4 Cftkanksha, B.Com. Third Year Q.24. Discuss the main provisions of Minimum Wages Act 194g 58 Q.25. Short Notes 61 (a) Support of Government for start ups. (b) Make in India (c) Employee’s Provident Fund Act, 1952Entrepreneurship and Small Business~Group -H 5 Q.1. Define Entrepreneurship. Explain its characteristics. Or Discuss Entrepreneurship as an art and as a science. Or Explain Entrepreneurship and its main features. Ans. Entrepreneurship—aAll activities undertaken by an entrepreneur to bring a business unit into existence are collectively known as entrepreneurship. An entrepreneur is one who starts anew enterprise to earn profits by producing or marketing of goods and services to meet the requirements of customers. Entrepreneurship is the ability and quality of entrepreneur to identify an investment opportunity and to organise an enterprise in order to contribute for the real economic growth. Some definitions of Entrepreneurship are produced here. (i) “Entrepreneurship is the dynamic process of creating incremental wealth —Robert C. Ronstadt (ii) “Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence.”—Robert D. Hisrich and Michael P. Peters. (ii) “Entrepreneurship is an attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity and through the communicative and management skills to mobilise human, financial and material resources necessary to bring a project to fruition— John Kao and Howard Stevenson. With the scruitiny of above definition we may say that Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. It has been described as the capacity and willingness to develop, organise and manage a business. Ithas been described as the capacity and willingness to develop, organise and manage a business venture along with any of its risks in order to make a proift. The people who create these businesses are called Entrepreneurs. Nature and Characteristics. Following are the points describing the nature and characteristics of Entrepreneurship. (1) Innovative Function—Entrepreneurship is a creative and innovative activity. Itinvolves doing things in a better way. It is the response created naturally with the change in economic environment. An entrepreneur introduces new things to customers, new methods of production to its unit, new.source/type of raw material etc. A ec ene c ccc Ee(2) Economic activity--Entrepreneurship is an Economic activity which involves creative and operation of new enterprise. (3) Goal oriented process—tt is a goal oriented process in which Specific goals are set and achieved with a specific set of process. (4) Profit making activity—Enterpises are set to run economic activity thereby generating proifts. The prime objective of entrepreneurship is profit making. (5) Risk bearing activity—Risk is always involved with entrepreneurship. The erierprise has to function under uncertain situations which may be risky from the pint of competition, customer needs and Preferences, raw material supply, reguiations and govemment policy changes, change in technology etc. (6) Organisation building function—The most critical ability for entrepreneur is organisation building function. It refers to building the unit and delegating responsibility to others. (7) Function of leadership—The entrepreneur needs to be good leader and excellent administrator to be a successful organiser. (8) Management skill—Entrepreneurs require management skill to tactfully handling the situations under risk and uncertainty. (9) Decision making—Entrepreneurship requires decision making.The decisions regarding the type of business and the method of doing are important to the smooth functioning of enterprise. An entrepreneur has to take decisions under unknown and unpredictable situations. (10) Itisa process—Entrepreneurship is the process of designing, launching and running a new business. It describes the capacity and willingness to develop, organise and manage a business. (11) Value creation—Itis the process of creating value for customers by exploiting untapped opportunities. (12) Purposeful act—It is a creative and purposeful activity. It is creative response of entrepreneurs towards changing marketing conditions in form of new products and services. (13) Function of high achievement—Entrepreneurship isa function of high achievement. People having high need for achievement are more likely to succeed as entrepreneurs. (14) Focussed towards growth—Entrepreneurship is the ability and quality of entrepreneurs to identify an investment opportunity and to organise an enterprise in order to contribute for the real economic growth. Entrepreneurship as an art and as Science—Entrepreneurship is termed as an art because it is an amalgamation of ‘creativity and ability’ to create something innovative. It is essential for an entrepreneur to possess an artistic vision and imaginative approach to capture andSe Entrepreneurship and Small Business-Group-H 7 encash a business opportunity. Learning and practicing the entrepreneurial art is a well-defined process by now and it can be leamed by anyone who wants to be an entrepreneur. This ‘process ’ is what can be defined as ‘science’ as it teaches one how to systematically build a successful startup. Thus Entrepreneurship is both Art and Science as the entrepreneur's ability to create something new is Art and the process followed is Science. An entrepreneur must have vision, passion, attitude, values, innovation, Leadership, experience and focus as his artistic quality. On the other hand he must follow scientific process through identifying opportunity, evaluate feasibility, assemble resources, Identify market, Building Sales strategy, financial viability, Product development, Business plan etc. Thus Entrepreneurship is Art as well as Science. Q.2. Discuss the functions of an entrepreneur. Ans. An entrepreneur has various functions to perform. We can categorise them into six categories, which are discussed here below. (a) Entrepreneurial functions (0) Managerial functions (c) Promotional functions (d) Commercial functions (e) Financial functions (A) Entrepreneurial functions—These are the basic functions of an entrepreneur. It includes : (1) Initiation— To take initiative is the foremost function of an entrepreneur. He has to be innovative, risk taking, planner and should manage resources to get its objective. An early initiative helps him to be ahead in the competition. They are motivators for their staff and create a sound work culture in the enterprise. (2) Risk bearing—The entrepreneur must have courage to bear the business risk than to avoid it. Anew business always involves risk because one invests money to get profit only. (3) Innovative—The entrepreneurs must bring innovation in market and invent new product, new services and new markets. Innovation helps the firm to get competitive advantage by adopting new products, new techniques, efficient process and flexibility. (4) Decision making—ttis a very strong and impactful function for any entrepreneur. Decision making starts with identifying problem, finding attemate solution, evaluating and picking the best among them. (8) Organisation building—tt is one of the major functions of an entrepreneur. He has to follow step by step procedure by making proper choice.8 Phanksha, B.Com. Third Year (B) Managerial function—The mangement functions are— (1) Planning—t is the predetermined strategic thinking process that involves selection of course of action to get desired results. Planning helps an entrepreneur to ascertain whatis needed to be done for achieving the desired objective. (2) Organising—The process of defining and Classifying the activities of the enterprise and setting up the authority relationships among them to achieve objective is organising. The placing of tight person at ihe right Place is organising. (3) Staffing—The staffing is Proper and effective selection, Placement, orientation, training and development, Performance appraisal, Promotion, compensation etc. (4) Directing—ttis the process where entrepreneurs guide, instruct, and oversee the performance of the workers or employees to achieve organisational objectives. (5) Controlling—tt is the Process of identifying whether the. organisation is going on right direction, according to the plan. This activity measures the deviation of actual performance from planned one and then takes corrective action to make it right. (6) Supervising—ttis the function of overseeing something or some person. (7) Leading—The leading function is guiding the group of people to achieve a common goal through proper Process and minimising risk. (8) Co-ordination—tt is the function that assures the different departments, groups and people work together for more fruitful results. (C) Promotional functions—This involves discovering idea, making aplan and assembling the requirement. (1) Discover the idea—The innovative idea is first generated in entrepreneur's mind. There may be many ideas generated. But the entrepreneur chooses the one which is most effective, convincing and profitable one. (2) Making business plan—A business plan is a written form of idea and future activity. It tells the plans to do. (3) Assemble the resources—After confirming the possibility of the idea, and making the business plan ready, the entrepreneur assembles resources to actually perform as per the plan. (D) Commercial functions These are four functions (1) Production—tt is the manufacturing of goods or creation of services. It includes decisions regarding factory site, location, design layout, product etc.EE ee Entrepreneurship and Small Business-Group -H. 9 (2) Marketing function—Marketing is all about identifying and meeting human and social needs in a profit. The main purpose of marketing is to provide value to the customer by identifying his demand. Itincludes advertising, selling and delivery. The success of any product or service is decided by proper ‘marketing mix’ —which is 4 Ps, — Product, Price, Place and Promotion. (3) Personnel—Personnel function is all about the people at work and their activity, relationships and commitment within the organisation. This function involves recruitment of employees, their training, working environment, health, safety etc. (4) Accounting—Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarising, interpreting and communicating financial information. (E) Financial functions ‘These are concemed with control and planning of financial resources. They are— (1) Financial Planning—ttis the job of determining how a business will afford to accomplish its strategic goals and objectives. A financial plan describes activities, resources, equipment, materials that are needed to achieve objectives. (2) Raising funds—To raise funds as per financial need is an important function. The entrepreneur has to search and select for sources of funds. They may be investor's funds, venture capital, crowd funding, Bank loans etc. (3) Utilising funds—Once the funds are raised, they are properly utilised according to plan through Proper budgeting, tracking expenses and setting financial goals. (F) Social functions—The enterprise runs in the society and its product are used by persons in the society. So entrepreneur has to fulfil social obligations/activities. These activities are— (1) Creating Jobs—The enterprise to tun, needs personnel. They are from the society. Entrepreneurs build business to bring change and develop society and provide people the opportunity of having jobs. (2) Community development—There are seve ral ways for community development. They may be promoting local business, contribution to local community, designing business for charity, collaborate with other business etc. The above discussed are the several functions performed by entrepreneur. Q.3. What are the Qualities of a successful Entrepreneur? aumeprencurse RELATES NSLS NP IST EOS TRIO IYRS IT ASN SNOP PDN NRT ASS 0 Gthanksha, B.Com. Third Year Ans. Qualities of a successful entrepreneur are— : (1) Knowledgeable—An entrepreneur should have knowledi e his organisation, its objectives, policies and procedure. He shoul have sufficient technical knowledge to supervise, control and guide | Ke subordinates. He must be familiar with the machi atthe workelace, e machine, tools and methodology (2) Innovative and creative—The entrepreneur should be innovati oa sez:ch for new ideas for the project. They should be creative enough te ind solution in different unexpected situations/problems. Entrepreneurs often come up with solutions which are the synthesis of other items, They will reshape picducts to market them to new industries. " (3) Disciplined—Successful entrepreneurs are disciplined enough tc focus on their olsiectives and move towards them to achieve them. : (4) Confident—The true entrepreneur is confident enough about his idea and project, he has no dilemma about the procedures and steps iaen according tc his planning. They have confidence in everything they lo. (6) Administrative ability—An entrepreneur should be able to behave as efficient administrator. He has the ability to get the work done from others. He should be quick at decision making and must behave in a systematic way. (6) Open minded—The entrepreneur must be open minded and must think beyond the narrow scale of convention. He should be ready to listen and implement new ideas from others, if found feasible. (7) Inspirational—The entrepreneur is expected to guide and inspire his subordinates. He should know how to instruct his workers, how to assign the work, how to evaluate their performance and then take corrective action if required. The entrepreneur must be able to settle the grievances and dispute among workers. (8) Communication Skills—The entrepreneur should have efficient communication skills. He must be good enough to communicate his ideas to subordinates and be properly ready to listen advice from his advisors. ; (9) Good listener—Entrepreneur should be a good listener too. He has to listen carefully complaints, grievances, advices, problems and suggestions of subordinates and staff. He must have patience to listen them. 2 (10) Leadership—An entrepreneur must have qualities of a good leader. He must be able to make up the morale of his subordinates and lead the team of workers. He must be competent to be a role model forEntreprencurship and Small Business~Group-H 1 (11) Cooperative—To develop a good team and get the work assigned to them without friction, cooperation of every team member is, required. The entrepreneur is the common link between all its workers. So he must be cooperative enough to get their cooperation. (12) Social—The entrepreneur must be a man of social values and integrity. He should be able to have patience to tackle the workers. He must possess emotional stability to give the impression that he is satisfied with his job and working conditions. . (13) Workpiace ethics—The entrepreneur must follow the ethics ot work place. He should behave like what he expects trom his subordinates. His timing, reaction and behaviour is what is noticed and followed by his subordinates. {14} Passionate.~-The entrepreneurs must love their work. He mist have passion towards his job and his mind is constantly on their work whether they are in or out of the workplace. The successful entrepreneut is one who always researches the ways to make his business peter Q.4. Why is entrepreneurship needed in the modern economy? Or Discuss the role of entrepreneurship in development of our economy. Or “Entrepreneur and Entrepreneurship are catalysts i) the process of economic development of a country.” Explain. R ent of a col ‘Ans. The Economic development of any country depends to a large extent on its enterprises and entrepreneurs. An entrepreneur is one who possesses ability and guts to bear risk. He looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important inputs in the economic development of a country. A country may be inherited with abundance of natural resources, but its economic development cannot be done without efficient entrepreneurs. It is the entrepreneur who contributes towards the balanced development of a country by optimum utilisation of its resources. The major role of ‘entrepreneurship is the promotion of country’s exports, generating wealth at all the levels in a society, improving social and community conditions. Role of entrepreneurship in Economic development—The pointwise discussion below shows the role of entrepreneurs and entrepreneurship in the economic development. (1) Capital formation—Entrepreneurs can mobilise the savings of public through the industrial security issue. They employ their own capital as well as borrowed capital for setting their enterprises When the public savings have invested in the industries, there is optimum utilisation of nn a rr ee UTE SEES TES WUT== Phankshe, B.Com. Third Year National resources. These activities lead to Creation of wealth, which is €ssential for economic development and industries, (2) Employment generation—With the setting up of more units y entrepreneurs, both on small and large scale, numerous job pportunities are created for others. There is a great share of jobs createq by entrepreneurship companies across the country providing lots of entry level jobs that allow unskilled workers to get training and necessary experience. In this way entrepreneurs play an effective role in reducing the problem of unemployment in the country. (3) Increase in National Income—Entrepreneurs grab new opportunities, create employments, utilise resources and bring new Product and services in the market. Thus they help increasing gross national product and national income. As aresult, the per capital income of the people of the country will also increase. This shows economic growth. (4) Wealth creation—Entrepreneurial activities help in wealth creation. It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographical areas, thus giving benefit to larger sections of the society. (5) Balanced Regional development—Entrepreneurs set industries in less developed and backward areas. The growth of industries in these backward areas creates development activities there, like road transport, health, education, employment etc. By setting industries in backwards regions they promote balanced tegional development. (6) Improved Standard of Living—The entrepreneurs adopt latest innovations and methods in production of goods and services in large scale and at cheap price. This enables the people to avail the better quality goods at lower prices, thereby improving their standard of living. (7) Expanding Companies—Entrepreneurs have major role in boosting the innovations, development and expansion in a company. They make efforts to boosting the number of units in their present companies. Also they try to boost up the existing production technique for expansion activities. (8) Research and development—The most important feature of an entrepreneur is innovation. For innovation, research and. development is desired. Thus entrepreneurs invest largely on research and development activities. (9) Reduces concentration of Economic power—Industrial development leads to concentration of economic power in the hands of few individuals which results in the growth of monopolies. In order to cope up with this problem, a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic poweree Entrepreneurship and Small Business-Group -H 18 amongst the population. | (10) Economic independence—Entrepreneurship plays an important role in national self-reliance. Industrial unit always makes efforts to produce substitutes of previously imported products and thus, helps to reduce the dependency for goods on other foreign nations. Also, these goods are exported to other nations and assist the nations to maximise their foreign exchange for the nation. (11) Promotes country’s export trade—Entrepreneurs help in Promoting a country’s export trade which is an important issue of economic development. They produce goods and services in large scale for the purpose of earning huge amount of foreign exchange from export in order to compete the import dues requirement. (12) Backward and forward linkages—Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces, backward and forward linkages which stimulates the process of economic development in the country. (13) Infrastructural growth—Entrepreneurs are always in favour of growing underdeveloped backward and countryside areas intending to utilise resources and also, generate employment opportunities. To develop business in such areas, they insist the government to develop the infrastructure in those areas. (14) Mobilisation of resources—Entrepreneurs help to mobilise and utilise local resources like small savings and talents of relatives and friends, which might otherwise remain idle and unutilised. They help in effective utilisation of resources. (15) Fulfilling consumer demand—A wide range of products is produced by entrepreneurs according to the taste and demand of people, Without any shortage of products, they fulfil the demand of the consumers and let them buy what they are looking for. Thus, all the demands of buyers are fulfilled within the nation and it eliminates the import of foreign goods. (16) Optimisation of capital—Entrepreneurs aim to get quick retum on investment. They act as a stabilising force by providing high output capital ratio as well as high employment capital ratio. (17) Development in production techniques—With the development of new entrepreneurial activities, these is some promotion of new techniques that use fewer resources and generate more benefits. It reduces the cost of production and similarly results in budget friendly products. There is a positive impact on the economy of a nation by adopting creative technologies. ; (18) Trade development—Entrepreneurs play an important roleCthanksha, in the promotion of domestic trade and foreign trade. een iene from various financial institutions in the form of cash cre , cre ‘ overdraft, short term loans, secured loans and unsecured loans and lea to the development of the trade in the country. (19) increase in government income—The development of entrepreneurship brings more tax revenue to the govemment, who spends this money on the welfare of the society. ; ; (20) Creating Innovation—An entrepreneur introduces new ideas and new combinations of factors. Entrepreneurs always try to introduce newer techniques of production of goods and services. An entrepreneur brings economic development through innovation. @.5. Discuss some theories of Entrepreneurship. Or Explain the Economic theory and Innovation theory of entrepreneurship. Ans. Theories of Entrepreneurship—Various theories of entrepreneurship have been developedto understand, explain and estimate entrepreneurship. They are based on factors like. Innovations, -Risk, leadership, achievement, culture etc. Some important theories are discussed. However this is list of various theories of entrepreneurship. (i) Innovation theory (i) Economic theory (iii) Need for achievement ‘theory . (vy) Risk/uncertainty bearing theory of knight E.E. Hagen’s theory of Emphasis on withdrawal of Status Respect. (vi) Exposure theory of entrepreneurship. (vil)X-efficiency theory of leiberstion (viii) Thomas Cochran theory of cultural values. (ix) Hoselitz theory of Emphasis on Marginal groups. () Kunkel's Behavioural theory (xi) Max Weber's theory (xii) Leadership theory (xiii) Peter Drucker’s theory Economic Theory—According to this theory, economic incentives = ne on prces for entrepreneurial Operations in the country. Economic Ike availability of funds and raw material, consumer d access to resources, government &conomic poli ci ren behind establishmen ts e Policies etc. are reasons in entrepreneurship eet These "actors Play an ‘mportant roleEntrepreneurship and Small Business-Group-H 15 —Entrepreneurship and economic growth are interdependent. —Demand for product and fulfilling such demand will lead to profit maximisation. —Favourable economic conditions motivates a person for any venture. —Entrepreneurship growth depends a lot on economic policy of government. —Easy availability of bank loan and credit are first motivators to any entrepreneur. —The infrastructural facilities also promote entrepreneurs. Entrepreneurship development and economic growth takes place whenever certain economic conditions are favourable. Innovation theory—This theory was propounded by Joseph ‘Schumpeter. In view of Schumpeter, entrepreneurship is a creative activity. Entrepreneuris an innovator who brings new products or services in the country. He believed that entrepreneurs disturb the stationary circular flow of economy by introducing innovation and take the economy to a new level of development. Innovation could involve any of these— —Innovation of new product, meaning that the product which the consumers have not seen and is of a new and better utility and quality. —Innovation to new method of production, means the noval process not yet been used in manufacturing and commercial production. This may increase the productivity and lower the cost of production. —Discovery of new market, means a new market which may have existed but was not tapped by the enterprise. —A new source of raw material, means the source or place which has not been commercially exploited by the enterprise before. —Innovation in management means reorganisation and reconciliation of thé position of enterprise in the industry by building a monopoly. Criticism of the theory : () the theory over emphasized on innovative function of the entrepreneurs ignoring organisational aspect of entrepreneurship. (i) Itignored the risk taking function of entrepreneur, which cannot be ignored. (iii) The theory is more applicable to developed country. (v) The theory does not provide for the explanation as to why few countries have more entrepreneurship talent than others. Uncertainty and Risk bearing theory of Knight—Risk bearing to work under uncertain conditions is an important function of entrepreneurs. Profit eamed is the reward of bearing non-insurable risk nn RTE FEN— ee 16 CPhanksha, B.Com. Third Year and uncertainty by the entrepreneur. This theory states that the entrepreneurs eam profit for bearing risk and uncertainty. Entrepreneurs take risk of different nature according to their ability to handle them. More tisk is required to be borne to earn more profits. Leadership theory—As per this theory, entrepreneurship is a function of managerial skill and leadership. An entrepreneur is desired to . have leadership quality. This theory was given by Hoselitz. He pointed out that Entrepreneurial leadership is the process of influencing behaviour of workforce, superiors, suppliers and competitors. It directs the people to achieve entrepreneurial goals. Itinfluences the work team and directs and controls the activities of enterprise. Peter F. Drucker's view/theory of Entrepreneurship—According to Peter Drucker, an entrepreneur innovates and creates resources because there is no such thing as resource, until somebody finds a use for something and attaches economic value to it. He stated that : —Entrepreneur must be an innovator and a leader. —Entrepreneur must be capable of analysing the opportunities and exploit them successfully. —Entrepreneur should innovate for the present period but not for the future. —Innovation must be very simple to understand, otherwise it may not give the desired results. —Entrepreneur must be very simple to understand. —Entrepreneur must possess the knowledge, diligence, persistence and commitment to innovation. —Entrepreneur need not to be owner of the business. —Entrepreneur must mobilise the resources and allocate them to make a commercial gain from the opportunities identified. Q.6. (a) Define intrapreneurship. Discuss its advantages. (b) Distinguish between entrepreneurship and intrapreneurship. Ans. (a) Entrepreneurship—intrapreneurship is the process where an employee within a large company acts like an entrepreneur within that organisation and takes responsibility for turning a new concept into afinished Product or service through calculated risk taking and innovation. According to American Heritage dictionary. Intrapreneur, means “A Person within a large corporation who takes direct responsibility for turing an idea into a profitable finished product through assertive risk taking an innovation.” In the words of P.Sharma and J.Chrisman “Intrapreneurship is 4Entrepreneurship and Small Business-Group-H 17 Process whereby an individual or a group of individuals, in association with an existing organisation, creates a new organisation or instigates renewal or innovation within the organisation.” Features— —An intrapreneur thinks and responds like an entrepreneur and looks for opportunities that will result in profit. —Under this employees with imaginative thoughts are encouraged. —Intrapreneurship is a unique way of making organisation more profitable. —An intrapreneur does not have ownership of a new venture. Advantages : (1) Intrapreneurship helps a company to foster its research and development and focus or next big project. (2) Intrapreneurs are not only talented persons but their work and dedication motivates other employees too. (3) A business organisation, saves money on traditional research and development with intrapreneurship. (4) Intrapreneurs helps to increase in revenue through increased sale. (6) A business firm with an intrapreneurial mindset attracts like minded professionals. (6) Intrapreneurs boost up employee morale by valuing and rewarding their ideas. . (7) Intrapreneurs do all research work before presenting their idea to management. Thus companies need not to spend on market research. (8) Intrapreneurship helps the company to expand its product range. (9) Intrapreneurs benefit the society with their innovation and new products. (b) Difference between Entrepreneurship and Intrapreneurship Basis Entrepreneurship Intrapreneurship Nature Itis developmental in Itis restoractive nature. A person makes in nature. A firm something new, never motivates its employees existed before product to act as an entre- or process or service. preneur. Challenge The marketis the major The culture of the challenge to win. organisation is the Anentrepreneur has major challenge faced to observe the market by employee. The conditions to cope with. intrapreneur has to, 18 Pthanksha, B.Com. Third Year cope with hurdle created, to corporate culture. Resources Anentrepreneur hasto Anintrapreneur has arrange his own resources _ to access the resources such as own funds of organisation such or the borrowed funds, as funds, manufacturing manufacturing facilities, setups, marketing marketing etc. facilities etc. Owner Anentrepreneur is Anintrapreneur is the whole sole not the owner of owner of the new anew venture. venture established by him. Decision — Entrepreneuris Intrapreneuris making independentto notindependent power take any decisions to take decisions. with respect to his set up. ee 7. (a) Explain technopreneurship alongwith its features. (b) What is Net preneurship? Ans. (a) Technopreneurship—Technopreneurship is. combination of two words— Technology and entrepreneurship. Thus entrepreneurs who use technological development innovations for their enterprise are technopreneurs. “Entrepreneurs who are into the core business involving technology based industries and make use of technology to come out with new or innovative products through a process of commercialisation are technopreneurs.” Technology based entrepreneurship is a process and formation of new business that involves technology and these technopreneurs use technological innovation and translate such technology into successful products or services. A technopreneur starts with a new idea. They create a new products or come up with a solution to some problem using technology. Technopreneurship can be seen in Information technology (IT) Sector, electronics, biotechnology, hi-tech products, technology used in delivering essential services etc. Examples of technopreneurs are-Bill Gates (Microsoft), Eon Musk (Tesla motors), Mark Zuckerberg (Facebook), Steve Jobs (Apple) and so on. 7Entrepreneurship and Small Business-Group -H 19 There are two types of technopreneurs. First one, those who develop a unique technology on which the business is set up. They are called ‘Technology Developers’. Second type, are those who see a new technology development and understand how it can be applied to meet the market need. They are called ‘Technology users’. Features of Technopreneurship (1) The products designed under it use the latest form of technology to serve various purposes. (2) Efficient use of resources are made to create a well structured and new product with high quality and at lost cost. (8) Innovation is the most important feature here. This innovation relates to the technology. (4) Technopreneurs look for new technology, ideas and methods that may improve the product to match the demand of consumer in the technological world. Adaptability helps in this by producing the improved product as per customer demand. (© Technology is rapidly changing in the world today. The technopreneurs who are advanced than others can capture the market beating the competition. (© Flexibility is also a feature of technopreneurship. It is the ability of an organisation to react to unexpected situations. (%) Technopreneurship is the process of organisational creativity. (8) Itemphasizes on integrating technology with entrepreneurship. (9) Technopreneurs make use of technology to come up with innovative. e-products through commercialisation. (10) Competition is also very important feature of ‘technopreneurship. (b) Net preneurship—it means the business using e-commerce and exchange of goods or services through online platform. Netpreneurship is the application of ‘communication and information sharing technology among trading partner. Itfacilitates modern types of information based business strategy for reaching and interacting with customers such as online banking, online shopping, online advertising and marketing, online order booking and online customer service etc. It reduces costs in managing orders and interacting with trading partners. Netpreneurship enables the formation of new types of information based products such as interactive games, electronic books, and information ‘on demand that can be very profitable for ‘content provider and useful for consumers. | ; eurship is about doing business electronically and includes many activities like: ‘electronic trading of goods and services, online delivery“we 20 thkanksha, B.Com. Third Year of digital content, electronic fund transfer, electronic share trading, commercial auction, online sourcing, direct consumer marketing, etc. Netpreneurship is not limited to internet alone. Electronic transactions like dealing over telephone, use of Tax, using ATM machine for funds withdrawal, sending SMS, payment through Debit/Credit card etc. are all examples of it. Netpreneurship is cost effective, easy to use, convenient, faster, personalised, secure and reliable mode of doing business. The Scope of netpreneurship is vast from direct selling and marketing, online banking, supplier integration to controlling of intra and inter organisational activities. Netpreneurship makes the product/services globally accessible, 24 hour available at low cost and time saving, with improved customer satisfaction/interaction. However, it is not free from disadvantages like lack of security, privacy and trust. Q.8. (a) Write a note on the role of social entrepreneurs. (b) Discuss the advantages and problems of international entrepreneurship. Ans. (a) Role of Social entrepreneurs. A social entrepreneur is a person who establishes an enterprise with the aim of solving Social problems or effecting social change. Examples of social entrepreneurship include microfinance institutions, educational programs, providing banking services in under served areas and helping children orphaned by epidemic disease. The main goal of a social entrepreneur is not to earn a profit, but to implement widespread improvements in society. Social entrepreneurs play a significant role in society. They are those professionals who do not work for money but for the benefit and overall welfare of society. They provide great help to the society at large. The roles of social entrepreneurs include— (1) Visionary ideas to find and eliminate the root cause of a problem, with a view not to make profit but to benefit the society. (2) Adopting a mission to create and sustain social value and not just private value. (3) Creator of universal changes and sustainable improvements. (4) Recognising and pursuing new opportunities to serve the mission. (5) Develop new methods, models, techniques and initiate new approach. (6) Engage in the process of continuous innovation, adaption and leaming. (7) Understanding the expectations and values of all the stake holders concemed and take necessary corrective steps if required.Entrepreneurship and Small Business-Group -H 21 (8) Responsible and accountable towards society. (9) Acting boldly without being limited by resources currently in hand. (10) Employment generation and creation of jobs. (11) Adopting a soical mission to create and sustain social value. (12) Tapping and making productive use of local materials, talent and other related resources. (b) Advantages of International entrepreneurship (1) International entrepreneurship boots up the economic development of the country as the firms of those countries increase their production capacity to supply goods in foreign countries. * (2) It creates employment opportunities also due to increase in production. (3) The natural resources of the country can be used efficiently with the expansion of market. (4) The increase in production gets the benefit of large scale production or economies of scale and also the reduction in cost of production. (©) International entrepreneurship helps a country to earn foreign exchange. (6) The products produced and used by developed countries come within approach of developing countries also. This improves the standard of living of people in developing country. (7) When the prices in domestic market are low, then entrepreneurs can sell their products at high prices in international market in countries where prices are high. (8) International entrepreneurship helps to contribute in the rise of sales and to earn profit. (9) It also helps in expansion of domestic market beyond national limits. (10) When the demand for the products starts becoming saturated in domestic countries then such entrepreneurs can enhance their business by approaching global market. Problems of International entrepreneurship : (1) The companies involved in export and import of goods have to follow many legal formalities. They have to fill many documents, get custom clearance, conversion of currency, shipping, insurance etc. formalities to be completed. (2) International entrepreneurship is facing more risk than domestic entrepreneurship. Due to long distance and long time in transit, there is22 O*kanksha, B.Com. Third Year tisk of damage of goods and the risk of fl ion i ; (8) Many restrictions are imposed camel mento eurrency, import of goods. ¥ goverment on export tof g and ® seenses are also required to be obtained. @ importer has to arrange forei . ‘ich it ‘enovy procedure for making payrient rene (curenay Nénich evolves (6) The languages s wi 5 poken and written are diffe i ones Entrepreneurs have to arrange some porsore who bel a ee ete with persons of other countries. can help ie taste, preference, customs, tradition: p ; t 2 a is, to| different for different countries. The entrepreneurs hawt opean vith these differences to promote and sell their products. pm Q.9. Discuss various environmental factors influencing entrepreneurial development. Ans. Entrepreneurship development refers to the process of enhancing entrepreneurial skills and knowledge through structured training and institution building programmes. The environmental factors affecting entrepreneurial development are discussed below: (1) Economic Planning—The various economic planning activities like formulation of a plan, implementation of plan, making assessment of resources, identifying the resources regarding economic ‘growth, making periodic assessment ete. directly and indirectly influence the environment of entrepreneurship development. (2) Economic conditions—The economic conditions like national income, economic resources, distribution of income and assets, economic development etc. are factors influencing entrepreneurship development. | (3) Infrastructure facilities: telecommunication, electricity, development of enterprise. The respo! lies with the government. — _— ; (4) Capital or venture capital availability—Availability of copia helps the entrepreneur to bring together ‘in labour eorened ha Hi ne i upply increases, the entre| r badbey capita tnd form is usually essential if a new increases.Venture funding of some 1 s scent enu: venture is to be started. Itis the form of funding to innovative . vores i A technically skilled k Technically skilled labour—A a is ot pesential environmental factor for the developme! illed ii i of am entrepreneurship activity. Labour skilled in a particular area venture facilitates the formation of new companies. The facilities like rail and roads, network etc. are required for the sibility forinfrastructure developmentEntrepreneurship and Small Business-Group - H 23 (6) Per Capita Income—Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase Net National Product and per capita Income of the country. (7) Economic System—The economic system operating in the country also affects the business enterprise. The economic system of a country may be capitalist, socialist, communist or mixed. Government regulation of economic activities depends upon the nature of the economic system. The economic environment of business is determined according to economic system obtained within a country. (8) Availability of Land or Facilities—The availability of land and other facilities like roads, water, power etc. affects the enterprise development. For the development of enterprise, high quality industrial space is essential. (9) Accessibility of Suppliers—To start a venture, the good accessibility of suppliers is also needed. This factor is very important deciding factor for establishing the industry where bulk raw material supply is required or where the personal service of suppliers is desired. (10) Accessibility to markets—This factor is particularly important when the entrepreneurial activity has local rather than national or intemational scope or when customers are geographically concentrated. The new entrepreneurs found it difficult to enter into a new market or inaccessible market due to its incapacity in respect of lower means and efficiency. (11) Social and cultural factors—Social, political and cultural barriers also deter the entry into a new market. A market structure may be a strong barrier for entrepreneurs to have access to the market. Therefore, environmental support for having entered into the new market or customers is primary for the entrepreneurship in any country. (12) Favourable Government Policies—Taxation rates, licensing policies, and other government activities can have a positive or negative impact on entrepreneurship. Several researchers address the governmental influence factor to observe that state and local legislation on taxation and licensing can make one location more attractive than another. (13) Availability of supporting service—Support services are auxillary activities that are vital for the operation and survival of new ventures. Thus, this factor usually affects a firm after the initial formation stage. These services are provided by accountants, tax experts, lawyers, and consultants specialising in new ventures and small businesses. (14) Population—A supportive population would promote the law,“= 24 Gthanksha, B.Com. Third Year labour and materials supply, financing, distribution and sellin or Services and promotion of the firm and the product. Q.10. Define Entrepreneurial Development . Program: Explain the need of such programme. me. Or What is EDP? Discuss the, Problems in conducting EDPs, Or Enumerate the various problems faced in the conduct of EDPs. Give suitable suggestion for removing these problems. 9 Of goods . Ans. Entrepreneurship Development Programme (EDP)—EDP isan attempt to develop a person as entrepreneur through training. Its motive is to acquire skill and capabilities in entrepreneur necessary for Playing his entrepreneurial role effectively. The main purpose of such EDP is to widen the base of entrepreneurship by developing achievement motivation and entrepreneurial skills among the less privileged sections of society. Schempter stated that Indentifying intelligence, motivation, knowledge and opportunity are the prerequisites for entrepreneurial development. “Entrepreneurial development programme may be defined as a programme designed to help an individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively. It is necessary to promote this understanding of motives and their impact on entrepreneurial values and behaviour for this purpose.” —N.P. Singh EDP is the process of —Enhancing the motivation, knowledge and skills of potential entrepreneurs. . _t, - —Arousing and reforming the entrepreneurial behaviour in theirday- to-day activities and —assisting them in developing their own ventures. Need of EDP ' (1) Eradicate poverty and unemployment—The probien poverty is severe and of long-lasting duration in India. Entreprenewst? development programmes can help the unemployed people to aaeal self-employment and entrepreneurial as a career.Several prog ral like National Rural Employment Programme (NREP), Integrate Inthe Development Programme (IRDP) etc. are in operation in India 7 hel ee ‘ potential entrepreneurs and to eliminate the poverty and unemploy!Entrepreneurship and Small Business—Group -H 25 (2) Balanced Regional development—EDP helps to establish industries. It reduces the concentration of economic power. Itis because the small scale industries can be set up in remote areas with little financial resources which help in achieving balanced regional development. (3) Prevents concentration of industries in urban areas—The unbalanced urban growth has resulted from over concentration of economic activities. Decentralisation of industries is very much required by relocating the industries. Through EDPs the entrepreneurs are motivated to set up industries in non-industrial areas. This will control, the industrial slums in urban areas and also reduce the pollution, traffic congestion, overcrowding of cities etc. (4) Utilising locally available resources—Our country is rich in natural resources. Since abundant resources are available locally, proper use of these resources will help to carve out a healthy base for sound economic and rapid industrialisation. The EDP can help in utilising these resources by training and educating entrepreneurs. (5) Promote self ‘employment—Our country has most of the young population. The talent of the youth must be diverted to self employment careers to help the country to reduce the unrest among youth for not getting employment after education. The EDP makes possible the self employment. (6) Promote cottage and small scale industries—EDP organises special programmes in rural areas to stimulate new ventures and encourage expansions of existing activities of small and medium industries. (7) Facilitating overall development—Entrepreneurs act as agents of proper use of various limited resources such as men, money, material, machines etc. which leads to overall development of an area, an industry. The successful entrepreneurs seta motivating example for others to adopt entrepreneurship as a career. (8) Capital formation—Various development banks like SIDBI, IDBI, IFCl etc. take initiative in promoting entrepreneurship through assistance to various agencies involved in EDP and by providing financial help to new entrepreneurs. (9) Economic independence—Entrepreneurs develop and produce substituted products of imported goods and prevent ‘the over dependance on other countries. They also enable the country to produce different variety of better quality goods and services at competitive prices of imported goods which help in promoting the economic independence of the country. (10) Create awareness—ERP encourages and creates awareness among prospective entrepreneurs about the availability of resources such26 G®hankska, B.Com. Third Year as raw material, technology, labour etc. They also flow information about various government schemes and assistance for Setting up industries, Problems in conducting ERP— (1) There is no provision of national Policy for entrepreneurship development. (2) Selection of tainers and trainees and finding the target group is also a difficult task. (3) The non availability of infrastructure facilities in rural and. backward areas is a hurdle on conducting the ERPs. (4) There is no standard course content for ERP. (5) The EDP agencies over estimate the skills and capabilities of the:educated youth of the country. (6) The EDPs are designed for a short term course of few weeks, This is difficult to develop entrepreneur's skill in such a short span of time. (7) There is no uniform Procedure adopted by agencies for identification of, Prospective entrepreneurs. (8) There are many interested persons who wish to learn the sklis of entrepreneurs but since they have no definite idea or Plan for the project, are not selected for EDP. (9) Non availability of competent teachers causes failure of EDP. (10) The banks and other financial institutions impose various Conditions for the grant of loan to entrepreneurs. Those entrepreneurs who fail to comply with the conditions are not able to get loan to set up their own enterprise. Hence EDPs are discouraged. Suggestions to make EDP successful— (i) EDP organisers should develop a viable project keeping in view the local resources fund, training requirements. (i) EDP should emphasise on stimulating activities like study of entrepreneurial activities, knowledge of entrepreneurial assistance, motivational training, identification of new piojects etc. (iii) The supporting activities like registration, funds mobilisation, license, tan relief, incentive and management consultancy services be taken on priority under EDP. (v) EDP should be designed to focus on expansion, diversification, modemisation and quality control. The selection of trainees should be made after proper examinations and tests. Persons having traditional background and interested persons should be preferred. (v) The trainers must be committed and qualifiedEntrepreneurship and Small Business~Group-H 27 (vi) The time span for EDP should be approximately six months. @.11. What is the role of government in organising EDPs? Discuss the achievements of EDP. Or Discuss the role of government in organising EDPs. Or Make a critical evaluation of government role on Entrepreneurship development programmes. Ans. The support and policies of goverment are desired for the development of entrepreneurship. Itis required that government play direct role for Entrepreneurship development. Keeping in view the importance of EDP, government have to take following steps and develop organisations for EDPs. These are discussed one by one. (1) National Institute for Entrepreneurship and Small Business Development (NIESBUD)—t is the apex body to conduct training programmes: for potential entrepreneurs of India. NIESBUD makes arrangements of training facilities, organising training programmes, preparing model syllabus of training course for different groups and areas. Italso conducts the test to offer diploma to trainees, publish literature on entrepreneurship, conduct workshops and seminars for promotion and development of entrepreneurship. The activities of NIESBUD are = —Developing effective training strategies and methodology. —Formulating scientific selection process. —Standardising model syllabus for training various target groups. —Developing training aids, manuals and other tools. —Conducting EDP for executives, women, S.C. and S.T:s. —Facilitating and supporting agencies: engaged in entrepreneurship development. —Organising activities that help develop entrepreneurial culture in society. (2) Small Industries Development Bank of India (SIDBI)— ‘SIDBI was set up to provide financial assistance to entrepreneurs from smail scale industries, tiny village and cottage industries through various schemes. The functions of SIDBI are— —Initiation for technical upgradation and modemisation of existing units. —To promote employment oriented units in Semi urban areas and encourage people to participate in EDP. —To expand the channels of marketing sector in domestic and intemational market for products of small scale recor Ee o ELAR REEN REA ENEEN AA Re RNRird Ye 28 GPthanksha, B.Com. Third Year To refinance loans and advances extended by the primary lending institutions to small scale units. . .. —To provide services like leasing, factoring etc. to pariicipany EDPs. . . —To expand financial support to Smalll Scale Industries Developmen Corporation for providing scarce raw materials to industrial units in sg) sectors. . (3) Entrepreneurship Development Institute of India (ED) Ahmedabad—ttis an All India institution set by public financial institutions and the Gujarat government. Its entrepreneurship development Programmes are quite comprehensive and successful. This also Conducts research and publications in the area of. entrepreneurship development, (4) Small Industries Development Organisation (SIDO)—sipo is a policy making, coordinating and monitoring agency for the development fo entrepreneurs. Itis the nodal agency that advises the ministry of Industry in formulating policies and Programmes for the development of SSIs. The functions of SIDO are. —To control training courses through SSIs, Branch SSls and Production Centres. —To organise EDPs, motivatonal campaigns, for rural educated unemployed. . —To assist and encourage entrepreneurs to set up industrial units in rural areas after getting training. —To secure reservations of certain Products to be manufactured by SSIs. (5) Small Industry Service Institute (SISI)—The SISIs are set up one in each state to provide Consultancy and training to small entrepreneurs. The activities of SISI are co-ordinated by the Industrial Management Training Division of Development Commissioner, SSI, Office (New Delhi). SIsI has a wide spectrum of technological, management and administrative tasks to perform. Functions of SIS! are —Conducting EDP all over the Country. —To assist existing entrepreneurs through technical and managerial counselling. —To advise the central and Stal —To assist in testing of raw inspection and quality control. —To provide financial assistance t —To provide market information, mss through banks. —To organise seminars, Workshops, S of tte government for Policy making. _ material and products of SSI, theif forthe benefit of entrepreneu's-Entrepreneurship and Small Business—Group -H 29 (6) National small Industries Corporation (NSIC)—NSIC was set up with the objective to supply machinery and equipment to small enterprises on hire-purchase basis and assisting them in procuring government order for various items of stores. The functions of NSIC are— —To assist in developing small scale units as ancillary units to large scale industries. —To provide machines to SSIO on hire purchase. —To help enterprises to participate in the stores purchase programme of central government. —To assist small industries with market facilities. —To import and distribute components and parts to actual small scale users —To distribute raw materials through their depots. —To consruct industrial estates and establish and run prototype production cum-training centre. (7) District Industries Centres (DICs)—The DICisan institution at the district level which provides all the services and facilities to the entrepreneurs. The entrepreneurs can getassistance from ‘DIC for setting’ up and running an industry. The four metropolitan cities Mumbai, Chennai, Delhi, Kolkata have been kept outside the preview of DICs. The DICs were established with a view to provide integrated administrative framework at-the district level with qualified personnel in technology, marketing, credit, economic investigation, raw materials. (8) Institute for Entrepreneurship Development (1ED)—Uttar Pradesh Government established an Institute of Entrepreneurship Development (IED) in collaboration with all the major financial institutions like IFC and IDBI. The main objective of setting up of this institute is to give special importance to entrepreneurship development needs in the more backward states. IED is engaged in organising, training, research and extension activities towards the development of potential entrepreneurs, co-ordinate and support EDPsin less developed regions, imparting training to the trainers and help the institutions engagedin the entrepreneurship development. _ @.12. What do you mean by entreprene urship sustainability? Discuss the support system for sustainable entrepreneurship. ‘Ans. Entrepreneurship ‘sustainability—Sustainability means e decision making and innovation that reduces responsible and proactive the negative impact and maintains the balance between social, environmental and economic growth. Entrepreneurship sustainability is the continuing commitment by30 Phanksha, B.Com. Third Year business to behave ethically and contribute to economic developmen, while improving the quality of life of the workforce, their families, loca communities, the society and the world at large, as well as the future generations. Sustainable enrepreneurs are for profit entreprenerus that Commit business operations towards the objective goal of achievin, ‘sustainability. It is the process of venture creation that links the activitieg Of entrepreneurship to the emergence of value creating enterprise that Contribute to the sustainable. development of the ‘socio-ecological system, The three dimensions of entrepreneurial sustainability are People, plant and profit. Entrepreneurial sustain ity is a process by which enterprises manage their financial, social and entrepreneurial riks, obligations and opportunities. Features of Entrepreneurial Sustainability— (1) It is a balancing act of Strategically managing and orienting environmental and social objectives and considerations. (2) It improves the quality of the process while ensuring the environmental and social impact is limited and minimised. (8) It has the objective to enhance Social wealth, with the goal to create profit and to ensure financial ‘viability to pursue other opportunities hat may arise to be exploited outside the ‘scope of social objective. (4) Sustainable entrepreneurs are for Profit entrepreneurs besides environmental and social objectives, They create profitable enterprise, but also achieve environmental and social objectives. They encompass both environmental and social objectives with the goal to be profitable and economically viable. Support system for sustainable entrepreneurship— A support system refers to a set of factors or elements that supplement the building of something. This ‘support may be of two types— First, Tangible which include money, material, machines etc. and second is Intangible, which consists of emotional support, moral support, guidance, direction etc. Both type of support is important for the systern/ enterprise sustainability. The entrepreneurial support system forms as a platform upon which the entrepreneur shall build the enterprise.It provides the basis for starting an enterprise to develop and grow the entrepreneurial activities and to achieve the maturity of business enterprise. Without entrepreneurial support system, we may not have any entrepreneurship at all. A support system for entrepreneurship is critical because of the inherent nature of. business and its management and operations. Entrepreneurial support system does not confine itself to start up only. It is not only intiation and induction of an enterprise to the business world but its scope iderEntrepreneurship and Small Business~Group-H 31 than that. Itnurtures: and grows the enterprise. The support system must be available till towards the survival, success and development of the business enterprise in the long run. Different support systems—A support system consists of all factors, institutions, associations, resources that help the entrepreneurs in innovating successfully. These are— (1) Universities—They provide a platform as part of the entrepreneurial ecosystem. Universities offer an ecosystem for start-up and spin-off activities, and they provide entrepreneurship. education and training. The entrepreneurship ecosystems include multidimensional enterprises that support entrepreneurship development through a range of activities including teaching, research and outreach. (2) Incubators—Business incubators are aform ofentrepreneurship support that caters to new ventures and medium and small scale industries in specific locations and can focus on particular industries or provide generic support for all types of business. Their activities are selection of members, provision of infrastructure business support, mediation in developmentof relationship and contract work. The it which are commonly seen are— —Business innovation centres —University business incubators —AIndependent private incubators —Corporate private incubators (3) Business development ‘organisation—Business development organisations belong to the supportive organisations extemal to the firm in an innovative system.The activities of business development organisations are intended only to serve as acomplementto the market. Their activities are of two types. —First, the configuration oriented support, which includes support such as provision of infrastructure, proximity to universities, research institutes, competently managed science incubators, supply of funds etc. —Second the process oriented support, which includes different types of business advice, coaching, education and networking activities. (4) Financial Institutions—They provide capital through banking system or stock market. Most financial institutions are intermediaries that direct funds from money lender to debtor or investor to investee e.g. commercial banks or venture capital fims. Some investors invest directly their own money to high risk start ups. There are anew range of financial institutions providing micro finance: ‘or crowd funding. Financial institutions offer financial support to entrepreneurs in the form of debt or equity.32 Phanksha, B.Com. Third Year (5) Design service providers—They support eco-innovation and Sustainable entrepreneurship through the application of knowledge, appiieg by designers, design researchers and other professionals. They Offer a variety of activities for their customers, users, collaborators and Clients, They offer the following— —Policy and Policy tools —Instruments —Product development and servics tools, —Cleaner production —Consultancy —Eco-design —tnnovation —Knowledge exchange and transfer —Material sourcing and management —Networking facilitation —Resource efficiency management —Supply chain management —Sustainable management of waste —Sustainable product innovation —Training and coaching —Waste management etc. (6) Motivator and consultants—Only highly motivated persons can become entrepreneurs. They need a motivating eco system. They have to surround themselves with motivated people and with experts who can give them a great deal of consultancy. This expertise can come from professionals, friends and experts in the field. The entrepreneur can use this valuable support system to gain precious insights into the market and business operations and competitiveness. Q.13. What are the financial requirements of an enterprise? Discuss the sources available for finance. Ans. Financial requirement/Need for an enterprise—Finance is the life blood and nerve centre of a business, just as circulation of blood is essential in the human body for maintaining life, finance is very essential to smooth running of business. Right from very beginning, i.e. with the idea generation, finance is needed to promote or establish the business, acquire fixed assets, make investigations such as market surveys etc, develop product, keep men and machine at work, encourage managemnet to make progress and create values. Also any existing firm requires further finance for making improvements or expanding the business.Entrepreneurship and Small Business~Group -H 33 Business needs capital investmenti.e. funds for investment in capital assets. This may be owner's equity or borrowings. Likewise any business requires working capital to run its day to day operations. The Steps in financial access are— (1) Estimating the financial requirements of the firm, segregating them into short term and long term financial requirements. (2) Deciding the proportion of different securities for raising funds i.e. deciding the capital structure. (3) Selection of source of finance from share capital, debentures, loans from financial institutions and bank, public deposit etc. (4) Selecting the pattern of investment. i.e. decision regarding the type and time of asset purchase. The decision making techniques of capital budgeting, opportunity cost analysis etc. are used for it. (5) The cash management is done in such a way that there is neither shortage of it and nor itis idle. A cash flow statement is prepared for this purpose. (6) Then financial control is implemented. These controls are — Retum on investment, Budgetary control, Break even analysis, cost control, Ratio analysis, cost and internal audit. Factors determining working capital (@) Nature of business (i) Proportion of Raw material cost to total cost (iii) Size of the business (Wy) Nature of industry. (¥) Tumover (vi Time lag in production (vil) Terms and conditions of sale and purchase. (viii) Stock requirement (ix)Requirement of cash (9 Bank support and credit worthiness (xi) Policy regarding dividend. (xii) Seasonal and cyclical fluctuations. Sources of Finance—There are many sources for finance, whether for working capital or for long term investment, these are discussed below— . (1) Shares—A company can isuse two types of shares—Preference shares and equity shares. Preference shares are those shares which get preference in respect of dividend and ce m of capital. Equity shares are those for which there is no fixed if dividend.Dividend on equity shares depends upon the availability of sufficient profits and the discretion of Board of Directors. i 0 ee 2 RT STA AE TAN WET BN TR34 GAhanksha, B.Com. Third Year (2) Debentures—They carry a fixed rate of interest which is a legay charge on the revenue of the company. Debentures are like loan. The Debenture holders are the creditors of the company. (3) Public deposits—This is the source in which fixed deposits from public a: 2 taken for periods varying from six months to seven years, (4) Retained earnings—The Profits which are not distributed to shareholders as dividends available to the company to fulfil its. financial needs. This remained profit is called retained eamings. Itis a self financing or ploughing back of profit. (5) Loans—The financial institutions provide long term and middle term loans and finance to the firms. The institutions. providing such type ofloans are ICICI, IFCI, IFC, NIDC and other commercial banks. (6) Commercial Banks—They are the most important source of financing short term capital. The commercial banks provide short term capital through —Loans and cash credit —Overdraft —Discounting bills (7) Trade credit—Trade credit means credit extended by supplier of goods in the normal course of business. The credit-worthiness of a firm and the confidence of its suppliers are the main basis of securing trade credit. (8) Instalment credit—tt is a kind of trade credit in which asset is purchased and the possession of goods is taken immediately, however, the payment is made in instalments over a predetermined period of time. (9) Advances—Some business houses get advances from their customers and agents against orders and this source is a short-term source of finance for them. Itis a cheap source of finance and in order to minimise their investment in working capital, some firms having long Production cycle, specially the firms manufacturing industrial products prefer to take advance from their customers. (10) Expenses—Accrued expenses are the expenses which have been incurred but not yet due and hence not yet paid also. These simply represent a liability of the firm for the services received. (11) Factoring or account receivable credit—A commercial bank may provide finance by discounting the bills or invoices of its customers. Thus a firm gets immediate payment for sales made on credit. A factor is a financial institution which offers services relating to management and financing of debts arising out of credit sales. (12) Deferred income— These are the income received in advance before supplying goods or services. They represent funds received byaEntrepreneurship and Small Business—Group-H 4 35 firm for which it has to supply goods or services in future. These fund increase the liquidity of a firm and constitute an im) ta oot short-term finance. portant golnrg 9 (13) Commercial paper—Commercial paper rej promissory note issued by firms to raise shorten at uneeeuted commercial paper in the Indian money market. The maturity period of commercial paper in India is mostly 91 days to 180 days. Itis sold ata discount from its face value and redeemed at face value on its maturity. Q.14. What factors are affecting the selection of technology? Discuss the schemes of technology upgradation adopted by governments. ‘Ans. Technology refers to the use of tools, machines, materials and techniques to make work easier and productive. Industrial technology helps people to achieve goals and objectives. The selection of appropriate technology which is best suitable for the requirement of enterprise is a must. Following are the factors affecting the selection of technology suitable for enterprise— (1) Cost—As the technology upgrades and becomes more s costly to purchase. The best modern technique ‘tal investment. The small scale sector with limited m. Instead, they may depend on labour intensive automatic, it become: may require large capil capital may not prefer ther technique. (2) Production—The quantity or determining factor of selection of technology. For any enterprise if the market is limited or resources are limited, then thereis not huge production and thus low tech plants are sufficient to meet its requirement. (3) Nature of product—The nature of product also determines the use of technology. The modern technology product like mobile phones, electronic gadgets and software may require modem technology. Whereas the routine products like FMCG (Fast moving consumer goods) may not need any modern technique of production. . (4) Strategy—Every organisation has its own manufacturing strategy of selecting between capital intensive technique or labour intensive technology (5) Research & development—The new may find a better technique suitable for prod factor for selection of technology: (6) Economic Evaluation abet ic technol techniques sugg ests the tee of cost per unit and retul volume of production is also research and development uct. So itis a determining nalysis: regarding different be adopted, while choosing mon investment are 2 ONE TH EEE PR TEE Nea EAS SIE TEEN LAN ES ENN AVR ReGPhanksha, B.Com. Third Year (7) Risk—The risk associated at al i ny level with also deter: ing factor for selection of technique. the *echnology is (8) Social factors—The social factors like le demographic, environmental issues are relevant for sel technology. (8) Governm (8) Government ver t » Need for anti-poltuy, technology is increasing as the govenment and the Public. wel roan more concerned about industrial pollution. Gove ewernment Schemes for technology Upgradation. Of small Gal, cultur, : al lection of @PPropriate vernment has various schemes for tech: i | fous Scnemes for technology upgrac scale Industries. These schemes are of two ve ation —Financial assistance/Support —Support services These are discussed one by one. Financial Assistance/Support This is given through following schemes. (1) Technology Development and Modernisation Fund Scheme—This scheme was made to set up a fund of 2 billion with a view to encourage existing units in small scale sector to adopt modem technique in their production activities and to adopt latest technology. Here direct help is provided to the small scale industries by way of term loan or equity participation. (ii) ISO 9000 Schemes—This scheme was made to improve quality of small scale units. The SIDBI has started it to provide financial help to small scale industries. It enables the industries to get ISO 9000 series certificate. The scheme provides finance to meet expenses for consultancy, documentation, audit certification free etc. required for ISO 9000 certification. (iii) Technology upgradation Fund Scheme for Textile and jute industries— This scheme was started in 1999 for a period of 5 years with the objective to encourage textile and jute industries for technology upgradation. This scheme provides 5 percent reimbursement of interest on financial assistance to SSI units in textile, cotton grinning pressing sectors. . (iv) Tannery Modernisation Scheme—lt was launched in January 2000 to encourage modernisation to tannery units in India. . SIDBI also provides capital subsidy in order to purchase mactingy for overall technological upgradation of the products and better capac! utilisation and reduction of wastage.Entrepreneurship and Small Business-Group-H 37 Support Services Following supporting services are also offered through these agencies for technology upgradation. (1) UPTECH—This is the scheme for technology upgradation and management programme. It was for the cluster of industries where common method of production are used. There were twelve clusters selected for it. These clusters are— —Lock industry, Aligarh —Perfume industry, Kannauj —Brassware cluster, Moradabad —Sports goods cluster, Jalandhar —Pottery cluster, Khurja —Food Processing, Pune in Maharashtra and Chittoor in A.P. —Forging industry in Ludhiana, Jalandhar, Hyderabad, Vijaywara. —Auto components industry, Pune, Indore, Chennai. —Bulk drug and formulation industry, AP. —Rice Mill cluster, Bhandara, Maharashtra —Till industry along west coast —Toy industry in Delhi & Noida It covers all the facts of technological improvements, quality upgradation, energy conservation, pollution control, process modification and modernisation. (i) Technology Bureau for small Enterprises—ttis a joint venture between IDBI and Asian Pacific Centre for transfer of Technology. TBSF provides assistance to small enterprises in the sphere of technology accession, transfer and fund syndication. The Bureau provides assistance by way of term loans, foreign currency, venture capital and bill finance. Small Enterprises Information and Resource Centre Network Scheme—This scheme aims at providing technical knowledge and packaged assistance to small information servers. Presently SENET has 21 electronic Nodes comprising of one main Nodal centre. (iv) Capital subsidy scheme for technical upgradation—This scheme is for SSI in selected sectors for technical upgradation. The scheme is introduced by Government of India. The scheme provides for latest technology and technology upgradation, improvement of productivity and quality of production, environment condition, installation of improved techniques, anti-pollution measures, energy conservation equipment in the sectors of leather products, food processing, drug and Pharma, autoparts, toys etc. (vy) Skill-cum-technology upgradation programme (STUP)—38 Pkanksha, B.Com. Third Year This scheme is supporied b' in s 1 y SIDBI and aims at strengtheni technical capabi ies of small scale industries. The scheme peed te products like metallurgy, plastics, foundries, teadymade garments, bicycle parts etc. These programmes are structured to impreve the performances of existing SSI units by developin i J g and strengthenin i i and technical competence among enitepreneurs, — Q.15. What is idea generation in the context of business) Briefly explain the common sources of idea generation. Ans. Idea generation—Business idea is the chance to meet ¢ market need, interest or want through a creative combination of resources and deliver superior values. Identification of business idea has been recognised as one of the most important abilities of successful entrepreneurs. Business idea is g favourable set of circumstances that creates a need for a new product. service or business. The business idea identified and exploited by an entrepreneu depends initially on his work experience, his previous experience in activities related to the present business activity and his level of education. Entrepreneurs with a higher level of education and more experience are associated with more creative business opportunities. Entrepreneuria motivation shows that highly motivated entrepreneurs are more likely to be involved in creative activities. A busienss idea can be generated in the mind of an entrepreneuri he follows following three things— . (i) He thinks differently, feels differently and acts differently. (ii) He must gain knowledge and experience about industry in corde! to identify new opportunity. (iii) He must understand the needs, problems and wants of the society and must think to find the possibilities for new products an process to counter those problems. si The entrepreneur mustuse different approaches/Techniques for ide duel generation. —Brain storming : It helps in generating a large number of pro ideas. —New ways of doing old things; —Converting hobby into business, like interior de designing, photography, painting etc. —Utilising waste material for conservation a environment too the recycling waste is desired. —Improving the existing product using newly devel . jo" signing, fash nd protection” oped technolo9Entrepreneurship and Small Business-Group-H 39 Sources of Idea generation The following are most common sources of idea generation. (i) Observing markets—Attempts should be made to determine the trend of demand and the composition and pattern of potential users of the product. The careful observation of the market can reveal a business idea. Market survey can also reveal the demand and supply position for various products. A survey of the available channels of distribution should also be made so that the selling compaign can be properly planned well in advance of the production. Advice of professional experts like dealers, commercial consultants, bank managers, advertising agencies may also be obtained to supplement product analysis and market surveys. (2) Target customers—Every creative and innovative entrepreneur must pay close attention to potential customers, clients or consumers on a continuous basis. Consumer knows best what he wants and the habits/tastes which are going to be popular in the near future. Contacts with prospective consumers can also reveal the features that should be built into a product/service. The idea or opinion generated from the target audience must be to a large extent represented by enough market to support a new business or expand a section of an existing business. (3) Existing products and services—Monitoring and evaluation of existing products and services may result in a new product or service that has more market appeal and better sales and profit potential. Prospective entrepreneurs can take advantage of information communication technology to build new variant of old products or services with a more market appeal, better sales and profit potentials. (4) From marketing distribution channels—The members of marketing distribution channels are excellent sources of new business ideas, because they are familiar with the needs of the market. Ideas received from such analysis could become a source of innovation and creativity. (5) Study of Project Profile—Various goverment and private agencies publish periodic profiles of various projects and industries. These profiles describe in detail the technical, financial and market requirements and prevailing position. A careful scrutiny of such project profiles is very * helpful in choosing the line of business. (6) From Research and Development—The greatest source of a new business idea.is the entrepreneur's own effort in research and development. (7) Government organisations—Many government organisations assist entrepreneurs in discovering and evaluating business ideas. Development banks, state industrial development/investment corporations, technical consultancy organisations, investment centres, export a RI AE TE RA TE WOTi 40 Gfhanksha, B.Com. Third Year promotion councils etc. provide advice and assistance in financial, marketing and other areas of business. (8) Trade Fair and Exhibitions—National and international trad fairs are a very good source of business ideas. Atthese fairs/procedures dealers in the concerned industry put up their products for display and/or sale. A visit to these fairs provides information about new Products; machines. Negotiations for these purchase, production, Collaboration, dealership etc. may also be made at these fairs. , Q.16. What are the objectives of feasibility analysis of Project? Discuss the tests of feasibility on which any project must be examined before approval. Or technical, What are the parameters on which the feasibiity of any business plan is tested? Ans. Feasibility analysis and its objectives—Project feasibility refers to step-by-step investigation of resources and development of project idea. It provides a controlled mechanism for restricting expenditure on Project development. Feasibility analysis means assessment of the potential and practical applicability of business idea. It is not just concerned with product or service but it is study of business vial lity as awhole. Feasibility analysis is done due to following reasons/objectives— (1) Feasibility analysis is done for the selection of suitable ‘technology for the proposed project. Selection of appropriate technology is done by examining the project idea with regard to proposed product's design, colour, price, output, demand potential and after sales service requirement. (2) The objective of feasibility study is to select the best altemative Project among the available project ideas so that the investment gives maximum returns. (3) The availability of qualified personnel and skill desired must be made available, before accepting any project idea. so the feasibility analysis is done keeping in view the human resources also. (4) Feasibility analysis is also required for checking whether the Project is Eco friendly or not. It is possible that a very good project may not be safe for the environment. (6) The feasibility study is done to see whether the projectis following the governemnt regulations and legal framework of the country. (6) The study is done also to assess the success or failure of the project from the point of view of changing technology and consumer demand. (7) The feasibility study is done with the objective to assess the time required to be taken by Project before reaching the satisfaction