ENTRAPRENEURSHIP

DEVELOPMENT AND
PROJECT
MANAGEMENT
BY- Dr. VASANT DESAI
Entrepreneurs:- Entreprendre – a French word means to
undertake. Britannica – “ An individual who bears the risk of
operating a business in an uncertain environment.
Schumpeter- Rate of growth of economy depends to a great
extent on the entrepreneurial activities. Innovation – something
new with which consumers are not familiar. Maintenance of
thing/ activities is not entrepreneurial activity.
Drucker’s viewpoint – Innovation is a tool. 1) At work 2) To
succeed 3) Market driven . Entrepreneurship means – managing
six events- 1) The unexpected events 2) The incongruity
(unease , strangeness) 3) make product appealing and 4)
Demographic change 5) perception change 6) knowledge
New Concept of entrepreneur – 1) Perceive opportunity 2)
Explore prospectus to start business 3) Obtain licenses 4)
Arrange initial capital 5) Provide guarantee 6) manage funds 7)
Supply Technical know-how.
Self employment alternatives – 1) Industry – manufacturing, processing
2) Trade- buy & sale 3) Commercial services – banking, insurance
4) Professional services – Accountant , engineer, Lawyer,
KEY ELEMENTS OF ENTEPRENEURSHIP – 1) INNOVATION 2)
RISK TAKING 3) VISION 4) ORGANIZING SKILLS 5) VALUES,
ETHICS AND CHARECTERS.

• Definition of SSI according to MSMED Act-2006

Type of industry Manufacturing Services

Micro Upto 25 lakh Upto 10 lakh

Small 25 lakh to 5 crore 10 lakh to 2 crore

Medium 5 crores to 10 crores 2 crores to 5 crores

 Environment for Entrepreneurship
• Socio- economic environment
• Family background
• Educational background
• Financial stability
• Personality and personal skills
• Infrastructural availability
• Supporting facilities
Entrepreneurship:- It requires desire to make money rather
than the amount of money one owns. External environment
– Social , Economic, Technological, political, legal-Govt.,
competitors. It is process of gaining money continuously.
Culture – It is characteristics of human of social interaction.
It provides socially acceptable patterns to meet biological and
social needs. Material culture and Non- material culture.
Entrepreneurial culture – It implies vision, values , norms and
traits which are conductive for economic development.
 Sub cultures of entrepreneurship-
• Culture of business :- Pattern of behavior, beliefs and practices in society.
• Business ethics :- followed by all members of business society.
• Productivity culture :- workers and owners, high motive.
• Quality culture :- TQC in all things.
• Organization’s culture :-
• Adaptability :- Changing with environment.
Key elements of Entrepreneurship:- Innovation 2) Risk taking
3) Vision 4) Organizing skills 5) Values, Ethics and
Characteristics
SSI outline of India :- Up to 2005 total( registered & unregistered ) Nos. = 118 lakhs.
Employment – 3 crore. Increase in % = 4.07%. Employment increase = 4 % per year.
Population – 1029 Mn. Available workforce = 37%. Total employed = 318.47 Mn. Employed in SSI = 25
Mn. Urbanization in India= 28.50% ( 2001). Highest Density of SSI = Punjab, Haryana, Keral,
Tamilnadu. And all UT’s.
 OWNERSHIP STRUCTURE

OWNERSHIP
STRUCTURE

COMPANY
SOLE
PARTNERSHIP (PRIVATE AND CO-OPERATIVES
PROPRITORSHIP
PUBLIC )
 OWNERSHIP STRUCTURE

PROPRIETORSHIP :- MOST POPULAR, Controlled by one

person, 100% responsible and share in profit. Less legal
formalities. freedom to take any decision, tax advantage,
secrecy. Disadvantages –
PARTNERSHIP :- Indian Partnership Act- 1930. minimum 2
persons. Max. – 20 and in banking 10 persons. Partnership
deed, It is joint ownership. Profit may be equal or unequal,
mentioned duties of partners, minors cannot become
partner, share of partner's widow or son in profit.
--* Duties of partner
--* Rights of partner
--* Dissolution of firm – 1) Compulsory dissolution
2) Dissolution by happening 3) Dissolution by court
Advantages of partnership and Disadvantages of partnership.
COMPANY :- Company Act- 1956. It is an association of persons in which
they contributed their money, to carryon some business or undertaking.
CHARECTERISTICS OF COMPANY :- 1. Artificial legal person 2. separate
Legal entity 3. Common seal 4. Perpetual existence 5. Transferability
Of shares 6. Limited liability of members.
•Article of association – Internal work.
•Memorandum of association – Area of operation , Co. name, place,
objectives, capital share, liability of members. Declarations.
Classification of Co. on the basis of liability of members- 1) Co. limited
By shares 2) Co. limited by guarantee 3) Unlimited Co.
•Comparison Btn. Public co. and private Co.
•Advantages of company
•Disadvantages of company
•CO-OPERATIVES – As per census – Reg. Co-op are 0.34% and un reg.
Are 0.11 % . Indian Co-op. law- 1912-section (4).
Means are limited , voluntary joining, common economic goal,
Dividend limited to 9%, Max. shares by the member = 10%.
Min. members =10. Max.- no limit.
*Registration
•One member one vote.
•Mutual help
 Factors to be considered while selection of
organizational form-
• Your personal characteristics
• Your plans of expansion
• Need of raising capital now and future
• Need for continuity
• Tax benefit
CHARECTERISTICS OF SMALL SCALE ENTERPRISES IN
INDIA-
• Barriers to Entrepreneurship = a) Personal –lack of viable
concepts ,market know. , Tech. Skills, capital, Business
know-how, Motivation
• B) Environmental- Social stigma, legal constraints,
protectionism, patents.
 NEW GENERATION ENTREPRENEURS
• Innovative
• Hard and smart worker
• Technically sound
• Leadership skill
• Flexible - ready to change
• Able to develop global relationship
• INTRAPRENEURS :-
Employees – courageous , hard worker, Innovative,
champion of new ideas, no share in profit or loss,
build their own network, love autonomy.
Comparison between Manager and Entrepreneurs
 ROLE OF ENTREPRENEUR IN INDIAN ECONOMY

• Employment creation - 4% per annum, prevent rural – urban

flow, helps underemployment in rural areas.
• Regional development – To save urban area from over
concentration of industries and develop rural area,
• Assist rapid industrialization – socio- economic development
• Use indigenous resources
• Assist in Poverty alleviation
• Training and developing employees
• Responsible to Govt. for payment of taxes.
• 2. DEVELOPMENT OF WOMEN ENTREPRENEURS
• US-1/4 th, Canada – 1/3 , France – 1/5 , India – 1/10.
• No. of self employed women have been increasing 3 times faster
than male entrepreneurs.
• Neutralization of gender bias
• India (2001 census) – 1029 Mn. population, urban pop. = 27.80%
 WE Cond-------------
• Males – 532 Mn. Female – 497 Mn. Male – 52 % , female 48%
• Female per 1000 males 2001 1991
• 934 927
• Workers Male 275 219 ( increased – 25%)
• Workers female 127 87 ( increased – 46%)
• Literacy Rate Male 75.30 64.10 ( increased by 17%)
• Female 53.70 39.30 ( increased by 37%)
• Highest literacy rate Kerala – 91% and lowest in Bihar – 47%.
• Poverty in India – 36% In China – 6%
• Adult literacy in India – 61% and in China - 91%.
• Why women entrepreneurs are making mark ?
1) Technological development – emphasis on brain power than muscle power
2) Growth of education
3) They can start with micro – businesses
4) They want to take new challenges and opportunities
5) They want to prove their mettle in male dominated society.
The stumbling block in the path of success of WE – Security, fear of failure and
Household responsibility.
PROBLEMES OF WOMEN ENTREPRENEURES IN INDIA
Need for achievement, economic independence and autonomy are absent
No risk bearing capacity
Lack of education
Family involvement
Lack of information and experience.

Problems in non-utilization of funds (loan fund):-

Only 11% of total barrowings are utilized by women in india
Reasons:
1.Inadequate size of loan
2.Personal savings available (paternal and maternal)
3.Collateral security
4.Time taken to process loan
5.Tight repayment schedule
6.Ignorance of banking procedures.
7.Lack of experience in formulating bankable projects.
8.Lack of skills( marketing, accounting, mgmt)

SELECTION OF BUSINESS BY WOMEN

1.Simple / low technology product
2.overall distribution of business
•No correlation between education and business activity is found.
Husband’s or parent’s businesses are continued.
 Opportunity scanning and Identification
• OSI – the process of identification of an opportunity is called OSI.
Sensing that there is a prospect ( hope, scope) for the business.
• Three steps of entrepreneurship – 1) Identification of business
opportunity 2) Establishment of an enterprise 3) Managing the
enterprise profitably.
• Identification of an opportunity –
• Understanding external environment
• Govt. policy
• Market survey of demand
• SWOT analysis – Opportunities in the market and threats of
competition.
• OSI – An observation in Indian small Scale Industry –
• 1) Products based on their own/partner’s experience
• 2) Expansion of existing business
• 3) Products having ready demand in local and regional market
• 4) Imports are banned – now in these days plastic toy imports are
banned by Govt. to arrest hazardous incoming of products and to
boost Indian SS sector.
5) Products which show high profitability
6) Reservation of product line or Zone – there are 114 items
specifically
reserved to produce in SSI. Certain region or location is reserved like
–
Electronic Zone / Chemical zone ( D zone )
7) Utilization of local raw material
8) Govt. policies – sales Tax free industrial estate for specific period.,
The Zeroing in process – Final Stage
It includes various factors to be considered before selection
Of a business. Whether these factors are favorable to our
business or not? Competition is stiff, moderate or low? Capital
requirement is low, medium , moderate or high ?
The zeroing process in not in one diction or not thought in a
particular sequence. So the direction will be clockwise and
anticlockwise. We can repeat this process for many products
and final decision in taken by comparing the points in the
reckoner ( table) as given below.
 Location Product

Working Capital Raw material

Entrepreneur

Forms of business Market

Total investment Labour

 Point rating on 0-5 scale. Higher the number indicates
favorable condition to our business. In the following workout
aquarium indicates highest favorability.

Products Raw Market Labour Investme Location Overall

Materials and nt Rating
others

Plastic 2 3 3 1 1 10
doors

School, 4 4 3 3 3 17
office
bags

Aquarium 4 2 3 5 5 19
Identification of an opportunity -
• Reservation of items (DIC office, MSME
circulars )
• Government purchase program
• Liberal financing
• Availability of infrastructural facilities.
• SWOT analysis-
Visualization by an entrepreneur is not
S O
static but manipulable. Opportunities will
be increased by Govt. policies to help
new E. Reservation policy. Etc.
W T
 Project appraisal

• Definition- It is aimed at determining the viability of a project and

reshaping a project to upgrade its viability. It is multidimensional analysis
of a project. It means the assessment of a project in terms of its economic,
social and financial viability.
• Various aspects scanned –1) Technical 2) Legal 3) Financial 4) Social 5)
Ecological 6) Economical 7) Organizational 8) Managerial Aspects. These
are external environment to be considered.
• Scope of Appraisal :- Undertaken by financial Institutions, bankers , and
includes many factors and their in-depth study.
• Steps Followed in Project Appraisal –
• 1) Economic Appraisal – No purely financial but social analysis. Quantify
project cost and benefit, ROR on investment = (S-E)x 100/I. Symptoms of
a good economic project- Increased output, Enhanced services, increased
revenue , higher earning, higher standards of living, Increased national
income , Improved income distribution.
• 2) Technical A. – Selection of locations , Various factors affecting on plant
location selection, Site selection , Size of plant , scale of operation,
Technical feasibility - manufacturing process , plant layout, tech,. Services,
scale of operation, selection of machineries and equipments.
 3) Organizational A. – Structure of organization, Recruitment ,
training and retention. 4) Managerial A.- Competent managers,
appointment of managers , directors. 5) Operational A.- political
labour consideration and technical collaboration arrangement 6)
Financial A.- Prospects for marketing the product or service
profitably., Cost analysis, Pricing , Financing the projects , Income
and expenditure.
Market and commercial aspect- Market opportunity + marketing
strategy .
Market opportunity – It includes demand forecasts, self share in
market, Planning of marketing process , organizing marketing
process , control on implementation of marketing plan.
Marketing strategy – It includes set of marketing inputs, product
quality, price , design, dealers discounts, distribution network,
packing etc.
ETOP – Environmental threats Opportunity Profile . This is a tool
recommended by Gluick for project appraisal.

Unfavorable Impact

Neutral Impact
Favorable Impact
 Contd…………………….

• It consists of symbols as – neutral impact , Favorable and

unfavorable impact of various sections of environments on
business. Various Environmental Sections are mentioned in format.

Sr. Environmental Sections Impact Details of Envt.sections

No.
1. Economic LPG

2. Socio-Cultural Values, attitudes , customs ,

beliefs.

3. Technology Old, new, foreign

4. Market Customers wants, income,

competition

5. Supplier Consistency, quality, quantity,

substitutes, R&D.

6. Legal/ Gov. Various acts, rules & regulations

7. Political Stability, community attitude, labour

attitude

8. International All international subsections

 Preparation of Business Plan

A business plan is written statement of what and how you hope to achieve in
a business.

You at Present Goal/Objective/Destination

Action

It is a process of environmental analysis.

•Internal Environment (Strengths and Weakness)

•External Environment (Economic, Political, Social, Technological, Legal,

Supplier etc.)

Business Plan is also known as Project Report or Pre Investment Feasibility

Study
 Scope & Significance of Business Plan
• Personal Analysis

• For Bankers

• For Promoters and Partners

• For Customers

• For Suppliers

It includes products (actually are services) – what we want to do?

Analysis - how to do?

Time Frame – when to do?

For whom – customers and potential clients

Exclusive Summary of Business Plan: A good business plan should
contain following points
1.Summary
2.Introduction
3.About the promoter
4.About the project
5.About the location
6.Land & Building
7.Plant & Machinery
8.Miscellaneous Assets
9.Production Process
10. Production Program
11. Raw Material
12. Utilities
13. Man Power
14. Market
a. Current market status
b. Proposed approach
15. Working Capital Management
16. Requirement of funds
17. Cost of production and profitability projection for 10 years
18. Cash flow statement
19. Break Even Analysis
20. Implementation Schedule