation of the

Internet and ecommerce. Disintermediation is the phrase used to describe this process.
Consumers have turned into their own travel agents in the travel sector. They plan
(c
and schedule their travel on the internet, using business-to-consumer channels that
were previously only available to supply chain members. Furthermore, many shops
have noticed an increase in competition as a result of competition from online stores.

Technology, on the other hand, has given rise to new types of intermediates. Re-
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intermediation is the name for this. Amazon, eBay, and Expedia are just a few examples
of new types of intermediates. They have the benefit of being well-integrated into social
networks, which open up new marketing avenues for a product or service. Consumers
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can publish their unbiased thoughts on specific products or services via various
channels. The perspectives offer value to the supply chain. They are highly appreciated
by other potential consumers, and their decisions are influenced by them.
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In certain cases, a new technology has entirely replaced an older one, causing its
demand to plummet and eventually disappear. In other circumstances, technologies
compete with one another for the right to be called the industry standard. For office
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software, Microsoft is the gold standard. Although the iPad is the current standard for
tablets and is currently under threat from Samsung, Blu-ray is the benchmark quality
standard utilised for modern audio-visual home entertainment.
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Technology can be used to gain a competitive advantage in a variety of ways
from a commercial standpoint. Cheaper production, increased consumer access,
improved branding, product quality, and higher levels of business analytics are just
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a few examples. A company must be watchful in order to prosper in a fast-paced
technological transition. It must keep up with any technical developments in the sector
and understand how they will affect the industry’s future attractiveness and profitability.
Pest Analysis Process

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The process of investigating a firm’s external macro environment is divided into five
stages (see Figure given below):
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Figure: Process and Stages of PEST Analysis
1. Identifying present and future external political, economic, social, and technological
aspects that affect the firm.
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2. Examination of each factor’s potential impact on the firm’s competitive position.

3. Classification of each aspect as an opportunity or a threat to the company.
4. The strategic importance of each set of PEST opportunities and threats is prioritised.
(c
The impact on the firm’s size and duration are used to rank it.
5. Developing a strategic action plan to mitigate or prevent negative consequences
while enhancing positive outcomes.
Environmental factors should be examined in terms of their impact on the

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firm’s resources, capabilities, and core competencies, according to the following
recommendations:
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●● Resources are the materials and labour that go into making a product or service.
Raw materials, buildings, machinery, and equipment are examples of tangible
resources. Financing, technology, human capital, supplier networks, sales force
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structure, distribution networks, patents, trademarks, established customer base,
brand equity, and business reputation are examples of intangible resources.
Resources can be pooled and developed into capabilities, which can then be
transformed into core competencies.
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●● Capabilities refer to a company’s ability to make the most of its internal resources
and integrate them into competitive products and processes. Developing novel
technology solutions, shortening time to market, generating more efficient
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distribution methods and retail outlets, attracting consumer attention through
marketing, and managing customer connections for long-term brand loyalty are all
examples of strategic competencies. Capabilities are built from a diverse range of
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internal resources and become ingrained in the firm’s internal procedures in an
unspoken way. They’re tough to codify as procedures, which makes them difficult
to replicate. Intangible resources are frequently the primary source of unrivalled
strategic skills.
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The goal of a PEST analysis is to give strategists a framework for increasing
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their knowledge of the external environment. It is not, however, designed to bind the
analysis in a straitjacket. The various components of the framework have explicit
interdependencies. An increase in government taxes, for example, is likely to reduce
consumers’ disposable income. New incentives for industry, on the other hand, are
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likely to attract more investment and hence increase employment and income in a
country.
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Furthermore, citizens’ increased environmental consciousness is likely to pressure

governments to pass legislation in favour of environmental protection. Users of the
framework should be aware that if not applied properly, a PEST study might turn into a
never-ending review of Political, Economic, Social, and Technological factors, resulting
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in an inconclusive analysis. Only those characteristics that have a direct impact on the
industry’s attractiveness and are anticipated to change in the near future should be
included, according to the framework’s basic premise. This would allow a company to
concentrate its efforts entirely on aspects that are critical to its competitive position.
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3.2 Feasibility Analysis
3.2.1 Meaning and Concept of Feasibility Analysis

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A feasibility study tries to objectively and logically discover the strengths and
weaknesses of a current firm or new enterprise, as well as the possibilities and risks
that exist in the environment, the resources needed to carry out the project, and the
likelihood of success. In its most basic form, the two factors for determining feasibility
(c
are the required cost and the value to be obtained.

A well-designed feasibility study should include information on the company’s

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or project’s history, a description of the product or service, accounting statements,
operational and management details, marketing research and policies, financial
statistics, legal needs, and tax duties. Feasibility studies are usually conducted before
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technical development and project implementation.
Since a feasibility study assesses a project’s chances of success, perceived
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objectivity is a crucial aspect in the research’s credibility with possible investors and
lenders. As a result, it must be conducted objectively and unbiasedly in order to
produce information on which judgments can be made.
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Investment plans involving large sums of money are almost always irrevocable.
As a result, before beginning a project/proposal, it is vital and imperative to determine
whether the project/proposal is feasible.
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Feasibility is the process of analysing and evaluating a proposed project to see if it
is:
a. technically viable,
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b. cost-effective, and
c. profitable.
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Feasibility studies, also known as Feasibility Analysis, are generally always done
when big sums of money are at stake.
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A feasibility study determines if a proposed project or system is feasible.
Four Feasibility Tests:

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a. Operational feasibility is a measurement of how well a solution will work in a company.

It’s also a reflection of how people feel about a system or endeavour.
b. Technological feasibility is a measurement of a technical solution’s practicality as
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well as the availability of technical resources and knowledge.

c. Schedule feasibility is a metric for determining how feasible a project’s schedule is.
d. Economic feasibility is a measure of a project’s or solution’s cost effectiveness.
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Designing a Feasibility Report:

During the project initiation phase, a feasibility study is one of the most important
actions. Its goal is to assess and justify the project’s technical feasibility, commercial
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viability, and cost-effectiveness. The study is used to demonstrate the project’s

feasibility and justify its launch.
Following the completion of the investigation, a feasibility study report (FSR) should
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be created to describe the activities and determine whether the project is reasonable
and feasible.
3.2.2 Contents of a Feasibility Report

(c
A feasibility report is a piece of evidence that tries to elicit some form of action.
Feasibility reports are written to persuade/assist decision-makers in their decision-

making process. Remember that your solution isn’t the only one available; the decision-
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makers will most likely have a number of options to pick from. A feasibility analysis also
analyses if the activity under investigation can be completed with the resources already
available OR how many resources will be required to fulfil the task. A feasibility study
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can be useful in a variety of situations, including event planning, financing, and even
house remodelling.
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What is the definition of a feasibility study?
A feasibility study is a method of determining a project’s viability and acceptability.

Before spending time and money into a project, a corporation must first determine
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whether the initiative will be successful. Companies may want to know about input
prices, the amount of research that will be required, or even the project’s marketability.
With regard to input prices, it is critical that businesses understand (even before
investing time and resources into the project) how much it will cost to complete their
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product. Companies also want to know how the public/people will react to a change if
they invest time in research and go forward with a change or advertising of a product.
Will there be a battle for the new product, or will it fail? Feasibility studies are used
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to give companies information and analysis on whether or not they should pursue a
particular course of action.
Feasibility assessments are frequently used to persuade decision makers to take

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one of two paths. Many times, there is just one path of action, but there should always
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be a backup plan.
Consider the following questions when writing your report:
What should you think about when writing feasibility studies or reports?
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When preparing a feasibility study, it’s crucial to keep alternatives in mind.

Companies’ decision-makers want to know why they have to make a choice, and
secondly why they should choose this particular option. To provide decision makers a
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cause to examine other solutions, feasibility reports must offer extensive information on
the problem that has arisen.
Is your point well-made and relevant?

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You must first identify your target audience or reader before choosing whether
or not your feasibility study is relevant. People in professional groups expect your
argument or analysis to be based on the organization’s requirements or goals, as well
as its future. In professional contexts, it is expected that the individuals reviewing your
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research are aware of those guiding ideas or criteria. To put it another way, make the
study logical and relevant to what you’re trying to achieve or the change you want to
see. Facts can add weight to your case. Decision-makers, on the other hand, want to
know that your sources are trustworthy. They want to know that the information they’re
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getting is from a reputable industry source. This could end up being the most crucial
component of any feasibility study or report. Because any material you obtain, no
matter how well presented, can be wrecked if you don’t have enough information about
your sources or, in the worst-case scenario, if your sources aren’t reputable.
(c
What should you think about in terms of your alternatives?
It’s critical to know how your options stack up against the criteria you’ve

established. Most of the time, your readers will want to know how your outcomes
Notes
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compare to those of others. This enables people to make an informed decision based
solely on data and outcomes. This, according to Anderson, is at the heart of any
feasibility assessment.
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What evidence have you gathered in opposition to your alternatives?
It is critical to establish judgments about the alternatives based on trials and
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findings on possible alternatives and how they perform. This isn’t meant to disparage
other solutions or products; rather, it’s meant to distinguish your product or idea.
General knowledge or conclusions about what each product performs well should
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be included. This is still a vital component since decision makers require a basis for
comparison, a reason to choose your proposal over the alternatives, which may already
be in existence or will be in the near future.
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What should be included in a conclusion?
Include in your conclusion how you plan to put your ideas into action for the
organisation and how they will benefit it. Explain why your strategy is the best for the
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firm. Compare and contrast statistics and data to assist readers understand the logical
choice and course of action that will help them choose one alternative over the other.
Explain your knowledge of the subject and assist them in realising that your suggestion
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is the best option for them. If you deliver the argument effectively, people will most likely
take your side based on your experiences. Based on the essential factors you specify in
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your feasibility study, the organisation will choose your plan of action.
A Basic Feasibility Report’s Key Features

The seven components of a feasibility report are listed below:
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●● Introductory paragraph - You must persuade the decision maker to consider any
option. You must first persuade them to read your report. Tell them how your work
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will benefit them personally or as an organisation.

●● Criteria/Constraints - You must clearly define the criteria for the desired outcomes.
You will be able to make practical and rational decisions as a result of this. In your
feasibility report, you have two options for presenting the criteria. To begin, divide
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the criteria into separate sections. When you have a lengthy report and need to go
into great detail with your explanation, this is the greatest option. Second, when
the criteria become more relevant, you can incorporate them throughout your
report. It’s vital to remember, though, that whatever technique you use, the criteria
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must be introduced early in the report. It’s also crucial to sketch out the restrictions
of your proposed solutions.
This demonstrates to the audience that you recognise and accept the fact that
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no solution is perfect. This will also ensure that the audience takes the best decision
possible.
●● Method – It is critical to deliver accurate and timely information. You should list
the trustworthy sources you used and the process by which they were obtained
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(internet, interview, book, etc.). Your document will lack credibility if you don’t use a
reputable research strategy or use credible sources.

●● Alternative Option Overview – You must highlight the essential elements of each
Notes
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alternative option. Make sure they’re simple to comprehend and presented in a
user-friendly format. Remember that your goal is to empower your audience to
make the best decision possible.
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●● Evaluation - The majority of your report should be devoted to evaluating the
possibilities using the criteria you devised. Add graphs, charts, and other visual
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aids to demonstrate that you’ve researched your options and compiled statistics to
back up your arguments for why your alternative is superior to the competition.
●● Conclusions - You must state the conclusion that you have reached. What criteria
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did you use to weigh the options? Then it’s a matter of deciding which option is
ideal for your company.
●● Recommendations – You must utilise your knowledge and experience to state
which choice you believe should be chosen.
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●● Note: Depending on the audience, scenario, mission, and other factors, all
seven elements may or may not be required to be included in the feasibility
study. Additionally, the pieces do not have to be in the exact order listed above.
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The conclusion, in particular, should be mentioned more than once in the report.
It should be summarised at the start of the report, and if the feasibility report is
lengthy, it can also be addressed in the middle.
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An executive summary should be included at the start of the report. The essential
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aspects of the feasibility study are summarised in 2-3 pages for busy administrators and
school board members to peruse quickly. The executive summary provides a high-level
overview of the feasibility study, allowing the reader to understand the big picture before
diving into the details. Only the executive summary may be read by some decision-
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makers. As a result, the executive summary should be brief and incorporate the study’s
primary findings, as well as a recommendation.
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Introduction
The introduction of a feasibility report serves two purposes:
●● To respond to the reader’s query, “Why do we need to look at these alternatives—

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are they relevant?”

To answer this question, you must first identify the problem that your report will help
to solve or the goal that your report is attempting to achieve.
●● To discuss and analyse the various possibilities you’ve considered, as well as how
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you went about studying and analysing them.

Note: Typically, the opening to a feasibility study reveals some of the most
essential conclusions as well as the most feasible change possibilities. Other aspects
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of a report of this form, such as the criteria, technique, or any other type of general
background, may also be briefly addressed and mentioned in this section.
Criteria/Constraints
(c
What to think about when writing your feasibility study or report. As you begin to
examine what you want to consider, keep in mind that most criteria revolve around one
or more of the following questions.
Will your strategy or plan deliver the results you want?

Notes
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On the technical side, this is very common. What you must determine is whether
or not your implementation or adjustment makes a significant effect. Let’s imagine you
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want to improve a particular component of your business. Will your adjustment actually
increase the quality and speed of what they’re attempting to accomplish? Or will you
discover in your research that the adjustment really slows down production or reduces
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worker efficiency? This is vital to know ahead of time because an improvement in the
workplace does not always imply an improvement in the way a company operates.
However, many of these elements will not become apparent until after you have
completed your research. In the worst-case scenario, you may not notice any negative
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effects until after the strategy has been implemented.
What will it take to put your plan into action?
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Even if your strategy appears to be logical and efficient on paper, it may not be
feasible in your field of work. In every area of a professional situation, you must
consider the conditions that develop. What you may discover is that your approach may
be incredibly successful in one field but a complete failure in another. This can also
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happen from one company to the next. As you work at several companies in the same
area, you’ll learn what works in one place but not in another. You may need to consider
the number of adjustments that will need to be made as part of your plan. Do you need
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to make significant modifications to your operations, or improve current equipment or
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materials that are in use or on hand? The amount of money that must be invested in a
new project is sometimes far greater than the actual amount of profit that will be gained
from the improvements. Your strategy must be viewed as a cost-benefit analysis.
Cost of implementation
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This may become the most important consideration in any business decision. How
much will it set you back? In any decision, the advantages must outweigh the costs, not
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just in business, but in any professional field. This is true even when selecting to focus
on one component of a project over another. When creating criteria for a feasibility
report, you must include the costs assuming everything went according to plan. Then
you might want to figure out how much it would cost if you experienced moderate or
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big setbacks. It’s critical to comprehend the expenses since, unless the advantages
surpass the costs, a corporation will almost certainly reject your planned course of
action.
It is also critical to consider the company’s future. Perhaps your plan of action
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will be ineffective for the first year, but what about the years after that? This must be
taken into account since, as with any other business choice, the initial fixed cost may
be significant, but the marginal gains may be substantial. In that situation, if the change
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is helpful to the company’s future, it may be a positive move. Consider the health-care
industry. Would it be advantageous for a corporation to invest in new equipment despite
the large upfront payment?
Is your product/idea appealing?

(c
This is as straightforward as determining whether or not your strategy will be

successful. Will people be willing to go to extremes for change, or will they reject what
you’re trying to accomplish? A change or solution must sometimes be more than merely

efficient and cost-effective. You must consider the shifting demographics of consumers
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and people. Many viable options do not always succeed simply because they have the
impact of driving customers away. As a result, the product or plan fails to sell. Employee
morale can be shredded as one of these unfavourable side effects. How would
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employees react, even if a plan is being promoted and projected to boost productivity?
Many firms fail to consider how their personnel would react to change. But the truth is
that keeping staff happy is the only way to enhance production. They will not see the
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need for change until they are pushed to enhance the firm and their personal status.
Method
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Keep in mind the following:
This is an extremely important and significant element of your feasibility report.
This section of your work shows the reader that what you uncovered through your
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research is important and reliable. By explaining how you came to know what you’ve
discovered and what you know today, you’re demonstrating to your audience that your
findings are reliable and have real importance. Your readers will feel comfortable and
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secure in making the necessary modifications if you use solid approaches for gathering
information.
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It all comes down to the source
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The question of which sources to employ varies greatly from one study to the next.
You can get your data from a variety of sources; it all depends on the questions you’re
seeking to answer. Academic journals or reports • Library research
◌◌ Phone calls
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◌◌ Face-to-face interviews are some examples of sources.

◌◌ Meetings with experts in the field or within your company/organization
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◌◌ Surveys (Survey Monkey!)

◌◌ Usability Testing
◌◌ Laboratory testing
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How much is sufficient?
Each report will have a different length and density of content. Your audience,
as well as the context and reason for which your article is produced, should all be
considered. The key goal is to simply persuade the readers that what you’re saying is
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accurate by discussing how you obtained your data in a reliable and safe manner. Make
sure your writing is focused on the reader and that they are satisfied. As a result, your
technique will be long and descriptive enough.
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What role does it play?
This section of your report will be placed differently depending on the sort of report
you’re producing. If you only employed a few distinct methods throughout your study,
it could be a good idea to list them all at the start of your report, with a paragraph for
(c
each one. However, if you have numerous unconnected approaches, it’s preferable to
sprinkle them throughout the report, where they’ll best complement your analysis or
data.
3.2.3 Types of Feasibility Analysis

Notes
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Market Analysis
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Market analysis has undergone a paradigm shift in recent years. Extrapolation
of past patterns utilizing statistical tools and methodologies can no longer be used to
estimate and project demand supply gaps for products and services. Multiple market-
influencing variables must be considered. Demand forecasts must be taken into
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account for all potential developments. Many initiatives have failed, not because of
technological or financial issues, but because they ignored client requirements and
market pressures, according to a review of projects completed over the years.
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Market analysis is largely concerned with two questions:
◌◌ What will be the collective demand for the planned product / service in the
future?
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◌◌ What will be the market share of the project that is being evaluated?
To answer the following issues, the market analyst will need a wide range of data
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as well as appropriate forecasting methods. The following types of information
are required:
◌◌ Past consumption patterns and current expenditure levels
◌◌ Supply problem in the past and now r
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◌◌ Potential and restrictions in terms of production
◌◌ Imports and exports
◌◌ Cost structure formation in competition
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◌◌ Consumer manners and conduct, intents, motives, attitudes, preferences, and

wants
◌◌ Channels of distribution and marketing guidelines are in use.
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◌◌ Constraints on the administrative, technical, and legal fronts.
Technical Analysis
Technical analysis is based on product descriptions and specifications, as well as
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quality-control criteria. The study covers accessible alternative technologies, selecting

the most appropriate technology based on the best mix of project components, the
impact of technology purchase, and license contract terms. Technical factors, such as
project selection, are given special consideration. The technology adopted should also
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take into account the quality requirements of raw materials and other inputs, as well as
ensuring that manufacturing costs are competitive.
The following are some of the most critical questions that technical analysis raises:
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◌◌ Have any preliminary tests or studies been conducted?

◌◌ Has the availability of raw materials, electricity, and other inputs been
acknowledged?
◌◌ Is the chosen production method appropriate?
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◌◌ Is the equipment and machinery chosen appropriate?

◌◌ Has funding been allocated for supplemental equipment and auxiliary

Notes
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engineering work?
◌◌ Is there a plan in place for dealing with effluents?
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◌◌ Is the site, building, and plant arrangement sound?
◌◌ Have work schedules been drawn out in a reasonable manner?
◌◌ Whether the technology that will be used is appropriate from a societal
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standpoint.
In a nutshell, technical analysis includes the following areas:
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Technical analysis is largely concerned with:
◌◌ Utility and resource inputs

◌◌ Product mix
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◌◌ Production process / technology
◌◌ Location and capacity of the plant
◌◌ Equipment and machinery
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◌◌ Civil works and constructions
◌◌ Charts and layouts for the project
◌◌ Schedule of work r
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Financial Analysis
Financial analysis attempts to determine whether the planned project will be
financially sustainable in terms of meeting the burden of debt servicing and whether
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the planned project will fulfil the return expectations of those who provide the money.
Financial analysis looks at the project’s viability from a financial or commercial
standpoint and calculates the return on investment. The following are some of the most
regularly utilized financial analysis methodologies:
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◌◌ Pay-back Period
◌◌ Return on Investment (ROI)
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◌◌ Present Value (NPV)

◌◌ Benefit Cost Ratio/Profitability Index (PI)
◌◌ Internal Rate of Return (IRR)
The following are some of the features that should be considered while preparing a
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financial appraisal:
◌◌ Investment return and project cost

◌◌ Capital costs
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◌◌ Profitability estimates
◌◌ Point of break-even
◌◌ The project’s cash flow
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◌◌ The worthiness of an investment is assessed using a range of criteria.

◌◌ Proposed financial situation
◌◌ The risk levels
Economic and Ecological Analysis

Notes
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Economic Analysis
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Economic analysis, often known as social cost-benefit analysis, is concerned with
assessing a project from a broader social perspective. The focus of such a decision is
on a project’s social costs and benefits, which are often distinct from its economic costs
and benefits. The following are the questions that social benefit analysis seeks to solve:
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◌◌ What are the project’s direct economic gains and expenses measured in
terms of efficiency pricing rather than market prices?
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◌◌ What effect would the initiative have on the distribution of income in society?
◌◌ What impact would the initiative have on the amount of savings and
investment in society?
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◌◌ What role would the project play in achieving certain merit objectives like as
self-sufficiency, employment, and social order?
Ecological Analysis
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Environmental issues have gained a lot of attention in recent years. Environmental
impact assessments should be carried out for major projects with considerable
ecological implications, such as plants and irrigation schemes, as well as polluting
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sectors such as bulk pharmaceuticals, chemicals, and leather processing. The following
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are some of the most important questions that ecological analysis raises:
◌◌ What is the expected environmental impact of the project?

◌◌ How much will it cost to put in place the necessary restoration procedures to
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ensure that environmental damage is kept to a minimum?
Environmental impact studies include the following objectives:

◌◌ Identify and describe the environmental resources/values (ER/Vs) or
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environmental attributes (EAs) that will be impacted by the project (in a

quantified manner as far as possible).
◌◌ To explain and evaluate the potential environmental impacts of the proposed
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project on the ER/Vs.

◌◌ To describe the project’s alternatives, which could achieve the same
objectives but have a different set of environmental consequences.
Environmental impact studies would make it easier to supply the essential
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corrective actions in terms of the equipment and facilities to be provided in the project in
order to comply with environmental regulations.
The figure below gives an understanding of the main issues that are faced while
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considering different types of analysis:

(c

Notes
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3.3 Project Management
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3.3.1 Understanding the Project Environment
Most projects have well stated objectives, work scope, budget, and schedules, but
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all too frequently, the project’s environment and context are not properly understood or
specified. When it comes to project management and execution, this is a key source of
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risk.
While having a clearly defined set of objectives, work scope, budget, and timeline
is necessary for planning, implementing, and controlling a project, the project will almost
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certainly fail if the project management team does not properly comprehend the project
environment and context. This is because, just as much as, if not more than, a clearly
defined job scope, budget, or schedule, the project environment and context influence
performance. Even though their goals and scope of work are similar, no two projects
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are alike. This is because even projects with the same goals and scope of work will
inevitably be carried out in diverse settings. As a result, environmental considerations
are frequently the determining elements in a project’s success or failure.
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When assessing the environmental and contextual shaping aspects that distinguish
one project from the next, keep the following in mind:
What is the project’s geographical location? – This will aid in the identification of
possible project execution restrictions and risk factors, such as:
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◌◌ Extremes in local weather and climate

◌◌ Topographical and geotechnical issues
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◌◌ Restricted access to the site

◌◌ Availability of utilities and local services
◌◌ Sensitivity to the environment
◌◌ Availability of human and material resources
(c
What is the political situation in which the project is taking place? - This will
influence how the project management team interacts with its stakeholders, for
example:
◌◌ Dealing with concerns of bribery and corruption

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◌◌ Managing policy divergences between the local and national levels
◌◌ Adapting to changes in political power or influence that occur unexpectedly
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◌◌ resolving differences between political groupings
How will the project be impacted by local regulatory and legal requirements? – This
may have an impact on project execution performance if certain factors, such as:
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◌◌ Standardization is prioritised.
◌◌ Content criteria for the local market
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◌◌ Observance of local and site-specific environmental regulations
◌◌ Observance of corporate ethics codes
◌◌ Limitations on the availability of people and material resources
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What kind of cultural and religious context does the project operate in? – This will
determine how the project management team should change the project execution
strategy, taking into consideration the following factors:
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◌◌ Accommodation and working conditions for personnel
◌◌ Local holidays and work hours that are reasonable
◌◌ Areas that are restricted or protected
◌◌ Considerations and needs for security
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What technology resources, skills, and expertise does the project have? – The
availability of technological know-how can have an impact on a project’s aims and
values by affecting:
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◌◌ Complexity of design
◌◌ Availability of human resources
◌◌ Project execution speed and efficiency
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◌◌ Observance of the project’s scope and standards

◌◌ End-product dependability and operability
◌◌ Project execution and operation safety
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What are the current market conditions for the project? - Market conditions are
continually changing, and depending on the overall economic situation, they can
either help or hurt a project’s performance. Changing market conditions can have the
following effects on a project:
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◌◌ Finance ability of the project

◌◌ Availability of human and material resources
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◌◌ Modifications to the project’s scope and/or standards

Who are the project’s stakeholders, what is their level of influence, and who
is in charge of the project? – The influences exerted on a project by its managing
organisation and other stakeholders are unavoidable. The following stakeholder
considerations, in general, affect the level of this influence:
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◌◌ Experience
◌◌ Culture

◌◌ Style
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◌◌ Structure
◌◌ Maturity
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◌◌ Risk Attitude
◌◌ Interests and Priorities
These are only a few of the environmental and contextual aspects to consider
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while creating a project management or execution strategy. The value of adequately
comprehending the project environment and context should never be underestimated,
as it can help even the most technically well-defined initiatives avoid being
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disorganised.
3.3.2 Project Schedule, Resource and Budget Planning
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Project Schedule Planning
The heart of the project life cycle is project planning, which tells everyone
involved where you’re going and how you’re going to get there. The project plans are
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documented, the project deliverables and requirements are specified, and the project
timeline is created during the planning phase. It entails developing a set of strategies
to steer your team through the project’s implementation and closure phases. This
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phase’s plans will aid you in managing time, cost, quality, modifications, risk, and other
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associated issues. They will also assist you in maintaining control over your employees
and external vendors to guarantee that the project is completed on time, on budget,
and on schedule. The project planning phase is generally the most difficult for project
managers because they must make accurate guesses regarding the number of people,
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resources, and equipment required to finish the project. You may also need to schedule
your communications and procurement efforts, as well as hire any third-party vendors.
To create our schedule, we must first describe the activities, order them correctly,
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estimate the resources required, and estimate the time required to finish the tasks.
Identifying Activities
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The work package elements of the WBS are further broken down in the activity
definition process. It outlines the precise actions required to complete the WBS’s
deliverables. These activities are the specific units of labour that must be completed
to fulfil the deliverables, not the deliverables themselves. Activity definition divides the
work into activities that can be estimated using everything we already know about the
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project. To obtain a decent picture of what you need to perform on the current project,
look at all of the lessons gained from comparable initiatives your organisation has
completed.
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Expert judgement, in the form of project team members who have developed
project scope statements and WBS before, can assist you in defining activities. If
you’re in charge of a project in a new domain, you might want to enlist the expertise
of specialists in that industry to help establish tasks so you know what activities will be
involved. You might want to make an activity list first, then have the expert look over it
(c
and make suggestions. Alternatively, you might enlist the help of the expert from the
start and request a chat about activity definitions with him or her before drafting your

first draught of the list. Sometimes you begin a project with little knowledge of the work
Notes
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you’ll be doing afterwards. Rolling-wave planning allows you to plan and schedule only
the parts of the project about which you have sufficient knowledge. When you don’t
know enough about a project, you can fill in the blanks with placeholders until you learn
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more. These are supplementary items in the WBS that are placed at high levels to
assist you to plan for the unexpected.
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A Real-Life Example
Susan and Steve have decided to marry, but they don’t have a lot of time to
organise their special day. They want the wedding to be a once-in-a-lifetime event. They
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want to invite a large number of people and give them a good time. They’ve always
wanted to get married in June, but it’s now January. It’s exhausting just thinking about
all of the nuances required. Susan has been planning the big day since she was 12, but
it appears that there isn’t enough time to finish all of the activities. The couple realised
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they required assistance when choosing the paper for the invitations.
There is a lot of work to be done before June. Sally starts by determining what
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work has to be done. She begins to compile a to-do list:
◌◌ Wedding invitations
◌◌ Wedding flowers
◌◌ Wedding cake r
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◌◌ Dinner menu
◌◌ Band
Because so many people are engaged in the wedding preparations, it takes a
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lot of planning to get everything done in the correct order by the right people at the
right time. . Sally was first concerned that she wouldn’t have enough time to ensure
that everything was completed properly. When she took the job, she knew she had
some powerful time management tools on her side, and she knew they would help her
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synchronise all of the needed duties.
Sally organised all of the activities in a work breakdown structure to get started.
The next exercise shows a portion of Sally’s wedding WBS.
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List of Activities
The activity list must now be filled once the activity definitions for the work
packages have been completed. The project activity list is a list of everything that has to
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be done to finish your project, including all of the activities required to deliver each work
package. The activity properties should be defined next. This is where each activity’s
description is kept. It contains all of the facts you’ll need to figure out as well as the
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work’s order. Any antecedent activities, successor activities, or limitations, as well as

descriptions and any other information about resources or time that you require for
planning, should be mentioned in the characteristics. Finish-to-start (FS), start-to-start
(SS), and finish-to-finish are the three primary types of predecessors (FF). The finish-to-
start antecedent is the most prevalent. It implies that one activity must be accomplished
(c
before moving on to the next. This is what you normally think of when you think about
predecessors; one thing must come to an end before the next can begin. It’s dubbed

finish-to-start because the first activity’s completion precedes the start of the second
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(Figure given below).
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Figure: An example of a finish-to-start (FS) predecessor
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Although the start-to-start precursor is less prevalent, it is sometimes necessary to
coordinate operations such that they start at the same time (Figure given below).
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Figure: An example of a start-to-start (SS) predecessor
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The precursor, finish-to-finish, depicts tasks that are completed at the same time
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(Figure given below).
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Figure: An example of a finish-to-finish (FF) predecessor
It is conceivable to have ancestors who work from beginning to end (SF). This
occurs when activities necessitate the initiation of a new activity before the successor
work can be completed. For instance, the musicians may not be able to finish playing
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until the guests have begun to leave the wedding. There are also some specific types of
predecessors that must be examined.
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External Predecessors
Your project may be affected by factors unrelated to the task you’re doing. We’re
counting on the wedding party who came before us to leave the reception venue in time
for us to decorate. The reception hall’s decoration is then based on that as an external
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precedent.

Predecessors with Discretion

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Typically, these are process- or procedure-driven or best-practice procedures
based on previous experience. Steve and Susan, for instance, want the bridesmaids to
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arrive at the reception before the couple. There is no requirement; it is simply a matter
of personal preference.
Mandatory Predecessors
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An invitation that hasn’t been printed yet can’t be addressed. As a result, printing
invitations is a prerequisite for addressing them. Mandatory predecessors are those
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who are required to exist due to the nature of the job.
The Difference Between Leads and Lags

Between activities, you may need to provide some extra time. When you purposely
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establish a delay between the previous work and the successor task, this is known as
lag time. When the bride and her father dance, for example, the others wait a while
before joining them (Figure given below).
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Figure: A lag means making sure that one task waits a while before it gets started
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When you give a successor task some time to get started before the predecessor
task finishes, this is known as lead time (Figure given below). As a result, you might
want the caterer to start cooking dessert one hour before everyone sits down to eat
dinner.
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Figure: A lead is when you let a task get started before its predecessor is done
Milestones
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Milestones are used to monitor all of your project’s major benchmarks. Some of
them may be included in your contract as conditions for successful completion, while
others may just be important milestones in the project that you want to keep track of.
The milestone list should make it clear which milestones are mandatory and which are
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optional.
Susan and Steve’s wedding milestones could include:
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◌◌ Invitations mailed
◌◌ Menu planned
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◌◌ Location booked
◌◌ Bridesmaids’ outfits fitted
You may discover that the scope of the project has to vary as you determine which
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tasks will be required. When this occurs, you must generate a change request and
submit it to the change management system.
The Process of Activity Sequencing
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Now that we know what we need to accomplish to make the wedding a success,
we must concentrate on the sequence in which we must do the tasks. Sally sat down
with all of the wedding festivities she had planned and began to work out exactly how
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they would take place. She employed the activity sequencing method in this situation.
Sally’s activity attribute list included the majority of the essential predecessors and
successors. This is when she considered what should come first, second, third, and
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so on. Major bits of work were written down on Sally’s milestone list, and she had
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approved and ready to go a handful of revisions to the scope she had uncovered along
the process.
Making a Gantt Chart

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A Gantt chart is a sort of bar chart created by Henry Gantt to show the progress
of a project. Gantt charts are popular for displaying schedule activities because they
are simple to read. The start and conclusion dates of a project’s terminal and summary
elements are shown in these graphs. The project’s work breakdown structure is made
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up of terminal and summary sections. The dependency relationships (i.e., precedence

network) between activities are also shown in some Gantt charts.
As a bar chart with the time scale across the top, Gantt charts represent all of
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the important stages of a project and their duration. The essential stages are listed
in order on the bar chart, beginning in the upper left corner and finishing in the lower
right corner (Figure 10.8). A Gantt chart is a simple tool that project managers use to
provide an approximate estimate of how long it will take to accomplish essential tasks.
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It’s sometimes a good idea to start with the target completion date for the entire project,
because it’ll become clear quickly whether the time frame is too short or too long. After
the major objectives have been identified, the comprehensive Gantt chart is usually
created.
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Figure: Gantt chart for directory production
In this example in Figure given above, key stage K (Organize distribution) begins
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at week 23 and ends at the same time as key stage L. (Distribute directory). K, on the
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other hand, could begin as early as week 17 if crucial stage J is finished. As a result,
key stage K is described as having “slack.” The end of key stage H (agreed print
contract) has been set for week 12. However, because crucial stage I (Print directory)
does not begin until week 23, it could end as late as week 22. As a result, key stage
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H is referred to “float.” A line forward of the bar to the latest potential finish point might
be used to represent float time on the chart. Slack and float show you where there is
flexibility in the timeline, which might be important once the project is up and going and
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you need to gain time.
You can include additional information in a Gantt chart, such as:
◌◌ Milestones might be represented by a symbol such as a diamond or triangle,

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◌◌ Project meetings could be represented by a circle.

◌◌ A square could be used to signify progress reviews.
If you’re working on a large project, you might want to make a distinct Gantt chart
for each of the major stages. You’ll be able to account for any last-minute surprises
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if you do this quickly before each crucial step begins. As the project continues, these
charts can be used to track and regulate development.
Gantt charts are reasonably simple to make by hand, but they lack the same
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amount of monitoring flexibility that a software tool provides. Project managers can use
a variety of programmes to help them schedule and control their projects. After the data
has been entered, a programme will assist you in creating “what if” scenarios, which will
depict what might happen if a critical stage is delayed or accelerated. If you’re working
by hand, this will be more challenging.
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Developing a Network Diagram

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When planning a project, many project managers use network diagrams. The
network diagram is a visual representation of the interdependencies between project
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operations. The tasks and their relationships are depicted graphically in network
diagrams. The work packages of the WBS are the tasks in the network. Because they
must be accounted for in the schedule, all WBS jobs must be included in the network.
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The entire schedule time, expected expenditures, and resource allocation commitments
could all be affected if even one task is left out of the network.
The first step is to organise your WBS jobs into a sequence. Some activities can be
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completed at any point during the project, while others require input from other tasks or
are time or resource constrained.
The WBS is not a schedule, but it serves as a foundation for one. Although the
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network diagram is a schedule, it is primarily used to discover critical scheduling
information that is then translated into more user-friendly schedule forms like
milestones and Gantt charts. The project team can use the network diagram to get
critical information. It explains how the tasks are related (Figure given below), where the
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danger areas are in the schedule, how long the project will take to complete as planned,
and when each job must begin and stop.
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Figure: The relationship between the work breakdown structure (WBS) and the
network diagram.
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Sally, in our wedding planner example, would check for relationships between
tasks to see what can be done in parallel and what needs to wait for others to finish.
Figure given below, for example, depicts how the tasks involved in creating the
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invitations are interdependent. A precedence diagramming method depicts activities in

rectangles and their relationships as arrows (PDM).
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Figure: An example of an activity on node (AON) diagram
An activity-on-node (AON) diagram is another name for this type of diagram.
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The activity-on-arrow (AOA) diagram is another approach to depict how tasks are
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related. Despite the fact that AON is more widely used and supported by all project
management software, PERT is the most well-known AOA-type diagram and the
historical foundation of all network diagramming. The key distinction is that the AOA
diagram generally uses circles as nodes, with nodes indicating the start and finish
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points of arrows or jobs. The arrows in the AOA network denote the activities or tasks
(Refer to figure given below).
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Figure: An example of an activity arrow (AOA) network diagram
Although all network diagrams offer the benefit of displaying task

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interdependencies, start and end timings, and the critical route (the longest path
through the network), the AOA network diagram has a few drawbacks that limit its
application.
The AOA approach has three key drawbacks:

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◌◌ The AOA network can only display finish-to-start relationships. Dummy

activities can occur in an AOA network, and there is no way to show lead

and lag other than by adding or deleting time, which makes project tracking
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difficult.
◌◌ Dummy activities are those that demonstrate the dependency of one activity
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on another for reasons other than technical. One activity may be dependent
on another because it is more cost effective to use the same resources for
both; otherwise, the two tasks might be completed concurrently. There are no
durations associated with dummy activities. They merely indicate that a task is
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dependent on another task in some way.
◌◌ AOA diagrams are less popular than AON diagrams simply because AON
networks are easier to use, and AON networks are supported by all project
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management software applications, whereas AOA networks are not.
The Critical Path
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The critical path is a sequence of tasks that allows a project to be finished in the
least amount of time possible. It is predicated on the concept that some chores must be
done before moving on to the next. A critical path diagram is a useful tool for planning
and controlling project dependencies. The length of time each activity will take must be
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calculated in order to find the critical path.
Let’s look at an illustration. The following is an estimate of how long each important
stage will take in weeks:
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Table: Stages of the Critical Path

We’ve assigned the critical stage “Secure finances” a time estimate of zero weeks
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because the project can’t start without some cash, however estimates will provide
more detail later. The stages can now be aligned to create a network diagram that
demonstrates that there are three paths from start to completion, each with a minimum
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duration of lines (Refer the figure given below).
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Figure: Critical Path Diagram
If we now trace each of the alternative paths to “Distribute directory” (the end
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point), taking dependencies into account, the important path is the one with the longest
duration. This is the shortest amount of time in which the project can be completed.
The critical route in this example is A–B–C–D–E–F–I–L, and the project’s earliest
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completion date is the sum of the expected dates for all critical path stages – 28 weeks
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– from the point of securing finance. If the project is to be completed on time, all crucial
phases on the critical route must be performed on time.
You will need to renegotiate the time scale if the predicted total time exceeds the
project sponsor’s expectations. The critical route map aids in identifying the activities
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that require the most attention.
Resource Planning
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Steve and Susan clearly have resource issues in the prior wedding case study.
Getting a handle on all of the jobs that must be completed is a good start, but knowing
the tasks and the sequence in which they must be completed isn’t enough. Before you
can create the final schedule, you must first determine who will perform each task and
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what they will require.
“There’s so much to do!” I have no idea who will handle the invitations, catering,
and music. “I’m completely drained.” Susan is clearly concerned about human
resources based on this statement. Steve, on the other hand, understands that not all
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resources are people: “And it’s not just people.” Food, flowers, a cake, a sound system,
and a venue are all required. “How are we going to get a handle on this?”
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People, equipment, space, money, and whatever else you’ll need to complete all of
the activities you’ve planned are all considered resources. Resources must be assigned
to each action on your activity list. You must first determine the availability of resources
before you can assign them to your project. Information on resource availability
comprises what resources you can utilise on your project, when they’re available, and
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the conditions under which they’re available.
Remember that some resources, such as consultants or training rooms, must be

planned ahead of time and may only be available at specific periods. Before you can
finish designing your project, you’ll need to know this. Because the wedding halls are
Notes
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all signed up in advance, a June wedding is more difficult to schedule than a December
wedding if you start planning in January. Clearly, there is a resource constraint here.
You’ll also need the activity list you made previously, as well as knowledge of how
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your company generally manages resources. You’re ready to estimate resources once
you’ve mastered these concepts.
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Estimating the Resources
The purpose of activity resource estimation is to allocate resources to each activity
on the list. Estimating activity resources may be done using five different methods and
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techniques. Bringing in experts who have done similar work in the past and receiving
their judgments on what resources are required is known as expert judgement.
Alternative analysis entails weighing a variety of choices for allocating resources.
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This includes altering the number and types of resources you use. Many times, there
are multiple ways to complete a task, and alternative analysis can help you choose
amongst them. Project managers in a variety of industries use published estimating
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data to help them figure out how many resources they’ll require. They rely on data from
other people’s initiatives to be collected, analysed, and published in papers, books,
journals, and periodicals.
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Project management software, such as Microsoft Project, generally includes
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capabilities that assist project managers in estimating resource requirements and
restrictions, as well as determining the optimal assignment mix for the project.
Bottom-up estimating is breaking down complex operations into smaller chunks

and determining resource allocations for each one. It’s a method of calculating
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individual activity resource requirements or costs, then adding them up to arrive at a

total estimate. Bottom-up estimating is a very accurate method of estimating, assuming
that the estimations at the scheduling activity level are correct. Bottom-up estimating,
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on the other hand, takes a long time since each activity must be assessed and
estimated precisely before being included in the bottom-up computation. The greater
the accuracy and cost of this technology, the smaller and more detailed the activity.
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Time Estimation for Activities

When you’ve finished estimating activity resources, you’ll have everything you
need to determine how long each activity will take. This is done through a method
known as activity duration estimation. This is where you examine each activity on the
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list, think about its scope and resources, and estimate how long it will take to complete.
Estimating the duration of an activity begins with the information you have about the
activity and the resources assigned to it, followed by collaboration with the project
team to arrive at an estimate. Typically, you’ll start with a preliminary estimate and then
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modify it to make it more precise. To make the most accurate estimates, you’ll need
these five tools and techniques:
Your project team members who are familiar with the work at hand will provide
expert judgement. If you don’t acquire their input, there’s a good chance your
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calculations will be off. Analogous estimation is when you look at how long similar
activities took on past projects. Only if the activity and resources are similar will this
work. Parametric estimating is the process of entering project information into a
formula, spreadsheet, database, or computer programme to generate an estimate. The

Notes
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parametric estimating software or algorithm you use is based on a database of real
durations from previous projects.
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When you use three-point estimating, you come up with three numbers: a realistic
estimate that is most likely to happen, an optimistic estimate that represents the best-
case scenario, and a pessimistic estimate that represents the worst-case situation. The
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weighted average of the three results in the final estimate. To account for additional
risk, reserve analysis implies adding extra time to the timetable (also known as a
contingency reserve or a buffer).
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Budget Planning
Money is at the heart of any enterprise. You could certainly get more people to
work on your project faster and provide more if you had a larger budget. That is why
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no project plan is complete unless a budget has been established. But, regardless
of how big or little your project is, or how many resources and activities are involved,
the process for calculating the bottom line is the same. It’s critical to develop detailed
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estimates for all project costs. After that, you compile the cost estimates into a budget
plan. It is now feasible to track the project’s progress against that budget while it is
being completed.
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Resource cost rates are determined: Everyone who will be working on the project
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will be paid at a set rate. You’ll be charged a fee for any resources you use to
construct the project (for example, wood or wiring). Calculating resource costs
entails determining the rates for labour and supplies.
●● Vendor bid analysis: You may need to deal with an outside contractor to complete
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your project. It’s possible that more than one contractor will bid on the task. This
tool will let you evaluate those bids and decide which one to accept.
●● Cost overrun reserve analysis: You’ll need to set aside some cash in case of cost
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overruns. If you know there’s a chance something expensive will go wrong with
your project, it’s a good idea to have some funds on hand to cope with it. Reserve
analysis entails setting aside certain funds in case of cost overruns.
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●● Quality-related costs: Include the costs of all quality-related activities in your total
budget. Because it is less expensive to detect bugs early in a project than it is
to find them later, there are always quality expenses connected with everything
your project generates. The cost of quality is just a method of keeping track of
the costs of such operations. It is the amount of money required to complete the
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project properly.
When you’ve used all of the tools in this procedure, you’ll have a good idea of how
much your project will cost. It’s critical to keep track of all of your supporting estimate
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data. That way, you’ll be aware of the assumptions you made when calculating the
statistics. You’re now ready to start creating your financial plan.
Estimating Costs to Compare and Select Projects

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When it comes to project selection during the conceptual phase, economic

concerns play a big role in deciding between competing proposals. An estimate of the
cost of each project is made to compare the simple paybacks or internal rates of return

between initiatives. The estimates must be accurate enough that the comparisons are
Notes
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meaningful, but the time and resources spent on them should be proportional to the
project’s size and complexity. The methods used to estimate the project’s cost during
the selection phase are often faster and utilise fewer resources than those used to
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develop precise estimates later in the process. They place a greater emphasis on the
expert judgement of experienced managers who can make good forecasts with less
information. Estimates made early in the project selection process are typically based
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on data from past projects that may be scaled to fit the size and complexity of the
current project or created using established methods.
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Analogous Estimate
An analogous estimate is one that is based on other project estimates. It’s logical
to expect that if a similar project cost a particular amount, the present project will cost
around the same. Because few projects are exactly the same size and complexity,
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the estimate must be changed to account for the differences. The choice of similar
projects and the degree of adjustment required is entirely up to the estimate maker’s
discretion. This judgement is usually based on many years of project estimation
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experience, including inaccurate estimates that served as learning opportunities for
the expert. Managers with less expertise who are asked to make similar estimations
can consult the material from past initiatives. If the Darnall-Preston Complexity Index
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(DPCI) was used to evaluate projects, the manager could immediately discover projects
with characteristics that were comparable to the one under review, even if they were
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handled by different people.
The DPCI evaluates project attributes, allowing for more informed project
profile creation. This index determines the degree of complexity of a project’s core
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components and generates a unique project profile. The project complexity level is
indicated in the profile, which serves as a standard for comparing projects and offers
information about project features that can be addressed in the project execution plan.
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It accomplishes this goal by categorising 11 characteristics into four groups: internal,

external, technological complexity, and environmental.
When a less-experienced management compares the original estimates to the

final project costs on multiple similar projects with the same DPCI ratings, he or she
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gets a viewpoint that would take many years to learn via trial and error. It also includes
references that the manager can utilise to back up his estimate.
Estimation using Parametric

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Average costs per unit are accessible if the project includes activities that are
common to many other projects. If you ask a construction business how much it would
cost to create a normal office building, for example, the estimator will ask for the
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structure’s square footage and the city in which it will be constructed. The company’s
estimator may estimate the cost of the construction based on these two factors—size
and location. Size and position are examples of parameters, which are quantifiable
variables that can be employed in an equation to determine a result. The estimator is
aware of the average cost per square foot of a typical office structure, as well as labour
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rates in the area. Other factors, like as finish quality, are employed to fine-tune the
estimate. Parametric estimates are those that are calculated by multiplying measurable
parameters with cost-per-unit values.
Bottom-Up Estimating
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Identifying the cost of each item in each activity of the schedule, including labour
and materials, is the most accurate and time-consuming estimation method. Finding the
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price of each item at the lowest level and then summing them to determine the cost
of higher levels is called bottom-up estimating if you regard the project schedule as a
hierarchy where the broad descriptions of activities are at the top and the lower levels
become more specific.
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Managing the Budget
Projects seldom go according to plan in every detail. The project manager must be
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able to recognise when costs differ from the budget and handle such differences.
●● Cash Flow Management

Even if the overall amount spent on a project is equal to or less than the amount
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estimated, the project may still face difficulties if money is not available when it is
needed. There is a natural friction between the financial personnel in an organisation,
who don’t want to pay for the usage of money that is just sitting in a checking account,
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and the project manager, who wants to make sure there is enough money available
to cover project expenses. The financial team prefers to hold the company’s money
in other investments until the very last minute before moving it to the project account.
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Contractors and vendors have similar worries, and they want to get paid as soon
as possible so that they may invest the funds in their own businesses. If activities
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surpass budget projections, the project manager would like to have as much cash on
hand as feasible.
●● Reserves for Unexpected Events
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Something unexpected happens in almost every project, causing expenses to rise

over the initial estimates. If estimates are rarely exceeded, the estimating process
should be re-examined since the estimations are excessively high. Although it is
impossible to forecast which activities will cost more than anticipated, it is reasonable
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to presume that some will. Risk analysis, which is covered in greater depth in a
subsequent chapter, includes estimating the possibility of such catastrophes. Rather
than overestimating each expense, funds are set aside to deal with unanticipated
but statistically expected price rises. Contingency reserves are funds set aside for
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this purpose. Because it is anticipated that this money will be spent, it is included in
the project’s overall budget. If this cash is sufficient to cover unexpected costs, the
project will be completed on time and on budget.
●● Reserves for Management
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If something happens during the project that necessitates a change in the project
scope, money may be required to deal with the matter before the project sponsor or
client may agree to a change in scope. It may be both an opportunity and a difficulty.
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For example, if a new technology were to be invented that would considerably improve
your completed project, there would be more costs and a change in scope, but it
would be well worth it. At the manager’s discretion, money can be made available
to satisfy needs that would affect the scope of the project. Management reserves
are the name for these monies. They are unlikely to be spent and are not part of the
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project’s budget baseline, although they can be included in the final project budget,
unlike contingency reserves.

●● Assessing the Budget Throughout the Project

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A project manager must compare the amount spent to the amount budgeted on
a regular basis and report this information to management and stakeholders. It’s
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crucial to figure out how this development will be assessed and reported.
●● Creating a Financial Plan
You may compute your overall project expenses by estimating and totaling the
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individual activity costs after you’ve divided your project down into activities. Cost
aggregation is the process of summing costs by category or activity.
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Timeline for Budgeting
Because each activity includes a start date and a length period, it is easy to compute
how much money will be spent by any given date during the project. The funds
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required to complete a project are typically transferred to the project account shortly
before they are required. These transfers must be timed such that the funds are
available to pay for each activity without causing a delay in its start. If funds are
transmitted too far in advance, the organisation may lose the ability to use the funds
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elsewhere, or they may be forced to pay extra interest if the funds are borrowed. A
money transfer timetable is made that should correspond to the need to pay for the
activity. Reconciliation is the process of aligning the schedule of transfers with the
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schedule of activity payments. Refer to Figure below, which depicts the costs of ten
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important project tasks. The funds are transferred four times into the project account.
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Figure: Fund Transfers and Expenditures

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Except for activity 6, where all available funds were used, there were more money
available than were spent for the majority of the project.

If the total of the first six activities exceeds the amount of cash available at that
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time in the project, there is no margin for error in the project budget profile given in
Figure given.
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Vendor contracts frequently request partial payment of their fees during the project.
If the unit of measure for partial completion is the same as the unit of measure for cost
budgeting, those contracts can be managed more easily. For example, if a graphic
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designer is putting together multiple pieces of artwork for a textbook, their contract may
stipulate that just 25% of the total number of drawings be completed before they are
paid in full.
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3.3.3 Project Life Cycle Stages
The project manager and the project team have one common goal: to complete
the project’s work in order to satisfy the project’s objectives. Every project has a start,
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a middle stage in which actions take the project closer to completion, and a finish
(either successful or unsuccessful). Initiation, planning, implementation, and closing
are the four primary phases of a normal project (each with its own set of duties and
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challenges). These phases, when taken together, reflect the course a project travels
from start to finish, and are referred to as the project’s “life cycle.”
Initiation Phase
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The project objective or requirement is determined during the first of these phases,
the start phase; this can be a business challenge or opportunity. A business case with
proposed solution alternatives is used to document a suitable response to the issue.
A feasibility study is carried out to see if each option meets the project’s goal, and a
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final suggested solution is determined. The practicality (“Can we do it?”) and rationale
(“Should we do it?”) of the project are discussed. After the preferred solution has
been authorised, a project is started to deliver the solution, and a project manager is
assigned. The project team begins to take shape when the primary deliverables and
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involved work groups are selected. The project manager then seeks approval to
proceed to the detailed planning phase.
Planning Phase
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The project solution is further developed in as much detail as feasible in the next
phase, the planning phase, and the procedures necessary to fulfil the project’s aim are
planned. The team identifies all of the work that needs to be done in this step. The
project’s tasks and resource requirements, as well as the strategy for achieving them,
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are identified. “Scope management” is another term for this. The activities, tasks,
dependencies, and timeframes are outlined in a project plan. By giving cost estimates
for labour, equipment, and materials, the project manager organises the production
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of a project budget. During project implementation, the budget is utilised to track and
regulate cost expenditures.
The three basic components of the planning process are complete once the project
team has selected the work, set the timetable, and evaluated the expenses. This is a
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great opportunity to detect and address anything that could jeopardise the project’s
successful completion. This is referred to as risk management. In risk management,
“high-threat” possible problems are identified, along with the action to be done on each

high-threat potential problem, either to lower the likelihood of the problem occurring or
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to reduce the project’s impact if it does. This is also a good time to identify all project
stakeholders and create a communication plan that outlines the information required
and the mechanism for delivering it to them.
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Finally, you should write a quality plan that includes quality targets, assurance, and
control procedures, as well as an acceptance plan that outlines the criteria that must be
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met to earn client acceptance. The project would have been meticulously prepared and
is now ready to be implemented.
Implementation (Execution) Phase
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The project plan is set into motion and the project’s work is completed during the
third phase, implementation. During implementation, it’s critical to maintain control and
communicate as needed. Progress is tracked on a regular basis, and any necessary
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revisions are performed and recorded as deviations from the original plan. This is where
a project manager spends the most of his or her time in any project. People carry out
the tasks as the project is being implemented, and progress is communicated through
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regular team meetings. The project manager uses this information to keep tabs on the
project’s progress by comparing progress reports to the project plan to assess project
activity performance and take corrective action as needed. Bringing the project back
on track should always be the primary priority (i.e., to return it to the original plan). If
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this isn’t possible, the team should keep track of deviations from the initial plan, as well
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as record and disseminate changes to the plan. During this step, project sponsors and
other key stakeholders should be brought up to date on the project’s progress using the
agreed-upon communication frequency and format. On a regular basis, the plan should
be updated and published.
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The projected end goal in terms of cost, schedule, and quality of deliverables
should constantly be highlighted in status reports. Every project deliverable should be
checked for quality and compared to the acceptance criteria. The project can be closed
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if all of the deliverables have been completed and the customer has approved the final
solution.
Closing Phase
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The focus of the final closure, or completion phase, is on delivering final deliverables
to customers, passing over project documentation to the business, terminating supplier
contracts, releasing project resources, and communicating the project’s close to all
stakeholders. The final step is to conduct lessons-learned analyses to see what worked
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and what didn’t. The wisdom of experience is passed back to the project organisation
through this form of analysis, which will benefit future project teams.
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3.3.4 Project Appraisal

A project appraisal is a cost-benefit examination of many aspects of a proposed
project with the goal of determining viability. A project necessitates the use of limited
resources. Before committing precious resources to the best project, an entrepreneur
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must evaluate numerous potential ventures. The economic, financial, technical market,
managerial, and social components of a project are all considered when evaluating it.
Because of the capital investment that is usually required in every project, the impacts

of a project appraisal are far-reaching and have very distinct long-term repercussions.
Notes
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Before giving loans to a project, financial institutions conduct a project appraisal to
determine its creditworthiness. In this context, a one-week training programme will
focus on: identifying and comparing significant evaluation methodologies ranging from
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social and developmental policies to environmental and stakeholder factors to key
mechanisms of economic and financial assessment; and systematically exploring the
principal risk factors and other key issues that must be considered in managing the
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planning of major, long-term projects.
The following are some examples of project appraisal methods:
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1. Economic Evaluation:
Project variables addressed in economic analysis include raw material
requirements, capacity utilisation, anticipated sales, anticipated expenses, and likely
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profits. It is claimed that a company should always have a profit target in mind, which
will regulate other economic variables such as sales, purchases, and expenses.
It will have to be determined how many sales are required to achieve the desired
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profit. Without a doubt, demand for the goods will be estimated in order to forecast
sales volume. As a result, demand for the product must be thoroughly defined, as it is,
to a large degree, the deciding factor in the project’s feasibility.
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In addition to the foregoing, the site of the business, which was chosen after
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considering a variety of factors, must be specified in the proposal. In this sense, the
government’s policies should be considered. The government provides special
incentives and concessions to businesses that locate in designated backward zones. As
a result, it must be determined whether the proposed business falls into this category or
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not, as well as whether the government has previously designated a specific place for
this type of business.
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2. Financial Analysis:
One of the most crucial pre-requisites for starting a business is the ability to
manage money. It is only finance that enables an entrepreneur to bring together one’s
labour, another’s machine, and yet another’s raw material in order to manufacture
ity
commodities.
The following aspects must be thoroughly examined in order to determine the

project’s financial viability:
m
Determine the financial requirements

Both fixed and working capital must be adequately accounted for. You may be
aware that fixed capital, often known as ‘fixed assets,’ refers to tangible and material
)A
assets that are purchased once and used again. Fixed assets/fixed capital include
things like land and buildings, plants and machinery, and equipment. The amount of
fixed assets/capital required varies each business, depending on the type of operation,
the size of the activity, and the time when the investment is made.
(c
However, all items relating to the asset, such as the asset’s cost, architect and
engineer’s fees, electrification and installation charges (which typically amount to 10%
of the value of machinery), depreciation, pre-operation expenses of trial runs, and so
on, should be taken into account when determining the fixed capital requirements.
Notes
e
Similarly, all costs associated with remodelling, repairs, or additions to structures should
be noted in the project report.
in
Working Capital
Working capital is defined as the difference between current assets and current
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liabilities in accounting. In general, a current ratio of 2: 1 is seen to be the best. The term
“current assets” refers to assets that can be converted into cash in less than a week.
The term “current liabilities” refers to debts that can be paid within a week. In a nutshell,
working capital is the amount of money required to run a business today. In other words,
O
it’s like circulating money, with cash being turned into inventories, inventories being
changed into receivables, and receivables being converted back into cash.
This circle continues indefinitely. As a result, working capital is a lubricant for any
ty
business, big or small. As a result, working capital requirements should be well defined.
Working capital shortages can have a negative impact on a company’s operations and
even bring it to a standstill. The degree of activity of a business, indicated as capacity
si
utilisation, must be clearly stated in the business plan or project report. However,
due to different business vicissitudes such as unanticipated raw material shortages,
unanticipated power outages, difficulty to penetrate the market mechanism, and so on,
r
the organisation occasionally fails to meet the intended level of capacity.
ve
Then there’s the matter of how long a company should keep producing in order to
meet all of its duties and liabilities. Break-even analysis (BEP) provides a solution. In a
nutshell, break-even analysis determines the level of production at which the company
makes no profit or losses. As a result, this level of production is referred to as the
‘break-even level.’
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3. Market Analysis
U
Before beginning production, the entrepreneur must assess the potential market for
the product. He or she must foresee who his or her potential buyers will be, as well as
where and when his or her goods will be offered. In this regard, there is a cliche: “The
manufacturer of an iron nail must know who will buy his iron nails.”
ity
Because production has no value for the producer unless it is sold, this is the
case. If the proof of pudding is in the eating, then the proof of all manufacturing is in
the marketing/consumption. In fact, the market’s potential determines the likelihood of
a successful business career. As a result, knowing the expected market for the product
m
to be produced becomes a critical component of every business plan. The many

approaches used to forecast the potential market, referred to as ‘demand forecasting’ in
‘Managerial Economics,’ range from naive to sophisticated.
)A
The following are some of the most prevalent ways for estimating a product’s
demand:
1. Opinion Polling Method: This method is used to estimate the opinions of the
product’s ultimate users, i.e. customers. This can be accomplished by conducting
(c
a comprehensive survey of all consumers (known as complete enumeration) or by

selecting a small number of consuming units from the relevant population (called,
sample survey).

Let’s take a closer look at each of these:

Notes
e
a) Fill out the Enumeration Survey:
All potential clients of the product are approached in this survey, and their
in
likely requests for the product are estimated and then totalled. It’s fairly easy
to estimate sales with this strategy. It is calculated by simply summing all of
the potential client needs. It should be evident with an example.
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Although the main advantage of this method is that it collects first-hand and
unbiased information, it also has significant drawbacks. Approaching a big
number of clients dispersed throughout the market, for example, becomes
O
laborious, costly, and inconvenient. Furthermore, buyers may not reveal
their purchasing intentions for a variety of reasons, including personal and
commercial/business confidentiality.
ty
(b) Sample Survey:
In this method, just a small percentage of the overall population is contacted,
and data on the product’s likely demand during the forecast period is
si
collected and averaged. Finally, the total demand for the product is generated
by multiplying the total demand of sample customers. Without a doubt,
the survey approach is less expensive and time-consuming than the full
enumeration method.
r
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(c) Sales Experience Strategy:
This method involves surveying a sample market before releasing a new
product for sale. The results of the market research are then extrapolated to
the entire universe in order to forecast total demand for the product.
ni
In theory, the survey market should be a true reflection of the national market,
however this is not always the case. For example, if Delhi is chosen as a
sample market, it may not be a true representative of a tiny town like Silchar
U
in Assam, simply because the characteristics of Delhi differ significantly from

those of Silchar. Again, if we use Agra as a model market, sales in Agra will
be influenced by the amount of the year-round floating tourist population.
However, many other places, such as Silchar in Assam, do not have this
ity
property.
(d) Vicarious Method:
In the vicarious method, product consumers are reached indirectly through
m
some dealers who have a feel for their clients rather than directly. The dealers’
perspectives on the clients’ perspectives are extracted. Because the approach
is dependent on dealers’ opinions, it is sure to be skewed by the dealers’
bias. The resulting outcomes are then likely to be unrealistic. These stumbling
)A
blocks, on the other hand, are unavoidable.
4. Life Cycle Segmentation Analysis:

It is well known that every product, like a person, has its own life cycle. In practise,
(c
a product’s initial sales are slow. Sales are increasing as a result of sales marketing
methods that have been implemented throughout time. The peak sale is reached once
a certain amount of time has passed. Following that, sales continue to drop. After a

period of time, the product’s demand dwindles and it dies. This is a product’s natural
Notes
e
death. As a result, every product has a ‘life cycle.’ This is precisely why businesses
seek out new items one after the other in order to stay afloat.
in
The product life cycle has been segmented into five stages based on the above:
1. Introduction: When a product is first introduced to the market, it is called the

introduction stage. This is when marketing departments start raising product
nl
awareness and contacting potential customers. When a product is first presented,
sales are often low, and demand grows slowly. This phase is usually devoted to
advertising and marketing campaigns. Companies examine distribution channels
O
and attempt to educate prospective buyers about the product.
2. Growth: Customers have accepted the product in the market and are beginning to
genuinely buy in during the growth stage. This indicates that demand and profitability
ty
are increasing, preferably at a steady rate. The growth stage occurs when the
product’s market expands and competition begins to emerge. Your success will
entice potential competitors to join you.
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3. Maturity: The mature stage occurs when sales begin to level out after a period of
tremendous expansion. Companies begin to lower their prices at this moment in
order to remain competitive in the face of increasing competition.
r
This is the stage in which a business starts to become more efficient and learns
from its mistakes during the start-up and expansion stages. Differentiation is usually
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prioritised over awareness in marketing campaigns. This could mean that product
features are improved, prices are reduced, and distribution is increased.
Products begin to enter the most profitable stage during the mature stage. Production
costs are decreasing while revenues are increasing.
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4. Saturation: During the product saturation stage, competitors have begun to take a
share of the market, and sales will neither increase nor decrease. This is usually when
the majority of customers are using a product, yet there are numerous competitors.
U
You want your product to become the brand preference at this time to avoid entering
the decline stage.
5. Decline: It also includes protective covenants such as the right of venture capitalists to
ity
govern the venture firm and, if required, alter its management, buyback arrangements,
acquisitions, and IPOs. Both the venture capitalist and the entrepreneur should
benefit from the terms of the contract. It should be adaptable, and its structure should
protect both parties’ interests.
m
Post-Investment Activity: Once the deal is funded and the venture is up and
running, the venture capitalist joins the company as a partner and collaborator to
ensure that everything is going according to plan. The product’s sales fluctuate from
)A
estage to stage, following an S-shaped curve as shown in figure below:

(c

Sales at various stages of a product’s life cycle can be predicted using the five
Notes
e
stages listed above.
5. Technological Feasibility
in
When evaluating a project, it’s also important to assess the project’s technical
feasibility. In its most basic form, technical feasibility refers to the ability of the proposed
facility and equipment to create the product within the established parameters. In terms
nl
of know-how, it refers to the availability of a pool of expertise to operate the intended
plants and apparatus. It should be determined whether the entrepreneur possesses the
necessary know-how or whether it must be acquired from another source. In the latter
O
scenario, the arrangements made to obtain it should be thoroughly examined. If the
project necessitates collaboration, the terms and conditions of that partnership should
be spelled out in detail and with care.
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When it comes to international technical collaboration, it’s important to be aware
of the current legislative rules, which provide a list of items for which only such
collaboration is permitted under specified terms and conditions. As a result, any
si
entrepreneur considering overseas collaboration should review these legal rules in
light of their specific ideas. The following inputs addressed in the project should also be
taken into account when analysing the technical viability of the project:
i. Land and site accessibility. r

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ii. Access to other resources such as water, electricity, transportation, and
communication.
iii. Access to servicing facilities such as machine shops, electric repair shops,
and so on.
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iv. Dealing with anti-pollution legislation.

v. Workforce availability in accordance with required skills, as well as projected
U
training in-plant and outside.

vi. Quantity and quality of required raw materials are available.
6. Management Competence:
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Management ability or competence is critical in determining whether or not a

business is successful. In a strict sense, projects that are otherwise possible may
fail due to a lack of managerial skill. On the contrary, with good management skills,
even a bad project can become a success. As a result, when evaluating a project, the
m
promoter’s managerial ability or talent should be taken into account.
Majority of businesses fail due to a lack of managerial competency or

mismanagement. This is especially true in small-scale businesses where the proprietor
)A
is both the owner and the manager. He may be jack of all trades but master of none
thanks to his one-man show.
(c

Case Study
Notes
e
Case Study on Implementation of Project Management: Macon, Inc.
in
Macon was a fifty-year-old company in the business of developing test equipment
for the tire industry. The company had a history of segregated departments with very
focused functional line managers. The company had two major technical departments:
mechanical engineering and electrical engineering. Both departments reported to a
nl
vice president for engineering, whose background was always mechanical engineering.
For this reason, the company focused all projects from a mechanical engineering
perspective. The significance of the test equipment’s electrical control system was often
O
minimized when, in reality, the electrical control systems were what made Macon’s
equipment outperform that of the competition.
Because of the strong autonomy of the departments, internal competition existed.
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Line managers were frequently competing with one another rather than focusing on
the best interest of Macon. Each would hope the other would be the cause for project
delays instead of working together to avoid project delays altogether. Once dates
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slipped, fingers were pointed and the problem would worsen over time.
One of Macon’s customers had a service department that always blamed

engineering for all of their problems. If the machine was not assembled correctly, it was
r
engineering’s fault for not documenting it clearly enough. If a component failed, it was
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engineering’s fault for not designing it correctly. No matter what problem occurred in the
field, customer service would always put the blame on engineering.
As might be expected, engineering would blame most problems on production

claiming that production did not assemble the equipment correctly and did not maintain
ni
the proper level of quality. Engineering would design a product and then throw it over
the fence to production without ever going down to the manufacturing floor to help
with its assembly. Errors or suggestions reported from production to engineering were
U
being ignored. Engineers often perceived the assemblers as incapable of improving the
design.
Production ultimately assembled the product and shipped it out to the customer.
Oftentimes during assembly the production people would change the design as
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they saw fit without involving engineering. This would cause severe problems
with documentation. Customer service would later inform engineering that the
documentation was incorrect, once again causing conflict among all departments.
The president of Macon was a strong believer in project management.

m
Unfortunately, his preaching fell upon deaf ears. The culture was just too strong.
Projects were failing miserably. Some failures were attributed to the lack of sponsorship
or commitment from line managers. One project failed as the result of a project leader
)A
who failed to control scope. Each day the project would fall further behind because
work was being added with very little regard for the project’s completion date. Project
estimates were based upon a “gut feel” rather than upon sound quantitative data.
The delay in shipping dates was creating more and more frustration for the
(c
customers. The customers began assigning their own project managers as “watchdogs”
to look out for their companies’ best interests. The primary function of these “watchdog”
project managers was to ensure that the equipment purchased would be delivered on

time and complete. This involvement by the customers was becoming more prominent
Notes
e
than ever before.
The president decided that action was needed to achieve some degree of
in
excellence in project management. The question was what action to take, and when.
Summary
nl
●● Environmental scanning is something that all futurists do–some are more
structured and systematic than others, but they all strive to discern between what
is constant, what changes, and what changes frequently.
O
●● Some have dubbed them Future Scanning Systems, Early Warning Systems,
and Future Intelligence Systems to prevent misunderstanding. The output of such
systems is increasingly being referred to as “Collective Intelligence.”
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●● Whatever word or concept is used, no system can completely eliminate all
uncertainty; the goal of a scanning system is to detect early signs of potentially
significant future events in order to obtain as much lead time as possible.
si
●● The scanning team receives feedback and new requirements, which is an
important part of the process. Without management feedback, information goes
unidirectionally through the system, and the system does not learn how to perform
r
better and create the most useful knowledge while avoiding information overload.
ve
●● Environmental scanning can be viewed as the primary source of information for
futures research. In one way or another, all futurists do it. It also feeds the issue
management and strategic planning processes.
●● ABI Inform contains citations, abstracts, and/or full text from over 1,000
ni
professional periodicals, academic journals, and trade magazines from across the
world.
●● The Public Affairs Information Service (PAIS) cites articles on current public issues
U
such as economics, finance, law, education, the military, political science, public
administration, international law and relations, the environment, science and
technology, demography, and public health, as well as general press reports and
commentary on public affairs.
ity
●● Sensing opportunities necessitates the use of information from a variety of

sources. The data gathered from various sources must be examined and exploited
in order to identify the best opportunity.
m
●● Entrepreneurs look for economic and business opportunities and are always
prepared to take advantage of them.
●● In terms of the goals for identifying business opportunities, it can be said that
)A
the entrepreneur is always attempting to establish new industries, and that

his qualities, such as imagination and creativity, also increase employment
opportunities, produce new products, and develop economic sources by lowering
costs, improving products, and innovating.
●● It is critical to examine supply in addition to demand and purchasing scenarios.
(c
When evaluating prospects, it’s critical to understand the existing companies in the
market where you’re competing or planning to compete.

●● In other circumstances, a company’s goal is to expand a specific business model

Notes
e
or philosophy rather than to continue functioning inside a specific industrial sector.
●● Exploring other countries may bring to extra prospects when a company operates
in
in a mature or saturated market. For a variety of causes, including differences in
economic growth and local customs, markets in various nations grow at different
rates.
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●● An unstable or crucial time or state of affairs that an entrepreneur must endure is
referred to as the initial crisis.
●● Entrepreneurs must operate in a fast-paced economic climate. As a result, in a
O
changing and developing environment, it is necessary to maintain the business
fresh.
●● A SWOT analysis assesses an organization’s internal strengths and weaknesses,
ty
as well as external opportunities and threats. Internal analysis is used to discover
the organization’s resources, capabilities, core competencies, and competitive
advantages.
si
●● Weihrich’s TOWS Matrix is a variation of the SWOT Analysis. The matrix identifies
possible tactical options for exploiting opportunities or protecting against threats by
leveraging current strengths and reducing weaknesses.
●● r
The term PEST stands for political, economic, social, and technological change.
ve
PEST analysis is a popular and effective method for assessing strategic risk. It
identifies the changes in the external macro environment and their consequences
on a company’s competitive position.
●● Political factors can be classified at three different levels: supranational, national,
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and subnational.
●● Economic considerations have the greatest impact on a market’s or industry’s
profitability and overall appeal.
U
●● Changes in economic conditions will have varying effects on various industries.

Firms must be able to recognise a clear behavioural connection between
economic and industrial trends.
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●● Work habits and attitudes, consumer tastes and preferences, and the specific
type, form, and amount of demand for a product or service are all influenced by
social trends. Monitoring social trends allows a company to reposition its products
or services to meet shifting client expectations.
m
●● The rapid pace of technological progress is fuelled by innovation, which is

fuelled by entrepreneurs who aim to push the limits of what is currently possible.
Technology becomes obsolete as new boundaries are crossed, and any
)A
competitive advantage is short-lived.

●● The goal of a PEST analysis is to give strategists a framework for increasing their
knowledge of the external environment. It is not, however, designed to bind the
analysis in a straitjacket. The various components of the framework have explicit
interdependencies.
(c
●● A feasibility study tries to objectively and logically discover the strengths and
weaknesses of a current firm or new enterprise, as well as the possibilities and

risks that exist in the environment, the resources needed to carry out the project,
Notes
e
and the likelihood of success.
●● A feasibility study is a method of determining a project’s viability and acceptability.
in
Before spending time and money into a project, a corporation must first determine
whether the initiative will be successful.
●● Market analysis has undergone a paradigm shift in recent years. Extrapolation of
nl
past patterns utilizing statistical tools and methodologies can no longer be used to
estimate and project demand supply gaps for products and services.
●● Technical analysis is based on product descriptions and specifications, as well
O
as quality-control criteria. The study covers accessible alternative technologies,
selecting the most appropriate technology based on the best mix of project
components, the impact of technology purchase, and license contract terms.
●● Financial analysis attempts to determine whether the planned project will be
ty
financially sustainable in terms of meeting the burden of debt servicing and
whether the planned project will fulfil the return expectations of those who provide
the money.
si
●● Economic analysis, often known as social cost-benefit analysis, is concerned
with assessing a project from a broader social perspective. The focus of such a
decision is on a project’s social costs and benefits, which are often distinct from its
economic costs and benefits. r
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●● Environmental issues have gained a lot of attention in recent years. Environmental
impact assessments should be carried out for major projects with considerable
ecological implications, such as plants and irrigation schemes, as well as polluting
sectors such as bulk pharmaceuticals, chemicals, and leather processing.
ni
●● Most projects have well stated objectives, work scope, budget, and schedules,
but all too frequently, the project’s environment and context are not properly
understood or specified. When it comes to project management and execution,
U
this is a key source of risk.

●● The project plans are documented, the project deliverables and requirements
are specified, and the project timeline is created during the planning phase.
It entails developing a set of strategies to steer your team through the project’s
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implementation and closure phases.

●● To create our schedule, we must first describe the activities, order them correctly,
estimate the resources required, and estimate the time required to finish the tasks.
m
●● A Gantt chart is a sort of bar chart created by Henry Gantt to show the progress of
a project. Gantt charts are popular for displaying schedule activities because they
are simple to read.
)A
●● When planning a project, many project managers use network diagrams. The
network diagram is a visual representation of the interdependencies between
project operations. The tasks and their relationships are depicted graphically in
network diagrams.
●● The critical path is a sequence of tasks that allows a project to be finished in the
(c
least amount of time possible. It is predicated on the concept that some chores
must be done before moving on to the next.

●● The purpose of activity resource estimation is to allocate resources to each activity

Notes
e
on the list.
●● Estimating activity resources may be done using five different methods and
in
techniques.
●● Bottom-up estimating is breaking down complex operations into smaller chunks
and determining resource allocations for each one.
nl
●● An analogous estimate is one that is based on other project estimates. It’s logical
to expect that if a similar project cost a particular amount, the present project will
cost around the same.
O
●● Projects seldom go according to plan in every detail. The project manager must be
able to recognise when costs differ from the budget and handle such differences.
●● Cost aggregation is the process of summing costs by category or activity.
ty
●● Initiation, planning, implementation, and closing are the four primary phases of a
normal project (each with its own set of duties and challenges). These phases,
when taken together, reflect the course a project travels from start to finish, and
si
are referred to as the project’s “life cycle.”
●● A project appraisal is a cost-benefit examination of many aspects of a proposed
project with the goal of determining viability. A project necessitates the use of
r
limited resources. Before committing precious resources to the best project, an
ve
entrepreneur must evaluate numerous potential ventures.
●● Sales experience strategy involves surveying a sample market before releasing a
new product for sale. The results of the market research are then extrapolated to
the entire universe in order to forecast total demand for the product.
ni
●● In the vicarious method, product consumers are reached indirectly through

some dealers who have a feel for their clients rather than directly. The dealers’
perspectives on the clients’ perspectives are extracted. Because the approach is
U
dependent on dealers’ opinions, it is sure to be skewed by the dealers’ bias.

●● When evaluating a project, it’s also important to assess the project’s technical
feasibility. In its most basic form, technical feasibility refers to the ability of the
ity
proposed facility and equipment to create the product within the established
parameters.
Glossary
m
●● Environmental scanning - Environmental scanning is the ongoing tracking of

trends and occurrences in an organization’s internal and external environment that
bear on its success, currently and in the future
)A
●● Business opportunity - A business opportunity (or bizopp) involves sale or lease

of any product, service, equipment, etc. that will enable the purchaser-licensee to
begin a business.
●● SWOT analysis - SWOT analysis is a strategic planning and strategic
management technique used to help a person or organization identify strengths,
(c
weaknesses, opportunities, and threats related to business competition or project

planning.

●● PEST analysis - PEST Analysis (political, economic, social and technological) is a

Notes
e
management method whereby an organization can assess major external factors
that influence its operation in order to become more competitive in the market.
in
●● Feasibility study - an assessment of the practicality of a proposed plan or method.
●● Market analysis - A market analysis studies the attractiveness and the dynamics of
a special market within a special industry
nl
●● Technical analysis - Technical analysis is a trading discipline employed to evaluate
investments and identify trading opportunities in price trends and patterns seen on
charts.
O
●● Financial analysis - Financial analysis refers to an assessment of the viability,
stability, and profitability of a business, sub-business or project
●● Economic analysis - Economic analysis essentially entails the evaluation of costs
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and benefits.
●● Project environment - A project environment is all the internal and external forces
that exert on your project management.
si
●● Resource Planning - Resource planning is a process of allocating tasks to team
members based on their capacity, skill sets, and the best fit for the job.
●● r
Budget planning - Budgetary planning is the process of constructing a budget and
then utilizing it to control the operations of a business.
ve
●● Project life cycle - The project life cycle includes the steps required for project
managers to successfully manage a project from start to finish.
●● Project appraisal - Project appraisal is the process of assessing, in a structured
ni
way, the case for proceeding with a project or proposal, or the project’s viability

U
1. The resource-based perspective suggests that unique firm resources should be the
starting point for developing successful strategies.
a. the business opportunity should be the starting point for developing successful
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strategies
b. unique firm resources should be the starting point for developing successful
strategies.
c. both business opportunity and unique firm resources should be the starting
m
point for developing successful strategies.

d. neither business opportunity nor unique firm resources should be the starting
point for developing successful strategies.
)A
2. SWOT is an abbreviation for:

a. Internal Strengths (S), Internal Weaknesses (W), External Opportunities (O),
External Threats (T).
b. Integrated Strategies (S), Integrated Weaknesses (W), External Opportunities
(c
(O), External Threats (T).

c. External Strengths (S), External Weaknesses (W), Internal Opportunities (O),

Notes
e
Internal Threats (T).
d. External Strengths (S), Internal Weaknesses (W), External Opportunities (O),
in
Internal Threats (T).
3. PEST analysis is:
a. a broad framework to help managers understand the environment in which
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their business operates.
b. a checklist to ask how political, economic, strategic or technological
O
developments can influence an industry and a company.
c. a checklist for forecasting political, economic, strategic or technological
factors.
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d. a framework for strategic analysis of internal and external environment.
4. ________ is the process of determining whether a business idea is viable.
a. Feasibility analysis
si
b. Opportunity recognition
c. Viability analysis
d. r
Achievability analysis
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5. ---------------- is the 1st phase in the life cycle of a project.
a. Construction
b. Normalization
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c. The pre-investment
d. Development stage
U
6. --------------------- is the combination of activities and of a project.

a. Design
b. Network
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c. Techniques
d. None of these.
7. -------------------- is an approval of a capital investment to develop facilities to provide
goods and services.
m
a. Project
b. Additive opportunities
)A
c. Complementary opportunities
d. None of these
8. Project appraisal involves analysis of
(c
a. Market variables, technical variables, financial variables and economic

variables.
b. Commercial, technical, social and political variables.
c. Technical, economic, social and financial variables.

Notes
e
d. Market, economic, social and financial variables.
9. Which is the mostly likely purpose of budgeting?
in
a. Assess the non-financial performance of an organization
b. Preparation of a five-year business plan
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c. Company valuation
d. Planning and control of an organization’ s income and expenditure
O
10. Which of the following statements can be considered to be an advantage of a bottom-
up budget?
a. The cheapest method of producing a budget
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b. Reduces the level of budget negotiation between staff
c. Uses the knowledge of all staff to build a fair budget
d. Prevents slack being built into budgets
si
Exercises
1. What do you know about environmental scanning?
2.
r
What are the various factors involved in sensing opportunities?
ve
3. Explain SWOT analysis for developing business opportunity.
4. How to develop business opportunity using PESTLE analysis?
5. Explain the concept of feasibility analysis.
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6. What are the different types of feasibility analysis?

7. Explain the term project environment.
U
8. What are the various phases of project life cycle?

9. Explain Network diagram with the help of an example.
10. What do you understand by project appraisal?
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Learning Activities
1. Raghav had always wanted to manufacture an innovative, energy efficient fan. He
was looking into various options and has finally narrowed it down to one option. He
m
understands that the entire idea would have to follow a process. Identify and explain
the process.
2. Varun decided to start his own venture and was looking into various ideas. Explain
)A
to him various sources from where he can get some good business ideas.

1. b.
(c
2. a.
3. a.

4. a.
Notes
e
5. c.
6. b.
in
7. a.
8. a.
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9. d.
10. c.
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1. Charantimath, Poornima M., Entrepreneurship Development Small Business
Enterprises, Pearson Education, First Impression, 2006.
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2. Gupta & Srinivasan, Entrepreneurial Development. Sultan Chand & sons
(Latest Edition)
3. Panda, Shiba. Charan, Entrepreneurship Development. New Delhi, Annual
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Publications (latest edition).
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Module - IV: Business Plan and Sources of Capital Notes
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●● Introduction to business plan
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●● Elements of a business plan
●● Components of a business plan
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●● How to write a business plan
●● Why some business plans fail: common pitfalls to be avoided
●● Entrepreneurial capital
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●● Equity financing
●● Debentures
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●● Commercial banks
●● Institutional finance
●● Friends and family
●● Angel financers
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●● Venture capital
Introduction
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Richard Cantillon defined it as the risk of buying something at a fixed price and
selling it at an unknown price. By introducing the concept of gathering the factors of
production, Jean Baptiste extended the definition. In 1911, Schumpeter added the
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concept of innovation to the definition of entrepreneurship, defining innovation as any

innovation that affects a process, market, product, factor, or even an organisation
(2006). Overall, entrepreneurship is a process of change, vision, and invention, or, to
put it another way, innovation, which necessitates passion and energy in order to put
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these creative ideas and solutions into action. However, according to Hirich, Peters, and
Shepherd (2010), the most challenging difficulty in starting an entrepreneurial enterprise
is obtaining money.
Entrepreneurs use a variety of sources of funding to fund their businesses. In

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general, capital is classified into two categories: “debt or equity” and “internal or
external sources,” which include personal funds, friends and family, and bank loans.
Between these two extreme groups of banks, which will never invest in a venture that
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is too risky, and entrepreneurs, their families, and friends, who are more supportive
of the venture, there are three other major financial sources: venture capitalists (VC),
business angels (BAS), and corporate venture capitalists (CVCS).
4.1 Business Plan

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A business plan is a necessary document for any new business to have in place
before it can begin operations. Writing a compelling business plan is generally a

requirement for banks and venture capital organisations before contemplating granting
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financing to new enterprises.
4.1.1 Introduction to Business Plan
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An entrepreneur must acquire a thorough understanding of the market, including
their unique value proposition, competitive strategy, and what it will take to succeed,
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through business planning. Specific operations and financial statement phrases, which
can require a lot of research and time to figure out, are part of this expertise.
It is rarely a smart idea to operate without a business plan. In fact, very few
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businesses can survive for long without one. There are many more advantages to
developing and keeping to a sound business plan, such as the ability to think through
ideas without investing too much money and, eventually, losing money.
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Each choice a firm makes should be outlined in a thorough business plan, including
all estimated expenditures and potential dangers. Even among competitors in the
same industry, business plans are rarely identical. However, they all include the same
essential components, such as an executive summary and a full explanation of the
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company, its services, and its goods. It also explains how the company expects to attain
its objectives.
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At the very least, the plan should include an outline of the industry in which the
company will operate and how it will set itself apart from possible competitors.
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The Different Types of Business Plans
Business plans assist organisations in determining their goals and staying on track.
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They can assist businesses in starting up and managing themselves, as well as helping
them grow once they’re up and running. They also serve as a technique of attracting
people to work with and invest in the company.
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While there are no right or wrong company ideas, they can be divided into two
types: traditional and lean start -up. The classic business plan is the most popular,
according to the Small Business Administration. They’re standard, but each area has
a lot more information. These are usually substantially longer and demand a great
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deal more effort. Lean start-up business plans, on the other hand, have a condensed
structure with crucial parts highlighted. These business plans aren’t as frequent in
the business sector because they’re brief—as little as one page—and lack detail. If
a corporation utilises this type of plan, they should anticipate to be asked for further
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information by an investor or lender.
Components of Business Plans: An Overview

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Despite differences in vocabulary and format, most business plans have the
same basic components. Let’s take a closer look at the aspects that Small Business
Administration recommends:
Summary of the Report

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Briefly describe what you do (Product or Service), who you do it for (Target
Market), and how you’ll be successful. Mission statement, management and
organisational structure highlights, targeted location and scale of operation are all
elements to consider. Include summary-level financial details and growth estimates if

Notes
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you’re looking for funding.
Description of the Business
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Provide a more extensive description of your company in this part, including
the opportunity (or market problem) and your solution. Include a description of the
consumer profile or a list of target businesses or organisations when selecting your
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target market. Details about your competitive advantage, such as managerial expertise
and/or product, process, or other differentiators, should be included here.
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Market Research
This is when your research’s rigour pays dividends. Put your knowledge of the
economy, industry, your target market, and associated trends and developments in this
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section. This is also where you’d include competition research, such as success factors
and how you’ll position yourself and your value offer in comparison to competitors. See
the links to sample analyses below for further information on competitive mapping:
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◌◌ Porter’s Five Forces: Analysing the Competition (Business News Daily.com)
◌◌ Three Competitive Map Examples from Simplicable
◌◌ Mapping Your Competitive Position from Harvard Business Review
Management & Organization

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Describe your legal form (e.g., sole proprietorship, partnership, corporation) and
introduce yourself and, if relevant, your management team or advisors in this section.
You may also want to expand on any connected themes or reasons, such as a social
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impact or a commitment to sustainability. Include an organisational chart, if applicable,

so that readers can see who is in charge of what functions.
You can also want to mention key successes to show what special skills each
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member of the team brings to the table. In the Appendix, you might include resumes
from key management positions.
Product or Service Line

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Detail your offerings and any market differentiators, such as copyrights or patents,
in the product or service section. Explain how your product or service benefits your
customers, especially in comparison to competitors’ offerings. Highlight any quality,
process, or material supplier certifications, as well as any other factors that affect buy
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decisions or decrease company risk, if relevant.
Sales & Marketing

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You can’t expect a better product or service to win on merit alone in a world where
consumers are inundated by options. This part requires you to outline your strategy
for bringing your product or service to market. You should also describe how the sales
will take place so that relevant expenditures and technologies may be accounted for in
your budget. Depending on your product or service, the complexity of your marketing
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activities and sales process (and the accompanying sales lead time) will vary.

Request for Funding (if applicable)

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This part is where you’ll outline your financial requirements and the anticipated
use of those money over the next five years if you’re using your business plan to
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request assistance. The SBA recommends stating whether you’re looking for debt or
equity financing, as well as the terms you’re looking for, such as the interest rate and
time duration. Explain why you need the money—for example, to pay operating costs
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while you create a revenue funnel. Finally, whether you’re paying off debt or selling the
company, describe your future strategic goal.
Financial Forecasts
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Whether you’re requesting funding or using your business plan as proof of
concept, a business plan is nothing without numbers. Financial statements should be
created regardless of whether you’re requesting funding or using your company plan
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as evidence of concept. A financial outlook summary, as well as predicted income
statements, balance sheets, cash flow statements, and capital expenditure budgets,
should be included in the five-year projections.
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For the first year, the SBA recommends utilising more specific (quarterly or
monthly) estimates. As you implement your plan, this degree of detail serves as a
reality check and early warning for you as a business manager. Include actual income
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statements, balance sheets, and cash flow statements for the last three to five years if
your company is still in operation. List any additional assets you’re willing to submit as
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collateral in this box. Check your estimates and grant proposal information to make sure
the story and the statistics match. This section runs the risk of becoming a jumble of
meaningless numbers. To present your financials in a clear and engaging manner, be
deliberate and creative (with your design, not the statistics).
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Appendix
The Appendix is used to give further information and any other pertinent or
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requested documentation. Credit histories, resumes, product photos, letters of

reference, licences, permissions, or patents, legal documents, permits, and other
contracts are all recommended by the Small Business Administration. Here is a sample
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of appendix for a business plan:
Appendix O
Sample 9- H1N1 business plan addressing Business continuity Planning/ continuity
of Operations Planning for Savannah/hilton Head Interantional Airport
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1. Introduction: The Avannah/Hilton head International Ariport H1N1 Business Plan in

modeled on guidance recommendaed by the U.S. Department of health and Human
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Services, the Centers for Disease Control and Prevention (CDC), and the U.S.
Department of Homeland Security. The Savannah Airport Commission recongnizes
the airport of this community plays a key role in protecting employees ‘health and
safety by limiting the negative impacts on the individual, the community, and the
nation’s economy. It is for this reason the Executive director of the Savannah Airport
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Commission has published a related H1N1 Business plan.

2. Planning for Fall and Winter Influenza

Season
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The CDCanticipates communities may be severely affected by the 2009 falt and
2009/2010 winter due to wider tranmission and greater impact. Seasonal influenza
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viruses may run concurrent with the H1N1 contributing to varying levels of severity
requiring organisations to respond in a flexible manner to varying levels of an outbreak.
The Savannah Airport Commission will continuously monitor national and international
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data disseminated by the CDC and take the appropriate action.
Our core H1N1 Business Plan involves four principles designed to decrease the
spread of influenza and lower the impact of influenza in the workplace.
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●● Reducing transmission among staff
●● Protecting individuals who are at increased risk of related complications
●● Maintaining business operations
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●● Minimising adverse affectes on other entities in the community
The Strategy associated with the H1N1 business Plan involves an evaluation
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process based on the following key indicators.
●● The severity of the disease (hospitalisation and death rates) in the community
●● The extent of the disease in the community
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●● The amount of worker absentecism for tenants and Commission employees
●● Pregnant women
●● employees with chronic medical conditions
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●● Other factors that ma affect employees ability to get to work

●● School closures or dismissals
●● High levels of illness in children
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Preparedness and Response

The Savannah Airport Commission’s preparedness and response to the H1N1
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Business plan involves two possible operational conditions (OPCON). OPCON 1

is a continuation of the current level of severity of influenza as was observed during
the spring and summer of 2009. OPCON 2 is a more svere outbreak. The Executive
Director of the Savannah Airport Commission will establish the respective OPCON
based on data from the CDC, CEMA, and other sources.
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OPCON 1
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●● The director of operations of his or her designee will conduct on OPCON I H1N1
briefing to all Savannah Airport Commission employees.
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●● The marketing department will advise airline tenants, concession tenants, and
lessess that the executive director has implemented OPCON 1.
●● Establish normal influenza absenteeism rates and begi n to track variances above
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the norm.
●● Employees are encouraged to get vaccinated against influenca.
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●● Employees at higher risk for complications from influenza, to include pregnant
women, employees with chronic lung disease, diabetes, and diseases that
suppress the immune system, should check with their health care provider if they
become ill.
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●● Assess essential business funcsions and determine at what threshould of
absenteeism airport functions may be affeted.
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●● All individuals exhibiting influenza symptoms should stay home and away from the
workplace and will not return until 24 hours after the fever is resolved.
●● Ensure health practices such as hand washing and covering coughs and sneezes
are in place. r
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●● employes who are well bt have an ill family member at home with infuenza should
monitor their health daily and not report to work if they exhibit symptoms of
influenza.
●● Routine cleaning of commonly touched surfaces will be performed by
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Environmental staff.
OPCON 2
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●● The director of operations of his designee will conduct an OPCON 2 H1N1 briefing
to all Savannah Airport commission employees.
●● The Marketing department will advise airline tenants, concession tenants, and
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lessess that the executive director has implemented OPCON 2.

●● Review influenza absenteeism rates and meet with the executive director to
determine a projection of the absenteeism rate.
●● Each department manager will provide the director of operations or his deisgnee
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with abverse functionality conditions of their department based on current

absentecism treands
●● The executive director and director of operations in coordinations with the CDC
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and CEMA will review data and determine the functional level of the airport based
on absenteeism rates.
●● The executive diretor will implement policy associated with work eligibility based
on symptoms and CDC or health department recommendations as well as return
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to work policy.
●● The Executive director or his designee may require social distancing (non-contact
with other employees within a given distance) to include reassignment of work
space.
Notes
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●● Conference rooms will be closed with the exception of exucutive use.
●● The executive director or his designee may implement work-from-home strategies
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to maintain functionality of the airport.
●● Employees who exhibit flu-like symptoms are encouraged not to travel and are not
permitted to travel on behalf of the Savannah Airport commission.
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4.1.2 Elements of a Business Plan
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The goal is to view a business plan as a component of a larger planning process
rather than a physical document that must be written.
1. Business Model
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The business model is something you will construct as an entrepreneur based on
your initial business concept. Everything you do in the planning process after this will
be based on that model. When you get a great idea, it can be as simple as a scrap of
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paper or a napkin that you have on hand. This piece of paper can then be translated
into a larger piece of paper with a better model graph.
What’s more significant is that your business strategy isn’t solely focused on your
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entrepreneurial idea; it all starts there. You must test your business model against
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reality - the market, or the clients who will use the company’s products. As a result, you
begin the planning phase immediately following the concept generation process.
2. Products or Services
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You have a business plan, but it’s worthless if your company doesn’t have
something to trade for money. The products and services that you will sell to your
customers will be the subject. They’ll be the things that help your customer solve
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challenges. In any case, your concept is based on an issue that exists in the market.
As a result, you, as an entrepreneur, must find and explain every component of future
products and services during the planning process. You can use the following questions
as a guideline for the process:
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◌◌ What will the customers get out of it?

◌◌ What characteristics will your items or services have?
◌◌ How will you manufacture your goods and services?
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◌◌ How will you make them? What technologies will you use?
◌◌ How will you market and sell those goods and services?
◌◌ Who are the market’s primary competitors?
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◌◌ What distinguishes your competitor’s products and services from your own?
◌◌ What are the key distinctions between your products and services and those
of your competitors?
◌◌ Consider what items and services you might be able to introduce in the future.
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By answering these questions, you may create a foundation for your products and
services in the long run.

3. Required Finances
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Every business venture necessitates funding. You can’t have an effective planning
process unless you include a financial plan in the process. You’ll need money to start
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your business, grow it, create and implement new ideas, pay for day-to-day expenses,
earn more money, and so on.
You can have the best ideas in your business model and develop the best products
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and services on paper, but if you can’t manufacture them and put them to market, your
firm won’t be able to start or grow as you planned.
As a result, you must devote some effort to determining the necessary financial
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resources for each business enterprise into which you desire to go.
You must answer the following questions as part of your planning process:
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◌◌ How much capital will I require to launch my business?
◌◌ How much money will I need once my business is up and running before it
starts producing money?
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◌◌ How much money do I need to put up?
◌◌ Where will I be able to get the extra funds?
◌◌ What is my financial back-up plan?
4. Market Analysis
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Market analysis is a way to see what’s going on in the world outside of your firm
and as an entrepreneur. It will provide you with answers you didn’t realise you needed,
which you can include into your business strategy, goods, and services, as well as
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your financial planning and plans. If you want to establish a company that is close to
potential clients, you must undertake market research. At the very least, the following
questions must be addressed in this analysis:
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◌◌ Who are your intended customers?

◌◌ How frequently will those customers buy a certain product or service?
◌◌ What is the maximum price they are willing to pay for goods and services?
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◌◌ What is the size of the market served by competitors?

◌◌ What is the cost of the competitor’s specific product or service?
◌◌ How do we make an impression with our marketing campaign?
5. Strategy, which includes an Online Strategy

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The strategy is the sixth component of your planning process that must be
addressed. Without a strategy, entrepreneurs are as lost as lost people in a space that
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appears to be boundless. A strategy is a tool that will open your eyes to your future
success route. As you can see, I emphasised the need of an internet strategy as part of
a larger business strategy. When developing a strategy, keep in mind your company’s
online presence, as it is becoming increasingly linked to your overall strategy.
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6. Break-Even Analysis
For entrepreneurs, break-even analysis is a very useful tool. It simply informs you
how much you need to sell in a certain amount of time to cover all of your expenses.
And everything above that point in terms of sales volume is profit. You can compare
Notes
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the projected and break-even numbers and make required adjustments in sales
forecasting, financial, and marketing activities, for example.
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7. Cash Flow Analysis
Will your company have enough cash to run its activities for a set length of time?
This question will be answered through a cash flow analysis. It is an important aspect of
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any planning process, particularly for new enterprises.
8. Profit-Loss Analysis
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Will your company make a profit or lose money? When will the business start to
make money? Profit-loss analysis will be used to answer these questions. You may
match your financial planning process with this response and know what steps you
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need to take to maintain normal business operations.
4.1.3 Components of a Business Plan
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Effective business plans must include a number of critical elements that address
various areas of a company’s objectives. The following are the most crucial components
of a business plan:
1. Executive summary r
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2. Business description
3. Market analysis and strategy
4. A marketing and sales strategy
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5. Examine the competition

6. Description of the management and organisation
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7. Description of the products and services

8. Description of the operating strategy
9. Budgetary projections and requirements
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10. Appendices and exhibits

1. Executive summary
The executive summary is the first and most important section of every business
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strategy. This summary gives an overview of the entire business plan and emphasises
the topics it will cover. It’s always ideal to write the executive summary last, so that
everything is known about the plan and can properly summarise it.
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The mission statement of the firm, as well as the products and services it plans to
offer or now offer, should be included in the executive summary. If the business plan
is for a new company, it may also include why it is being established.
2. Description of the company
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The business description is the following section of a business plan. This section
contains a detailed description of your company’s aims, products, services, and

target consumer base. It should also include information about the industry that a
Notes
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company will serve, as well as any market trends and main rivals. In the business
description, it should also mention your and your team’s industry experience as well
as what sets the company unique from the competitors.
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3. Market research and planning
The market analysis and strategy section of a business plan’s objective is to
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investigate and determine a company’s major target audience, as well as where to
find them. The following are some of the points to consider in this section:
◌◌ The key pain points experienced by the potential customers
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◌◌ Where the target market is geographically located
◌◌ Target market’s most pressing demands and how your products or services
might address them
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◌◌ Target market’s demographics
◌◌ Where THE target market spends the majority of their time, such as certain
social media platforms and physical locations
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This section’s purpose is to clearly define the target audience so that strategic
predictions can be made about how the product or service will perform with them.
4.
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Sales and marketing strategy
The specifics of how an entrepreneur plan to market and sell your products and
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services should be covered in this section of your business plan. This part should
contain the following information:
◌◌ Projected marketing and promotion methods
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◌◌ Pricing plans for company’s products and services

◌◌ Sales techniques
◌◌ Why should target audience buy from a particular entrepreneur instead of his
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other competitors?
◌◌ What is his company’s unique selling proposition?
◌◌ How will he get his products and services in front of the target audience?
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5. Examine the competition

A detailed competition study that clearly defines a comparison of an organisation to
the competitors should also be included in the business strategy. Outline the problems
and strengths of the competition, as well as how it is expected an organisation to
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compare. This section should also highlight any market advantages the competitors
have and how to aim to differentiate your company. It should also discuss how a
company differs from others in the field, as well as any potential problems itvmay
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encounter when entering the market, if applicable.

6. Organizational and management descriptions
The details of a company’s management and organisation approach should be
covered in this area of the business plan. Introduce the company’s leaders, including
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their qualifications and duties. You can also add company’s legal structure and
human resource requirements.

7. A description of the products and services

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Use this section to expand on the details of company’s products and services that
are mentioned in the executive summary. Include any pertinent information regarding
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products and services, such as how they will be manufactured, how long they will
last, what requirements they will address, and how much they will cost to develop.
8. Business plan
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This section of business plan should explain how an entrepreneur intend to run a
business. Include facts about company’s operations, such as how and where it will
operate, how many employees it will have, and any other relevant information.
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9. Budgetary projections and requirements
The financial component of a business plan should include information on how an
entrepreneur expect to generate revenue and how much money he will need to get
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started. The financial statements, as well as an analysis of these figures and a cash
flow prediction, should all be included.
10. Appendices and exhibits
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Any additional information to support the elements stated in a business plan should
be included in the last section of your business plan. Exhibits and appendices can be
included to demonstrate the feasibility of business plan and to provide investors with
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a clear knowledge of the research that supports it. The following is a list of common
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information to add in this section:
◌◌ Resumes of company executives and other stakeholders
◌◌ Marketing studies
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◌◌ Permits
◌◌ Proposed or current marketing materials
◌◌ Relevant legal documentation
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◌◌ Photographs of the product
4.1.4 How to Write a Business Plan

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A financial institution’s administration and monitoring should include the

development of a business plan (institution). It should state the institution’s objectives
and goals. It’s a written outline of how the company will manage its resources to
achieve its objectives and how the company will track progress.
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The business plan should be a complete plan that is the outcome of extensive
planning by the organisers and management of the institution. It should forecast market
demand, client base, competition, and economic conditions in a realistic manner. The
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plan must adhere to good banking principles and indicate a realistic risk assessment in
light of the market’s economic and competitive realities. In the appropriate areas of the
strategy, an institution with a distinctive purpose or emphasis (for example, credit card,
trust only, cash management, or bankers’ bank) should address this special or unique
feature in depth.
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The business plan should encompass three years and include extensive
descriptions of suggested activities to accomplish the institution’s major functions. The

description should be detailed enough to show that the institution has a fair probability
Notes
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of success, will operate safely and securely, and will have sufficient capital to sustain
the risk profile.
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Any organisation with an Internet or other electronic delivery channel should have
a clear and precise definition of the market it intends to serve, as well as the products
and services it will offer via electronic channels. Because the Internet has the capacity
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to reach everyone with Internet access anywhere in the world, well picked information
on market areas, products, and services is critical. The marketing strategy should detail
how the organisation will establish its brand.
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I. Table of Contents
II. Executive Summary
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Describe the plan’s highlights.
III. Business Description
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A. Describe the institution’s business, including products, markets, services, and
atypical operations, as well as any particular market niches.
B. If the organisation is structured as a holding company, explain how it operates,
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including a brief description of the organisational structure and how it interacts
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with its affiliates.
C. Describe the extent to which transactions with connected businesses or persons
are or will be conducted. Include phrases.
D. Discuss the institution’s legal structure and stock ownership, as well as any
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investments in subsidiaries or service corporations.

E. Describe the current financial situation and current resources, such as the
office network, staff, and client base, for an operating company. Discuss the
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advantages and disadvantages in detail.

F. Provide details on the proposed location, office space, and any branch
structures.
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G. Discuss any plans for development or expansion, such as new branches,

offices, mergers, or acquisitions.
IV. Marketing Plan

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A marketing plan should explain the facts that show the institution has a good
chance of meeting revenue estimates, customer volume, and important marketing and
income goals. The analysis should be based on the most recent data available, with
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references to the sources of information. This part should go over the primary planning
assumptions for the market analysis, economic, and competitive components that were
utilised to construct the goals, objectives, and assumptions in detail.
A. Product Strategy
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1) Describe and list the general terms of the anticipated products and services,
including any subsidiaries’ activities. Discuss any intentions for subprime or

speculative lending, as well as any plans to originate loans with high loan-to-
Notes
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value ratios.
2) Describe how the institution will offer products and services over the next three
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years, emphasising any differences in different market sectors or distribution
methods, as well as the time frame for introduction and expected costs.
3) Describe the institution’s plans for secondary market/mortgage banking
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activities, such as loan participations. Discuss if forward take-out commitments
or loan securitization will be used. Describe any plans to use hedging to reduce
the risks associated with this business. Discuss plans for retaining recourse
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and servicing as well.
4) Describe the main sources of loans and deposits, as well as the most common
means of obtaining them. Provide comprehensive details of all such activities,
including sources, quantities, fees, and any intended tie-in of compensation
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arrangements with the broker or agent, if using brokers or agents.
5) Describe any agreements with e-commerce enterprises (for example, links to
another’s Web site for online shopping, ordering, or purchasing goods and/or
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services).
B. Market Analysis
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Identify the intended target market as well as the geographic market location
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(s).
2) Describe the demographic characteristics of the target market population (for
example, age, education, and occupation).
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3) Discuss any current and/or proposed steps to achieve the institution’s goal to
promote home finance in detail for a federal savings association file.
C. Economic Component
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1) Describe the economic outlook for the plan’s three years. The plan should
include the most likely scenario as well as discussion of potential economic
downturns.
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2) List any national, regional, or local economic considerations that may have
an impact on the institution’s activities. Include a discussion of any expected
market changes, the variables that influence those changes, and the impact
those changes will have on the institution.
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3) Describe the prospective market’s current economic characteristics, such as

size, income, industry, and housing trends.
4) Discuss the economic elements that determine the products and services to
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be given, based on the economic qualities outlined previously. When distinct

types of services are recognised for different market areas in the Description
of Business section, a more in-depth discussion is required.
D. Competitive Analysis
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1) Compare and contrast the institution’s product strategy with that of its main
target market competitors (s). Include predicted relative strength, market

share, and pricing outcomes.

Notes
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2) Go over the overall marketing/advertising plan, including how to reach
the target market through brand, product, and service marketing. Outline
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the precise medium that will be used, as well as the timing and amount of
advertising that will be done.
3) Discuss the target market’s prospective competitors.
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V. Directors and Officers Management Plan
A. Indicate how many organisers and/or directors there are. Provide a list of board
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committees as well as a brief description of each committee’s tasks.
B. Provide an organisational chart that shows the number of officers and
employees. Describe the top executive officers’ roles and responsibilities.
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Describe any management committees that have been formed or that will be
formed.
C. Discuss the institution’s plans for managing management succession, including
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any management training programmes or other resources that may be available.
VI. Records, Systems, and Controls

A.
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Describe the institution’s present and/or projected accounting and internal
control systems, including any electronic processing technologies that may be
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used.
B. Describe the proposed internal audit function by management. The department’s
independence, as well as the scope and frequency of audits, should be stated
in the description. Discuss the audit staff’s experience and education. If external
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auditors will be utilised for internal audits, provide them with identical information.
C. Outline the compliance management programmes, including their independence,
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scope, frequency, and personnel qualifications. Talk about how the institution
will handle customer complaints.
D. The state intends to hire independent public accountants to conduct an annual
audit.
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E. Discuss which functions will be outsourced and which will be handled in-house
by the institution.
VII. Financial Management Plan

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A. Earnings and Capital

1) Discuss the capital objectives and methods for achieving them.
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2) Summarize the strategy for achieving the earnings goals in terms of return
on assets, net interest margin, or other profitability criteria.
3) Discuss the strategy for obtaining capital and financing growth, with a
focus on meeting regulatory capital needs.
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4) Examine the proposed capital structure’s suitability in light of internal and

external risks, as well as planned operational and financial assumptions,
such as technology, branching, and predicted organisation and operating
expenses. Provide a detailed rationale for the projected capital, including

Notes
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any planned off-balance-sheet activities.
5) Outline the debt servicing needs for any debt issued at the holding
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company level to fund the organisation.
6) Discuss the institution’s capital, including the utilisation of options,
warrants, and/or other advantages.
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7) Provide a summary of the dividend policy.
B. Liquidity and Funds Management
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1) Talk about how the bank will identify and assess liquidity risk.
2) Discuss the institution’s liquidity risk management strategy, including
funding sources (deposits, borrowings, securitizations). Include any
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support from a holding firm.
3) Describe any intentions to borrow money from banks or other financial
institutions, including the amount, composition, interest rate, maturity,
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purpose, and collateral.
4) Talk about the types of investment securities the institution intends to buy.
C. Market Risk Sensitivity
1)
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Discuss the institution’s interest rate risk objectives, strategies, and risk
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tolerance.
2) Talk about how the bank will identify and assess interest rate risk.
3) Discuss the sensitivity of the institution’s asset and liability portfolios to
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interest rate fluctuations, as well as the influence of earnings, capital, and

net portfolio value. To manage interest rate risk, talk about the risk limits.
4) Explain any plans to engage in hedging actions (for example, futures,
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options, interest rate swaps, or other derivative instruments).

D. Credit Risk
1) Talk about how the bank will identify and assess credit risk.
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2) Describe the loan review programme, including the independence, scope,

frequency, and credentials of the employees.
3) Describe the methods used to calculate the loan and leasing loss allowance.
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VIII. Monitoring and Revising the Plan

A. Describe how the board of directors will ensure that the company plan is
followed.
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B. Explain how the board of directors will revise and adjust the plan to account
for large or material economic changes.
IX. Alternative Business Strategy (Optional unless the regulator requires)

(c
An alternative business strategy explains how a company will operate in

circumstances where market conditions differ dramatically from those forecast in

the business plan. This alternative business strategy should be realistic in terms
Notes
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of business risks and contain effective risk management. Potential undesirable
situations relating to asset or liability combinations, interest rates, operating expenses,
marketing costs, and growth rates should all be considered in this alternative plan. This
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conversation should include realistic plans for the bank’s future access to additional
capital, as well as contingency funding plans that address techniques for managing
anticipated liquidity swings, if appropriate. This plan should also include any financial
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measures to protect against unforeseen costs and keep the company well financed.
This section should be updated on a regular basis, especially as the institution grows
more complicated and industry conditions change.
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X. Financial Projections
A. Provide financial data for the first three years of operations, including a pro
forma and quarterly estimate. Include annual totals in the Income Statement as well.
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The financial statement line items should be consistent with the Consolidated Reports
of Condition and Income so that predicted and actual performance can be easily
compared. The reports listed below should be used:
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◌◌ Projected Balance Sheet (Schedule RC or SC)
◌◌ Projected Income Statement (Schedule RI or SO)
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Regulatory Capital Schedule (Schedule RI-A or CCR)
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Financial statements should be given in two ways: (1) in dollar amounts, and (2) as
a proportion of total assets.
1) Describe all of the assumptions used to create the projected statements in detail,
including the estimated interest rate scenario for each interest earning asset and
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interest costing liability over the business plan’s term. Present a comprehensive
explanation for anticipated capital, including any branch expansion and off-balance-
sheet activity.
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2) Describe the assumptions that were utilised to calculate noninterest income and
noninterest expense. Calculate the cost of the lease, capital improvements,
furnishings, fixtures, and equipment, as well as system and equipment upgrades.
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3) Describe the assumptions for each new product and service’s start-up costs,
volumes, projected returns, and expected time frame.
B. Explain how marketing studies or surveys were used to support the
institution’s predicted development.
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C. Discuss the marketing costs required to reach the expected market share for
both loan and deposit products. Assumptions should be consistent with what
comparable institutions in the target market have experienced. Explain any
)A
substantial differences between the target market’s assumptions.

D. Conduct a financial forecasts sensitivity analysis. A sensitivity analysis puts
the primary underlying assumptions in the business plan and the resulting
financial predictions through a realistic stress test. Adjust the financials to
reflect the consequences of negative interest rate fluctuations, asset/liability
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mix changes, higher-than-expected operating expenses, marketing costs,

and/or growth rates, for example.

4.1.5 Why Some Business Plans Fail: Common Pitfalls to be

Avoided Notes
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Every year, thousands of company ideas are written, but only a small percentage
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of them will succeed. While some business plans may contain sound concepts, they
fail for a variety of reasons, forcing their authors to start over. The same can be said
for internal projects. Big plans are drawn up, and ideas are formed, but when it comes
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to making the project function in the real world, everything goes apart. You can be
prepared to encounter and overcome these challenges if you understand the frequent
reasons why business strategies and projects fail.
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An updated business strategy is beneficial to every organisation. While it may
appear to be only for start-ups, it also applies to established businesses. A well-written
business plan keeps the entire firm on track in terms of executing the company’s
strategy and achieving its objectives.
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Mistakes in a business plan can lead to everything from minor oversights to
disastrous errors for your company. It is even more critical for businesses in the funding
stage to ensure that the information they present is correct and that none of their
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concepts are deceptive or out of step with the existing market.
Here are some crucial business plan flaws to avoid in order to save your business
plan from being thrown out:
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●● Bulky and long Summary of the Report
The executive summary is where readers of a business plan, such as investors,
bank institutions, and important vendors, first assess your business proposal. The
executive summary is a succinct but informative summary of the most critical aspects
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of your business strategy. It should clearly express how a highly competent team will
deliver items or services to precisely defined target markets in accordance with a
consistent strategy. Furthermore, it should highlight the company’s value proposition,
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which explains how their products or services will improve the lives of their customers in
a lucrative way.
As a result, if the executive summary does not present a clear, convincing, and
persuasive description of the firm, the busy investor is likely to move on to the next
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proposal.
●● Associating your value offer with out-of-date technologies or shrinking markets

When establishing the opportunity, you envision for a product or service in your
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business plan, you must analyse it and cannot simply assume that the concept will find
demand in the real world. A properly developed business plan will ensure that your
company is set up for success. This means you’ll need to create a value proposition
)A
for your product or service that will disrupt a new or existing market. It will be extremely
difficult for you to obtain capital in markets that are decreasing or being replaced by
new sectors.
What would you think if someone invented waterproof ink for typewriter ribbons,
for example? You wouldn’t be surprised because the amount of people looking to buy
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anything like that is really small.

●● A lack of understanding of the target audience and segments

Notes
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There is no such thing as a product or service that can satisfy everyone’s needs.
We’d all be using the same phone if that were the case. In truth, your product or service
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caters to a certain and desirable type of customer.
You can’t think about how you’ll handle the strong competition unless you define
your target market. There are other companies that offer the same product and service.
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Investors put their trust in businesses that have completed and achieved a thorough
understanding of the primary and secondary markets. You must identify your target
market and plan how you will reach out to them.
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●● Making growth expectations that are unreasonable and aggressive
Many investors skip straight to the financial section of the business plan after
reading the executive summary. It’s critical that the assumptions and forecasts in this
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section are accurate. Plans that demonstrate sales forecasts, operating margins, and
revenues that are poorly reasoned, internally inconsistent, or plain unrealistic severely
undermine the overall business plan’s credibility. Financial assumptions and projections
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that are grounded and well-supported, on the other hand, show operational maturity
and confidence. In your financial analysis, benchmarking is a particularly useful
instrument.
●● r
Recognizing your competitors but not conducting research on them
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Many firms are too focused on themselves. It’s a healthy attitude to be confident in
your product or service. However, there’s a chance that this will skew your perception of
how it relates to items and services offered by competitors that have been in the market
for a while. Furthermore, entrepreneurs frequently overlook or underestimate the threat
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of new entrants who could raise competitive pressure.
Unrealistic Expectations and Goals

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Setting high objectives and having the best of intentions when it comes to writing
a business plan or completing a project don’t always work out in the real world. While
having ambitious goals is vital, the method to reaching them must be reasonable and
accessible. It’s one thing to desire to sell a million devices; it’s quite another to actually
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promote those gadgets and have them sell. It is vital to establish attainable goals and
aspirations in order for a company plan or project to thrive, ideally during the first year
or first few months of operation. If you have a big aim, that doesn’t mean you should
abandon your strategy; rather, you should make reasonable milestones along the way
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and plan realistically.
Market Research is Lacking

)A
Market research is an essential component in launching a new company or idea.

You don’t have enough information to move forward if you don’t completely comprehend
the competitors and the present state of your market. Thorough market research must
be conducted before a company strategy or project can be started, and the results must
be regarded realistically. If your niche is crowded, you’ll need to devise a strategy to set
(c
your company or project distinct and help it flourish. Otherwise, your voice will be lost in
the din or will never be heard since there isn’t a market for it.

Problems with Productivity and Motivation

Notes
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Entrepreneurs are known for their drive to succeed and their ambition. These
two factors have the potential to turn someone with no money into a multi-millionaire.
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However, determination to succeed and the capacity to stay motivated even when the
odds are stacked against you are critical to business success. This motivation should
be extended to your company’s employees or members of your project team. The best
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concept in the world will fail if they are not productive and motivated.
Budgeting Errors
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Another significant reason why business plans and projects fail is a lack of real-
world budgeting. You won’t always be able to go to the bank for a new loan to help
you launch your business or project. If you don’t get your project moving in the right
direction, your funding may run out. Research on the estimated cost of launching a firm
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or project and keeping it going for the first year and through growth pains should be
done ahead of time. Before you get too far into something, you need to find funding
sources and plan for the worst-case scenario.
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Inadequate Leadership
A lack of business acumen on the part of the management team or the firm owner
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is another prevalent factor for small enterprises failing. In some cases, especially when
a company is in its initial year or two of existence, a business owner is the only senior-
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level employee.
While the owner may have the abilities to develop and market a profitable product
or service, they frequently lack the qualities of a good manager and lack the time to
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effectively manage others. A business owner with no dedicated management staff is

more likely to mismanage some parts of the firm, such as finances, hiring, or marketing.
Smart business owners outsource activities that they don’t perform well or for
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which they don’t have enough time. One of the first additions a small firm requires in
order to maintain operations in the future is a competent management team. It’s critical
for business owners to be confident in each manager’s understanding of the company’s
processes, present and future workers, and products or services.
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Improper Business Planning

Prior to opening their doors, many small firms neglect the necessity of
comprehensive business planning. At the very least, a good business strategy should
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include:
◌◌ A comprehensive description of the company

◌◌ Current and future personnel and management requirements
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◌◌ Opportunities and risks in the broader market

◌◌ Capital requirements, including expected cash flow and various budgets
◌◌ Marketing initiatives
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Before operations begin, business owners who fail to meet the demands of the
company through a well-thought-out plan are setting their organisations up for major
problems. Similarly, a company that does not examine its initial business plan on a

regular basis—or is not prepared to adjust to changes in the market or industry—will

Notes
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face insurmountable challenges during the course of its existence.
Mistakes in Marketing
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Many business owners fail to plan for their company’s marketing needs in terms
of finance, prospect reach, and precise conversion-ratio estimates. It can be difficult
to get funding or redirect cash from other corporate units to cover the difference when
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organisations misjudge the entire cost of early marketing initiatives.
Since marketing is such an important component of any early-stage organisation,
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companies must ensure that they have set reasonable marketing budgets for present
and future needs.
Similarly, establishing realistic forecasts for target audience reach and sales
conversion ratios is crucial to the success of a marketing campaign. Businesses who
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do not grasp these characteristics of effective marketing strategies are more likely
to fail than those that take the time to develop and conduct cost-efficient, successful
campaigns.
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Avoid these common business plan blunders:
1. Don’t put off developing a strategy. Don’t wait until you have enough time, or
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until you have the proper people, or until you have an urgent reason to make
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a strategy. Instead, do it right now. Recognize that you require a business
plan and that the first step is to write one. Get a draught going, and then keep
updating it to keep it up to date with your business. Of course, you’ll quickly
understand that your plan may never be completed, but the essential thing is
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that you’re thinking about it. Your business should constantly be planned.
2. Don’t mix up cash and profit. There is a significant distinction between the two.
Waiting for consumers to pay might put a strain on your finances while having
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little effect on your profitability. Loading your inventory consumes funds while
leaving earnings unchanged. Profits are unaffected by spending the majority
of your money on inventory, but cash flow is far more significant than profits
because profits are an accounting term and cash is money in the bank—
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profits aren’t used to pay bills.

3. Don’t let your priorities become muddled. A plan with concentration and power
is one that emphasises three or four primary priorities. Three or four main
concepts are easily understood by most people. A strategy with 20 priorities
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isn’t really a plan at all.

4. Don’t place too much emphasis on the business concept. It is not the idea
itself that lends a business value to an idea, but the business that has
)A
already been established on top of it. To turn a concept into a business, it

needs people who show up every morning, phone calls that are answered,
items that are manufactured, ordered, and shipped, services that are
given, and customers who pay their bills. Either produce a business plan
that demonstrates you how to turn that wonderful concept into a profitable
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business, or forget about it. A great business isn’t built on a brilliant idea alone.

5. A plan should not be confused with the act of planning. To be successful,

Notes
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you’ll need both. And your planning doesn’t finish until you’ve completed your
strategy. The value of a plan lies in the actions it inspires, and action begins
the day you decide on the plan’s primary points. Recognize that your company
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strategy is never truly finished—you should be modifying it all the time
because reality is continuously moving forward. You’ll never be able to tell the
difference between plan and reality if you don’t have a plan setting marker.
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Don’t just write down your strategy; put it into action.
6. During the first 12 months, don’t distort the details. I’m referring to your
financials, milestones, dates, duties, and deadlines when I say “details.” The
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most crucial factor is cash flow, but you’ll also need a lot of information when
it comes to allocating jobs to people, setting activity dates, and defining what’s
expected to happen and who’s going to do it. These particulars are crucial.
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Without it, a business plan is useless.
7. Don’t sweat the small stuff in the long run. This is about planning, not
accounting, and you’re simply making educated guesses about the future in
an uncertain environment. Monthly details, as vital as they are at first, become
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a waste of time as time goes on. When your sales estimate is so unclear,
how can you project monthly cash for three years? In the primary conceptual
literature, you can plan in five, ten, or even twenty-year periods, but you can’t
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plan in monthly detail beyond the first year. Nobody believes it and no one
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expects it.
8. Don’t make ridiculously optimistic “hockey stick estimates” of sales
skyrocketing in the near future. Yes, it occurs once every generation, but no
one believes it in a business plan because everyone claims it. No investor
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would tell you that, even though your sales have been flat up to this point,
they feel that after you have their money, your sales will skyrocket. If you’ve
truly established a once-in-a-generation company with explosive sales, you’ll
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need to include so much bottom-up data in your prediction that even the most
sceptical investor will believe it.
9. Don’t write excessively. Keep your company strategy succinct and to the
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point, focusing on your most important goals. This is a business strategy, not
a dissertation. Stick to the major topics and utilise bullet points to keep them
concise and easy to remember.
10. Don’t get too worked up about the formatting. There has never been a
business plan that failed because the page headers were not color-coded.
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Don’t use many fonts, a lot of colours, or complicated page layouts to spruce
up your strategy. Don’t keep critical facts hidden. Keep things simple and don’t
get caught up in the details.
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4.2.1 Entrepreneurial Capital

Two criteria have been established to define entrepreneurship. The first is the
ability of economic agents to detect economic opportunities that can only or best be
(c
fulfilled through the development of a new firm, based on their level of (asymmetric)
knowledge. The second requirement is economic activity, which entails the
establishment of a new business to capitalise on the economic value of that information.

Entrepreneurship is not neutral in terms of geographic geography, according to

Notes
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theories and empirical confirmation. It has long been known that entrepreneurial activity
differs by location. Attempts to rigorously link spatial differences in entrepreneurship
with locational specific qualities revealed that such spatial activity is shaped by
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elements specific to specific regions, rather than being random.
The underlying pool of entrepreneurship capital could be reflected in such
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entrepreneurial activities. The capacity for spatially relevant spatial units of observation
to create the beginning of new firms is referred to as entrepreneurial capital. In an
attempt to relate social capital with entrepreneurship, a significant and robust literature
has evolved. However, social capital and entrepreneurship capital are two separate
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notions that should not be mixed up. “Social capital refers to relationships among
persons — social networks and the norms of reciprocity and trustworthiness that
emerge from them,” writes Putnam (2000, p. 19). In this way, social capital is linked
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to what some refer to as “civic virtue.” Civic virtue is most strong when rooted in a
robust network of reciprocal social interactions, according to social capital... Networks,
conventions, and trust are examples of aspects of social structure that promote
coordination and collaboration for mutual benefit.”
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Entrepreneurial capital, on the other hand, is moulded by a wide range of elements,
including institutions, laws, money, traditions, and policies. Thorton and Flynn (2003)
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and Aldrich and Martinez (2003) analyse studies that attempt to link social capital
metrics to entrepreneurship. Putnam, in reality, did not make a direct link between
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social capital and entrepreneurship. Rather, associational membership and public trust
were the most important aspects of social capital to Putnam. While they are important
for social and economic well-being, the link to entrepreneurship is less apparent.
Entrepreneurship’s relationship with entrepreneurship capital may be more important
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and meaningful than the relationship between entrepreneurship and social capital.
Audretsch and Keilbach show how entrepreneurship capital can affect

economic performance in their 2003 study. They pinpoint three processes by
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which entrepreneurship capital influences economic performance. The first is that

entrepreneurship facilitates the spread of knowledge. While Romer (1984) and Lucas
(1993) stressed the importance of knowledge in producing economic growth through
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knowledge spill overs, entrepreneurship can also act as a method for transferring such
spill overs.
The second factor is the increased competitiveness that entrepreneurship brings.

As Jacobs (1979) and Porter (1990) point out, entrepreneurship may have a greater
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impact on competition in the input market for new ideas than in the product market.
The third mechanism is entrepreneurship’s contribution to greater variety in a region.
Glaeser et al. (1992) propose and support the hypothesis that having more diversity in
a region leads to better economic performance. As a result, entrepreneurship capital
)A
promotes knowledge spill overs, higher competitiveness, and more diversity in a region,
all of which help to drive economic progress.
4.2.2 Equity Financing

(c
The process of raising funds through selling shares of the company to the general
public, institutional investors, or financial institutions is known as equity financing.
When a company needs money, it can use both debt and equity to finance it. Equity
financing is frequently preferable since it eliminates the need for the company to repay
Notes
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its investors if it fails. In exchange for their money, investors receive ownership of the
company and voting rights proportional to their investment.
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The following is an example of equity financing.
With a $ 10,000 start-up capital, an entrepreneur founded Company ABC. He holds

100 percent of the company’s shares at the outset. He is seeking new financing for
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the Company’s expansion after a few years of operation. He sells 50 percent of the
Company’s stock for $100,000. By investing $ 50,000 in the Company, a venture
capitalist or angel investor will obtain 50% equity, while the entrepreneur’s interest will
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be reduced to 50%, despite the fact that he initially put only $ 10,000 in the Company.
As a result, equity financing and the percentage of ownership held by each investor
are determined by the timing and value of the Company’s investments.
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Equity Financing Types
Different classes of shares might exist in a company; equity financing includes not
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only common equity but also other forms of capital:
Companies, mainly huge corporations, issue many classes of shares:
◌◌ Class A shares: Investors gain ownership of the company, which includes

voting rights and dividends. r
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◌◌ Investors in Class B shares receive ownership (voting rights) but no dividend.
◌◌ Preference shares: Investors receive a pay-out (often a greater or guaranteed
dividend) but do not control the company.
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◌◌ Differential voting rights shares: Investors get differential voting rights, which
means they get one vote for every two shares they own, and they get a larger
dividend to compensate for this differential voting right than common equity
investors.
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Equity Financing Options

When a new firm is launched, the owner invests his or her own money, either
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by selling personal assets such as land and property or by using monetary assets.
However, when the company grows and the demand for funding grows, monies must be
obtained from outside sources.
Various investors have made investments in the Company at various periods of its
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growth, as listed below:
1. Angel Investors
Apart from the firm owner or founder, angel investors are usually the initial investors.
)A
They are mainly wealthy individuals and the business owner’s friends and family.
They usually give financial backing at a beneficial early stage of the firm and do not
get engaged in the operation of the company. When a company seeks funding from
venture capitalists, angel investors typically take their money out at a higher rate.
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2. Investors in Venture Capital

Venture capitalists, also known as VCs, are investors who invest in a company
after it has been operating effectively for a number of years and they believe it has
a competitive advantage in the market. VCs are picky about their investments,
Notes
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examining many aspects of the company, management, and market before making
a decision. They typically spend a large sum of money and take active managerial
roles on boards of directors. Their job is to improve the Company’s business
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characteristics so that they can eventually be listed on stock exchanges and traded
publicly.
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3. Initial Public Offerings (IPOs) for retail investors
Initial Public Offerings, or IPOs, allow companies to sell their stock to the general
public. IPOs provide an exit strategy for some founders and venture capitalists,
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as well as an opportunity for public investors to invest in a well-established and
expanding company. Shares are posted on stock exchanges and are regularly
exchanged between investors, who can be either retail or institutional.
4. The use of crowdsourcing
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Crowdfunding is another way for businesses to raise small amounts of money from
a group of investors. Through a crowdfunding campaign launched by the Company,
each investor makes a tiny investment in the firm. The investors are usually a group
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of angel investors who believe in the product and the founders of the company and
want to help support the company’s initial development.
Equity Financing’s Benefits r

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●● The company does not have enough cash, collateral, or resources to raise funds
from debt financing; thus, equity financing is a good source of funds for the
entrepreneur because the investors will share the risk of the business with the
founders.
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●● Funds can be raised through IPOs once the business is settled and has a
regular cash flow. These cash can be put to good use in the future for technical
developments. Equity finance enables the Company’s founders and management
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to raise capital for diluted ownership and to grow a business to a higher level of
profitability and scale.
●● The Company is owned by the investors. Increased share prices or dividends paid
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by the Company provide them with higher returns than other investment vehicles.
Equity Financing’s Disadvantages

The following are some of the drawbacks of equity financing:
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●● Dilution of shares: When equity financing is used, the initial investors’

shareholdings are diluted. The founders lose a proportionate amount of stock in
the Company as money are raised from new investors, the original shareholders.
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●● Loss of control: As the Company grows, the founders’ shareholdings shrink,

potentially creating a conflict of interest and leading to a loss of control over their
own company. Because investors may be involved in active management of the
company, there may be a conflict of interest in how the company is run.
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●● Time and effort: Before investing, potential investors spend a significant amount
of time conducting due research on the company. They want to know if their

investment will be safe, secure, and successful, therefore they look for a company
Notes
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plan, sales and profit predictions, and market conditions. As a result, it takes time
for entrepreneurs to look for money while also focusing on their business.
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4.2.3 Debentures
The term “debenture” comes from the Latin word “debere,” which meaning “to
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borrow.” A debenture is a written instrument that bears the company’s common seal and
acknowledges a debt. It contains a contract for repayment of principle after a specified
period, at intervals, or at the company’s discretion, and for payment of interest at a
fixed rate payable on fixed dates, commonly half-yearly or yearly. ‘Debenture’ includes
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Debenture Inventory, Bonds, and any other securities of a company, whether or not they
constitute a charge on the firm’s assets, according to section 2(12) of The Companies
Act, 1956.
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Types of Debentures
Debentures are issued by a firm and are classed as follows: Company Accounts
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and Analysis of Debentures
Financial Statements from a Security Perspective
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(a) Secured Debentures: Secured debentures are those that have a charge placed on
the company’s assets for the purpose of payment in the event of default. It’s possible
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that the charge will be fixed or floating. A fixed charge is placed on a specific asset,
whereas a floating charge is placed on the company’s overall assets. A fixed charge
is created against assets retained by a corporation for use in operations that are not
intended for sale, whereas a floating charge is created against all assets save those
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assigned to secured creditors.

(a) Unsecured Debentures: Unsecured debentures have no specific charge on the
company’s assets. On these debentures, however, a floating charge may be created
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by default. Normally, debentures of this type are not issued.
From the Perspective of Tenure

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(a) Redeemable Debentures: Redeemable debentures are those that are redeemable
at the end of a certain period, either in a lump sum or in instalments, during the
company’s lifetime. Debentures can be redeemed at par or at a higher price.
(b) Irredeemable Debentures: Irredeemable debentures are also known as Perpetual
m
Debentures since the company does not give any assurance that the money
borrowed would be repaid when the debentures are issued. These debentures are
repayable in the event of a company’s bankruptcy or the end of a protracted period
of time.
)A
From the standpoint of Convertibility

(a) Convertible Debentures: Convertible debentures are debt instruments that can be
converted into equity shares or any other security at the company’s or the debenture
(c
holders’ discretion. These debentures might either be entirely or partially convertible.

(b) Non-Convertible Debentures: Nonconvertible debentures are debentures that cannot

Notes
e
be converted into shares or other instruments. The majority of corporate debentures
fall under this group.
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From the perspective of the Coupon Rate
(a) Specific Coupon Rate Debentures: These debentures are issued with a fixed rate
of interest, known as the coupon rate. The rate chosen can be fixed or fluctuating.
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Typically, the variable interest rate is linked to the bank rate.
(b) Zero Coupon Rate Debentures: These debentures have no fixed interest rate.
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Such debentures are issued at a large discount to compensate investors, and the
difference between the nominal value and the issue price is recognised as the
amount of interest associated to the debentures’ tenure.
From the view Point of Registration
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(a) Registered Debentures: Registered debentures are those debentures in respect
of which all details including names, addresses and particulars of holding of the
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debenture holders are entered in a register kept by the company. Only a conventional
transfer deed can be used to transfer such debentures.
(b) Bearer Debentures: Bearer debentures are debentures that can be transferred by
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delivery and for which the corporation keeps no record of the holders. The individual
who delivers the interest coupon connected to debentures receives the interest.
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Debentures have a Number of Advantages
Because a debenture does not carry voting rights, financing through them does not
dilute equity shareholders’ control over management.
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●● Financing through them is less expensive than the cost of preference or equity
capital because the interest payment on debentures is tax deductible.
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●● The company does not invest its profits in a debenture.

●● Debentures should be issued when sales and earnings are relatively consistent.
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Debenture Disadvantages
●● Each business has a certain amount of borrowing power. The capacity of a firm to
borrow further capital is reduced when debentures are issued.
●● With a redeemable debenture, the firm is required to make plans for repayment on
m
the designated date, even if the company is experiencing financial difficulties.

A company’s earnings are permanently burdened by a debenture. As a result,
when the company’s earnings fluctuate, there is a bigger risk.
)A
4.2.4 Commercial Banks

Banks are the main actors in all areas of the financial markets, including credit,
cash, securities, foreign exchange, and derivatives, due to their vast monetary holdings.
(c
Commercial banks play an important role in the economy’s overall financial health since
they lend money for a variety of purposes and for varying periods of time. Banks charge
a premium for taking out a loan.
Commercial banks provide loans to businesses in the form of cash credits,

Notes
e
overdrafts, term loans, bill purchase/discounting, and letter of credit. Banks assist
businesses by providing loans to help them produce commodities, contribute to
industrial progress, and create jobs.
in
Technically, bank loans cannot be a long-term source of financing for organisations
because they have an interest rate and must be repaid within a set period of time.
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Before a bank will approve a loan, the borrower must offer some form of security. Other
services provided by banks include merchant banking, corporate advice services,
portfolio management services, and so on.
O
Banks are the main actors in all areas of the financial markets, including credit,
cash, securities, foreign exchange, and derivatives, due to their vast monetary holdings.
Commercial banks play an important role in the economy’s overall financial health since
they lend money for a variety of purposes and for varying periods of time. Banks charge
ty
a premium for taking out a loan.
Commercial banks provide loans to businesses in the form of cash credits,

overdrafts, term loans, bill purchase/discounting, and letter of credit. Banks assist
si
businesses by providing loans to help them produce commodities, contribute to
industrial progress, and create jobs. Technically, bank loans cannot be a long-term
source of financing for organisations because they have an interest rate and must
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be repaid within a set period of time. Before a bank will approve a loan, the borrower
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must offer some form of security. Other services provided by banks include merchant
banking, corporate advice services, portfolio management services, and so on.
A commercial bank is a financial organisation that assists members of the public

in opening and managing checking and savings accounts as well as money market
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accounts. A commercial bank, on the other hand, has a larger, business-oriented focus,
as the name implies. In addition to the more standard deposit, withdrawal, and transfer
services, most commercial banks provide business loans and trade financing. With such
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a diverse business profile, commercial banks have a wide range of funding sources.
Savings Accounts
A commercial bank’s primary source of funds is still deposits. The funds raised
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could be used to pay off interest-bearing accounts, complete consumer withdrawals,

and other transactions. The total amount of savings deposits held by commercial banks
and other financial institutions in the United States was more than $9.1 trillion as of
February 19, 2018.
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Savings account deposits are particularly significant to banks because the federal
Regulation D regulation restricts how often a savings account user can withdraw funds.
Currently, account holders are only allowed to make six transfers each month, either
)A
online, over the phone, or through an overdraft. This allows banks to utilise the monies
in the accounts while still meeting the customer’s withdrawal needs.
Reserve Funds
(c
A commercial bank uses deposits to develop a reserve fund that allows it to pay
interest on accounts and process withdrawals. A bank’s reserve fund should, in theory,
be equal to its capital. A bank’s reserve fund is built by amassing surplus profits during

good financial years in order to use the cash in bad times. On average, a bank aims to
Notes
e
save about 12% of its net earnings in order to develop and maintain a reserve fund.
Capital of Shareholders
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Some stock-exchange-listed commercial banks can use shareholder capital to
obtain the funds they require to stay in operation. When a corporation sells stock on the
open market, for example, it raises both its cash flow and its share capital. This is often
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referred to as equity financing. Banks can only report the amount of capital that was on
their balance sheet at the time of the audit. Share appreciation and depreciation are not
included in a shareholder’s total capital. When a bank generates a profit, it often has
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two options: paying dividends to its shareholders or reinvesting the money back into the
bank. Most banks use both strategies because they keep a piece of the earnings and
distribute the rest to their shareholders. The amount of money returned to the bank is
usually determined by the company’s policy and the state of the stock market.
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Retained Earnings
To help support their operations, many commercial banks earn retained earnings
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or fees. Overdraft fees, loan interest payments, securities, and bonds can all be used
to recover retained earnings. Customers are also charged fees for services such as
keeping an account, providing overdraft protection, and monitoring their credit scores.
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Commercial Banks’ Advantages
Every coin has two sides, and getting a bank loan has a sunny side that looks like
this:
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●● Banks are flexible sources of credit since the borrowing party determines the
amount to be received, which can be increased or lowered based on business
needs. When funds are not required, loans can be repaid in advance.
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●● Banks keep borrowers’ information confidential and secure.

●● Banks assist businesses in times of need by giving finances.
Commercial Banks’ Limitations

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When borrowing money from a commercial bank, there are several restrictions.
The following are some of the drawbacks of borrowing money from a commercial bank:
●● Banks are known for conducting extensive investigations into a company’s

m
background and affairs, financial structure, plan, and other factors, as well as
requesting asset security and personal sureties. This complicates the process of
obtaining funds;
)A
●● Funds are often available for short periods of time, with renewal being unclear and
complicated;
●● Banks impose onerous terms and conditions before granting a loan.
4.2.5 Institutional Finance

(c
Entrepreneurship growth is both a learning process and a resource development

process. Entrepreneurs aren’t born; they can be nurtured and trained to be innovative

and start new businesses. It should, however, be a place where an entrepreneur may
Notes
e
study and practise his or her craft. Furthermore, certain criteria for entrepreneurial
development, such as motivation, knowledge, and opportunity, are necessary.
Specialized financial institutions primarily offer long-term financial help in a variety of
in
ways. They provide guarantees for loans raised by the company concern from other
sources in addition to granting loans. These organisations are also referred to as
development banks because they supply the sector with not only finance but also
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expertise and entrepreneurship. These organisations conduct potential industrial
assessments, identify growth projects, and aid entrepreneurs with technical,
managerial, and other assistance. The federal and state governments, respectively,
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initiated the establishment of these special financial institutions at the national and state
levels.
1. India’s Industrial Development Bank
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An act of Parliament established it as a wholly owned subsidiary of the Reserve
Bank of India in July 1964. It is a national institution that provides term finance to the
sector at the highest level. The government took over the ownership of the bank in
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1976, and it was given the additional role of acting as the principal financial institution
for coordinating the activities of institutions involved in the financing, promotion, or
growth of the industry.
IDBI’s Functions
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●● It provides industrial firms with direct financial help in the form of long-term loans.
●● It provides technical and administrative support for industry promotion and
expansion.
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●● Other financial institutions were concerned about these loans due to industrial
concerns.
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●● It takes industrial bills of exchange, as well as discounts and rediscounts them.

●● It offers refinancing services.
2. India’s Small Industries Development Bank (SIDBI)

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Small Industries Development Bank of India Act, 1989 established it as a wholly

owned subsidiary of IDBI for bill refinancing, rediscounting, and equity support to
the small-scale sector. It began operations on April 2, 1990. With effect from March
27, 2000, SIDBI was de-linked from IDBI. It is the apex national institution for the
m
promotion, financing, and growth of small-scale industries.
SIDBI’s Functions
)A
a) It offers term loans and working capital as a form of financial help.

b) It provides financing to small businesses by discounting and re-discounting bills
resulting from the sale of machinery.
b) It assists with venture capital.
(c
d) It offers services such as factoring and leasing.

3. National Bank for Agriculture and Rural Development (NABARD)

Notes
e
NABARD was established to promote agricultural, small-scale industries, cottage
and village industries, handicrafts, and other related activities. This is an apex bank for
in
farm funding in the rural sector. It was established on July 12, 1982. It offers refinancing
services. It started a microfinance scheme through which millions of poor individuals
have been given credit. It has established special funds to encourage innovations in
nl
underserved areas, such as watershed development funds, tribal development funds,
research and development funds, pharmaceutical innovation funds, microfinance
development funds, and equity funds.
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NABARD’s objectives
NABARD provides all sorts of credit for the agriculture sector and rural
development as an apex refinancing agency. The NABARD’s principal aims, as
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mentioned in the statement of objectives presented to the Lok Sabha when the law was
introduced, were divided into the following categories:
1) In the field of credit for the promotion of agriculture, small scale industries, cottage
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and village industries, handicrafts and other rural crafts, and other allied economic
activities in rural areas, the National Bank will be the apex organisation in terms of
policy, planning, and operational aspects.
2) r
The Bank will act as a refinancing institution for institutional credit, including long-
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term and short-term loans, for the promotion of rural activities.
3) The Bank would also make direct loans to any institution that the Central Government
approves.
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4) The Bank will have natural ties to the Reserve Bank and will have a close working
relationship with it.
By paying a fraction of the total project cost, the Indian government encourages
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farmers to undertake projects in specific locations. All of these projects are aimed at
increasing capital investment, long-term revenue, and employment in key national
sectors.
In some of the schemes listed in this section, NABARD has been a proud channel
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partner of the government. Subsidies are handed on to the financing banks as they are
received from the competent ministry.
◌◌ The Dairy Entrepreneurship Development Scheme is a programme that

encourages people to start businesses in the dairy industry.
m
◌◌ Organic inputs commercial production units

◌◌ The Scheme for Agri clinics and Agribusiness Centres.
)A
◌◌ The National Livestock Mission is a non-profit organisation dedicated to the

welfare of livestock
◌◌ GSS-Ensuring Subsidy End Use.
◌◌ Interest Subsidy Program.
(c
◌◌ A new infrastructure for agricultural marketing.

4. Regional Rural Banks (RRBs)

Notes
e
The goal of establishing regional rural banks was to bring financial services to the
rural people’ doorsteps. These banks gave funds to a target population made up of
in
the poorer members of society at a reduced rate of interest. RRBs have been allowed
to land outside the intended group since 1997, with their advancements classified as
priority or non-priority.
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Regional Rural Banks have a set of goals that they want to achieve. The aims and
actions of RRBs can be summarised as follows in light of the Act’s preamble:
1) Addressing credit inequities in rural communities.
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2) By developing such procedures, the outflow of rural deposits to urban regions
might be limited.
3) To alleviate regional inequities and boost rural employment-generating
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activities.
RRBs provide financial assistance to various groups of the rural population
engaged in rural activities in order to achieve their goals.
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Regional Rural Banks’ areas of operation
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Regional Rural Banks are required to operate within a specific geographic area for
which they have been formed. Typically, each RRB’s operating area is limited to a few
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districts within the state in which it is established. By way of a notification, the federal
government, in collaboration with NABARD and the Sponsor Banks, determines the
region of operation of RRBs.
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5. The State-Owned Banking Corporation (SFCs)

Parliament passed the State Financial Corporation Act 1951 to allow all states,
excluding Jammu and Kashmir, to establish their own state financial corporations. So
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far, 18 SFCs have been established in various states and union territories.
SFCs’ major goal is to finance and develop small and medium firms in projects
worth up to Rs. 5 crore in order to achieve balanced regional socio-economic
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growth and create jobs. SFCs run a number of refinance and equity-type assistance
programmes developed by IDBI and SIDBI, including schemes for artisans, SC/ST,
women, ex-servicemen, physically handicapped, and transport operators, as well as
schemes for building up hotels and hospitals.
m
The functions of SFCs are listed below.
a) They offer term loans for the purchase of land, buildings, machinery, and other
fixed assets.
)A
b) They built polytechnics or training colleges to provide technical education to

qualified individuals.
b) They take on the development of the state’s less developed areas, focusing
on infrastructure development such as power, roads, and water.
(c
d) They encourage people to work for themselves.

e) They give funding for current units to expand, modernise, and upgrade their
Notes
e
technology.
f) They identify and investigate local issues.
in
g) Under the IDBI scheme, they provide seed capital support.
h) They offer a deferred payment guarantee for plant and machinery purchases.
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i) Under World Bank initiatives, they give foreign exchange loans to industrial
firms.
6. State Industrial Development Corporations (SIDCs)
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SIDCs were established in the 1960s and 1970s. These were formed as
completely owned state government businesses under the Companies Act of 1956
and as autonomous corporations under special state statutes. Various governments
ty
have established state industrial development corporations in order to boost industrial
growth in their respective areas. These corporations follow the rules set down by state
governments. In our country, there are 28 SIDCs in operation. They help small and
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medium businesses and projects with a budget of up to Rs.10 crore.
SIDCs have two main functions:
a)
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they promote and develop industries through activities such as project
identification, project report preparation, and entrepreneur selection and
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training; and
b) they give term loans to businesses.
c) On behalf of the federal and state governments, they give programmes and
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subsidies.
d) They function as an agent for IDBI and SIDBI, allowing them to take
advantage of the seed capital system.
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g) They provide entrepreneurs with risk capital in the form of equity participation.
f) They build industrial areas by constructing infrastructure.
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7. State-Run Development Corporations for Small Businesses (SSIDCs)

SSIDCs are state-owned enterprises that cater to the needs of small and cottage
businesses in their respective states and territories. They engage in a number
of activities to help the small business sector grow. There are now 18 SSIDCs in
m
operation.
SIDC’s Objectives
a) The SIDC’s mission is to promote micro, small, and medium-sized businesses.

)A
b) It helps to foster entrepreneurship and skill development; c) It aids in the

development of industrial infrastructure.
d) Its goal is to assist industry with publicity and marketing.
(c
SSIDCs have the following functions:

a) They provide seed funding on behalf of the state government.

b) They are in charge of producing and distributing scarce raw materials.

Notes
e
c) They rent out machinery with the option to buy it later.
d) They assist in the marketing of small-scale unit products.
in
e) They support industrial units with managerial tasks.
8. District Industries Centers (DICs)
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In every district, DICs have been formed. The goal of building such centres is to
promote the growth of small and medium-sized businesses. They gather information
on raw material availability and make arrangements for machinery and equipment,
O
marketing research, and financing facilities, among other things, to support the
development of small businesses in the district. They discover potential borrowers in
the small-business sector and help them submit loan applications to the district’s banks.
DICs are in charge of identifying beneficiaries and implementing the PMRY plan in their
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districts under the Prime Minister’s Rozgar Yojana scheme (PMRY).
District Industries Centers’ Objectives (DICS) The primary goals of DICs are as
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follows:
a) To identify new entrepreneurs and provide them with assistance in starting

their own businesses.
b) r
To provide smaller blocks with financial and other resources.
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b) To intensify all industrialization initiatives at the district level.
d) To promote rural industrialisation as well as the growth of handicrafts.
g) To achieve economic equality in the district’s various areas.
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b) Allowing young enterprises to participate in various government programmes.

g) To aspire to a regional development imbalance.
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h) To bring together all of the required facilities under one roof.
District Industries Centres Serve a Variety of Purposes (DICS)

The DIC’s programme is jointly supported by the state and federal governments.
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It took part in a variety of promotional activities aimed at promoting the growth of small
unit sectors at the district level. The DIC is primarily responsible for the following tasks:
1) To identify new entrepreneurs: DICs run a variety of motivational programmes to help

them find new business owners across the districts. It is done, for example, under
m
certain schemes and with the collaboration of SISs and TCOs to run entrepreneurial
programmes.
)A
2) Purchase of fixed assets: To purchase fixed assets, DICs recommend that the
prospective entrepreneur apply for a loan from one of the concerned financial and
development institutions, such as NSIC, SISI, and DCIs also recommend commercial
banks to meet the SSI’s daily working capital requirements.
3) Provides subsidies and other incentives: DCIs assist rural residents in obtaining
(c
government subsidies under various schemes. It improves the financial capability of

the units, allowing them to engage in additional development operations.

4) Import and export guidance: The government offers a variety of incentives for the
Notes
e
import and export of specific commodities and services. The importer and exporter
licences are issued based on the DIC’s recommendation.
in
5) Entrepreneurial training programmes: DCIs support a variety of training programmes
for rural entrepreneurs who are new to business, as well as recommending other
institutions to participate in such programmes. These are designed to assist budding
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businesses more effectively.
6) Provides employment for unemployed educated ones: The DICs have introduced
a scheme to guide the unemployed educated youth by providing them facilities for
O
self-employment. The age range is 18 to 35 years old, with a metric or technical
trade certification as a minimum. The fact that technocrats and women are given
prominence is noteworthy.
Specialized Financial Institutions play a critical role in promoting India’s
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entrepreneurial sector. Emerging potential entrepreneurs who are establishing
businesses require financial assistance. Long-term funding help to industrial units in
entrepreneurship that want to use the most up-to-date technology in the creation of
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commercial items is provided by venture capital financing. Diverging entrepreneurs
must start a new business and develop new products that have yet to be tested in the
market. In the industrial sector, venture capital funding has played an instructional role
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in the development of small-scale enterprises, particularly in developing nations like
India.
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When it comes to launching a business, the first thing that comes to mind is
securing financing. While there are other methods for obtaining finances, it is critical
to select the most promising and high-yielding. Friends and family finance works as
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a basic technique for beginning a firm and sometimes during its early phases. This
funding mechanism is viewed in a variety of ways. Some people don’t think it’s a good
concept, while others absolutely rely on it. So, whether or not to use friends and family
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for financing is a personal decision.
To make an informed conclusion, it’s critical to weigh the benefits and drawbacks of
this financing strategy.
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4.2.6 Friends and Family

It’s crucial to understand what friends and family financing is before weighing
the benefits and drawbacks. It comes in friends and family funding when you request
finances from family members, friends, colleagues, or anyone close to you.
m
We all have personal networks that can help us out in a pinch. Similarly, if you’re
beginning a firm, this network might be able to assist you in raising some initial capital.
)A
It’s critical to realise that friends and family cash might come in a variety of sizes
and circumstances. As a result, you must be able to keep track of it.
Funding from family and friends comes in a variety of forms.
Family and friend funding can be classified into a number different categories,
(c
despite the fact that it is frequently informal. Other types of investment, such as peer-to-
peer lending, crowdfunding, and angel investing, have certain characteristics with these.

Business loans and equity capital are two of the most common types of
Notes
e
investments made by family and friends. As a thank you for their help, you offer to repay
the loan with interest or transfer an ownership stake to a friend or family member.
in
It’s difficult to know how much to promise when your company is just getting
started. Although an equity interest is a scalable approach to give your supporters a
fair portion of any future earnings, you may not want to give away too much of your firm
nl
during the pre-seed fundraising stage.
1. Loans from relatives and friends for your business

Small business loans from family and friends are a popular way for them to help you
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get your venture off the ground.
Friends and family loans are most common in the early stages of a company’s
development, during the pre-seed or seed capital stages. When things aren’t going
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well in the short term, some entrepreneurs use start-up money from family and
friends as a rescue option. A friends and family business loan, like any other loan,
may have an interest rate that determines how much you pay back in total.
si
Friends and family investors, on the other hand, are frequently willing to accept an
interest-free loan just because they want to see you succeed.
In any case, make sure everyone understands what you’ve committed on and put
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the payback terms in writing so there are no misunderstandings afterwards.
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2. Family and friends provide equity money.
In some instances, you may wish to exchange stock for financial assistance from
family and friends. Because, like any stock investment, you’re giving up some control
of your firm, it’s critical to consider how much you’re giving up and how much value
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you place on it.

Keep in mind that equity investment will become more widespread in the future. So,
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if you’re using pre-seed fundraising from family and friends, don’t leave yourself with
little to no ‘spare’ equity to give to subsequent institutional and angel investors.
Equity investment is advantageous since the amount you repay your investors is
contingent on the future value of your company. However, it may offer your investors
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a stakeholder role in the management of your firm, so make sure you have a plan
in place for how to deal with this if your friends and family try to make choices about
your company.
3. Contracts and terms of repayment
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Even if you’re borrowing money from family and friends whom you know implicitly,
it’s always a good idea to have documented payback terms and contracts for any
investment.
)A
A friends and family investment agreement is a smart protection that ensures you
both know what to do if something goes wrong.
The following are some examples of common issues, which span from financial
disputes to personal disagreements:
(c
◌◌ If you are unable to make the agreed-upon instalments

◌◌ If your business earns unexpected earnings and your investors demand a

Notes
e
piece of the pie,
◌◌ If your family and friends try to influence your business decisions,
in
◌◌ You never know when a work relationship will start to interfere with a
previously tight personal relationship, so be prepared to handle any issues
professionally and sensibly.
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You may avoid complications like these by sticking to your promised payback
timeline and making it clear what your supporters can expect in total. This way,
everyone gets what they hoped for from their investment.
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What Are the Benefits of Borrowing Money from Family and Friends?
There are numerous advantages to using family and friends to finance your project.
1. Easiest Way to Raise Funds
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There’s no need to prepare a pitch deck or a powerful speech to wow the investors.
All you have to do now is persuade your friends and family to support your plan. It
is by far the simplest way to raise funds for your company. Most of your friends and
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family have no idea what you’re up to. Nonetheless, they will financially support you
as you develop as an entrepreneur. In comparison to professional investors, you can
easily persuade your loved ones to invest in your company.
2.
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The Financing Terms That Work
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Your friends and family are unlikely to inquire about the profit margins of your
company’s equity shares. Friends and family financing has the greatest terms
because of this. It is not necessary to request funds without prior consent, but you will
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receive a better bargain with friends and family than with investors. After the original
investment, several friends have gone on to become partners in the company. So,
rather than fighting with loan sharks or obstinate investors, you can enlist the support
of your loved ones.
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3. Take it whenever you’re in need.

You can’t keep asking for money from venture investors every time you need it. When
it comes to your friends and family, however, it’s the complete reverse. You can use
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it whenever you want. You won’t need to create any one-time financial estimates
because your friends and family will be more than willing to help. Your bank will take
significant action against you if you do not pay the loan interest on time. Your friends
and relatives, on the other hand, will not put you through troubles. You can return it
m
to them whenever you are able to raise enough funds.

4. Tell Others About Your Success
Wouldn’t you want your loved ones to enjoy your triumphs if your business is doing
)A
better than you expected? Rather than paying a portion of your income to venture
capitalists, it is preferable to share your profits with those who have helped you along
the way. It can only be done with the help of friends and family. This allows you to
assist many of your struggling friends or family members while also providing them
with a source of money in exchange for their assistance.
(c
5. There Are No Expectations or Pressures

When you’re looking for money from venture capitalists or angel investors, you’re
Notes
e
constantly under pressure to work harder and make a certain amount of money. You
can work with a clear head and easily attain your goals if you have borrowed money
from friends and relatives. This is the largest advantage of borrowing money from
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friends and relatives.
What Are the Drawbacks of Getting Money from Family and Friends?
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You must be aware of the disadvantages, just as you must be aware of the
advantages, in order to fully comprehend the significance of this fundraising strategy.
1. Prioritizing Relationships
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One of the primary disadvantages of bringing money into relationships is the
possibility of losing both. Relationships are more valuable than money, it is true.
Unfortunately, it has become a source of discord and contention among friends and
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family members. If your business isn’t profitable, or if a family member or friend isn’t
getting the desired reward, it can lead to disagreements and, as a result, relationships
can be ruined.
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Taking finances from family or friends can result in pandemonium for a variety of
reasons, which is why most individuals avoid it.
2. Capital Availability is Limited
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You cannot make a financial estimate with your friends and family, unlike venture
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investors. With this type of finance technique, capital availability will always be
constrained. You won’t be able to get what you want unless you know someone who
works in a similar field. You’ll have to look for alternative sources of funding sooner or
later. As a result, many people find that borrowing money from friends and relatives
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is not a reliable alternative. It is preferable to rely on capital investors if you require a

large sum of money.
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4.2.7 Angel Financers

If you’re starting a business, getting capital from an angel investor can be a
terrific method to get money without going into debt. Working with angel investors also
ity
provides you access to their expertise and mentorship, which can be invaluable in the
early stages of a company’s development. Understanding the benefits and drawbacks
of seeking finance from angel investors might help you decide whether this is the best
option for your company.
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What are angel investors, and what do they do?
An angel investor is a high-net-worth individual who invests in small businesses

or entrepreneurs in exchange for stock in the company. They may make a one-time
)A
investment or continuing financial support to assist the nascent company in its early
stages.
Angel investors frequently seek a larger return on their investment than they would
get from investing in the stock market. However, their interest in start-ups is frequently
(c
more than purely financial. They might want to work in a certain field, mentor a new
generation of entrepreneurs, or apply their talents and expertise in a different way.

The Origin of Angel Investors

Notes
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The name “angel” comes from the Broadway theatre, where wealthy patrons
contributed funds to theatrical shows. The wealthy folks contributed monies, which were
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repaid in full with interest once the projects began to make money. After completing
research on how entrepreneurs obtained financing for enterprises, William Wetzel, the
founder of the Centre for Venture Research and a professor at the University of New
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Hampshire, invented the phrase “Angel Investor” in 1978. He coined the phrase to
characterise investors who provided seed funding to new firms.
Silicon Valley is home to the biggest number of start-ups in the United States, as
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well as modern angel investors. In the second quarter of 2011, Silicon Valley garnered
39 percent of the $7.5 billion invested in US-based start-ups. In 2011, total financing
totalled $22.5 billion, a $2.4 billion increase over 2010. Start-up enterprises can pitch
directly to potential angel investors and acquire capital for their businesses through
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sites like AngelList. Every year, dozens of boot camps and conferences are held where
entrepreneurs can present their ideas to investors one-on-one.
Most angel investors are not millionaires, contrary to common opinion.
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Angel investors might earn anything from $60,000 to $100,000. Some are retired
entrepreneurs, doctors, lawyers, and successful businesspeople looking for ways to
keep up with the latest business news while supplementing their income. They also use
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their entrepreneurial skills, experience, and networks to assist budding entrepreneurs
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with the start of their businesses. Angel investors, unlike venture capitalists, are not
motivated simply by monetary gains. They are inspired by young entrepreneurs’
determination to succeed and develop a business empire, with the belief that money will
follow.
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Types of Angel Investors

Angel investors are typically those who have earned the status of “accredited
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investor,” though this is not needed. Someone with a net worth of one million dollars
or more in assets, or who has earned at least $200,000 in the previous two years, is
considered an accredited investor. It’s vital to keep in mind, though, that an accredited
investor isn’t always an angel investor. Angel investors must have a passion to fund
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businesses in order to qualify.
Angel investors, unlike venture capitalists, typically invest their own money. This
sort of investor bridges the gap between seed funding from friends and family and
venture capital funding, which may be required for a stronger firm. Angel investor is a
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broad term that refers to a variety of people who invest in various ways, including the
following:
Friends and family: This is the most popular source of start-up funding, and it’s
)A
usually where they start looking for money.
Professionals with a high net worth, such as doctors, lawyers, or successful

business people, are typically willing to spend a substantial sum of money in exchange
for equity in a business, depending on the business.
(c
Groups: A growing number of angel investors are opting to work as part of a group.
This considerably increases the level of investment possibility.

Crowdfunding is a kind of funding that is getting more popular. It entails big groups
Notes
e
of people investing small sums of money online in order to achieve a certain financial
goal.
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Advantages and Disadvantages of Angel Investors
Angel investors have both advantages and downsides when it comes to funding:
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Angel investors have Several Advantages
The biggest benefit of getting cash from an angel investor is that it is less risky
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than taking out a small company loan. An angel investor, unlike a bank, does not
need repayment because they receive equity in exchange for capital. Angel investors
are often seasoned investors that have a long-term approach to investing and are
aware that they may not see a return on their investment for a long time. In addition to
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investment opportunities, many angel investors are looking for personal chances.
Angel investors can also provide guidance to the start-up because they have a lot
of business experience. They are invested in your company’s success and can provide
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crucial advice and insight. According to research, firms funded by angel investors are
more likely to develop significantly, provide a higher rate of return, and stay in business
for a longer period of time.
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Other advantages of hiring an angel investor for a start-up include:
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◌◌ Being affiliated with the investor lends credibility.
◌◌ Contact information for possible clients or workers
◌◌ Professional relationships with investment bankers, accountants, lawyers, and
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other experts
◌◌ Knowledge of the market and techniques employed by similar businesses
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Angel investors’ Disadvantages

While angel investors make it feasible for entrepreneurs to launch their businesses,
there are certain drawbacks to this method of funding, such as the loss of equity. In
exchange for capital, many entrepreneurs give away between 10% and 50% of their
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business.
Within the first five to seven years, angel investors might expect a significant return
on their investment, perhaps up to ten times their original investment. This can put you
and your employees under even more stress. Assess if the business can develop at the
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rate that an investor would expect before accepting investment, and set growth goals.
The lack of control is another negative. Most angel investors take a hands-
on approach to the firm after investing their money in a start-up. Experiential angel
)A
investors, for example, may prefer to have an exit strategy in place, such as bringing
a firm public or selling it to a larger corporation. They might try to persuade you to sell
the company before you’re ready. Conversely, if you give up too much equity, they may
choose to replace you with a more experienced leader, thereby eliminating you from the
(c
company you founded.
How to figure out if angel investing is a good fit for your business

If you’re considering receiving an angel investment, here are some things to

Notes
e
consider:
1. Make sure you have a business plan.
in
Create a solid business plan before taking financing from an angel investor—or
even approaching someone about funding your venture. Whether you’re looking for
cash from a lender or an investor, you’ll need this. Angel investors want to see a
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comprehensive and convincing business plan. Financial estimates, ideas for how
you will market the business, and specifics about the target market you wish to seek
are all part of this.
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2. Be specific about the investor’s offer.
Put in writing what the investor is providing your company in terms of services other
than financing, as many angel investors expect to actively participate in the firms
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in which they invest. This could include participating on the company’s board of
directors, working as a mentor, or taking an active position as a manager. While
your increased involvement, as well as the knowledge and experience you gain, is
valuable to the organisation, it’s always ideal to have expectations written down in
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advance.
3. Define your roles.
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It’s also crucial to establish a clear understanding of each person’s responsibilities,
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as the angel investor may have their own ideas about how to run your company.
4.2.8 Venture Capital

A private or institutional investment in an early-stage / start-up company is known
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as venture capital (new ventures). Ventures, as defined, entail taking a risk (having an
unclear conclusion) in the hopes of making a significant profit. Venture capital is money
invested in start-ups and small firms that have a lot of potential to develop. Venture
U
capitalists are the people who invest this money (VCs). A venture capitalist makes a
venture capital investment when he or she buys stock in a firm and becomes a financial
partner. Business capital investment is also known as risk capital or patient risk capital
since it involves the danger of losing money if the venture fails and the investments take
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a medium to lengthy time to pay off.
Venture capital is often raised from institutional investors and high-net-worth

individuals and pooled by venture capital firms.
m
An outside investor’s money is used to fund a new, growing, or struggling

business. The venture capitalist offers the funds understanding that the company’s
future profitability and cash flow are subject to severe risk. Rather than being offered
as a loan, capital is invested in exchange for a share of the company’s ownership.
)A
Venture capital is the best option for funding an expensive capital source for firms,
especially those with substantial up-front capital requirements for which there are no
other affordable options. Software and other intellectual property are the most common
examples of untested value. That is why venture capital funding is most common in the
rapidly growing industries of technology and biotechnology.
(c

Investing in Venture Capital has Certain Characteristics

Notes
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◌◌ Lack of Liquidity is a High-Risk Situation
◌◌ Long-term perspective
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◌◌ Capital gains and participation in the stock market
◌◌ Investments in creative projects are made with venture capital.
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◌◌ Venture capital investors are involved in the company’s management.
Venture capital funding methods

◌◌ Equity
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◌◌ Participating debentures
◌◌ Conditional loan
The Funding Process: As a company, approaching a venture capitalist for funding
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Typically, the venture capital fundraising process encompasses sic stages in the
creation of a company:
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a. Deal Origination
Venture capital financing begins with origination of a deal. A steady stream
of deals is required in the venture capital market. Deals can come from a
r
number of different places. A referral system, in which deals are directed to
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venture capitalists by their parent organisations, trade partners, industry
associations, acquaintances, and so on, is one such source.
Active search through networks, trade shows, conferences, seminars,
overseas resist, and other sources of deal flow is another source of deal
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flow. Certain intermediaries who serve as a link between venture funders and
potential entrepreneurs also serve as dealmakers.
b. Screening
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In order to select the finest ventures, venture capitalists conduct preliminary

examinations of all projects based on broad criteria such as technology or
product, market breadth, investment size, geographic location, and stage of
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funding.
To show prime facie eligibility, venture capitalists in India ask the applicant
to provide a brief profile of the prospective venture. Entrepreneurs are also
asked to meet for a face-to-face discussion to clarify key points.
m
c. Evaluation
After a proposal has passed the preliminary screening, it is subjected to a full
evaluation. A thorough examination of the project profile, the entrepreneur’s
)A
track record, market potential, technological feasibility, future turnover,

profitability, and other factors is carried out.
In India, venture funders consider the entrepreneur’s background, particularly
in terms of honesty, long-term vision, the desire to improve managerial
(c
abilities, and business orientation. They also take into account the
entrepreneur’s entrepreneurial talents, technical ability, manufacturing, and

marketing abilities, as well as their experience. The project’s viability is also

Notes
e
assessed in terms of product, market, and technology.
Furthermore, Indian venture investors conduct a detailed risk analysis of the
in
project to determine product, market, technological, and entrepreneurial risk.
Following a thorough examination of all aspects of the project, the venture
capitalist makes a final choice in terms of the risk-reward spectrum, as shown
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in figure.
d. Negotiating a Deal
The venture capitalist negotiates the terms of the contract with the
O
entrepreneur if the venture is determined to be feasible. It does this to
preserve its own interests. The deal’s terms include the amount, type, and
price of the investment.
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It also includes protective covenants such as the right of venture capitalists
to govern the venture firm and, if required, alter its management, buyback
arrangements, acquisitions, and IPOs. Both the venture capitalist and the
entrepreneur should benefit from the terms of the contract. It should be
si
adaptable, and its structure should protect both parties’ interests.
e. Post-Investment Activity
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Once the deal is funded and the venture is up and running, the venture
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capitalist joins the company as a partner and collaborator to ensure that
everything is going according to plan.
The venture capitalist’s involvement in the company usually takes the form of
a seat on the Board of Directors or informal influence on marketing, finance,
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and other managerial tasks. In most cases, the venture investor does not
get involved in the day-to-day operations of the company; instead, it steps in
when there is a financial or managerial crisis.
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f. Exit Strategy
The final stage of venture capital financing is the exit strategy, which involves
realising the investment in order to profit or reduce losses. The venture
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capitalist should create an exit strategy, calculating the precise time of exit
based on a variety of elements such as the venture’s nature, the size and
type of financial stake, the level of actual and potential competition, market
circumstances, and so on.
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At the exit stage of venture capital financing, venture capitalists make decisions
about disinvestments/realisation options based on the type of investment, including
equity/quasi-equity and debt instruments. IPOs, acquisition by another firm, purchase
of the venture capitalist’s part by the promoter, and purchase of the venture capitalist’s
)A
portion by an outsider are all options for venture capitalists to exit.
Venture Capital Funding Types

The many types of venture capital are classified according to how they are used
(c
at different stages of a company’s life cycle. Early-stage funding, growth financing, and
acquisition/buyout financing are the three main types of venture capital.

The venture capital financing process is completed in six steps, each of which
Notes
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corresponds to different stages of a company’s development.
●● Seed money is a small amount of money used to test and develop a fresh idea.
in
●● Start-up: Funding is required for new businesses to cover marketing and product
development costs.
●● Manufacturing and early sales funding are covered in the first round.
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●● Second-Round: Operational money provided to early-stage businesses that are
selling items but are not profitable.
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●● Third-round financing, often known as mezzanine financing, is money used to
expand a newly profitable business.
●● Fourth-Round Financing: Also known as bridge financing, the fourth round is
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recommended to fund the “going public” process.
A) Early-Stage Financing
●● Seed funding, start-up financing, and first stage financing are the three types of
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early-stage financing.
●● Seed finance is a small sum of money given to an entrepreneur in order for them
to be eligible for a start-up loan.
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●● Companies are provided start-up funding in order to complete the creation of
products and services. Companies who have spent all of their initial money and
require financing to launch full-scale commercial operations are the primary
beneficiaries of First Stage Financing.
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B) Expansion Financing
Second-stage financing, bridge financing, and third-stage financing, often known as
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mezzanine financing, are all types of expansion funding.
Second-stage finance is given to businesses to help them get started on their

expansion plans. Mezzanine finance is another name for it. It is offered with the
intention of supporting a specific company in expanding significantly. Companies that
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use Initial Public Offerings as a main business strategy may be eligible for bridge
financing as a short-term interest-only loan or as a kind of monetary support.
C) Acquisition or Buyout Financing

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There are two types of acquisition or buyout financing: acquisition finance and
management or leveraged buyout financing. Acquisition financing enables a corporation
to purchase specific components or the complete company. Management or leveraged
)A
buyout finance allows a group of executives to acquire a specific product from another
company.
The Benefits of Venture Capital

●● They contribute to the organisation a wealth of knowledge and experience.
(c
●● A large amount of equity capital can be offered.

●● The company is not in a position to return the funds.

Notes
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●● It gives essential knowledge, resources, and technical expertise in addition to
funding to help a firm succeed.
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Venture Capital’s Disadvantages
●● The founder’s autonomy and authority are lost as the investors become part
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owners.
●● It’s a time-consuming and difficult procedure.
●● It’s a risky method of funding.
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●● The benefits of such funding can only be appreciated in the long run.
●● Route of exit
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Venture Capitalists can cash out their investment in a variety of ways:
◌◌ IPO
◌◌ Buyback of promoters
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◌◌ Acquisitions and Mergers
◌◌ Other key investors purchased the company.
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Venture Capital Investment Examples
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Kohlberg Kravis & Roberts (KKR), one of the world’s top alternative investment
asset managers, has signed a definitive deal to invest USD150 million (Rs 962 crore)
in JBF Industries Ltd, a Mumbai-based listed polyester manufacturer. In its Singapore-
based wholly owned subsidiary JBF Global Pte Ltd, the company would buy a 20%
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ownership in JBF Industries and invest in zero-coupon compulsorily convertible

preference shares with 14.5 percent voting rights. KKR’s funding will assist JBF in
completing its ongoing projects.
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In a new round of fundraising sponsored by Goldman Sachs and Zodius

Technology Fund, Pepperfry.com, India’s largest furniture e-marketplace, has raised
USD100 million. The cash will be used to increase Pepperfry’s footprint in Tier III and
Tier IV cities by adding to the company’s increasing fleet of delivery vehicles. It also
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plans to create new distribution centres and increase its network of carpenters and
assembly workers. This is the greatest amount of money raised in India by a sector-
focused e-commerce company.
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)A
(c

Case Study
Notes
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Case Study on Business Plan of Ranganathan, C. K. – CavinKare
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C K Ranganathan, Chairman and Managing Director of CavinKare, has shown
the world it is possible to beat the multinationals even in the most difficult market of
fast-moving consumer goods. Ranganathan’s journey, which started from a small town
of Cuddalore in Tamil Nadu, has been an amazing one. A business which he started
nl
with only with Rs.15, 000 is now worth Rs.500 crore. He learnt the first entrepreneurial
lessons from his father, Chinni Krishnan, who started a small-scale pharmaceutical
packaging unit, before moving on to manufacture pharmaceutical products and
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cosmetics.
His Father, His Inspiration
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His father, Chinni Krishnan, an agriculturist, was also into pharmaceutical business.
When he was in the fifth standard, he had a lot of pets -- more than 500 pigeons, a lot
of fish and a large variety of birds. He used to earn pocket money out of pet business at
that time. Perhaps, the entrepreneurial spirit in him showed its first streak.
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The Origin of the Concept of Sachets
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His father had come out with the sachet concept, when he entered college, a
couple of years prior to his father’s demise. He felt liquid can be packed in sachets as
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well. When talcum powder was only in tin containers, he was the one who sold it in 100
gm, 50 gm and 20 gm packs. When Epsom salt came in 100 gm packets, his father
brought out salt sachets of as low as 5 gm.
‘Whatever I make, I want the coolies and the rickshaw-pullers to use. I want to
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make my products affordable to them,’ he used to say. Selling things in sachets was his
motto as he said, ‘this is going to be the product of the future.’ But his father could not
market the concept well. He moved from one innovation to another but never thought of
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marketing strategies. He was a great innovator, but a poor marketer.
Joining the family Business

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After his father’s death, his brothers took charge of the family business. In 1982,
when he joined them after his studies, they had launched Velvette Shampoo. Within
eight to nine months, Ranganathan left the business because his ideas clashed with
theirs. As he was in the manufacturing unit, he did not know anything about marketing
or finance but, his inferiority complex notwithstanding, he was somehow confident of
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doing business better.
Starting his Own Business with Rs.15, 000

)A
For a week, Ranganathan could not make up his mind as to what business to do.
He knew only two things; making shampoo and rearing pets. He did not want to venture
into the shampoo business as it would initiate a fight with his brothers. However, he
decided to do the same later as he could only make shampoo.
(c
He rented a house-cum-office for Rs.250 a month against an advance of Rs.1,

000. He took another place for the factory for a rent of Rs.300 a month and against an
advance of Rs.1, 200. He bought a shampoo-packing machine for Rs.3, 000.
How Chik Shampoo was Born

Notes
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Ranganathan named it Chik Shampoo after his father. The product did not succeed
immediately; he learnt many things during the process. In the first month, he could sell
in
20,000 sachets and from the second year, started making profits. He moved to Chennai
in 1989 but his manufacturing unit continued to be in Cuddalore. It took him three years
to get the first loan because banks asked for collateral. But one particular bank gave
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him a loan of Rs.25,000 which he rotated and later upgraded to Rs.400,000, Rs.15 lakh
and so on.
“You know what the bank manager wrote in our loan application? This person does
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not have any collateral to offer but there is something interesting about this SSI unit.
Unlike others, this company pays income tax. I must say my business never looked
back because I was very particular about paying income tax”, he says.
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Strategies that Made Chik Shampoo No. 1 In South India
When Chik entered the market, Velvette Shampoo was being marketed
aggressively by Godrej. But a scheme of his became extremely successful -- he
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exchanged five sachets of any shampoo for a Chik Shampoo sachet, free. Later, he
altered the scheme -- he started giving one free Chik Shampoo sachet in lieu of five
Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only.
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The sales went up from Rs.35, 000 to Rs.12 lakh a month.
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When he introduced jasmine and rose fragrances, his sales went up to Rs.30 lakh
per month and with actor Amala as the model, his sales rose to Re.1 crore a month.
Each idea of his was rewarded by his customers. His market share increased and in
1992, he became the numero uno in South India. It took nine years for him to overtake
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my brothers’ business.
How Chik Shampoo Conquered the Rural Market

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Multinational companies sold products in big bottles and not in sachets and they
sold only from fancy stores. They did not look at the small kirana stores, nor did they
look at the rural market. Ranganathan went to rural areas of South India where people
hardly used shampoo. He showed them how to use it through a live demonstration on a
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young boy. He asked the assembled to feel and smell his hair.
Next, he planned Chik Shampoo-sponsored shows of Rajnikanth’s films. He

showed advertisements in between, followed by live demonstrations. He also
distributed free sachets among the audience after these shows. This worked wonders
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in rural Tamil Nadu and Andhra Pradesh. After every show, His shampoo sales went up
three to four times. Today, the Indian rural market is growing at a pace double than that
of the urban market.
)A
Launching Meera Herbal Powder

He continued with Chik Shampoo for seven years before venturing into anything
else. Meera Herbal powder was actually not his idea. Shaw Wallace already had a
herbal product but it was marketed very poorly. He felt there was a demand for herbal
(c
products and he made a good product. In the third month itself, he topped the market.
In six months, he had 95 per cent market share, while Shaw Wallace had only 4-5 per
cent.
How Beauty Cosmetics Became Cavinkare

Notes
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As he planned to expand to new products, he thought the name Beauty Cosmetics
would be restrictive. In 1998, he ran a contest among his employees for a name and
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one of them suggested CavinKare; with C and K spelt in capitals. C K, his father’s
initials. Cavin in Tamil means beauty and grace.
Perfumes for the Poor
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He wanted to cater to those who cannot afford (high priced) perfumes. Good
perfumes came at a huge price -- they were beyond the means of ordinary people. He
O
decided to come out with a Rs.10 pack Spinz. He was successful in that too.
Ranganathan has great admiration for those who fight against all odds and attain
success. C. K. Ranganathan, is a successful entrepreneur and venture philanthropist.
He has set an ambitious sales target of Rs.5, 000 crore by 2012.
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Summary
●● An entrepreneur must acquire a thorough understanding of the market, including
si
their unique value proposition, competitive strategy, and what it will take to
succeed, through business planning.
●●
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A business plan is a necessary document for any new business to have in place
before it can begin operations. Writing a compelling business plan is generally
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a requirement for banks and venture capital organisations before contemplating
granting financing to new enterprises
●● Whether you’re requesting funding or using your business plan as proof of
concept, a business plan is nothing without numbers. Financial statements should
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be created regardless of whether you’re requesting funding or using your company

plan as evidence of concept.
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●● Market analysis is a way to see what’s going on in the world outside of your firm
and as an entrepreneur. It will provide you with answers you didn’t realise you
needed, which you can include into your business strategy, goods, and services,
as well as your financial planning and plans. If you want to establish a company
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that is close to potential clients, you must undertake market research.

●● For entrepreneurs, break-even analysis is a very useful tool. It simply informs
you how much you need to sell in a certain amount of time to cover all of your
expenses.
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●● The executive summary is the first and most important section of every business
strategy. This summary gives an overview of the entire business plan and
emphasises the topics it will cover. It’s always ideal to write the executive
)A
summary last, so you know everything there is to know about your plan and can
properly summarise it.
●● The details of your company’s management and organisation approach should
be covered in this area of your business plan. Introduce your company’s leaders,
including their qualifications and duties. You can also add your company’s legal
(c
structure and human resource requirements.

●● Every year, thousands of company ideas are written, but only a small percentage
Notes
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of them will succeed. While some business plans may contain sound concepts,
they fail for a variety of reasons, forcing their authors to start over.
in
●● Mistakes in a business plan can lead to everything from minor oversights to
disastrous errors for your company. It is even more critical for businesses in the
funding stage to ensure that the information they present is correct and that none
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of their concepts are deceptive or out of step with the existing market.
●● Plans that demonstrate sales forecasts, operating margins, and revenues that are
poorly reasoned, internally inconsistent, or plain unrealistic severely undermine the
O
overall business plan’s credibility
●● Setting high objectives and having the best of intentions when it comes to writing
a business plan or completing a project don’t always work out in the real world.
While having ambitious goals is vital, the method to reaching them must be
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reasonable and accessible.
●● A lack of business acumen on the part of the management team or the firm owner
is another prevalent factor for small enterprises failing. In some cases, especially
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when a company is in its initial year or two of existence, a business owner is the
only senior-level employee.
●●
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The process of raising funds through selling shares of the company to the general
public, institutional investors, or financial institutions is known as equity financing.
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When a company needs money, it can use both debt and equity to finance it.
●● Venture capitalists, also known as VCs, are investors who invest in a company
after it has been operating effectively for a number of years and they believe it
has a competitive advantage in the market. VCs are picky about their investments,
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examining many aspects of the company, management, and market before

making a decision.
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●● Crowdfunding is another way for businesses to raise small amounts of money

from a group of investors. Through a crowdfunding campaign launched by the
Company, each investor makes a tiny investment in the firm. The investors are
usually a group of angel investors who believe in the product and the founders of
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the company and want to help support the company’s initial development.
●● The term “debenture” comes from the Latin word “debere,” which meaning “to
borrow.” A debenture is a written instrument that bears the company’s common
seal and acknowledges a debt. It contains a contract for repayment of principle
m
after a specified period, at intervals, or at the company’s discretion, and for

payment of interest at a fixed rate payable on fixed dates, commonly half-yearly or
yearly.
)A
●● Secured debentures are those that have a charge placed on the company’s assets
for the purpose of payment in the event of default. It’s possible that the charge will
be fixed or floating.
●● Irredeemable debentures are also known as Perpetual Debentures since the
company does not give any assurance that the money borrowed would be repaid
(c
when the debentures are issued.

●● Convertible debentures are debt instruments that can be converted into equity
Notes
e
shares or any other security at the company’s or the debenture holders’ discretion.
These debentures might either be entirely or partially convertible.
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●● Registered debentures are those debentures in respect of which all details
including names, addresses and particulars of holding of the debenture holders
are entered in a register kept by the company. Only a conventional transfer deed
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can be used to transfer such debentures.
●● Commercial banks play an important role in the economy’s overall financial health
since they lend money for a variety of purposes and for varying periods of time.
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Banks charge a premium for taking out a loan.
●● Savings account deposits are particularly significant to banks because the federal
Regulation D regulation restricts how often a savings account user can withdraw
funds.
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●● A commercial bank uses deposits to develop a reserve fund that allows it to pay
interest on accounts and process withdrawals. A bank’s reserve fund should, in
theory, be equal to its capital. A bank’s reserve fund is built by amassing surplus
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profits during good financial years in order to use the cash in bad times.
●● To help support their operations, many commercial banks earn retained earnings
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or fees. Overdraft fees, loan interest payments, securities, and bonds can all be
used to recover retained earnings. Customers are also charged fees for services
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such as keeping an account, providing overdraft protection, and monitoring their
credit scores.
●● Entrepreneurship growth is both a learning process and a resource development
process. Entrepreneurs aren’t born; they can be nurtured and trained to be
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innovative and start new businesses. It should, however, be a place where an

entrepreneur may study and practise his or her craft.
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●● Small Industries Development Bank of India Act, 1989 established it as a wholly

owned subsidiary of IDBI for bill refinancing, rediscounting, and equity support to
the small-scale sector.
●● NABARD was established to promote agricultural, small-scale industries, cottage
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and village industries, handicrafts, and other related activities. This is an apex
bank for farm funding in the rural sector. It was established on July 12, 1982.
●● The goal of establishing regional rural banks was to bring financial services to the
rural people’ doorsteps. These banks gave funds to a target population made up of
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the poorer members of society at a reduced rate of interest.

●● SSIDCs are state-owned enterprises that cater to the needs of small and cottage
businesses in their respective states and territories. They engage in a number
)A
of activities to help the small business sector grow. There are now 18 SSIDCs in
operation.
●● It’s crucial to understand what friends and family financing is before weighing the
benefits and drawbacks. It comes in friends and family funding when you request
(c
finances from family members, friends, colleagues, or anyone close to you.

●● Working with angel investors also provides you access to their expertise
Notes
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and mentorship, which can be invaluable in the early stages of a company’s
development. Understanding the benefits and drawbacks of seeking finance from
angel investors might help you decide whether this is the best option for your
in
company.
●● The name “angel” comes from the Broadway theatre, where wealthy patrons
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contributed funds to theatrical shows. The wealthy folks contributed monies, which
were repaid in full with interest once the projects began to make money.
●● Angel investors are typically those who have earned the status of “accredited
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investor,” though this is not needed. Someone with a net worth of one million
dollars or more in assets, or who has earned at least $200,000 in the previous two
years, is considered an accredited investor.
●● Venture capital is money invested in start-ups and small firms that have a lot of
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potential to develop. Venture capitalists are the people who invest this money
(VCs). A venture capitalist makes a venture capital investment when he or she
buys stock in a firm and becomes a financial partner.
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●● Second-stage financing, bridge financing, and third-stage financing, often known
as mezzanine financing, are all types of expansion funding.
●●
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There are two types of acquisition or buyout financing: acquisition finance and
management or leveraged buyout financing. Acquisition financing enables a
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corporation to purchase specific components or the complete company.
Glossary
●● Business plan - A business plan is a formal written document containing the goals
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of a business, the methods for attaining those goals, and the time-frame for the
achievement of the goals
●● Entrepreneurial capital - Entrepreneurial capital is focused on sustaining
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competitive advantage which is achieved with greater enthusiasm when human

and relational capitals are transformed into structural capital.
●● Equity financing - Equity financing is the process of raising capital through the sale
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of shares.
●● Debentures - A debenture is a marketable security (a type of investment) issued
by a business or other organization to raise money for long-term activities and
growth.
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●● Commercial banks - A commercial bank is a kind of financial institution that carries

all the operations related to deposit and withdrawal of money for the general
public, providing loans for investment, and other such activities.
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●● Institutional finance - Institutional finance means finance raised from financial

institutions other than commercial banks.
●● Friends and family - The term “friends and family shares” refers to stock offered by
a new business to friends, family members, or other associates of the company’s
(c
executives.
●● Angel finance- Angel finance is a term used to describe what happens when

individuals (“business angels”) or groups of angels (often known as a syndicate)

Notes
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invest their own money in a business in return for shares.
●● Venture capital - Venture capital (VC) is a form of private equity and a type of
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financing that investors provide to start-up companies and small businesses that
are believed to have long-term growth potential.
●● IPO - An initial public offering or stock launch is a public offering in which shares
nl
of a company are sold to institutional investors and usually also to retail investors.
●● Retained earnings - Retained earnings are the amount of profit a company has left
over after paying all its direct costs, indirect costs, income taxes and its dividends
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to shareholders.
●● Conditional loan - The conditional loan approval is a statement from a lender
asserting that the lender is willing to loan a specific amount of funds to the
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potential borrower after meeting specific conditions.
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1. A business plan should be _______________ to convey critical information to
potential investors.
a. long and detailed
b. crisp and concise r
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c. complex
d. technical
2. Writing a business plan can ensure that an entrepreneur
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a. figures out how to make her business work.

b. meets his target revenue goals.
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c. achieves her expense projections.

3. ___________ in a business plan shows the estimated profit and expenses of the
venture.
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a. Financial plan
b. Revenue model
c. Accounts payable
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4. What is the component of business plan?
a. Marketing Strategy
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b. Sales Strategy
c. Executive Summary
d. All of the above
(c
5. Which of these business components help in understanding how the business’s

plans to expand in the future?

a. Growth strategy
Notes
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b. Competitor’s analysis
c. Company description
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d. Revenue plan
6. Industrial Finance Corporation of India (IFCI) was established in _______.
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a. July 1948
b. July 2001
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c. July 1956
d. July 1991
7. State Industrial Development Corporations were established by _______.
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a. Ministry of Finance
b. The different states
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c. Central Government
d. None of these
8. Debentures represent
a.
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Fixed capital of the company
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b. Permanent capital of the company
c. Fluctuating capital of the company
d. Loan capital of the company
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9. What are the policies that influence access to finance in context of innovative
entrepreneurship?
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a. Debt financing
b. Venture capital
c. Business Angels
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d. All of these
10. ‘Angels’ usually provides which type of financing?
a. Debt
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b. Equity
c. Stock
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d. None of these
11. ___________are the informal associations of people who choose to come together
to find ways to improve their living condition
a. NGO
(c
b. Self-Help Groups
c. Private companies

d. None of these
Notes
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Exercises
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1. Explain the term business plan.
2. What are the various components of business plan?
3. How to write a business plan? Explain
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4. Explain why some business plans fail.
5. What are the various sources of finance for entrepreneurs?
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6. Explain the role of equity financing as a source of finance for entrepreneurs.
7. What are the advantages and disadvantages of debentures?
8. Explain some of the financial institutions started for the development of entrepreneurs.
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9. Who are angel investors? Explain
10. What do you know about venture capital?
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Learning Activities
1. Interview a small business owner who has requested a bank loan or an equity
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investment from external sources. Ask him or her these questions:
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◌◌ Did you prepare a written business plan before approaching the financial
officer?
◌◌ If the answer is “yes,” did you have outside or professional help in preparing
it?
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◌◌ How many times have your requests for additional funds been rejected? What
reasons were given for the rejection?

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1. b. 2. a.
3. a. 4. d.
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5. a. 6. a.
7. b. 8. d.
9. d. 10. b.
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11. b.

)A
1. Taneja, Satish and Gupta, S. L. Entrepreneurship Development, New Venture

Creating. Galgotia Publishing House, New Delhi, Latest edition.
2. Kuman, Ashok. S (1990). Entrepreneurship in Small Industry. New Delhi:
Discovery.
3. Anil Kumar S, S. C. Poornima, Mini K. Abraham, K. Jayashree,
(c
Entrepreneurship Development. New Age International (P) Limited, Publishers,

2003.

Module - V: Institutional Support for Entrepreneurs

Notes
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●● Need for Institutional Support to Entrepreneurship Development
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●● Role of Government in Promoting and Supporting Entrepreneurship
●● Financial Assistance and Subsidies Offered by the Government
●● Micro, Small and Medium Enterprises Development Act, 2006
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●● District Industries Centers (DICs)
●● Ministry of Micro, Small, and Medium Enterprises (MSME)
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●● National Institute for Entrepreneurship and Small Business Development
(NIESBUD)
●● The National Science and Technology Entrepreneurship Development Board
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(NSTEDB),
●● Technology Development Board
●● Entrepreneurship Development Institute of India (EDII)
●●
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Non-Governmental Institutions
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Introduction
The word “institutional support” refers to a component of the industrial and
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business economic environment. It is made up of authorities and entities whose

choices and active support in the form of laws, regulations, financial and non-financial
assistance affect the way businesses operate.
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Government-owned, statutory, semi-autonomous, or autonomous institutions are all

possibilities. It is the government or government-supported entities that are authorized
to engage in particular activities to promote industrial activity in the state, such as
funding, marketing, project planning, and training.
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In the promotion process, there are three stages: inception, operation, and
expansion or diversification. Through numerous specialized institutions set up in
accordance with the government’s objectives and policies, business houses were aided
in facilitating the aforementioned steps. Through numerous specialized organizations
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set up in accordance with the legislation, the government aided business houses in
facilitating the aforementioned stages through its plans and policies. An entrepreneur
who wants to start a business on his own or with friends and family should be aware
)A
of the numerous institutions and organizations that are available to him under the law.
Information dissemination in this area can only aid them in realizing their dream of
becoming a great business.
5.1 Institutional Support for Entrepreneurs

(c
Institutional support refers to the support to the entrepreneurs by different types

of institutions. It also refer to formulate policies provide support regulate and facilitate
to develop manufacturing and service enterprises with the help of many institutions. In
Notes
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this module, we will study about the Need for Institutional Support to Entrepreneurship
Development
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5.1.1 Need for Institutional Support to Entrepreneurship
Development
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Starting a business or an industrial unit—call let’s it an enterprise—requires a
variety of resources and facilities. Given their limited resources, small businesses find it
challenging to have their own. Finance has always been a valuable resource for starting
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and running a business. As a result, money is regarded as an organization’s “life-blood.”
Finance is a crucial resource, but it is not the only requirement for running a
business. A minimum degree of infrastructure facilities must be in place before any
economic activity can begin. Financial aid and concessions will never be enough to
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compensate for infrastructure shortcomings such as transportation and communication.
This is one of the reasons why, despite government financial aid and privileges to
entrepreneurs, industries have not developed in backward areas.
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The following are the numerous types of support and facilities offered by various
institutions to entrepreneurs in order to assist them in establishing businesses.
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For example, he or she may need to obtain materials, machinery, men, and other
resources in order to manufacture a product (s). Finance is essential to obtain all of
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these inputs and resources necessary to run a business. For example, only money
allows an entrepreneur to acquire raw materials or inputs from others, purchase
machinery and equipment from others, recruit workers from the labour market, and pay
day-to-day company expenses, among other things.
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Finance is required to obtain these resources and inputs. The reality is that the
availability of money is what keeps the enterprise wheel turning, or, to put it another
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way, what keeps the enterprise going on a continual basis. Finance is regarded as the
life-blood of an enterprise because of its critical role in its operation.
Now comes the crucial question of where this money comes from. What, on the
other hand, are the sources of entrepreneurial funding? Entrepreneurial money comes
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from two sources: the entrepreneurs’ personal funds and funds from outside sources
such as banking institutions.
There is ample evidence that an entrepreneur’s financial options are severely

restricted. It’s not hard to understand why. Most entrepreneurs were unemployed
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before starting their business. As a result, they lack the necessary finances to run
the business. As a result, they rely on outside cash to run their businesses. As a
result, some would-be entrepreneurs abandon their plans to start businesses or start
)A
businesses with insufficient finances. As a result, businesses have been operating with
insufficient money since their inception.
One of the leading causes of drawback in small businesses has been identified as
a lack of cash. Small businesses suffer from malnutrition as a result of a lack of cash,
(c
which contributes to high infant mortality rates among small businesses. In light of the
foregoing, it is necessary to provide financial assistance to entrepreneurs so that they

do not face a funding crisis and, as a result, do not succumb to illness and, eventually,
Notes
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closure.
In a more ordered fashion, the need for institutional finance for small enterprises
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might be imbued with a variety of explanations as follows:
a. In India, small businesses are defined by their size and resources, especially
financial resources.
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b. Due to a lack of personal funds, small businesses are prey to local money
lenders, who are infamous for demanding exorbitantly high interest rates.
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c. The combination of a high interest rate on borrowed capital from local money
lenders, on the one hand, and entrepreneurs’ refusal to repay loans due to
their poor financial situation, on the other, renders their financial situation
increasingly vulnerable.
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d. In extreme circumstances, failure to repay debts leads to money lenders
seizing the assets of small business owners.
e. The availability of funds from local money lenders is also insecure and
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unreliable.
f. Small businesses require protective financing that is governed by established
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rules and regulations, rather than exploitative financing that is not governed by
established rules and regulations.
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Finance is one of the most important aspects of any business. As a result, small
business owners must be very clear about the nature and scope of their financial
requirements. Knowing about possible alternate sources of finance is essential to
meeting financial needs.
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Given the scarcity or lack of funds/resources available to small entrepreneurs, the

Government of India has established a number of institutions to satisfy their financial
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needs as part of its goal of promoting the small-scale industry in the country.
5.1.2 Role of Government in Promoting and Supporting

Entrepreneurship
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The government plays a critical role in fostering entrepreneurship. With the goal
of balancing regional development, the government develops industries in rural
and backward areas by providing various amenities. The government established
programmes to assist entrepreneurs in the fields of technology, finance, market
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development, and entrepreneurial growth in order to aid in the acceleration and

adoption of innovations in industrial development. To achieve this goal, the federal and
state governments established a number of institutions.
)A
A. Institutions Established By The Central Government

1. Small Industries Development Organisation (SIDO)
SIDO was founded in October 1973 and is presently administered by the Ministry
(c
of Trade, Industry, and Marketing. SIDO is the apex organisation at the central level
for making policies for the development of small-scale industries in the country, and
it is led by the Additional Secretary and Development Commissioner (Small Scale

Industries) under the Ministry of Small-Scale Industries of the Government of India.

Notes
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SIDO is contributing significantly to the strengthening of this critical industry, which
has proven to be one of the country’s strongest economic cornerstones. SIDO also
offers further assistance through its Comprehensive Plan for Rural Entrepreneurship
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Promotion.
2. Management Development Institute (MDI)
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Gurgaon is home to MDI (Haryana). It was founded in 1973 and is funded by the
Industrial Finance Corporation of India, with the goal of increasing the industry’s
managerial performance.
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It offers managerial training in a variety of sectors. It also contains programmes
for officers from the IAS, IES, BHEL, ONGC, and many other major public sector
organisations.
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3. Entrepreneurship Development Institute of India (EDI)
The IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd., and the State Bank of India (SBI)
fund the Entrepreneurship Development Institute of India (EDI), an autonomous
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and not-for-profit institute founded in 1983. EDI has aided in the establishment of
twelve state-level entrepreneurship development centres and institutes. However,
one of the most satisfying results was incorporating entrepreneurship into the
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curricula of a huge number of schools, colleges, science and technology institutions,
and management schools throughout numerous states. In the international arena,
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EDI has received recognition and support from the World Bank, Commonwealth
Secretariat, UNIDO, ILO, British Council, Ford Foundation, European Union, ASEAN
Secretariat, and a number of other renowned organisations for its efforts to develop
entrepreneurship through resource sharing and training programmes. EDI has
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also established Entrepreneurship Development Centers in Cambodia, Lao PDR,

Myanmar, and Vietnam, and is working to establish similar centres in Uzbekistan and
five African nations.
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4. All India Small Scale Industries Board (AISSIB)

The Small-Scale Industries Board (SSI Board) is an apex advisory body tasked with
advising the government on all problems affecting small businesses. It is chaired
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by a Central Government Minister and includes representatives from the Central

Government, State Governments, National Small Industries Corporations, State
Financial Corporations, Reserve Bank of India, State Bank of India, Indian Small
Industries Board, Public Service Commission, and Trade and Industries Members.
m
5. National Institution of Entrepreneurship Development and Small Business

Development, New Delhi (NIESBUD)
The Government of India founded it in 1983. It is the highest organisation in
)A
charge of overseeing the actions of numerous entities involved in entrepreneurship

development programmes. The Government of India Society Act of 1860 established
it as a society. The institute’s main activities are:
i. Developing efficient techniques and methods
(c
ii. Create a model training syllabus;

iii. Create training aids, tools, and manuals

iv. Workshops, seminars, and conferences will be held.

Notes
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v. To assess the benefits of EDPS and to enhance the entrepreneurial
development process.
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vi. To assist the government and other organisations in implementing
entrepreneur development programmes.
vii. To conduct EDP research and development.
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6. National Institute of Small Industries Extension Training
It was founded in 1960 and is headquartered in Hyderabad. The main goals of the
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National Institute of Small Industries Extension Training are as follows:
i. Directing and coordinating syllabi for small business training.
ii. Guidance on managerial and technical matters.
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iii. Putting on workshops for small business owners and managers.
iv. Providing research and documentation assistance.
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7. National Small Industries Corporation Ltd.
The NSIC was founded by the Central Government in 1995 with the goal of aiding
small businesses in government procurement programmes. Through its marketing
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network, the organisation provides a large market for the products of small
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businesses. It also aids small businesses in exporting their goods to other countries.
8. Risk Capital and Technology Finance Corporation Ltd. (RCTFC)
RCTFC was founded in 1988 with a 15-crore rupee authorised capital. The
RCTFC’s main goals are to provide risk capital for the extension and expansion of
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entrepreneurial development, as well as venture capital for high-tech technology

development and transfer initiatives.
9. National Research and development corporation (NRDC)
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The National Research Development Corporation (NRDC) was founded in 1953 by

the Government of India’s Department of Science and Industrial Research. Its key
goals are:
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◌◌ assisting in technology transfer;

◌◌ technology transfer; and
◌◌ establishing relationships with other technical institutions and gathering
indigenous techniques created by them.
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10. Indian Investment Centre

This is a self-governing body formed by the federal government. Its main goal is to
)A
aid in the promotion of foreign collaboration with Indian businesses as well as to

provide required information to foreign entrepreneurs.
11. Khadi and village industries Commission (KVIC)
Khadi and Village Industries Commission established by an Act of Parliament in
(c
1956.
It is a non-profit organisation whose mission is to promote and develop Khadi and

Village Industries in rural areas. Its primary goals are to:

Notes
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i. Create jobs in rural areas.
ii. Skill development
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iii. Rural industrialisation
iv. Technology transfer
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v. Building a solid rural community base and rural people’s self-reliance
12. Indian Institute of Entrepreneurship (IIE)
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In 1953, the Department of Small-Scale Industries and Agro-Rural Industries founded
it.
It is a self-governing organisation with headquarters in Guwahati. Its primary goal
is to provide research, training, and consulting in the field of small business and
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entrepreneurship.
13. Miscellaneous Organisation
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In addition to the aforementioned, other organisations across India aid and engage in
entrepreneur development. ICICI, IFCI, SIDBI, UTI, IDBI, IIBI, and others are among
them.
14. National Alliance of Young Entrepreneurs (NAYE) r
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In partnership with various public sector banks, it has funded a variety of
entrepreneurial development initiatives. The scheme’s principal goal is to encourage
young people to look into investing and self-employment alternatives. It provides for
their education and supports them in obtaining the funds they want. In 1975, NAYE
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established a Women’s Wing to empower women and elevate their standing.

15. Centre for Entrepreneurial Development (CED) Ahmedabad
It was supported by the Gujarat government as well as public financial institutions in
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the state. It runs entrepreneurial development programmes in a number of locations.

The following are some of the key characteristics of the training programme:
i. Training programmes were implemented following an assessment of available
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options.
ii. Appropriate connections were made with supporting entities that provided
money, factory sheds, raw supplies, and other services.
iii. The entrepreneurs were chosen through behavioural testing.
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iv. Theoretical and practical parts of training programmes were discussed.

v. Following up on the training, the full-time project leader took action.
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15. Institute for Entrepreneurial Development (IED)

The IDBI, in collaboration with other financial institutions, public sector banks, and
state governments, established it. The IEDs were established to meet the needs of
the country’s industrially backward states in terms of entrepreneurial growth.
(c
Organization for Technical Consultancy No. 17 (TCOs) All India Financial Institutions
and State Governments have set up a network of TCOS across the country.

These organisations were formed to offer a comprehensive range of services to

Notes
e
entrepreneurs in general, and small company entrepreneurs in particular. The
following are some of their primary responsibilities:
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i. Determining the feasibility of a potential industrial project.
ii. Project reports, feasibility reports, and pre-investment status preparation.
iii. Finding possible business owners.
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iv. Assisting with technical and administrative issues.
v. Conducting project techno-economic studies.
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vi. Conducting market research and surveys, to name a few.
vii. Providing advice on the establishment of laboratories and a design centre.
18. Public Sector Banks
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Public sector banks have been collaborating with NAYE to run entrepreneurship
development programmes. These banks’ major goal has been to find potential
entrepreneurs in rural and underdeveloped areas. The Punjab National Bank, for
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example, began an entrepreneurial aid programme in West Bengal and Bihar in
March 1977. Similarly, the Bank of India has been providing entrepreneurial aid to
the states of Punjab, Rajasthan, Himachal Pradesh, J&K, and the Union Territories
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of Chandigarh and Delhi since August 1972.
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The following are some of the most essential types of entrepreneurial assistance:
i. Identifying potential entrepreneurs

ii. Identifying projects that are viable.
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iii. Assisting with project profile preparation

iv. Assisting in the evaluation of projects.
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v. Organizing hands-on training.
5.1.3 Financial Assistance and Subsidies Offered by the

Government
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The Indian government offers a variety of business subsidies and incentives

in order to foster a thriving business community and create jobs. It is critical for any
entrepreneur running a start-up or an established business to be aware of these
subsidies and incentives in order to take advantage of them while making capital
m
expenditures in order to lower capital costs, lower interest burdens, and achieve break-
even faster. We’ve put together a list of 7 Subsidies Every Indian Entrepreneur Should
Know.
)A
Credit Linked Capital Subsidy Scheme (CLCSS)

Due to a lack of information about access to money, quality standards, and
contemporary technology, many Small-Scale Industries (SSI) in India continue to create
goods and products using old technology and plant and machinery. However, market
(c
liberalisation and globalisation have forced equipment upgrades and modernization

to assure the unit’s existence and expansion. As a result, the Ministry of Small-Scale

Industries operates a technology upgrade scheme known as the Credit Linked Capital
Notes
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Subsidy Scheme to help SSI in India upgrade their technology.
The CLCSS offers SSI units a 15% capital subsidy on institutional finance used
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to introduce well-established and enhanced technology in several of the sub-sectors/
products approved under the plan for loans up to Rs.1 crore.
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Subsidy for Establishing Cold Chain
The goal of the Scheme of Cold Chain, Value Addition, and Preservation
Infrastructure is to provide seamless cold chain and preservation infrastructure services
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from the farm gate to the consumer. It includes pre-cooling, weighing, sorting, grading,
and waxing facilities at the farm level, as well as multi-product/multi-temperature cold
storage, CA storage, packing facility, IQF, blast freezing in the distribution hub, and
reefer vans, mobile cooling units for the distribution of horticulture, organic produce,
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marine, dairy, meat, and poultry. The concept allows for project planning flexibility, with
a focus on the development of cold chain infrastructure at the farm level.
Partnership / proprietorship firms, companies, corporations, cooperatives, self-
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help groups (SHGs), farmer producer organisations (FPOs), NGOs, central / state
public utilities, and others can set up an integrated cold chain initiative if they meet the
scheme’s eligibility requirements.
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Technology Upgradation Fund Scheme (TUFS) – Textile Sector
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After agriculture, the textiles industry is the second largest employer. It accounts
for around 14% of industrial production, 4% of GDP, and 17% of the country’s
export revenues. It employs about 35 million people directly, including a significant
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proportion of women and SC/ST persons. As a result, the Ministry of Textiles has
aided the industry in reaching new heights and improving technology to meet global
standards through its flagship scheme, the Technology Upgradation Fund Scheme
(TUFS). Interest Reimbursement of 5% is offered under the TUFS Scheme on interest
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charged by financial institutions or banks for textile technology upgradation projects.

Furthermore, the scheme provides for margin money and/or capital subsidies for
the purchase of a variety of textile manufacturing equipment, such as power looms,
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common effluent treatment facilities, garment machinery, technical textile machinery,

handlooms, and so on.
Subsidy for Acquiring Quality Management System

In today’s competitive global market, MSME units must implement quality
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standards in order to compete successfully and increase profitability by improving

internal processes. As a result, in order to encourage Indian MSME units to adopt
quality standards, the government of India offers a subsidy that covers the cost of
)A
obtaining ISO certifications such as ISO-9000 and ISO-14001. All units with an SSI
Registration are eligible for a reimbursement of up to 75% of the costs of obtaining ISO-
9000/ISO-14001 certifications, up to a maximum of Rs.75,000/- per instance.
Interest Subsidy for MSME Units in Gujarat

(c
The Gujarat State Government, in an effort to boost industrial investment and make
the state more investor-friendly, offers interest subsidies to MSME units that make

new investments, or existing units that invest in capacity addition or diversification, or

Notes
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existing units that invest in modernising machinery to newer technology. MSME’s are
the backbone of any economy, and this incentive is designed to help Gujarat become
one of the country’s most industrialised states.
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This scheme provides a 7% interest subsidy for micro-enterprises and a 5%
interest subsidy for small and medium-sized businesses. In the case of the first project,
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youth under the age of 35 will receive an additional 1% interest subsidy. Priority is also
given to female entrepreneurs. The highest amount of interest subsidy available each
year is Rs.25 lakhs for up to a 5-year term.
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Capital Subsidy for Solar Lighting and Small Capacity PV Systems
The Jawaharlal Nehru National Solar Mission (JNNSM) was launched by the Indian
government to encourage sustainable energy generation and meet India’s growing
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energy demand while also addressing the country’s energy security concern. The
JNNSM offers a variety of incentives and low-interest loans to promote and expand
solar energy generation across the country.
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The JNNSM provides a capital subsidy of up to 40% of the approved unit cost
(benchmark cost) for solar lighting systems and small capacity Photovoltaic systems
through the capital subsidy for solar lighting and small capacity PV systems. Special
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category states, such as NE, Sikkim, J&K, Himachal Pradesh, and Uttarakhand, would
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be eligible for a capital subsidy of 90% of the benchmark cost.
Support for International Patent Protection in Electronics & IT

The Ministry of Communications and Information Technology (MCIT) of the
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Government of India has launched a scheme to provide financial assistance to SMEs

and Technology Start-Up units for international patent filing in order to promote
indigenous innovation, recognise the value and capabilities of global IP, and seize
growth opportunities in the fields of information technology and electronics.
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All patent processing costs are subsidised under this programme, including
attorneys’ fees, patent office filing fees, examination fees, patent search charges, and
additional costs for entering the National Phase up to grant/issue. Up to 50% of the total
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patent fee can be reimbursed under this programme. Support will be restricted to Rs.15
lakhs or half of the entire costs of filing any innovation, whichever is lower.
5.1.4 Micro, Small and Medium Enterprises Development (MSMED)

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Act, 2006
The Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006
aims to help these businesses grow and improve their competitiveness. It establishes
)A
the first legal foundation for the recognition of the idea of “enterprises,” which includes
both manufacturing and service-oriented businesses. For the first time, it defines
medium enterprises and attempts to merge the three tiers of these businesses, namely
micro, small, and medium. The Act also establishes a legislative consultation process at
the national level, with balanced representation of all stakeholders, particularly the three
(c
types of businesses, and a broad range of advisory tasks. The MSMED Act divides

businesses into manufacturing and service businesses based on their investment in

Notes
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plant and machinery/equipment (excluding land and buildings), as shown below:
in
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5.2.1 The District Industries Centres (DICs)
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The District Industries Centres (DIC) initiative began in 1978 with the goal of
establishing an integrated administrative structure at the district level to promote small-
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scale industries in rural areas. The DICs are envisioned as a district-level single-window
interfacing agency that provides assistance and support to small businesses under one
roof. DICs are the central and state governments’ implementation arm for numerous
initiatives and programmes. Small businesses are registered with the district industries
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centre, and the DIC also administers the PMRY (Pradhan Mantri Rojgar Yojana).
The General Manager, Functional Managers, and Project Managers make up DIC’S’
organisational structure, which provides technical assistance in areas relevant to the
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district’s needs. The state government is in charge of DIC management.
DIC’s progress 422 District Industries Centres (DICs) were established between
March 31st, 1998, and March 31st, 1999, encompassing 431 districts in the country,
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excluding metropolitan centres and certain new districts. According to the 2011 census,
the number of districts had increased to 640.
District Industries Centre’s Mission In each district, a single agency is responsible

for all small and village industry needs. The District Industries Centres have undertaken
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different programmes for investment promotion at the grassroots level, such as holding
seminars and workshops, and offering support for trade fairs and exhibitions conducted
by various Industry’s groups. The District Industries Centre provided all of the services
and support needed for MSME firms under one roof. The Centre contains a separate
)A
wing that caters to the unique requirements of cottage and household industries as well
as small businesses.
Functions of DICs
(c
The DICs are jointly supported by the state government and the federal
government. The government has allocated significant funding to DICs, which they can
use to build an office building, purchase furniture, fixtures, equipment, cars, and other

ongoing needs. With this foundation, DICs at the district level implement a variety of
Notes
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promotional tactics aimed at promoting all aspects of SME development in the district.
It begins with the identification of potential entrepreneurs and ends with the marketing
of SMEs’ products. The DICs give and provide a bundle of services and facilities,
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including credit counselling, raw materials, training, and marketing, among other things,
for unemployed educated young entrepreneurs in general. As a result, DIC provides
promotional, technical, physical, financial, marketing, and other types of services that
nl
are essential for SSI’s growth and development. The following are some of DICS’s most
important functions:
1. Entrepreneurial Identification: DICs assist in the development of new entrepreneurs
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by conducting entrepreneurial inspiration programmes around the district, particularly
under the SEEUY initiative. For conducting EDPs, DICs also enlist the help of SISs
and TCOs.
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2. Provisional Registration: Entrepreneurs can apply for provisional registration
with DICs, which allows them to complete all essential measures to establish the
business. Only after obtaining provisional registration can the entrepreneur seek
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help from term financing institutions. Provisional registration is granted for a period
of two years and can be renewed every year for a total of two years.
3. Permanent Registration: Once the entrepreneur has completed all of the necessary
r
formalities to begin production, such as site selection, electricity connection, and
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machinery installation, they can apply to the DIC for permanent registration. The
entrepreneur can only apply for discounted raw material supplies once he or she has
obtained permanent registration. Permanent registration is required to receive all of
the benefits that the government offers from time to time.
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4. Fixed Asset Purchases: The DICs recommend that the prospective entrepreneur
submit loan applications to various financial and developmental agencies, such as
NSIC, SISI, and others, for the acquisition of fixed assets. It also advises commercial
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banks on how to meet SSI’s working capital requirements for day-to-day operations.
5. Departmental Approvals: DIC takes the effort to get departmental clearances, which
are required to form a unit. It also takes further steps to ensure a fast power hookup.
ity
6. Support for Village Artisans and Handicrafts: Despite their innate aptitude and
competence, village artisans are disadvantaged by a lack of financial resources to
compete in a competitive market. The DIC, in collaboration with other lead banks
and nationalised banks, provides financial assistance to those artists.
7. Incentives and Subsidies: DIC assists SMEs and rural craftsmen in obtaining
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government subsidies through various initiatives. This improves the morale and
financial capability of the units, allowing them to engage in more developmental
initiatives. Subsidies from various entities include power subsidies, interest subsidies
)A
for engineers, and IRDP subsidies, among others.

8. Interest-Free Sales Tax Loan: For SSI units in rural areas, SIDCO offers an interest-
free sales tax loan up to a maximum of 8% of total fixed assets. The DIC, on the other
hand, will issue the penalty order. The DIC suggests that the SME be registered for
(c
the Government Purchase Program by the National Small Industries Corporation

Limited.

9. Import and export assistance: The government offers a variety of incentives for the
Notes
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import and export of specific goods and services. Any importer or exporter can take
advantage of these perks as long as the transaction is routed through the appropriate
DIC. Only on the suggestion of the DIC is an export or import licence provided to the
in
importer or exporter.
10. Fairs and Exhibitions: The DIC encourages and promotes the participation of SSI
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units in various fairs and exhibitions hosted by the Government of India and other
organisations to promote industrial products. DICs give SMEs free space to display
their products and offer financial assistance to help them do so.
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11. Training Programs: DIC offers training programmes for rural entrepreneurs as well
as assisting other institutions or organisations that provide training to small business
owners.
12. Self-employment for Educated Unemployed Kids: The DICs have developed a
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programme to help educated unemployed youth by providing them with self-
employment opportunities. The youngster should be between the ages of 18 and
35, with a minimum metric or middle school education and an I.T.I. in engineering or
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technical trade. Women and technocrats are given priority.
Administration
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The District Industries Centre’s General Manager is in charge. General Manager is
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a Joint / Deputy Commissioner level position. Senior executives such as the Manager
(Raw Material), Manager (Credit), Manager (Economic Investigation), Manager
(Marketing), Industrial Promotion Officer (IPO), and Technical Officer cum Project
Manager help the General Manager (PM).
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Monitoring of DICs
The Industries Commissioner oversees the operation of DICs and their
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accomplishments. Meetings of General Managers are held on a regular basis to

review performance and assist in the resolution of problems encountered during
the implementation of various schemes. At the district level, there are two types of
committees that deal with the problems of industries and industrialists:
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i. The District Industrial Executive Committee (DIEC) and the District Industrial
Executive Committee (DIEC). The DIEC is responsible for resolving industry-
related issues and promoting industrial growth. The Chairman of this
Committee is the District Collector, and the Member Secretary is the DIC
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General Manager. Presidents of District Panchayats, DDOs, MPs, MLAs,

prominent persons working in the district’s industries, and members of all
district-level industries associations are among the DIEC’s other members.
)A
ii. Industrial Follow-Up Team (Single Window) (SWIFT) When starting a new
business, entrepreneurs encounter numerous challenges. They must engage
with a variety of federal agencies and obtain many permissions. SWIFT
assists them in resolving their issues in one place. This committee reports
to the District Collector, with the DIC’s General Manager serving as Member
(c
Secretary and the District Development Officer serving as SWIFT’s Vice

President. This committee is made up of all of the district’s industry-related
officers.
5.2.2 Ministry of Micro, Small, and Medium Enterprises (MSME)

Notes
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Over the last five decades, the Micro, Small, and Medium Enterprises (MSME)
sector has grown as a highly vibrant and dynamic segment of the Indian economy.
in
MSMEs not only serve an important role in creating large numbers of jobs at a cheaper
cost of capital than large enterprises, but they also aid in the industrialization of rural
and backward areas, reducing regional imbalances and ensuring a fairer distribution
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of national revenue and wealth. MSMEs serve as ancillary units to large enterprises,
and this sector makes a significant contribution to the country’s socioeconomic
development.
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According to the data of August 2020, this sector consists of 36 million units,
employs over 80 million people. With over 6,000 products, the sector provides around
8% of GDP, as well as 45 percent of total industrial production and 40 percent of the
country’s exports. The MSME sector has the potential to spread industrial expansion
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throughout the country and may be a key player in the inclusive growth process.
Khadi is the father of the nation and the proud legacy of our national independence
movement.
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India’s Khadi and Village Industries (KVI) are two national treasures. One of the
most important elements of KVI in the Indian economy is that it generates employment
at a low cost per capita. The KVI Sector not only meets the basic needs of the huge
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rural sector of the country for processed commodities, but it also provides long-term
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employment to rural craftsmen. Today, KVI represents an exceptional, legacy product
that is both ‘ethnic’ and ‘ethical.’ The Sector has the potential to attract a large number
of clients from the middle and upper classes of society.
Coir industry is a traditional agro-based sector that began in Kerala and has spread
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to other coconut-producing states such as Tamil Nadu, Karnataka, Andhra Pradesh,

Odisha, West Bengal, Maharashtra, Assam, Tripura, and others. It is an export-oriented
business with the potential to increase exports by adding value through technological
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interventions and diversifying products such as coir geotextiles, among other things.
Coir goods’ acceptance has risen significantly as a result of their ‘environmentally
friendly’ reputation.
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In collaboration with concerned Ministries/Departments, State Governments, and

other Stakeholders, the Ministry of Micro, Small, and Medium Enterprises (M/o MSME)
envisions a vibrant MSME sector by promoting growth and development of the MSME
sector, including Khadi, Village, and Coir Industries, by providing support to existing
enterprises and encouraging the creation of new enterprises.
m
Introduction to the Ministry

On May 9, 2007, the Ministry of Small-Scale Industries and the Ministry of Agro
)A
and Rural Industries amalgamated to become the Ministry of Micro, Small and Medium
Enterprises (M/o MSME), following a revision to the Government of India (Allocation
of Business) Rules,1961. This Ministry now develops policies, promotes/facilitates
programmes, projects, and schemes, and oversees their execution with the goal of
aiding MSMEs and assisting them in scaling up.
(c
The promotion and growth of MSMEs is primarily the responsibility of state

governments. The Government of India, on the other hand, complements the efforts of

state governments through a variety of initiatives. The M/o MSME and its organisations’
Notes
e
role is to support states in their efforts to stimulate entrepreneurship, employment, and
livelihood opportunities, as well as to improve MSMEs’ competitiveness in the changing
economic environment. The Ministry’s and its organisations’ schemes/programs are
in
designed to facilitate/provide:
(i) adequate credit flow from financial institutions/banks; (ii) support for
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technology upgradation and modernization; (iii) integrated infrastructural
facilities; (iv) modern testing facilities and quality certification; (v) access to
modern management practises; (vi) entrepreneurship development and skill
upgradation through appropriate training facilities; (vii) support for product
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development, design intervention, and packaging; (viii) welfare of artisans and
work conditions
The Ministry’s Primary Planning Strategies
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1. National Manufacturing Competitiveness Programme (NMCP)
The program’s goal is to improve Indian MSMEs’ global competitiveness by enhancing
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their processes, designs, technology, and market access. The programme calls for
significant expenditures to improve the MSME sector’s whole value chain. All 10
components of the NMCP have already been implemented and are expected to
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boost MSME innovation and growth. Quality Management Systems and Quality
Technology Tools, Design Clinic Scheme, Building Awareness on IPRs, Support
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for Entrepreneurial and Managerial Development, Marketing Support/Assistance to
MSMEs, Setting Up of New Mini Tool Room, and Lean Manufacturing Competitiveness
Scheme are some of the items on the list. These parts are designed to bring the best
aspects of industrial competitiveness to the MSME sector, which has historically
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been unable to afford such procedures and approaches.

2. Credit Guarantee Scheme for Micro and Small Enterprises
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The scheme’s goal is to make credit available to SSI units, particularly small units,
for loans up to Rs. 100 lakhs without the need for collateral or third-party guarantees.
The Scheme offers collateral-free credit (term loans and/or working capital) extended
to new and existing micro and small businesses by eligible lending institutions up to
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Rs. 100 lakh per borrowing unit. Up to 75 percent of the credit facility up to Rs.50
lakh is covered by the guarantee, with an extra guarantee of 50 percent of the credit
facility over Rs.50 lakh and up to Rs.100 lakh. The scheme is run by the Credit
Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), a joint venture
between the Indian government and SIDBI. In a 4:1 ratio, the Government of India
m
and SIDBI contribute to the CGTMSE corpus.

3. Credit Linked Capital Subsidy Initiative (CLCSS)
)A
The CLCSS scheme intends to help small scale enterprises, such as micro, agro,
and rural industrial units, upgrade their technology by providing 15% upfront capital
subsidy institutional finance for the induction of well-established and upgraded
technology in defined sub-sectors/products recognised under the Scheme. Under
the updated programme, the acceptable capital subsidy is computed based on
(c
the purchase price of plant and machinery. The maximum acceptable loan for this
scheme’s capital subsidy calculation has also been increased from Rs.40 lakh to

Rs.100 lakh. Small-scale industry modernization will be aided even more by the
Notes
e
changes to the CLCSS standards.
4. Cluster Development Program for MSEs
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The Micro and Small Enterprises – Cluster Development Programme (MSE – CDP)
is now being implemented for the holistic and integrated development of micro and
small enterprises in clusters. Soft interventions, such as diagnostic investigations,
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are planned, as well as physical interventions, such as the installation of CFCs and
infrastructure development in new and current industrial estates.
5. Scheme for Performance and Credit Ratings
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National Small Industries Corporation (NS IC) Limited is implementing the scheme.
The scheme’s main goal is to give MSEs a reliable third-party opinion on their
capabilities and creditworthiness in order to raise awareness among them about
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the strengths and weaknesses of their current operations. CRISIL, CARE, ONICRA,
SMERA, ICRA, and Brickwork India Ratings are among the rating firms that have
been appointed under the system. The rating charge paid by micro and small
businesses is subsidised for the first year only, up to a maximum of 75% of the fee
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or Rs.40,000/-, whichever is less, under this scheme.
6. Marketing Assistance Scheme
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National Small Industries Corporation (NSIC) Limited is implementing the scheme.
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The scheme’s main goals are to improve MSMEs’ marketing competitiveness,
offer them with a venue for contact with individual/institutional customers, keep
them informed about current market conditions, and give them a way to solve
their difficulties. MSMEs are assisted under the Scheme in exploiting new market
prospects by organizing/ participating in a variety of domestic and international
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exhibitions/trade fairs, intense Buyer-Seller meetings, and other marketing events.

7. International Cooperation (IC) Scheme
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The Scheme’s primary goals are to provide technology infusion and/or upgradation
to Indian micro, small, and medium enterprises (MSMEs), as well as to modernise
and promote their exports. The following activities would be covered by the Scheme:
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(a) Delegation of MSME business delegations to other countries for the purpose
of exploring new areas of technology infusion/upgradation, facilitating joint
ventures, improving the market for MSMEs’ products, foreign collaborations,
and so on;
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(b) Participation of Indian MSMEs in international exhibitions, trade fairs, and

buyer-seller meetings in foreign countries as well as in India;
(c) Holding international conferences and seminars on topics and themes. The
)A
IC Scheme provides financial aid to entrepreneurs for flight and space rent.
State/Central government organisations, industry/enterprise associations,
registered societies/trusts, and organisations involved in the promotion and
growth of MSMEs are all eligible to apply.
8. Assistance to Training Institutions Scheme
(c
The Scheme provides financial help for the establishment of new institutions (EDIs), the
enhancement of current EDIs’ infrastructure, and the promotion of entrepreneurship

and skill development. These training institutions will get help in the form of a capital
Notes
e
grant for the creation/strengthening of facilities, as well as programme support for
implementing entrepreneurship and skill development programmes. On a matching
basis, the maximum aid for infrastructure creation or strengthening will be Rs. 150
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lakhs, not to exceed 50% of the project cost.
The maximum aid on a matching basis for the North Eastern area (including Sikkim),
nl
Andaman & Nicobar, and Lakshadweep would be Rs. 270 lakhs or 90 percent of
project cost, whichever is less, for the North Eastern region (including Sikkim),
Andaman & Nicobar, and Lakshadweep. Any state or union territory government,
educational institutions, non-governmental organisations, and other development
O
agencies can apply for funding to build or improve infrastructure. Training Institutions
that desire to provide training programmes under the Scheme must register with
one of the Ministry’s three National Level EDIs, namely NIESBUD in Noida, IIE in
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Guwahati, and NIMSME in Hyderabad. For entrepreneurship development and skill
development programmes, the maximum support per trainee per hour is Rs 50.
(Rs.60 for NER, A&N and Lakshadweep)
9. Survey, Studies and Policy Research
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The Scheme’s main objectives are to:
◌◌ collect relevant and reliable data on various aspects and features of MSMEs
on a regular/periodic basis, r
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◌◌ study and analyse the constraints and challenges faced by MSMEs as well
as the opportunities available to them in the context of liberalisation and
globalisation of the economy using empirical data or otherwise, and
◌◌ use the results of these surveys and analytical studies for policy research.
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This programme has resulted in the completion of several studies on the

MSME sector as well as evaluation studies of the Ministry’s numerous
schemes.
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5.2.3 National Institute for Entrepreneurship and Small Business

Development (NIESBUD)
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The National Institute for Entrepreneurship and Small Business Development is a

flagship agency of the Ministry of Skill Development and Entrepreneurship, dedicated
to promoting entrepreneurship and skill development through training, consulting, and
research. Training of Trainers, Management Development Programs, Entrepreneurship-
cum-Skill Development Programs, Entrepreneurship Development Programs, and
m
Cluster Intervention are some of the Institute’s main operations. Since its beginning,
NIESBUD has delivered training to 12,37,307 people through 46,837 distinct training
programmes. There are 5,011 international players representing more than 145
)A
countries from around the world.
Major Activities
The Institute’s Governing Council, whose chairman is the Minister of MSDE, sets
policy, direction, and leadership. The Governing Council’s policies and decisions are
(c
carried out by the Executive Committee, which is chaired by the Secretary and includes
the Director General of the Institute as a member-secretary.

●● Assessing training programmes and finding gaps in order to systematically

Notes
e
conduct training programmes, orient them, and motivate youth to become
entrepreneurs.
in
●● Creating and designing a variety of communication media tools to promote
entrepreneurship among the country’s varied socioeconomic groups.
●● Assisting and catalysing groups that are directly or indirectly involved in the
nl
development and promotion of entrepreneurship and self-employment in the
country.
●● Providing entrepreneurship and skill development consulting services, particularly
O
to MSDEs.
●● In addition to the foregoing, providing consulting services to other institutions
involved in entrepreneurial training, whether public or private.
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●● Course curriculum design, conceptualization, and standardisation for
entrepreneurship and skill development programmes.
●● Fostering research and development initiatives in the field of entrepreneurship,
si
notably in the MSDE sector. Documenting and disseminating information about
entrepreneurship and small business development.
●● Developing and publishing entrepreneurship/enterprise development/skill
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development/MSDEs literatures, papers, journals, and information material
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●● Providing an interactive forum for various target groups to exchange ideas and
experiences, mostly through seminars, workshops, conferences, and training
programmes.
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●● Identifying the problem and providing feasible solutions through research projects
aimed at generating knowledge and driving entrepreneurship development.
Major Concentration Areas:

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●● Creating a holistic environment within the Institute to foster entrepreneurship and

skill development.
●● Evaluating and updating NIESBUD-sponsored training programmes to keep up
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with internal and external changes in the entrepreneurship and small business
development environment.
●● The institute is actively involved in promoting entrepreneurship and dispelling
common misconceptions about it among the general public. This aids in the
m
effective dissemination of information on entrepreneurship and skill development.
The Institute’s Major Highlights Include:

)A
●● The government has announced a number of job-creation initiatives, including the

creation of training materials and the organisation of training sessions for aspiring
entrepreneurs to help them realise their ambitious goals.
●● Staying on top of changes in the macro and micro environment as it relates to
(c
government policies. Through concerted efforts, the Institute has been able to
achieve and maintain financial self-sufficiency by organising various programmes;

improving the conduct of market-driven fee-based training activities; and

Notes
e
increasing sales of training materials.
●● The Institute has highly qualified faculty and experienced professionals with
in
specialisation in multidimensional aspects related to Entrepreneurial Competency
& Motivation; Project Identification.
●● Assisting job seekers in bridging the gap between employers and job seekers in
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order to start their own business.
Objective
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NIESBUD is a top-level organisation that reports to the Ministry of Skill
Development and Entrepreneurship of the Government of India.
●● To standardise and systematise the procedures of identifying, training, supporting,
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and maintaining potential and current entrepreneurs.
●● To assist and stimulate institutions and organisations in conducting training and
other activities related to entrepreneurship development.
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●● To serve as the apex national resource institute for accelerating and enhancing the
process of entrepreneurship development, as well as measuring the impact of the
same across various social strata.
●● r
Organize research and documentation initiatives relating to entrepreneurship and
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skill development to provide critical information and support to trainers, promoters,
and entrepreneurs.
●● To provide a holistic environment in which trainers, promoters, and consultants can
be trained in a variety of areas related to entrepreneurship and skill development.
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●● Provide national/international consulting services to promote entrepreneurship and

small business development on a national and international scale.
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●● To provide national/international platforms for interaction and idea exchange in the

creation and refinement of policy at various levels.
●● To share entrepreneurship development experience and skills across national
borders in order to raise national awareness.
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●● To share international knowledge and skills in the field of entrepreneurship

development in order to map its growth on a global scale.
Recent Accomplishments
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●● The Institute has successfully generated and supplied content for online training
programmes, and it is now expanding its content and curriculum repository for a
variety of market-driven online training programmes.
)A
The Institute has changed and evolved to provide instruction via the internet in
order to deal with the COVID-19 scenario. Most of the institute’s training, such as the
Trainers’ Training Programme on Employability, Entrepreneurship, and Life Skills for
PMKVY Partner Institutions and the ESDP on Retail Team Leader for the Ministry of
(c
Defence’s Directorate General of Training, has moved to a digital online platform. The
institute is in talks with other national and international organisations about delivering
entrepreneurship training via digital channels.

5.2.4 The National Science and Technology Entrepreneurship

Notes Development Board (NSTEDB)
e
The National Science and Technology Entrepreneurship Development Board
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(NSTEDB), established by the Government of India in 1982, is an institutional
mechanism with the broad goal of encouraging gainful self-employment among India’s
science and technology (S&T) workforce and the establishment of knowledge-based
nl
and innovation-driven businesses.
The NSTEDB is part of the Department of Science and Technology. It includes

representatives from socioeconomic and scientific departments and ministries, as
O
well as leading entrepreneurship development organisations and all-India financial
institutions.
The NSTEDB’s main goals are to:
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◌◌ Promote knowledge-based and innovation-driven businesses;
◌◌ Facilitate the generation of entrepreneurship and self-employment
opportunities for S & T people; and
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◌◌ Facilitate the distribution of information.
◌◌ To form partnerships with various federal and state government agencies to
promote S&T-based entrepreneurship.
◌◌
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To serve as a policy advisory body to government agencies for the growth of
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S&T-based entrepreneurship;
◌◌ To create jobs through technical skill development using S&T infrastructure.
NSTEDB’s programmes have raised awareness among S&T professionals

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about the benefits of pursuing entrepreneurship as a vocation. Academicians

and researchers have taken a significant interest in such socially important
responsibilities, and have participated in various NSTEDB-sponsored programmes.
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The mission of entrepreneurship development and job creation was assigned to over
100 organisations, the majority of which are academic institutions and non-profit
organisations.
This site details some of the NSTEDB’s most important programmes and activities.
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To adapt to the changing economic and market environment, more programmes are
being developed.
Initiatives to Encourage Innovation

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●● For technology-driven start-ups, there is a Seed Support System.

●● Incubator managers’ capacity enhancement - Platforms for Incubators to Network
Nationally and Internationally
)A
●● Service Tax exemptions to incubator and incubates

●● Service Tax Exemption to Incubates
In exercise of the powers conferred by sub-section (1) of section 93 of the
(c
Finance Act, 2994 (32 of 1994), the Central Government, on being satisfied that it is
necessary in the public interest so to do, hereby exempts taxable services provided
by an entrepreneurs located within the premises of a Technology Business Incubator

(TBI) or Science and Technology Entrepreneurship Park (STEP) recognized by the

Notes
e
National Science and Technology Entrepreneurship Development Board (NSTEDB)
of the Department of Science and Technology Government of India from the whole of
the service tax leviable thereon under section 66 of the said Finance Act subject to the
in
conditions.
Conditions for Service Tax Exemption
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The exemption contained in this notification shall apply subject to the following
conditions: i)the Entrepreneur enters into an agreement with the TBI of the STEP as
an incubatee to enable him to develop and produce hi-tech and innovative products;
O
and ii)the total business turnover of such entrepreneur does not exceed fifty lakh
rupees during the previous financial year; Provided that the exemption contained in this
notification shall apply for a period of one year;
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Explanation: Under this notification, the exemption for taxable services is not
applicable for any taxable services delivered or to be provided immediately after the
entrepreneur’s total business turnover surpasses fifty lakh rupees in a given financial
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year. The 1st of April, 2007, is the effective date of this notification.
Innovation Partnership Programs
CoE - NIDHI (Center of Excellence) r

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Technology-based new businesses are high-risk, high-growth businesses that
require an enabling environment like the NIDHI-Centre of Excellence (NIDHI-COE) to
improve their chances of success. So far, the DST has funded more than 150 STEPs/
TBIs around the country, which have nurtured over 4000 businesses. The Department
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is providing an enhanced support of Rs.50 crore over five years for the establishment
of these CoEs in order to supplement and scale up existing incubation operations in
TBIs. PSG-Science & Technology Entrepreneurial Park (PSG-STEP) at PSG-College
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of Technology, Coimbatore, SINE IITBombay, CIIE-IIM-Ahmedabad, TBI-Veltech

University, and EDC NCL-Pune are the current five NIDHI-CoE (Centres of Excellence).
Two further NIDHI-CoE projects are in the works for 2021-2022: FIIT, IIT Delhi, and
T-Hub, Hyderabad.
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5.2.5 Technology Development Board

The Technology Development Board (TDB) was established by the Indian
government on September 1, 1996, in accordance with the provisions of the Technology
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Development Board Act, 1995, with the goal of promoting the development and
commercialization of indigenous technology as well as the adaptation of imported
technology for wider domestic applications. TDB gives financial help to businesses and
)A
other organisations that are seeking to develop and commercialise such technology.
The Act made it possible for TDB to establish a Technology Development and
Application Fund. The Government of India provides grants to the Fund from the R&D
Cess collected from industrial concerns under the provisions of the Research and
(c
Development Cess Act, 1986, as modified in 1995. The Act also allows TDB to add to
the Fund by crediting all other sums received by TDB, recovery of monies given from

the Fund, and any income from investments of the Fund’s size. The Finance Act of
Notes
e
1999 allowed for full income tax deductions for donations to the Fund.
The Central Government revoked the Research and Development Cess Act, 1986,
in
with effect from April 1, 2017, in its General Budget 2017-18. From 1996-97 to 2016-17,
the government collected a total of Rs. 7974.32 crore in R&D Cess.
TDB got a total of’977.47 crore as Grant-in-aid from the Department of Science
nl
and Technology of the Government of India over a 24-year period (1996-97 to 2019-20).
Financial Assistance Modes
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TDB offers financial help in the form of a loan, equity, or, in extreme circumstances,
a grant. Throughout the year, applications for financial assistance from industrial
concerns (incorporated under the Companies Act, 1956 or the Companies Act, 2013)
are received.
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1. Loan
The financial aid to industrial enterprises is offered in the form of a soft loan with a
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simple interest rate of 5% per year. The maximum amount of financial assistance in the
form of a loan is 50% of the project’s unincurred costs. The loan money is disbursed
in instalments based on the completion of connected milestones in accordance with
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the loan agreement’s terms and conditions. During the life of the loan, royalties will be
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paid on sales of TDB’s project’s products. TDB may appoint a nominated director to the
Board of Directors of the aided industrial company in particular situations. A project’s
implementation period should not exceed three years in most cases. Collateral and
guarantees are used to secure the loan and interest. Normally, loan repayment and
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interest payments begin after the project is done and a one-year moratorium period
has passed. In most cases, the loan is repayable in nine half-yearly instalments. The
interest accumulated up until the first instalment is repaid is spread out over three
years.
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TDB does not charge applicants for administrative, processing, or commitment

fees.
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2. Equity
TDB invests equity money in an industrial concern (formed under the Companies
Act, 1956 or as per the Companies Act 2013) at its inception, start-up, and/or expansion
stages, based on TDB’s assessment of the needs and the debt-to-equity ratio. The
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TDB’s whole Board of Directors decides on the equity subscription. It can be up to 25%
of the approved project cost, as long as the investment does not exceed the promoters’
capital. TDB does not intend to replace existing loans or stock in industrial firms that
)A
have received such funds from other sources.
3. Grant
TDB also provides financial assistance in the form of grants to industrial concerns
and R&D organisations working on indigenous technology development. Grants
(c
are granted at the discretion of the whole Board and are only given in extraordinary
circumstances that serve the national interest.

Active Participation
Notes
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TDB, in addition to responding to applications from businesses and other
organisations, takes a proactive approach to ensuring full assistance for technology
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development and commercialization. TDB has promoted the development and
commercialization of indigenous innovations through a variety of programmes within the
auspices of its mandate. The following are a few of them:
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Participation in Venture Capital Funds (VCFs)
The Technology Development Board (TDB) recognised that many technological
O
projects fail to meet the traditional needs of financial institutions and commercial banks.
In addition to directly supporting indigenous technologies for commercialization, TDB
saw the need to collaborate with other organisations to promote technology-focused
Venture Capital Funds (VCF) to ensure that a lack of sufficient funds does not prevent
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good technologically innovative viable projects from being developed.
As a result, TDB invested in Venture Capital Funds to promote early-stage

businesses through SMEs with innovative goods and services. Because of TDB’s
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motivation and participation, venture capitalists have tailored their support to TDB’s
objective. TDB’s participation in VCFs was also seen by the Board as a vehicle for
expanding the geographical scope of TDB’s mandate to support technology businesses,
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particularly those in the MSMEs/SMEs category with innovative products/services.
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TDB’s effort has also inspired venture capitalists and private equity funds to invest
heavily in technology-based ventures, with a particular focus on areas that are key
development drivers for the Indian economy.
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Seed Support for Start-ups in Incubators

TDB established the Seed Support Scheme in 2005 to provide early stage/start-
up financial help to young entrepreneurs with creative technology venture ideas in
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order to incubate and bring their concepts to fruition, and eventually to market. The
suggested aid was designed to act as a link between technology development and
commercialization. The scheme was established to provide financial assistance to
Start-ups in Incubators/Technology Business Incubators (STEP/TBI) supervised
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by the Department of Science and Technology’s National Science and Technology

Entrepreneurship Development Board (NSTEDB).
TDB has assisted 35 TBIs and STEPs with a total of’35.00 Crore in financial help
(including two times financial assistance to four TBIs/STEPs). These incubators have
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aided various incubated firms with their projects in the fields of telecommunications,
information technology, robotics, agriculture, instrumentation, engineering, the
environment, pharmaceuticals, food, solar energy, textiles, and biotechnology. The
)A
programme ran smoothly and helped a number of entrepreneurs with up-scaling

and associated projects. It also made it easier for incubators to build up a corpus of
incubation funds.
Issuance of “Call for Proposals”

(c
The Board takes a proactive approach, issuing “Calls for Proposals” in various
areas of importance from time to time in order to familiarise local industry with TDB’s

intent to support innovation-driven technology focused projects in various strategic

Notes
e
areas as per the policies and initiatives of the Government of India, such as “Make in
India,” “Startup India,” and “Atmanirbhar Bharat,” among others.
in
Dispute Resolution Committee (DRC)
Many cases have been deemed stressed since the TDB’s creation, either owing
to technology failure or commercialization failure. Because of these NPAs/stressed
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cases, pre-litigation, and litigation cases, the Board established a “Dispute Resolution
Committee (DRC)” in late 2015 to address these issues.
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DRC’s goal is to provide businesses with a platform for resolving TDB dues
payment concerns. DRC, on the other hand, makes no attempt to interfere with TDB’s
legal actions. The DRC’s recommendations are presented to the Board for approval.
Many disputes with firms have been resolved and recoveries have been made as a
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result of this approach.
Online Submission of Project Proposals
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TDB took the first step toward a more open and efficient working environment by
allowing “Online Submission of Project Proposals” via its “Project Management System
(PMS).”
Exhibitions/Seminars
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Various efforts, such as interactive meetings/participation in exhibitions in
partnership with other organisations, were undertaken throughout the year 2019-20 to
raise awareness in the industry, entrepreneurs, and R&D institutions about the available
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financial support from TDB.
The Development of a Social Media Platform

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TDB recognised the necessity to have its own Social Media platforms in order to
gain transparency in its operations and increase connectedness, as well as considering
the relevance of Social Media platforms in the current context, and launched the
following official pages:
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Facebook: www.facebook.com/tdbgoi
LinkedIn: https://www.linkedin.com/in/ technology-development-board/
Twitter: https://twitter.com/tdbgoi
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5.2.6 Entrepreneurship Development Institute of India (EDII)

The Entrepreneurship Development Institute of India (EDI), a non-profit
)A
organisation established in 1983, is supported by premier financial institutions such as

IDBI Bank Ltd, IFCI Ltd, ICICI Ltd, and State Bank of India (SBI).
The Economic and Social Commission for Asia and the Pacific (ESCAP) has
chosen the EDI to join its network of Centres of Excellence for HRD Research and
(c
Training.

Through entrepreneurship education, training, research, and institution building,

Notes
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EDI’s aim is to become a catalyst in promoting the creation of competent first
generation entrepreneurs and the transfer of existing SMEs into growth-oriented firms.
EDI has been in the forefront of the entrepreneurship movement across the country,
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believing that entrepreneurs may be formed through well-planned and well-directed
activities rather than being born.
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In line with this concept, EDI intends to:
◌◌ Create a multiplier impact on self-employment chances,

◌◌ Increase the supply of competent entrepreneurs through training, and
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◌◌ Increase the supply of entrepreneur trainers and motivators.
◌◌ Taking part in attempts to construct institutions;
◌◌ instilling the spirit of ‘Entrepreneurship’ in young;
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◌◌ Developing and disseminating new knowledge and insights in entrepreneurial
theory and practise through research,
◌◌ facilitating corporate excellence through the creation of intrapreneurs
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(entrepreneurial managers),
◌◌ enhancing the managerial capabilities of small-scale industries,
◌◌
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To achieve the following goals, collaborating with similar organisations in India
and other developing countries.
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Since 1983, EDII has been a prominent Entrepreneurship Management Institute
and the only institute devoted solely to Entrepreneurship Development, providing best-
in-class education. With the current dynamic business climate in mind, the PGDM-E
curriculum is specifically created for entrepreneurial mindsets to foster critical and
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lateral thinking. Through an academically demanding, directly relevant, and highly

practical learning experience, EDII nurtures hopefuls and facilitates new initiatives.
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The Institute provides comprehensive mentorship to assist students in starting,

progressing, and maintaining their adventure.
●● Learning is facilitated by the use of entrepreneurial Milestones.

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●● Through outcome-based learning, the entrepreneurial mindset is developed.

●● Limited seed money is extended and networks with venture capitalists, buyers,
and sellers are developed, depending on the viability and scalability of a venture.
●● Students are given assistance in creating a realistic action plan for career
m
planning, talent development, and family business growth.

●● While students receive in-depth training in finance and marketing, EDII also helps
them make connections in these fields.
)A
●● Students are also prepared to work in a variety of industries for companies ranging
from start-ups to small and medium-sized businesses to global corporations.
EDI offers the following courses:

(c
(a) Post Graduate Diploma in Management Development Studies (PGDM-DS):

The Post Graduate Diploma in Management – Development Studies is a

broad and multi-disciplinary focused programme that aims to provide students

Notes
e
with knowledge, analytical, and conceptual skills in the field of social and
economic development.
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(b) Post Graduate Diploma in Management Business Entrepreneurship (PGDM-
BE): The EDI’s PGDM-BE programme is a two-year, full-time, residential
programme for entrepreneurs and entrepreneurial managers.
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(c) Post Graduate Diploma in Management Development Studies (PGDM-DS):
The institute has introduced a new course in the market called Post Graduate
Diploma in Management – Development Studies, which ensures that the
O
youth are equipped with the tools they need to effect “change” in society.
The Development Studies course incorporates Mahatma Gandhi’s maxim, “Be
the change you want to see in the world,” among many other basics and theories.
Development Studies (DS) is a social entrepreneurship course that is similar to an
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MBA. Social entrepreneurship is a bold, adventurous, and difficult notion to grasp.
At EDI, the entrepreneurship process is as follows:
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Students are taught how to recognise opportunities and assess their viability.
Students create a business strategy with the help of mentors and advisors. They are
provided with a platform on which to present their ideas to banks and investors in order
to create their own business.r
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About Ecosystem
The Institute places a strong emphasis on developing a viable ecosystem-focused
educational framework that transfers information and develops human capital. EDII
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supports many future entrepreneurs by building a supportive ecosystem that allows

them to engage with other entrepreneurs and senior business leaders in order to
develop their business acumen. EDII hosts a number of well-attended public events
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and guest lectures each year with a variety of speakers from various industries, MSME
policymakers, bureaucrats, and prominent entrepreneurs. The goal is to raise student
knowledge of the numerous product development facilities and resources available on
campus in order to instil an entrepreneurial mindset in them.
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CrAdLE-In-Campus Incubation Centre

A variety of workshops, courses, and mentorship programmes will provide the
knowledge and skills needed to build and implement a successful business plan.
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Individuals who are just starting out in company, as well as SMEs wishing to improve
their performance, will have access to a variety of services, including physical
infrastructure, managerial support, technical help, funding, and networking.
)A
EMPRESSARIO
An annual flagship event of the institute that serves as a unique venue for startups,
new age entrepreneurs, industry mentors, investors, and the student community to
participate in India’s ever-growing startup ecosystem. Empresario has been dubbed
(c
one of India’s largest entrepreneurship events, with businesses from all sectors and
participants from all across the country participating.

Start-Up Support
Notes
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It has received funding from the Gujarat Government’s Education Department’s
Student Start-up Innovation Policy (SSIP). It is also a member of the MHRD Innovation
in
Cell’s Institutions’ Innovation Council (IIC). These policy measures of the Government
of India and the Government of Gujarat will encourage students working on their start-
up ideas.
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Promotion of Research Effectiveness
Entrepreneurship Journal: The Centre’s acclaimed academic magazine, the
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Journal of Entrepreneurship, has established its credibility among researchers in India
and internationally as a unique arena for disseminating their theoretical and empirical
research findings. The Journal contains findings from research and inventive trials,
with a special focus on countries such as India, which has implemented a variety of
ty
programmes to promote its people’s latent entrepreneurial talents. It focuses on
the evolving contours of entrepreneurial research and training, providing readers
with up-to-date information on the newest trends and advancements in the field of
entrepreneurship. In addition to book reviews, the Journal publishes high-quality original
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pieces that push the boundaries of knowledge.
In-House Research Projects: In order to push the boundaries of knowledge in the

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field of entrepreneurship, the Institute fosters and conducts in-house research using the
Centre’s intellectual and other resources. Fellowships: The EDII intends to promote joint
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research endeavours with institutions and persons outside the Institute through short-
term research fellowship programmes. Young researchers are encouraged to contribute
to the field of entrepreneurship.
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Visiting Fellowships: The Institute invites prominent researchers to produce papers

or conduct research in the subject of entrepreneurship, focusing on a variety of issues
affecting the small and medium firm sector.
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Biennial Conferences: These conferences are designed to bring together

researchers, academics, planners, and policymakers to exchange their research
findings and experiences on topics of current interest and significance.
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Working Paper Series: The Institute has started a working paper series in which
researchers are encouraged to contribute to the field of entrepreneurship and tackle
topics that worry it.
5.2.7 Non-Governmental Institutions

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Aside from the Central Government and State Government agencies, some Non-
Governmental Organizations (NGOs) also support the cause of small-scale companies
)A
in the country. Non-governmental organisations and trade groups are among these
organisations. They give a common forum for SSI needs to be voiced and collaborative
actions to be launched.
Government policies have emphasised the importance of these associations

and non-governmental organisations (NGOs) in establishing common facilities and
(c
other cooperative ventures in technology, marketing, and other support systems. The
following are some of the key associations:

The Indian Council of Small Industries (ICSI)

Notes
e
The Indian Council of Small Industries (ICSI) was founded in 1979 to assist rural
craftsmen and tiny, cottage, and small industries. ICSI has over 1500 decentralised
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sector associations as members.
The following are the main functions of ICSI:
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i. Dissemination of information
ii. Promotion of entrepreneurship.
iii. Management and consulting services.
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iv. Education and research
Laghu Udyog Bharti (LUB)
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The Laghu Udyog Bharti (LUB) is a non-profit organisation
Laghu Udyog Bharti (LUB) was established in 1995 to promote and protect the
interests of small and medium-sized businesses. It has been given representation
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on government bodies responsible for the development of SSIs at both the national
and state levels. It is also in charge of offering entrepreneurship training, as well as
technical assistance and marketing services.
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The following are the services provided by LUB:
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i. Entrepreneurial training.
ii. Technological advancement.
iii. Advertising and marketing services
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India SME Technologies Services Ltd. (ISTSL)

India SME Technologies Services Ltd. (ISTSL) is a platform that allows micro,
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small, and medium businesses to access into worldwide prospects for the acquisition of
new and emerging technology as well as for business collaboration.
Their objective is to provide professional technology transfer and support

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services to micro, small, and medium-sized businesses in order to improve market

competitiveness and promote sustainable development.
Credit Guarantee Fund Trust for Micro and Small Industries

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In August 2000, the government launched a credit guarantee fund scheme for
small businesses, and the SIDBI established the Credit Guarantee Fund Trust for
Small Industries (CGTSI) with the mission of implementing the credit guarantee fund
)A
scheme for micro and small businesses by lowering banks’ and financial institutions’
risk perceptions in lending.
Federation of Associations of Small Industries of India (FASII)

It was founded in 1959 to advocate SSIs’ concerns to the government and to
(c
coordinate with other organisations involved in the SSI sector’s promotion.
The following are its goals:

i. To promote the development of small scale, tiny, and cottage industries;

Notes
e
ii. To collaborate with industrial businesses and educational institutions in
collecting and exchanging information about the small-scale sector;
in
iii. To provide professional, technical, and management consultation services;
iv. To conduct studies, surveys, and research assignments;
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v. To advocate for small industries by interacting with the Union and State
governments and other bodies;
vi. To establish and operate trade centre’s display centres, sub-contracts
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exchanges and other promotional institutions for the benefit of the small-scale
sector and
vii. To establish test centres, laboratories and common facility centres for the SSI
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sector.
World Association of Small and Medium Enterprises (WASME)

WASME was founded in 1981 to promote economic collaboration among its
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members. Chambers of commerce, small business development corporations, financial
institutions and commercial banks, and other state government agencies from emerging
countries are among its members.
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It enables: i. technology transfer; ii. manpower training; iii. maintaining a register
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of experts/consultants; iv. organising seminars and conferences; and v. acting as a
clearinghouse for information and marketing services, among other things.
Federation of Indian Chambers of Commerce and Industry (FICCI)

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The FICCI was founded in 1927 as a national agency through which India’s
chambers of commerce and trade associations could express their concerns about
contemporary economic issues. It acts as a liaison between various chambers of
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commerce and trade groups and the business and industrial interests they represent.
The Federation has tight ties with the Union Government and is represented on
more than 65 advisory groups appointed by the Government and other influential
organisations.
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Small and Medium Business Development Chamber of India (SME Chamber of

India):
The chamber makes every effort to promote the development and expansion of
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MSMEs by organising a variety of activities to achieve its goals. The Chamber helps
new and established entrepreneurs manage and expand their businesses by providing
information and advice. To promote and support the MSME sector, the Chamber
)A
has created important strategies. The Chamber also values and supports MSMEs to
implement innovative ideas and concepts in order to grow their businesses.
To educate and promote awareness among MSMEs, the chamber organises:
i. Seminars,
(c
ii. Conferences,
iii. Workshops and Training Programs,
iv. And other trade promotional events.

Notes
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v. The Chamber honours successful entrepreneurs by bestowing National and
International MSME and Entrepreneurship Excellence Awards in the areas of
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manufacturing, services, international trade, finance, agro-food processing,
information technology and IT-enabled services, telecommunications,
research, technology development, and other fields.
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Associated Chambers of Commerce and Industry of India (ASSOCHAM):
Like FICCI, Assocham is an apex organisation to which some of India’s older
O
chambers of commerce belong. It was established in December of 1920. It aims to
give businesspeople a voice and ensure that their opinions are taken into consideration
in the shaping of the country’s economic life. It also engages in persuasion tactics
geared at administrative agencies and legislators in order to familiarise themselves with
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members’ perspectives.
Confederation of Indian Industry (CII)
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In 1992, the Confederation of Engineering Industry was renamed Confederation
of Indian Industry. It is in charge of providing business and government with advising,
consultative, and representational services. It has been given representation on
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important policy-making bodies in the industry. It also serves as a hub for international
industrial collaboration.
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Federation of Indian Exporters Organisation (FIEO)
The Ministry of Commerce established this apex organisation in October 1965.
It depicts the spirit of enterprise of Indian entrepreneurs in the global market. The
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Federation engages in routine tasks like as sending and receiving trade delegations
from other nations, sponsoring commodities and market surveys, and gathering and
disseminating commercial intelligence.
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It provides services for: i. resolving trade disputes that arise during international
trade; and ii. advising the government on all topics relevant to export trade.
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Rural Small Business Development Centre (RSBDC)

It is the first of its type and is financed by NABARD. It was established by the World
Association for Small and Medium Enterprises. It helps individuals and groups who are
socially and economically disadvantaged.
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Its goals are to:
i. provide management and technical assistance to present and future micro

and small business owners in rural areas.
)A
ii. Organizing a number of rural entrepreneurial workshops, skill upgradation

workshops, mobile clinics and trainers training programmes, as well as
awareness and counselling camps in various areas around North India.
(c
Indian Investment Centre (IIC)

The Indian Investment Centre (IIC) is a government-run agency with nearly
three decades of experience in investment promotion. It is the entity to contact first
for investment, and it serves as a single point of contact for genuine information or
Notes
e
assistance with investments, technological partnerships, and joint ventures. The Indian
Investment Centre offers a wide range of complimentary services.
in
Direct Foreign Investment’s Role:
i. The Indian Investment Centre is a body that is known for disseminating information
about the conditions, rules, policies, procedures, and incentives relating to investment
nl
and the available infrastructure, as well as investment prospects in India.
ii. The Indian Investment Centre serves as a single point of contact for foreign investment
O
projects, assisting Indian and international entrepreneurs in satisfying project
approval procedural criteria. It also assists them in overcoming any bottlenecks that
may arise during the project’s implementation.
iii. It provides information and assistance to overseas entrepreneurs on financial and
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technical collaborations in India.
iv. The Indian Investment Centre is a non-profit organisation that assists international
investors in establishing industrial enterprises in India.
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v. It informs them about the current investment climate and prospects. It also informs
investors about government, industry, and foreign investment policies, as well as
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facilities and taxes laws, and helps them find collaborators in India.
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vi. Overseas, the government agency aids Indian businesses in locating sources of
cash and technology, hence promoting international collaborations.
vii. Through diplomatic officials in the external affairs office and other related institutions,
it does promotional work and provides guidance to entrepreneurs in other countries.
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Role in Non-Resident Indian Investment:

The Indian Investment Centre is the major agency in charge of encouraging
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investment in India by Non-Resident Indians (NRIs) and Overseas Corporate Bodies

having NRI holdings, as well as providing lead services to them.
i. It acts as a single point of contact for projects involving NRI investment and
offers all essential services for their establishment.
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ii. The Indian Investment Centre informs them on government policies and
procedures, as well as accessible services and incentives.
iii. NRIs and overseas corporate bodies are given access to the essential data
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for project selection.

iv. In addition, the nodal agency supports them in securing permission from
government authorities.
)A
v. The Indian Investment Centre is a member of the State Level Review

Committees, which monitor project performance and assist them in reducing
any complexities that may arise throughout the implementation process.
(c

Case Study
Notes
e
Case Study on Azim Premji: Wipro
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Achievements: Azim Premji has several achievements to his credit. In 2000, the
Asia week magazine voted Premji among the 20 most powerful men in the world. He
was among the 50 richest people in the world from 2001 to 2003 as listed by Forbes.
In April 2004, Time magazine rated him among the 100 most influential people in the
nl
world. In 2005, the Indian Government honoured Azim Premji with the Padma Bhushan.
Chairman of Wipro Technologies; one of the richest Indians for the past several years;
his success story is a source of inspiration to a number of budding entrepreneurs.
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He was studying Electrical Engineering from Stanford University, USA, when due to
sudden demise of his father he was called upon to handle the family business. He took
over the reins of family business in 1966 at the age of 21 years.
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At the first general meeting of the company attended by Azim Premji, a shareholder
doubted Premji’s ability to handle business at such a young age and publicly advised
him to sell his shareholding and give to a more mature management. This spurred him
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and made him all the more determined to make Wipro a success story. And the rest
is history. When Azim Premji occupied the hot seat, Wipro dealt with in hydrogenated
cooking fats and later diversified into bakery fats, ethnic ingredient based toiletries,
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hair care soaps, baby toiletries, lighting products and hydraulic cylinders. Thereafter
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Premji made a focused shift from soaps to software. Under his leadership Wipro has
metamorphosed from a Rs.70 million company in hydrogenated cooking fats to a
pioneer in providing integrated business, technology and process solutions on a global
delivery platform. Today, Wipro Technologies is the largest independent R&D service
provider in the world. Under his leadership, the fledgling US$ 2 million hydrogenated
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cooking fat company has grown to a US$1.76 billion IT Services organization serving
customers across the globe. In the past two years Wipro has also become the largest
BPO services provider, based in India. Wipro’s growth continues be driven by its core
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values.
Wipro was the first Indian Company to embrace Six Sigma, the first Software
Services Company in the world to achieve SEI CMM Level 5 and it also became the
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world’s first organization to achieve PCMM Level 5 (People Capability Maturity Model).
Premji equates Quality with Integrity – both being non-negotiable.
In the year 2001, Premji established Azim Premji Foundation, a not-forprofit

organization with a vision of significantly contributing to quality universal education to
m
build a just, equitable and humane society. This means every child receiving quality
education. Although one of the richest Indians, he flies economy class and is happiest
when hiking, reading or discussing the foundation he has set up to promote primary
)A
education.
“Excellence endures and sustains. It goes beyond motivation into the realms
of inspiration. Excellence can be as strong a uniting force as solid vision. What
is excellence? It is an unending great journey all about going a little beyond what
we expect from ourselves. I have found that excellence is not so much a battle you
(c
fight with others, but a battle you fight with yourself, by constantly raising the bar and
stretching yourself and your team”, Azim Premji.

How Does one Create Excellence in an Organization?

Notes
e
1. First, we create an obsession with excellence. We must dream and think of excellence
not only with our mind but also with our heart and soul. Let us look outside, at the
in
global standards of excellence in quality, cost and delivery and let us not rest until we
surpass them.
2. Second, we need to build a collective self-confidence, because excellence requires
nl
tremendous faith in one’s ability to do more and in a better way. Unless, we believe
we can do better, we cannot.
3. Third, we must understand the difference between perfection for its own sake and
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excellence. Time is of essence. Excellence is about doing the best we can and speed
lies in doing it quickly. These two concepts are not opposed to each other; in fact,
speed and timeliness are important elements of quality and excellence.
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4. Fourth, we must realise that we cannot be the best in everything we do. We have
to define what our own core competencies are and what we can outsource to other
leaders. Headaches shared are headaches divided.
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5. Fifth, we must create processes like Six Sigma, CMM or ISO that enable excellence.
Use them because they are based on distilled wisdom and it is imperative that we
use the most modern tools to keep processes updated.
6. r
Sixth, we must create a culture of teaming (Quality). Cross-functional teams that are
ve
customer facing can cut through an amazing amount of bureaucracy, personal empire
building and silos and deliver savings that spreads to the rest of the organization and
teaming becomes a way of life.
7. Seventh, invest in excellence for the future. Future always seems to be at a distance.
ni
But it comes upon you so suddenly that it catches you by surprise, if not shock. We
must certainly trim our discretionary expenses, but must ensure that our investments
in strategic areas lead to excellence are protected.
U
8. Finally, excellence requires humility. This is especially needed when we feel we have
reached the peak of excellence and there is nothing further we can do. We need an
open mind to look at things in a different way and allow new inputs to come in. The
great man then shared some tips for success:
ity
◌◌ Have the courage to think big; never compromise on fundamental values;

◌◌ Build up self-confidence, always look ahead and have the best around you;
◌◌ Have an obsessive commitment to quality; play to win; and
m
◌◌ Leave the rest to the force beyond
Summary
)A
●● The entrepreneur must still perform some additional tasks in order to get the
business up and operating.
●● Finance is required to obtain these resources and inputs. The reality is that the
availability of money is what keeps the enterprise wheel turning, or, to put it
another way, what keeps the enterprise going on a continual basis. Finance
(c
is regarded as the life-blood of an enterprise because of its critical role in its

operation.

●● Small businesses suffer from malnutrition as a result of a lack of cash, which

Notes
e
contributes to high infant mortality rates among small businesses.
●● The government plays a critical role in fostering entrepreneurship. With the goal of
in
balancing regional development, the government develops industries in rural and
backward areas by providing various amenities.
●● SIDO was founded in October 1973 and is presently administered by the Ministry
nl
of Trade, Industry, and Marketing. SIDO is the apex organisation at the central
level for making policies for the development of small-scale industries in the
country.
O
●● Gurgaon is home to MDI (Haryana). It was founded in 1973 and is funded by the
Industrial Finance Corporation of India, with the goal of increasing the industry’s
managerial performance.
ty
●● The IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd., and the State Bank of India (SBI)
fund the Entrepreneurship Development Institute of India (EDI), an autonomous
and not-for-profit institute founded in 1983.
si
●● The Small-Scale Industries Board (SSI Board) is an apex advisory body tasked
with advising the government on all problems affecting small businesses. It is
chaired by a Central Government Minister and includes representatives from the
r
Central Government, State Governments, National Small Industries Corporations,
State Financial Corporations, Reserve Bank of India, State Bank of India, Indian
ve
Small Industries Board, Public Service Commission, and Trade and Industries
Members.
●● The Government of India founded it in 1983. It is the highest organisation in
charge of overseeing the actions of numerous entities involved in entrepreneurship
ni
development programmes.
●● The NSIC was founded by the Central Government in 1995 with the goal of aiding
U
small businesses in government procurement programmes. Through its marketing

network, the organisation provides a large market for the products of small
businesses.
●● RCTFC was founded in 1988 with a 15-crore rupee authorised capital. The
ity
RCTFC’s main goals are to provide risk capital for the extension and expansion of
entrepreneurial development, as well as venture capital for high-tech technology
development and transfer initiatives.
●● The National Research Development Corporation (NRDC) was founded in 1953 by
m
the Government of India’s Department of Science and Industrial Research.

●● Khadi and Village Industries Commission established by an Act of Parliament
in 1956. It is a non-profit organisation whose mission is to promote and develop
)A
Khadi and Village Industries in rural areas.

●● In partnership with various public sector banks, it has funded a variety of
entrepreneurial development initiatives. The scheme’s principal goal is to
encourage young people to look into investing and self-employment alternatives.
(c
It provides for their education and supports them in obtaining the funds they want.
In 1975, NAYE established a Women’s Wing to empower women and elevate their
standing.

●● The IDBI, in collaboration with other financial institutions, public sector banks, and
Notes
e
state governments, established it. The IEDs were established to meet the needs of
the country’s industrially backward states in terms of entrepreneurial growth.
in
●● Public sector banks have been collaborating with NAYE to run entrepreneurship
development programmes. These banks’ major goal has been to find potential
entrepreneurs in rural and underdeveloped areas. The Punjab National Bank, for
nl
example, began an entrepreneurial aid programme in West Bengal and Bihar in
March 1977.
●● The CLCSS offers SSI units a 15% capital subsidy on institutional finance used to
O
introduce well-established and enhanced technology in several of the sub-sectors/
products approved under the plan for loans up to Rs.1 crore.
●● Ministry of Food Processing Sector gives a subsidy for creating a cold chain in
order to develop a strong food processing industry. The goal of this programme
ty
is to give financial assistance for integrated cold chain and preservation
infrastructure facilities that run from farm to customer without a break.
●● In today’s competitive global market, MSME units must implement quality
si
standards in order to compete successfully and increase profitability by improving
internal processes. As a result, in order to encourage Indian MSME units to adopt
quality standards, the government of India offers a subsidy that covers the cost of
r
obtaining ISO certifications such as ISO-9000 and ISO-14001.
ve
●● The Gujarat State Government, in an effort to boost industrial investment and
make the state more investor-friendly, offers interest subsidies to MSME units
that make new investments, or existing units that invest in capacity addition or
diversification, or existing units that invest in modernising machinery to newer
ni
technology.
●● The Ministry of Communications and Information Technology (MCIT) of the
Government of India has launched a scheme to provide financial assistance
U
to SMEs and Technology Start-Up units for international patent filing in order to
promote indigenous innovation, recognise the value and capabilities of global
IP, and seize growth opportunities in the fields of information technology and
electronics.
ity
●● The Micro, Small, and Medium Enterprises Development (MSMED) Act of

2006 aims to help these businesses grow and improve their competitiveness. It
establishes the first legal foundation for the recognition of the idea of “enterprises,”
which includes both manufacturing and service-oriented businesses.
m
●● The District Industries Centres (DIC) initiative began in 1978 with the goal of
establishing an integrated administrative structure at the district level to promote
small-scale industries in rural areas. The DICs are envisioned as a district-level
)A
single-window interfacing agency that provides assistance and support to small

businesses under one roof.
●● MSMEs not only serve an important role in creating large numbers of jobs
at a cheaper cost of capital than large enterprises, but they also aid in the
(c
industrialization of rural and backward areas, reducing regional imbalances and

ensuring a fairer distribution of national revenue and wealth. MSMEs serve as

ancillary units to large enterprises, and this sector makes a significant contribution
Notes
e
to the country’s socioeconomic development.
●● The Micro and Small Enterprises – Cluster Development Programme (MSE –
in
CDP) is now being implemented for the holistic and integrated development of
micro and small enterprises in clusters. Soft interventions, such as diagnostic
investigations, are planned, as well as physical interventions, such as the
nl
installation of CFCs and infrastructure development in new and current industrial
estates.
●● The NSTEDB is part of the Department of Science and Technology. It includes
O
representatives from socioeconomic and scientific departments and ministries, as
well as leading entrepreneurship development organisations and all-India financial
institutions.
●● The Technology Development Board (TDB) was established by the Indian
ty
government on September 1, 1996, in accordance with the provisions of the
Technology Development Board Act, 1995, with the goal of promoting the
development and commercialization of indigenous technology as well as the
si
adaptation of imported technology for wider domestic applications.
●● Aside from the Central Government and State Government agencies, some
Non-Governmental Organizations (NGOs) also support the cause of small-scale
r
companies in the country. Non-governmental organisations and trade groups
ve
are among these organisations. They give a common forum for SSI needs to be
voiced and collaborative actions to be launched.
●● Laghu Udyog Bharti (LUB) was established in 1995 to promote and protect the
interests of small and medium-sized businesses. It has been given representation
ni
on government bodies responsible for the development of SSIs at both the

national and state levels.
●● India SME Technologies Services Ltd. (ISTSL) is a platform that allows micro,
U
small, and medium businesses to access into worldwide prospects for the
acquisition of new and emerging technology as well as for business collaboration.
●● Federation of Associations of Small Industries of India (FASII) was founded in
ity
1959 to advocate SSIs’ concerns to the government and to coordinate with other
organisations involved in the SSI sector’s promotion.
●● WASME was founded in 1981 to promote economic collaboration among its
members. Chambers of commerce, small business development corporations,
m
financial institutions and commercial banks, and other state government agencies
from emerging countries are among its members.
●● The FICCI was founded in 1927 as a national agency through which India’s
)A
chambers of commerce and trade associations could express their concerns about
contemporary economic issues.
●● In 1992, the Confederation of Engineering Industry was renamed Confederation of
Indian Industry. It is in charge of providing business and government with advising,
consultative, and representational services. It has been given representation
(c
on important policy-making bodies in the industry. It also serves as a hub for

international industrial collaboration.

●● Rural Small Business Development Centre (RSBDC) is the first of its type and
Notes
e
is financed by NABARD. It was established by the World Association for Small
and Medium Enterprises. It helps individuals and groups who are socially and
economically disadvantaged.
in
●● The Indian Investment Centre (IIC) is a government-run agency with nearly three
decades of experience in investment promotion. It is the entity to contact first for
nl
investment, and it serves as a single point of contact for genuine information or
assistance with investments, technological partnerships, and joint ventures.
Glossary
O
●● Entrepreneurship development - Entrepreneurship development is the means of
enhancing the knowledge and skill of entrepreneurs through several classroom
coaching and programs, and training.
ty
●● Subsidies - A subsidy or government incentive is a form of financial aid or support
extended to an economic sector generally with the aim of promoting economic and
social policy.
si
●● Cold chain - A cold chain is a low temperature-controlled supply chain.
●● Enterprise development - Enterprise development, or ED, is the act of investing
time and capital to help people establish, expand or improve business.
●●
r
Policy research - Social scientific research which has non-university groups as
ve
its main intended audience (although the results may in practice also interest
academic audiences)
●● Survey - look closely at or examine (someone or something).
ni
●● Equity- the quality of being fair and impartial.

●● Confederation - an organization which consists of a number of parties or groups
united in an alliance or league.
U

1. Entrepreneurial development is the key to achieve all-round __________
ity
a. economic development
b. increase in profits
c. shareholders value
m
d. business development
2. “Seed Capital Scheme” has been operated by
a. SBI
)A
b. IDBI
c. NSCI
(c
3. Who took the lead to extend financial assistance to small-scale industries

a. SBI

b. IFCI
Notes
e
c. IRBI
in
4. ICICI stands for ____
a. Industrial Company & Investment Corporation of India Limited
nl
b. Industrial Corporation & Investment Company of India Limited
c. Industrial Credit & Investment Corporation of India Limited
O
d. Investment Credit & Investment Corporation of India Limited
5. The main objective of setting up DICs was to promote under a single roof all the
services & support required by small & village entrepreneurs. This scheme was
introduced in May ___
ty
a. 1970
b. 1975
si
c. 1978
6. DIC stands for ___ r
ve
a. Disassembled Industries Centres
b. District Industries Collaboration
c. District Industries Centres
ni
d. Developing Industries Centres

7. SIDO stands for ___
a. Small Industries Developing Organization
U
b. Small Industries Development Organization

c. Short Industries Development Organization
ity
d. Small Industries Deployment Organization

8. SIDBI was set up as a subsidiary of_________.
a. IDBI.
m
b. IFCI.
c. ICICI.
d. SFC.
)A
9. NABARD is a Bank for _____________ development

a. Urban
b. Agricultural and Rural
(c
c. Scientific
d. Agriculture and research

10. National Alliance of Young Entrepreneurs (NAYE) Sponsored an Entrepreneurial

Notes
e
Development scheme with Bank of India in______________.
a. January 1920.
in
b. August 1920.
c. January 1972.
nl
d. August 1972.
Exercises
1. Explain the need for institutional support for entrepreneurship development.
O
2. What is the role of government in promoting and supporting entrepreneurship?
3. What are the various financial assistance provided by the government for
entrepreneurship development?
ty
4. Explain Micro, Small and Medium Enterprises Development Act, 2006.
5. What are District Industries Centres?
si
6. Explain the various schemes under Ministry of Micro, Small and Medium Enterprise.
7. What do you know about Technology Development Board?
8. r
Write a note on Entrepreneurship Development Institute of India (EDII).
ve
9. Which are some of the non-governmental institutions for entrepreneurship
development?
Learning Activities
ni
1. Contact a local entrepreneur who recently launched a business. Ask him/her:

◌◌ Did he or she prepare a business plan before starting the company? Why or
why not?
U
◌◌ If the entrepreneur did not create a plan, is he or she considering doing so

now?
◌◌ If the entrepreneur did create a plan, what benefits did he or she gain from the
ity
process?
◌◌ How long did it take to complete the plan?
◌◌ How did he or she put the plan to use during the start-up phase?
◌◌ Does he or she intend to keep the business plan updated? What advice does
m
he or she have to offer another entrepreneur about to begin writing a business

plan?
)A

1. a.
2. b.
(c
3. a.
4. c.

5. c.
Notes
e
6. d.
7. b.
in
8. a.
9. b.
nl
10. d.
O
1. Charantimath, Poornima M., Entrepreneurship Development Small Business
Enterprises, Pearson Education, First Impression, 2006.
2. Gupta, C.B., Business Organisation and Management. Sultan Chand and
ty
Sons, 2005.
3. Panda, Shiba. Charan, Entrepreneurship Development. New Delhi, Annual
Publications (latest edition).
r si
ve
ni
U
ity
m
)A
(c

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Subject Matter Expert

1.3.4 Myths about Entrepreneurship

Module - II: Environmental Monitoring and Importance of Business Idea 69

2.1.2 Environmental Factors Affecting Entrepreneurship

2.1.5 Entrepreneurial Development Programme

2.2.1 Sources of Business Idea

Module - IV: Business Plan and Sources of Capital 195

4.1.2 Elements of a Business Plan

4.1.4 How to Write a Business Plan

4.2.2 Equity Financing

4.2.4 Commercial Banks

4.2.8 Venture Capital

Module - I: Basic Concepts of Entrepreneurship

‘entrepreneur’ is thought to have been coined by a French economist named ‘Jean-

to support the development and implementation of small businesses.

enterprise is known as an entrepreneur. In other terms, an entrepreneur is a person

organisation are referred to as entrepreneurship.

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Entrepreneurship is a critical factor that affects a country’s economic growth as well

(i) Decision-making, innovation, implementation, future forecasting, independence, and

(viii) It is the systematic and purposeful pursuit of change.

and coordinated search for change.

(x) Entrepreneurship is a form of artistic expression.

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Sociologists believe that certain communities and cultures encourage entrepreneurship,

An entrepreneur is a person who organises and speculates on a business.

The term “entrepreneur” is frequently connected with someone who launches a

1.1.1 Concept of Entrepreneur

directs the making of such adjustments in the economic systems as he considers

An entrepreneur does one or more of the following:

◌◌ identifies profitable investment opportunities,

◌◌ secures start-up money.

◌◌ provides technical expertise.

manufacturing, distribution, or service industries, among other fields.

accepted by workers. In order to emphasise efficiency, quality, speed, innovation,

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required. An entrepreneur is expected to play a key role in creating the necessary

Richard Cantillon, a French economist in the early eighteenth century, coined

architects and public works contractors, approximately 1790 A.D.

a promoter of musical or other forms of entertainment. It was used to describe those

The three main points of view are as follows:

1. Entrepreneur as a Risk Bearer:

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1934: Schumpeter: According to him entrepreneurs are innovators who use a

1961: David McClleland: An entrepreneur is a person with a high need for

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1964: Peter Drucker: An entrepreneur searches for change, responds to it and

1983: G. Pinchot: Intrapreneur is an entrepreneur within an already established

1.1.2 Distinction between Entrepreneur and Manager

●● belongs to the profession of law, accountancy, medicine, engineering, or

●● is a member of a recognised professional body or institutional body exercising

●● holds a degree or diploma in management from a recognised university and

A professional manager is someone who works to plan, organise, lead, and

◌◌ a clear understanding of his job needs

◌◌ have a performance-oriented relationship with his subordinates, superiors,

◌◌ communicate with colleagues to improve the standard contribution

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Managers and Entrepreneurs

To achieve predetermined goals, the professional manager brings into operation

planning, organising, staffing, motivating, controlling, and coordinating the work of

An established profession is defined by its members’ acceptance of the