Unit - 2

ENTREPRENEURSHIP
DEVELOPMENT
ENTREPRENEURSHIP ENVIRONMENT
“We cannot direct the winds,
but we can adjust the sails.”
 Environment - Sum total of external factors
within which an enterprise operates.
 Characteristics of environment:
1. Dynamic
2. Uncontrollable and external.
3. Poses threats and offers opportunities.
OBJECTIVES
 To know various environmental factors that
affect the entrepreneurial development.
 To determine the extent to which these factors
affect the growth and survival of an enterprise.
 To determine the relationship existing between
an enterprise and its operating environment.
ENTREPRENEURIAL ENVIRONMENT
POLITICAL ENVIRONMENT
POLITICAL ENVIRONMENT
 It is concerned with general stability of the country
in which an enterprise is expected to perform and
the political philosophy of party in power towards
business.
 Political forces define the business climate by the
constraints they impose and by the activities they
permit.
 Political factors include:
1. Political philosophy
2. Political atmosphere
3. Quality of leadership
ECONOMIC ENVIRONMENT
 ECONOMIC ENVIRONMENT

 Condition of the economy where the business primarily operates.

 It includes:

1. Economic resources
2. Economic conditions
3. Economic policies
4. Labour policies
5. Trade and tariff policies
6. Incentives and subsidies etc.
LEGAL ENVIRONMENT
 It refers to the regulatory framework within
which an enterprise operates.
 Legal environment includes flexibility and
adaptability of the law and other legal rules
governing the business activities in a country.
 Factors related with legal environment are:
1. Determining areas
2. Regulation of entrepreneurial functions
3. Regulating results of entrepreneurial
activities
SOCIO-CULTURAL ENVIRONMENT
 It prepares the background for entrepreneurial
activities.
 The social setting in which the people grow,
shapes their basic believes, values and norms.
 It includes:
1. Caste system
2. Consumer opinion
3. Cultural structure
TECHNOLOGICAL ENVIRONMENT
TECHNOLOGICAL ENVIRONMENT
 Technology represents the application of scientific
knowledge for practical purpose.
 It includes the expertise, procedures and systems
used by enterprise to make profound changes in
the transformation process and in goods and
services.
 Factors leading to entrepreneurial growth are:
1. Better utilisation of productive resources
2. Increase in competition capacity
3. Risk Efficiency
4. Improvement in productivity
E-COMMERCE – NEW OPPORTUNITY
FOR ENTREPRENEURS
INTERNATIONAL ENVIRONMENT
 International business environment deals with
the forces which originate outside the home
country in which an enterprise is working.
 It includes:
1. Development of Multinational Corporation
2. Globalisation
3. GATT/WTO
4. International Capital Market
CONCLUSION
 Study of the interface between entrepreneurship and the
entrepreneurial environment is essential for successful
operation of business firms.
 It opens up fresh avenues for the expansion of new
entrepreneurial operations. The entrepreneurs may come forward
with new ideas and with new ventures when they find
environment suitable to their enterprises.
Growth of Entrepreneurs
With growing academic interest in entrepreneurship, a lot of recent research has
concentrated on the reasons for apparent spurt in entrepreneurship. Some of the
macro-level reasons for the current growth in entrepreneurial activity are discussed
below :
1) Industry structure : Recent technological changes have led to an industry
structure that is generally shifting towards a bigger role for small firms. More
larger companies would find it more desirable to promote ancillaries and
vendors than to get into the activity directly.
2) New technologies : Increase in instability in the markets led to the decrease of
mass production and the move towards flexible specialization.
3) Deregulation and Privatization : Now companies have to deal with less
licenses and fewer governmental controls.
4) Formation of new business communities : Recent advances in IT have made
inter-firm coordination relatively cheaper compared to intra-firm cordination.
5) Increasing demand for variety
6) Services sector : Increase in per capita income leads to a greater share of the
services sector in the national economy.
7) Government incentives and subsidies

8) Increasing flow of information

9) Easier access to resources

10) Entrepreneurial education

11) Return on Innovation : Strengthening of IPR has acted as a major boost to
entrepreneurs willing to take risk on an innovation.

12) Entrepreneur as a Hero

13) High regards for self-employment

14) Rising dissatisfaction at job

 ENTREPRENEURIAL FAILURES
1) Lack of experienced management : Management team is very new
to this role. Management team has no past record of being in
charge of fortunes of a whole company.
2) Few trained or experienced manpower : Experienced candidates
are reluctant to join a new start-up.
3) Poor financial management
4) Weak marketing efforts
5) Lack of information
6) Incorrect pricing
7) Improper inventory control
8) Short term outlook
9) Few business networks
10) Four Pitfalls for entrepreneurs (Proposed by Peter Drucker)
- The personal Factors
- Lack of Planning
- Lack of Intuition
- Lack of Organizational skills.
ENTREPRENEURSHIP DEVELOPMENT
PROGRAM AND TRAINING
After Independence it was found that most of the industrial
growth was limited to a few areas and confined to few top business
houses .
Government decided to encourage entrepreneurial activities and
ventures through various incentives in both industrially backward
and rural areas.
Various agencies and institutions were engaged in
entrepreneurship development activity. Main thrust of these was to
provide technological , financial , market and morale support to the
potentials of entrepreneurs, who act as catalyst agents of change.
Entrepreneurial
Development
Program(EDP)

EDP 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”.
 NATIONAL INSTITUTE FOR ENTREPRENEURSHIP AND
SMALL BUSINESS DEVELOPMENT (NIESBUD)

• Highest body, established in 1983 by the Ministry of industry,

Government of India.
• Entrusted the task of coordinating the activities of different
agencies engaged in the task of entrepreneurship development.
• Confines it’s training activities to such areas where no
organisation is coming forward for organising programmes and
which is totally new.
• Aims at creating conducive environment for emergence of
entrepreneurship.
Functions
 Evolving effective training strategies and methodology.
 Formulating scientific selection procedure.
 Developing training aids, manuals and other tools.
 Facilitating and supporting agencies engaged in entrepreneurship
development .
 Conducting such programmes which are not undertaken by other
agencies.
 Maximising their benefits and accelerating the process of
entrepreneurship development.
 Organising all those activities that help develop entrepreneurial culture
in society.
 ENTREPRENEURSHIP
DEVELOPMENT INSTITUTE OF INDIA
(EDII)
It is a national institute set up
by Public Financial Institutions
and Government of Gujarat. It
promotes research , training
and institution building
activities by encouraging
active participation of
backward areas and special
target groups in
entrepreneurship.
Its Entrepreneurship development programme consists of

1. Selecting potential entrepreneurs.

2. Achievement motivation training .
3. Product selection and project report
preparation.
4. Business management training.
5. Practical training and work experience.
6. Post training support and follow up.

The programme run by EDII is said to be the oldest, largest,

most comprehensive, best organised and the most successful
entrepreneurship development programme in the country.
 TECHNICAL CONSULTANCY
ORGANISATIONS (TCOs)
Various state governments in association with all India
financial institutions have promoted various technical
consultancy organisations to provide technical consultancy
and training to prospective entrepreneurs. These
organisation provide a comprehensive package of services to
potential entrepreneurs.
 Functions
 Finding out industrial potential .
 Undertaking feasibility studies and preparing
project profiles.
 Conducting marketing research.
 Imparting technical and managerial training.

It aims to provide assistance to entrepreneurs right

from starting of their enterprise to successful
management of same.
 INDIAN INVESTMENT
CENTRE
(IIC)
It is a non profit centre promoted and supported by the
Government of India. It aims at promoting mutually beneficial
joint venture between Indian and Foreign entrepreneurs. It
provides relevant information to the foreign investors, desirous
of making investment in our country. It promotes collaborations
between Indian and foreign entrepreneurs.
 Besides these there are several other
important institutions providing assistance
for entrepreneurial development such as -
Xavier institute of social services, Ranchi

Xavier institute of Ranchi has been training rural entrepreneurs

since 1974. It assists the trainees in drafting project proposals
and in obtaining the required finance. It also offers a six month
programme to tribals. The programme consists of :
i. Identification and selection of candidates
ii. Motivation training
iii. Managerial training
iv. Financial assistance
Madhya Pradesh Consultancy Organization LTD

This is a technical and management consultancy organization. It

was promoted by all-India financial institutions and state
corporations. It conducts entrepreneurship development
programmes for four target groups : technical graduates,
unemployed graduates, scheduled castes and scheduled tribes and
women.

Calcutta “Y” self employment centre (CYSEC)

This center was organized as a registered society by a number of

prominent industrialists, businessman, bankers, professionals and
social workers. It’s target group is youths between 18 and 30 years
of age who are currently without regular employment. The centre
provides unemployed youth with vocational training and
assistance in establishing their own business.