8 Notes

Entrepreneurship
Development
Unit 1
Prepared and Presented by
Pooja Tripathi
Assistant Professor
Delhi Metropolitan Education
1
Introduction
• Opening Remark
• https://www.youtube.com/watch?v=Dw3
UVWpCMmE
2
3
Unit 1: Introduction
S.No. Topic
1.1 The Entrepreneurship : The concept
1.3 The Entrepreneurship : Definitions
1.4 Emergence of Entrepreneurial class
1.5 Emergence of Entrepreneurial class
1.6 Theories of Entrepreneurship
1.8 Case Study
4
1.1 The Entrepreneurship :
The concept
5
Suggested Readings
• Entrepreneurship Development and Small
Scale Enterprise, Pearson Education
• Entrepreneurship Development : An
analytical study, Akansha publishing
House
6
7
8
9
10
1.1 The Entrepreneurship : The
Concept
• Entrepreneurship is a dynamic process of vision, change, and creation.
• It requires an application of energy and passion towards the creation
and implementation of new ideas and creative solutions.
• An entrepreneur is an aggressive catalyst for change in the world of
business.
• An independent thinker who dares to be different in a background of
common events thereby catering to the social and economic
advancement.
• The prime focus of any entrepreneur is to capitalize the opportunities
and to build a strong ethical base.
• Entrepreneurial development is a pivotal issue that needs to be
addressed by any country to develop endowed entrepreneurs who can
make a mark in this world of competitions.
11
ENTREPRI
SE OBJECT
ENTREPREN
EUR PERSON
ENTREPRENEUR
SHIP PROCESS
12
Characteristic of Entrepreneur
13
Traits of Entrepreneur
14
1.1 The Entrepreneurship : The
Concept
• Concept
– Businessmen Vs Entreneurship (
https://www.youtube.com/watch?v=iwOYGLS3Qhw)
– Management Vs Entrepreneurship
– Leadership V/s Entrepreneurship (

https://www.facebook.com/watch/?v=519088128708361)
• Importance
– For individual
– For society
– For country
15
Management Vs Entrepreneurship
Entrepreneurship Management
It is process of creating Enterprise It is an overall business activity

by taking financial risk in order to which is getting done through
get profit and with people in formally
organized group
New venture On going business
Profit salary
Set Goal Achieve Goal
Entrepreneurs hold all the right to Management doesn’t enjoy

enjoy complete financial freedom complete financial freedom of the
of the business business
16
Leadership V/s Entrepreneurship
Entrepreneurshi Leadership
p
Profit Change
Enterprise/ market Social System
Less achievement oriented High Achievement oriented
Highly Innovative Not much innovative
Executers Dreamers
17
1.2 The Entrepreneurship :
Definitions
18
Introduction
• https://www.oxford-review.com/oxford-r
eview-encyclopaedia-terms/entrepreneur-
definition/
19
Changing Meaning &
Definitions
• Since 1447 word entrepreneur is in dictionary
• A person who is active and achieves something.
• 11th Century (initiators, takes up construction work,
clergy)
• 14th Century ( specialized in construction)
• With the growing importance of secular public
buildings and intensification in the division of work,
the entrepreneur increasingly developed dual roles.
The first role was that of organizer and administrator,
while the second was the role of capitalist.
• Till 15th century (adventurers)
20
Changing Meaning &
Definitions
• 17th Century (Risk takers, Involved in big
undertakings)
• Projector: One person engaged in projects
involving risk where the profit was uncertain.
• 18th century End: The concept had become
obsolete in this connection and was gradually
replaced by the “capitalist” concept.
“Undertaker” later came to mean someone
who organizes funerals.
21
Reason for Many Definitions
 Multidisciplinary
 complicated, ambiguous and changeable
 difference of opinion
22
Meaning of Entrepreneurship
Societal Phenomenon Scholarly Domain
• Entrepreneurship as a function • Entrepreneurship as a
of society will only take place if function of the market
the activities are successful
enough to affect the market in • Entrepreneur as an
a positive way, i.e. only individual
successful entrepreneurship • Entrepreneurship as a
will be recognized.
process
• The introduction of new
economic activities that lead to
changes in the marketplace
• New Activity and Market
Place(venture/ society)
23
Entrepreneurship as a function of the
market
• The entrepreneur as risk-taker/risk-manager (see e.g.
Cantillon, 1755; Say, 1804; Knight, 1916).
• The entrepreneur as opportunity creator/innovator (see
e.g. Schumpeter, 1911; Dahmén, 1950; Baumol, 1994).
https://www.youtube.com/watch?v=RqEetboK1s4
• The entrepreneur as coordinator of limited resources
(see e.g. Say, 1804; Casson, 1981).
• The entrepreneur as alert seeker of opportunities (see
e.g. Mises, 1951; Kirzner, 1974).
• The entrepreneur as capitalist (see e.g. Smith, 1776;
Ricardo, 1817; Marshall, 1890).
24
The Entrepreneur as an
Individual
25
Individual
26
Individual
27
Conclusion
• https://www.youtube.com/watch?v=0d25
25875vU
28
Entrepreneurship as a process
• “The entrepreneurial process involves all
the functions, activities, and actions
associated with the perceiving of
opportunities and the creation of
organizations to pursue them”
• Two main component of definition:
The emergence of new organizations
The emergence of opportunities
29
Some Important DEFINITIONS
• Richard Cantillian
• Entrepredre (French word) “undertakers”
• Entrepreneur as a person who pays a certain price for a product to
resell it at an uncertain price thereby making decision about
obtaining and using resources while assuming “the risk enterprise”.
• Adam Smith
• Considers him as capitalist
• Has insight into society need
• Role of industrialist
• Change Agent who transforms demand into supply
• Carl Merger
• Change agent
30
Cont…
• Peter Drucker
– Entrepreneur Vs Manager
– Innovation is the instrument of entrepreneur
– Not necessary have its own business
• Robert Ronstand
– Entrepreneurship is the direct process of creating
incremental health
– Provide unique value
• Francis A. Walker’s views:

– Excellent as organiser and coordinator
– Should be pioneer
31
New concept of Entrepreneur
• The term “entrepreneur” has been defined as
one who detects and evaluates a new situation in
his environment and directs the making of such
adjustments in economic systems as he seems
necessary. Thus has following characteristics:
– Perceives opportunities for profitable investments
– Explores the prospects of starting such manufacturing enterprise
– Obtains necessary licences
– Arranges initial capital
– Provides personal guarantee to financial institutions
– Supplies technical know-how
32
Elements of Entrepreneurship
• Creativity and innovation
• Risk taker
• Drive and Passion
• Opportunity evaluator
Thus, entrepreneurship can be defined as creating
value by people working together to implement an
idea through application drive and willingness to
take risk
An entrepreneur is an individual who bears risks
of operating a business in the face of uncertainty
about future conditions.
https://www.youtube.com/watch?v=prDs
SjywWag&t=10s 33
1.3 EMERGENCE OF ENTREPRENEURIAL CLASS
34
Suggested reading
• Chhabra, T.N. (1014), Entrepreneurship
Development, Sun India
• David, Otes, (1014), A Guide to
Entrepreneurship, Jaico Books Publishing
House, Delhi
35
Introduction
• Points covered in last sessions
 Concept of entrepreneurship
 Definition of entrepreneurship
• Topics to be covered today:
 Emerging phases of entrepreneurship
 Important personalities
 Important changes over the period
36
EARLY PHASE OF ENTREPRENEURSHIP
S.no. Time Details

Period
1 11th Although , the term entrepreneurship was
Century introduced by European economy but it
remained locked for a long time, which
hampered entrepreneurship and innovation.
1 18th Greatly changed in favor of entrepreneurship

Century and innovation, as evidenced by the
burgeoning of the joint stock company and
development of a banking system.
37
EARLY PHASE OF ENTREPRENEURSHIP
S.n Time Famous Details
o. Period personalities
1 Approx. Richard Discrepancies between demand
1680-1744 Cantillon and supply in a market create
opportunities for buying cheaply
and selling at a higher price and
that this sort of arbitrage would
bring equilibrium to the
competitive market. The
assumption was that the
entrepreneur would buy products
at a fixed price, have them
packaged and transported to
market and sell them at an
unpredictable, uncertain price.
People who took advantage of
these unrealised profit
opportunities were called
“entrepreneurs”.
38
18th and 19th Century Development
Time Time
18th Adam Smith According to him Entrepreneur are the capitalist
century
1748-1841 Jeremy in his reasoning the entrepreneur was no more
Bentham than an individual who undertook certain tasks
on contractual terms
1806-1874 John Stuart He has been recognized as the person who
Mill established the word “entrepreneur” for a more
general use than that attributed to it by
economists.
1841-1914 Alfred Apart from risk takers and coordinator,
Marshall Entrepreneur are the best educators of initiative
and versatility, which are the chief sources of
industrial progress.
Late 19 Frank The entrepreneure receives a return for making
century Knight( Europ decisions under conditions of true uncertainty.
e to US) 39
1.4 Emergence of Entrepreneurial class…
• 16th CENTURY:
– The term entrepreneur was referred to a person who
was involved in military expeditions.
• 17th CENTURY:
– An entrepreneur was a person who entered into a
contractual arrangement with the Govt. to perform a
service or to supply some goods.
– Civil engineering activities such as construction and
fortification.
– The profit was taken (or loss was borne) by the
entrepreneur.
40
1.4 Emergence of Entrepreneurial
class…
• 18th CENTURY:
– 4 MAIN CONCEPTS EVOLVED
 It was Richard Cantillon, French Economist, who applied the
term entrepreneur to business for the first time (1744).
 He is regarded by some as the founder of the term.
 He defined an entrepreneur as a person or an agent who buys
factor services at certain prices with a view to sell them at
uncertain prices in the future.
• Concept 1: ENTREPRENEUR = RISK BEARER
41
class…
• Jean-Baptiste Say, (aristocratic industrialist) in 1804—
An entrepreneur is an economic agent who unites all
means of production- land, labour and capital to produce
a product or service.
– Product sales pay rent, wages, interest and what remains is
profit.
– He shifts economic resources from an area of lower to an area of
higher productivity.
• Concept 2: ENTREPRENEUR = ORGANISER
42
class…
• Joseph A. Schumpeter (1944)
• The entrepreneur in an advanced economy is
an individual who introduce something new in
the economy- a method of production not yet
tested by experience in the branch of
manufacturing, a product with which
consumers are not yet familiar, a new source of
raw material or of new markets and the like.
• Concept 3: ENTREPRENEUR = INNOVATOR
43
class…
• 1910: Adam Smith – An entrepreneur is a person who only
provides capital without taking active part in the leading
role in the enterprise.
• 1961: David McClelland—A person with a high need for
achievement [N-Ach] who is energetic and a moderate risk
taker.
• 1964: Peter Drucker—One who searches for change,
responds to it and exploits opportunities. Innovation is a
specific tool of an entrepreneur hence an effective
entrepreneur converts a source into a resource.
• 1014: Ronald May—Someone who commercializes his or her
innovation
44
Factors impacting Entrepreneurial
growth
• Ethical value of
Entrepreneur
• Minority Group
• Need for achievement
• Political System
• Exposure to
opportunity
• Industrial climate
45
Conclusion
• Entrepreneurship has evolved extensively over
the period .
• The term was introduced in 11th century in
France and evolved from late 17th century .
• It took following evolution:
Military expedition
Contractor
Projector
Risk taker
 organizer
Innovator
Capitalist
Achiever
Opportunity Seeker
Commercializes innovation
46
1.5 Emergence of
Entrepreneurial class in India
47
Suggested reading
• Chhabra, T.N. (1014), Entrepreneurship
Development, Sun India
• David, Otes, (1014), A Guide to
Entrepreneurship, Jaico Books Publishing
House, Delhi
48
Introduction
• Topics covered till now:
Concept of entrepreneurship
Definitions of entrepreneurship
Emergence of entrepreneurship
• In today’s session:
The emergence of entrepreneurial class in
India
Importance of topic
Founder entrepreneurs of India
Conclusion 49
The Entrepreneurial Class In
India
• Ancient India-Even in 1700 BC during the Harappan
civilization internal and external trade was prevalent.
Moving onto Iron age, Vedic age, Magadha empire,
Nanda dynasty and Mauryan empire trade was
widespread and overseas trade was also done.
• Medieval India (AD 700-AD 1857) trade was heavily
done by the Delhi sultanate and later on by the
Mughals. Mughals used to trade with the Arab
countries, Persia, and Egypt. They imported silver
from Japan, horses from West Asia and gold from
East Indies. They traded with Europe and China also.
50
The Entrepreneurial Class In
India
• Indian trade prospered during the Mughal period and
Indian products were in huge demand in Britain starting
from 1600. Between 1700 and 1710, British government
revised its custom regulations twice to discourage demand
of Indian goods. This phase continued up to 1757 when
East India Company captured parts of Bengal.
• With the arrival of the British in India trade was hit as
they implemented policies which discouraged indigenous
industry. The British administrators transported the raw
material to Britain and discouraged indigenous
manufacturing to allow the British products to find a
market in India.
51
Entrepreneurial Class in Modern India
Pre-Independence (1857-1947)
• By 1858 Britain had whole of India under its rule. It

exploited our natural resources and used our population
as the customers of its goods. It deliberately kept the
economic development of the country in poor shape.
Despite these hurdles Indian entrepreneurs like
Jamsetji Tata, GD Birla, L.R. Kirloskar, and
Jamnalal Bajaj started off ventures which not only
encouraged other Indian entrepreneurs but also
succeeded. The Swadeshi movement also encouraged
consumption of Indian goods and hence these
industries.
52
Entrepreneurial Class in Modern India Pre-
Independence (1857-1947) Continued…
• Setting up of the First Indian

Mills
 In 1854, a Parsi businessman
Cowasji Dowar set up the first
Cotton Textile mill in India.
 In 1868 Jamsetji Tata set up the
Tata Group.
 In 1874 Jamsetji Tata set up a
cotton mill called the Empress
mill in Nagpur.
 In 1880 Wadia set up a cotton
mill in Mumbai.
 In 1888, Lakshman Rao
Kirloskar founded the Kirloskar
group. Jamsetji Tata “ the father of Indian
History 53
• Setting up of the First
Indian Enterprise
 Tata Iron and Steel
Company (TISCO) was
the first enterprise to
start in 1907 in
Jamshedpur, Jharkhand
by Dorabji Tata. Before
this individual mills
were set up, this was a
large scale production
facility.
54
• In 1919, the first jute mill was set up in Calcutta by
Birla.
• In 1916, Jamnalal Bajaj set up the Bajaj Group.
• In 1941, JRD Tata set up the Tata Airlines, the first
civil aviation company in India.
• In 1945, TELCO (Tata Engineering and Locomotive
Company) and WIPRO were set up.
• In 1910 during WW1 raw materials could not be
sent to England leading to setup of more factories
in India by the British.
55
The Founder Entrepreneurs of India
Jamnalal Bajaj
GD BIRLA
JRD TATA 56
Entrepreneurial Class in Modern India
Post-Independence (1947-1017)
• India’s economic development strategy after
independence gave preference to mining, agriculture,
and investment goods sector.
• Pt. Nehru wanted to develop the Indian economy on
the lines of Soviet Union's socialist structure. He
favored that the state should control every aspect of
the economy.
• In 1956, the Industrial policy was released.
• Between 1960 to 1980, the country’s economy reeled
under the “licence raj” and a corrupt bureaucratic
system. Entrepreneurial Class in Modern
57
Entrepreneurial Class in Modern India Post-
Independence (1947-1017) continued…
• Despite the hurdles, Dr. Verghese Kurien
came up with the world’s first buffalo milk
powder plant in Anand , Gujarat in 1955.
• In 1957, Dr. Verghese Kurien founded
AMUL (Anand Milk Union Limited) in
Anand, Gujarat.
• In 1966, Dhirubhai Ambani set up
Reliance Textile Industries Pvt. Ltd.
58
• In 1991, Dr. Manmohan Singh brought about
huge economic reforms in terms of
liberalisation. The economic focus changed from
an agro based economy to an industrialized one.
With LPG (Liberalisation, Privatisation,
Globalisation) the barriers for entrepreneurial
development diminished leading to growth of
the entrepreneurial class.
• The Industries Development and Regulation Act
of 1971 was abolished in 1991
59
• On 14 august, 1995 the first publically available Internet service
in India was started by VSNL (Videsh Sanchar Nigam Limited)
while the ERNET (Educational Research Network) was
launched in 1986.
• In 1004 the government formulated its Broadband policy
leading to availability of high speed internet in the country and
in 1010 the 4G spectrum auction made the 4G internet
available.
• On 16 January, 1016 the government launched the Start Up
India scheme to further support the budding entrepreneurs of
the nation. The Current Indian Entrepreneurial Footprint
DILIP SANGHVI MUKESH AMBANI AZIM PREMJI KIRAN
MAZUMDAR SHAW NARAYAN MUR
60
Conclusion……
• Following three events as landmarks in the emergence of
the entrepreneurial class in India:
1. 1907-the setting up of the Tata Iron and Steel Company by
Dorabji Tata led to more such enterprises by other Indian
entrepreneurs.
2. 1991- liberalisation of business activities meant lesser barriers
to entry and encouraging atmosphere for entrepreneurs.
3. 1995- internet became the tool in the hands of the educated
youngsters to realise their entrepreneurial dreams easily.
Companies like Oyo rooms, Flipkart, Paytm, Limeroad, Jio,
Menstrupedia, Zivame and many more are all aided by the
power of Internet.
61
62
Suggested Readings
• Charantimath, (8th Ed., 1014),
Entrepreneurship Development and Small
Business Enterprise, Pearson Education
• Bamford C.E. (1st Ed., 1015),
Entrepreneurship: A Small Business
Approach, McGraw hill Education
• Balaraju, Theduri, (1011),
Entrepreneurship Development: An
Analytical Study, Akansha Publishing
House 63
Introduction
• Topics Covered in last session
– Emergence of entrepreneurial class in India
• Today’s topic to be covered
– Various theories given for entrepreneurship
– Personalities giving those theories
64
• Economic Theories
• Psychological Theories
• Sociological Theories
65
Economic entrepreneurship theory
 Classical theories of economic entrepreneurship Theory

Richard Cantillon (1697-1745): The task of the entrepreneur
is to identify demand and to manage production so as to
satisfy it. He takes risks and scouts out the way ahead to find
potentially profitable activities.
Adam Smith (1714-1790): Smith proposed the idea of an
invisible hand—the tendency of free markets to regulate
themselves by means of competition, supply and demand,
and self-interest.
Alfred Marshall (1841-1914): According to him, there is small,
innovative firm (which by definition is exposed to uncertainty
and risk) where the entrepreneur has a key role, and the large
firm, which has share capital, and which is based on a
bureaucratic organization and mass production.
66
Economic Entrepreneurship
Theory
1. Theory of Functional Behaviour – Casson
1. Theory of Economic Incentives – Papanek and
Harris
4. Theory of Adjustment of Price – Kirzner
4. Theory of X-Efficiency-Leibenstein
5. Theory of Innovations-Schumpeter
6. Theory of Harvard School
7. Theory of High Achievement – McClelland
8. Theory of Profit-Knight
9. Theory of Market Equilibrium-Hayek
67
Theory...
1. Theory of Functional ..Behaviour – Casson :An
economy subject to volatility and shocks, there is a
continual need for market adjustment. Its ability of
an entrepreneur to assess make these adjustment by
quickly identifying opportunity and arranging
resources to make adjustment.
2. Theory of Economic Incentives – Papanek and
Harris: According to G.F.Papanek and J.R.Harris
Theory, economic incentives are the integral factors
that have induced entrepreneurial initiatives. Main
features of this theory are- (i) Economic incentives,
(ii) Link between economic gains and the inner urge
68
Theory...
Theory of Adjustment of Price – Kirzner: The chief
role of entrepreneur is based upon the adjustment
of price in the market. The buyer may pay higher
price or seller may accept a lower price, which
gives rise to opportunities for profit. Further if
different prices prevail in the same market, there
in an opportunity for profitable arbitrage between
two segments.
Theory of X-Efficiency-Leibenstein: Harvey
Leibenstein propounded the theory of X-efficiency
which is popularly called Gap Filling Theory.
According to Leibenstein, entrepreneurial
functions are determined by the X-efficiency 69
Theory...
Theory of Innovations-Schumpeter: The entrepreneur
does not operate within conventional technological
constraints, making small gradual changes to existing
production methods. Instead, they develop new
technologies or products that make discrete discontinuous
changes which shift the paradigm altogether, breaking
organizational routines and driving economic
development. In Schumpeter’s words, the entrepreneur as
innovator is responsible for ‘the doing of new things or the
doing of things that are already being done in a new way’
(Schumpeter, 1947, p. 151). This could involve: (i) the
creation of a new product; (ii) a new method of
production; (iii) the opening of a new market; (iv) the
capture of a new source of supply; or (v) a new
70
organization of industry.
Theory...
Theory of High Achievement – McClelland
– Gave following two characteristics of entrepreneurship:
• Doing things in new and better way
• Decision making under uncertainty
– Main reason for being entrepreneur is need for
achievement
• Theory of Harvard School:
– Initiate, maintain develop a profit –oriented business
– Following are two important part of entrepreneurship
• Organisation and coordination
• Sensitivity to environment
71
Theory...
Theory of Profit-Knight: This theory is developed by Knight,
Frank H. He points out that entrepreneurs are specialized
group of persons who bears risk and deals with uncertainty.
Main features of this theory are pure profit, situation of
uncertainty, risk bearing capability, guarantee of specified
sum, identification of socio economic and psychological
factors, use of consolidation techniques to reduce business
risks.
Theory of Market Equilibrium-Hayek: Entrepreneurship is
coordination of existing knowledge which was dispersed
widely over different parts of the economic system:
entrepreneurs were believed to play a central role in
disseminating market knowledge of new events, thereby
improving the coordination of the economy. 72
Conclusion
• Classical theories
Richard Cantillon (1697-1745)
Adam Smith (1714-1790)
Alfred Marshall (1841-1914)
73
Conclusion
1. Theory of Functional Behaviour – Casson
 1. Theory of Economic Incentives – Papanek and Harris
 4. Theory of Adjustment of Price – Kirzner
 4. Theory of X-Efficiency-Leibenstein
 5. Theory of Innovations-Schumpeter
 6. Theory of Harvard School
 7. Theory of High Achievement – McClelland
 8. Theory of Profit-Knight
 9. Theory of Market Equilibrium-Hayek
74
Psychological Theory
• Entrepreneurship gets a boost when
society has sufficient supply of individuals
with necessary psychological
characteristics. The psychological
characteristics include need for high
achievement, a vision or foresight and
ability to face opposition. These
characteristics are formed during the
individual’s upbringing which stress on
standards of excellence and self-reliance. 75
Psychological Theory
• Theory of Psychology: This theory is developed by John
H. Kunkel. According to him psychological and
sociological variables are the main determinants for the
emergence of entrepreneurs. According to him,
entrepreneurship can be dependent upon the following
structures in the economy, i.e.- (i) Demand Structure (ii)
Limitation Structure (iii) Labor Structure and (iv)
Opportunity structure.
• Theory of Personal Resourcefulness: The root of
entrepreneurial process can be traced to the initiative
taken by some individuals to go beyond the existing way of
life. The emphasis is on initiative rather than reaction,
although events in the environment may have provided the
trigger for the person to express initiative.
76
Sociological entrepreneurship theory
• The supporters of sociological theory says

that the entrepreneurial activities is
affected from social status hierarchy and
values. Individuals’ position, tradition,
cultural values, mobility and social status
etc. are thoroughly effected to
entrepreneurship development..
77
Sociological entrepreneurship
theory
• Frank W. Young Theory
• B.F. Hoselitz Theory
• Max Weber Theory
• Cochran Theory
• Stocke’s Theory
78
Frank W. Young Theory
According to theory, individual are not
entrepreneurs rather group undertakes
entrepreneurship. A group comes in reactive status
when the following circumstances happen at one
attempt.
a. When group experiences minority situation in
society.
b. When group do not make approach upto
effective social machinery.
c. When group is having sound and more
institutional resources rather than other
79
groups.
B.F. Hoselitz Theory
• Entrepreneurship development is based on
social progress and employment patterns.
• Personality development is an essential quality
for entrepreneurship development.
• Culturally marginal groups are important
characters for development process.
• Marginal groups are having the ability of
innovation.
• Managerial ability and leadership quality is must
for entrepreneurship development.
80
Max Weber Theory
• Entrepreneurship development is based
on Protestants.
• Selection of occupation pursuits is effected
from religious and social values.
• Religious and moral values are effected to
people’s attitude, thinking power.
81
Cochran Theory
• The success of an entrepreneur is basically affected from
the following factors:
i. The social attitude of the person towards his
occupation.
ii. The role expectations of the sanctioning group.
iii. The operational requirements of the job.
• Thus, the social attitude of the person and the role
expectations are determined by the society’s values as
well as sanctioning groups that determine the success
and failure of entrepreneurship. Overall entre
preneurship development is associated with social
environment.
82
Stocke’s Theory
• According to David Stoke’s theory,
entrepreneurship is likely to emerge under
specific social sanctions, social culture and
economic action. According to Stokes,
personal and societal opportunities and
the presence of requisite psychological
distributions may be seen as conditions for
an individual movement to get changed
into industrial entrepreneurship.
83
Conclusion
• Physiological Theory:
Theory of Psychology
Theory of Personal Resourcefulness
• Sociological Theory
Frank W. Young Theory
B.F. Hoselitz Theory
Max Weber Theory
Cochran Theory
Stocke’s Theory
84
Conclusion
1. Theory of Functional Behaviour – Casson
1. Theory of Economic Incentives – Papanek and Harris
4. Theory of Adjustment of Price – Kirzner
4. Theory of X-Efficiency-Leibenstein
5. Theory of Innovations-Schumpeter
6. Theory of Harvard School
7. Theory of High Achievement – McClelland
8. Theory of Profit-Knight
9. Theory of Market Equilibrium-Hayek
85
Conclusion
86
TYPES OF ENTREPRENEURS
87
Introduction
• CLARENCE DANHOF
CLASSIFICATION
• COLE’S CLASSIFICATION
• ON THE BASIS OF STAGES OF
DEVELOPMENT
• ON THE BASIS OF TYPE OF
BUSINESS
• ON THE BASIS OF USE OF
TECHNOLOGY
• ON THE BASIS OF MOTIVATION
88
CLASSIFICATION BY
CLARENCE DANHOF
a) INNOVATIVE ENTREPRENEURS
b) ADOPTIVE OR IMITATIVE
ENTREPRENEURS
c) FABIAN ENTREPRENEURS
d) DRONE ENTREPRENEURS
89
INNOVATIVE
ENTREPRENEURS
• They are generally aggressive on
experimentation and cleverly put
attractive possibilities into practice.
• An innovative entrepreneur, introduces
new goods, inaugurates new methods of
production, discovers new markets and
reorganizes the enterprise.
• Innovative entrepreneurs bring about a
transformation in lifestyle and are always
interested in introducing innovations. 90
ADOPTIVE OR IMITATIVE
ENTREPRENEURS
• Imitative entrepreneurs do not innovate
the changes themselves, they only imitate
techniques and technology innovated by
others.
• They copy and learn from the innovating
entrepreneurs.
• While innovating entrepreneurs are
creative, imitative entrepreneurs are
adoptive
91
DRONE ENTREPRENEURS
• Drone entrepreneurs are those who refuse to
adopt and use opportunities to make changes in
production.
• They would not change the method of
production already introduced.
• They follow the traditional method of
production.
• They may even suffer losses but they are not
ready to make changes in their existing
production methods.
92
FABIAN ENTREPRENEURS
• These entrepreneurs are traditionally bounded.
• They would be cautious.
• They neither introduce new changes nor adopt
new methods innovated by others entrepreneurs.
• They are shy and lazy. They try to follow the
footsteps of their predecessors.
• They follow old customs, traditions, sentiments
etc. They take up new projects only when it is
necessary to do so.
93
COLE’S CLASSIFICATION
EMPIRICAL ENTREPRNEUR
– Who never introduces anything new in his method of production
or business.
– Simply follows the rule of thumb
– Like drone entrepreneurs
RATIONAL ENTREPRENEUR
– Who is ready to introduce even revolutionary changes on the
basis of general economic conditions prevailing in that area.
– Takes rational decisions himself depending up on the situation.
COGNITIVE ENTREPRENEUR
– Who takes advices and services of experts and introduces
changes.
94
ON THE BASIS OF STAGES OF
DEVELOPMENT
1) First Generation Entrepreneur: He is one who
starts an industrial unit by means of his own
innovative ideas and skills. He is essentially an
innovator. He is also called new entrepreneur.
2) Modern Entrepreneur: He is an entrepreneur
who undertakes those ventures which suit the
modern marketing needs.
4) Classical Entrepreneur: He is one who develops
a self supporting venture for the satisfaction of
customers’ needs. He is a stereo type or traditional
entrepreneur.
95
ON THE BASIS OF TYPE OF
1)
BUSINESS
Business Entrepreneur: He is an individual who
discovers an idea to start a business and then builds a
business to give birth to his idea.
2) Trading Entrepreneur: He is an entrepreneur who
undertakes trading activity i.e; buying and selling
manufactured goods.
4) Industrial Entrepreneur: He is an entrepreneur who
undertakes manufacturing activities.
4) Corporate Entrepreneur: He is a person who
demonstrates his innovative skill in organizing and
managing a corporate undertaking.
5) Agricultural Entrepreneur: They are entrepreneurs who
undertake agricultural activities such as raising and
marketing of crops, fertilizers and other inputs of 96
ON THE BASIS OF USE OF
TECHNOLOGY
Technical Entrepreneur:
• They are extremely task oriented.
• They are of craftsman type.
• They develop new and improved quality goods
because of their craftmanship.
• They concentrate more on production than on
marketing.
97
TECHNOLOGY …
• Non-Technical Entrepreneur:
• These entrepreneurs are not concerned with
the technical aspects of the product.
• They develop marketing techniques and
distribution strategies to promote their business.
• Thus they concentrate more on marketing
aspects
98
TECHNOLOGY …
• Professional Entrepreneur:
• He is an entrepreneur who starts a business
unit but does not carry on the business for long
period.
• He sells out the running business and starts
another venture.
99
ON THE BASIS OF
MOTIVATION
• Pure Entrepreneur:
• They believe in their own performance while
undertaking business activities.
• They undertake business ventures for their
personal satisfaction, status and ego.
• They are guided by the motive of profit.
• For example, DhirubhaiAmbani of Reliance
Group.
100
ON THE BASIS OF
MOTIVATION…
• Induced Entrepreneur:
• He is induced to take up an entrepreneurial
activity with a view to avail some benefits from
the government.
• These benefits are in the form of assistance,
incentives, subsidies, concessions and
infrastructures
101
ON THE BASIS OF
MOTIVATION…
• Motivated Entrepreneur:
 These entrepreneurs are motivated by the desire to
make use of their technical and professional expertise
and skills.
 They are motivated by the desire for selffulfillment.
• Spontaneous Entrepreneur:
 They are motivated by their desire for selfemployment
and to achieve or prove their excellence in job
performance.
 They are natural entrepreneurs.
102
ON THE BASIS OF
ENTREPRENEURIAL
Novice:
ACTIVITY
• A novice is someone who has started his/her first entrepreneurial
venture.
Serial Entrepreneur:
• A serial entrepreneur is someone who is devoted to one venture at
a time but ultimately starts many.
• He repeatedly starts businesses and grows them to a sustainable
size and then sells them off.
Portfolio Entrepreneurs:
• A portfolio entrepreneur starts and runs a number of businesses at
the same time.
• It may be a strategy of spreading risk or it may be that the
entrepreneur is simultaneously excited by a variety of opportunities.
103
INTRAPRENEURS
 The new brand of corporate entrepreneurs from within
an organisation are called as intrapreneurs.
• The term intrapreneur was coined in USAin the late
seventies.
• Many senior executives of big companies in America left
their jobs and started small business of their own.
• They left the organisation because they did not get any
opportunity to apply their own ideas and innovative ability.
• These entrepreneurs become successful in their own
ventures.
• Some of them caused a threat to the corporations they left.
104
INTRAPRENEURS
• This type if entrepreneurs have come to be called
Intrapreneurs.
• They believe strongly in their own talents.
• They have desire to create something of their
own.
• They want responsibility and have a strong drive
for individual expression and more freedom in
their present organisational structure.
• When this freedom is not forthcoming, they
become less productive or even leave the
organisation to achieve self actualisation 105
Conclusion
• Types of Entrepreneur
• Entrepreneur
• Assignment for tutorial
106
Entrepreneurship
Development
Unit 2
Pooja Tripathi
Assistant Professor
107
108
Unit 2: Promotion of Venture
S.No. Topic
2.1 Opportunity Analysis
2.2 External Environment Analysis
2.4 Economic, Social, and Technological Analysis
2.4 Competitive analysis
2.5 Legal Requirement for Establishing New Unit and Raising

Fund
2.6 Venture Capital Sources and Documents required
2.7 Forms of Ownership
109
Suggested Readings
House
110
• Introduction
–Promotion of venture
–Concept of Opportunity
–Sources of Opportunity
111
Promotion of Venture
• Definitions;
– Prof E.S.Veed: Promotion involves four elements, first is
discovery, second is investigation, third is assembling and
fourth is financing.
– Prof. H.E.Hoglan: Promotion is the process of creating specific
business enterprises. The aggregate of activities contributed by
all those who participate in building up the business.
– Prof C.W. Grestentenberg: Promotion may be defined as a
discovery of business opportunities and the subsequent
organisation of funds properly and managerial ability into
business creation for purpose of making profits.
– Prof. Cockburn: Promotor is the person who commits to build
and operate the industries in the context of given scheme and
takes necessary steps to fulfil this objectives.
112
Promotion of venture
• Sensing the business opportunity
• Analysing Business Environment
• Determining capital resources
• Setting up a new unit
113
Opportunity
• Opportunity is a positive trend in external environment.
• It is an attractive project idea which an entrepreneur
accepts as a basis for his investment decision
• A mere “possibility” is to be distinguished from business
“opportunity”.
• A business possibility may take the shape business
opportunity fit proves as commercially viable.
114
Opportunity
• Opportunities might be pursued and the
various alternative solutions that might be
developed to exploit them, such as new
products, services, processes and ideas.
• It is only when customers are convinced
about the benefits of the solution that they
are offered that the opportunity might be
considered to be viable as a business
venture.
115
Opportunity Analysis
• Opportunity identification is not necessarily be invention
and the development of completely new products or
services. The response to the opportunities that are
identified might take the form of many small
improvements in the processes used by an organization
or throughout the whole supply chain.
• Before taking a decision to implement new ideas, it is
necessary to study in depth their profitability and
viability so that the venture may be successful and there
may be reasonable return on investment. Such studies
are called opportunity analysis and is done in various
ways.
116
Cont..
• Various factors such as financial and non-
financial incentives provided by the government,
availability of markets and environmental factors
etc. are considered by the
prospective entrepreneur in the process of
opportunity analysis.
• Muzyka (2000) explains that opportunities come
in many ways, shapes and forms and
entrepreneurs, while not needing to have the
idea themselves must structure a business
around the idea.
117
Sources of Opportunity
Ansoff and McDonnell
(1990) Drucker (1985)
• Ansoff and McDonnell • The unexpected event that triggers off
a new demand (for example, interest in
emphasized the effect of shock
renewable forms of energy because of
events on innovation. potential shortages or the high price of
Opportunities for the oil) or climatic effects (for example,
organization and threats to the demands for construction following
the Asian tsunami and hurricanes)
organization emerge from the
• an incongruity between what is
environment and are not available and what is needed by
within the control of the consumers (for example, the creation
organization. They suggested and growth of telephone and Internet
that shock events arrive banking)
• a process need to fulfil a major new
suddenly, pose novel problems
demand by consumers (for example,
and raise the prospect of major security software for e-commerce)
business loss.
118
Drucker (1985)……
• A change in the industry structure, for example
the increased deregulation of financial markets
leading to many new businesses, or in the energy
and farming sector
• A change in demographics (for example, the
increasing number of elderly people in
developed countries boosting demand for certain
categories of new products)
119
• A change in the perception or mood of the
community (for example, green marketing
and interest in organically farmed foods)
• The development of new knowledge (for
example in bioscience leading to the
growth in research into and promise of
new products and in biotechnology
regarding the development of personal
identification for passports and identity
cards) 120
Other sources of opportunity
• Mature markets, not necessarily growth markets
• Creating customer value
• Generating new ideas
• The triggers to the creation of new business
– Frustration with existing products and services
– Exploiting a hobby
– Starting young with a simple idea
– Responding to a personal crisis
121
Other sources of opportunity…
• The vital role of information
• Using someone else’s ideas
• Removing unnecessary features
• Do better what the employer does
• Exploiting structural changes in sectors
and large organizations
• Sectors with particular potential for
entrepreneurs
122
Other sources of opportunity…
• Organization structure opportunities
• Creativity and thinking techniques
• Asking customers or potential
customers
• Analyzing competitor products
123
FACTORS OF OPPORTUNITY
ANALYSIS
• Market and Demand Analysis
• Resource Analysis
• Technical Analysis
• Business Environment Analysis
– (i) Industrial policy,
– (ii) Licensing policy
– (iii) Industrial Development and Regulation Act
– (iv) Price Control Policy
– (v) Distribution System
– (vi) Incentives for industries in backward region
– (vii) Incentives for small scale units,
– (viii) Incentives for export-oriented units
– (ix) Recirculation of Foreign Exchange
– (x) Assessment of profitability and position of existing industr.es etc.
124
FACTORS OF OPPORTUNITY
ANALYSIS…
Financial Analysis
i) Total Cost of ‘a project including cost of land, building, machines, raw
material, cash flow etc.
(ii) Sources and requirements of fixed and working capital.
(iii) Expected sales, terms of credit, income, profit, interest, return on
investment etc.
(iv) Assistance and financial concessions from the government.
(v) Social profit analysis in case of public enterprises.
(vi) Return on capital investment.
Risk Analysis
Plant Location and Layout Situation
Evaluation Analysis
125
OBJECTIVES OF IDENTIFICATION
OF BUSINESS OPPORTUNITIES
(i) To evaluate the possibilities of utilizing physical resources of a
particular region from the technical angle.
(ii) To identify those industries which are not based on
local resources
(iii) To identify the industrial potentialities in particular region and
country as a whole.
(iv) To estimate the capital, labour, transport, power, fuel, raw material
for feasible industries.
(v) To explore the development possibilities of the region with regard to
agriculture, minerals, labour, irrigation etc.
(vi) To identify those areas and directions which are necessary for the
balanced growth of region.
(vii) To evaluate the impact of financial resources,
production, employment in industrial development process.
126
Conclusion
• Promotion of Venture
• Concept of opportunity
• Sources of Opportunity
• Factors of Opportunity analysis
• Objectives of Opportunity Analysis
127
2.2 External Environment
Analysis
• Introduction:
– What is Business
environment?
– Types of Business
environment?
– What External
environment?
– Why do we need to
analyse external
environment?
128
Business
Business environment may be understood as the organized efforts of an
enterprise to supply consumers goods and services for profit.
Businesses may vary in size, as measured by number of employees,
volume of sales etc. But, all businesses share one common purpose that
is to earn profit.
Apart from profits, business may thrive for:
– An important institution in the
– Society
– For the supply of goods and services
– Creating job opportunities
– Offering better quality of life
– Contributing to economic growth of the country
• Business is important for an individual, society and the country.
• Similarly, Business also need society.
• “Change” is one word that is constant for any Business.
129
Business Environment
• Business environment refers to all forces, Which
have bearing on functioning of business. This
can be social , political, economic, and
technological factors, apart from internal forces
that of the organization.
• Features:
• Impact of external forces
• Specific and general forces
• Dynamic in nature
• Uncertainty
• Relativity
• Multifaceted
130
Importance of scanning
environment
• First mover advantage
• Identification of threats
• Coping with rapid Changes
• Improving performance
• Giving direction to growth
• Meeting competition
• Image building
• Continuous learning
131
Types of Business Environment
132
Internal Environment
• The business has absolute control on internal
environment.
• It Includes six Ms:
– Man( Human Resources)
– Money (financial Resources)
– Marketing Resources
– Machineries (Physical assets)
– Management Structure and Nature
– Miscellaneous Factors ( R&D, Image and brand
equity, Value system, Competitive advantage)
133
External Environment
Types of External Environment
Micro Environment Macro Environment
Supplier
Customers Economic
Marketing Socio Culture
Intermediaries Political
Financiers Legal
Public Perception
134
Micro Environment
• Micro Environment also refers to task environment and
operating environment.
• Micro Environment, though external ,impacts to
specifically to company.
• Micro Environment factors are more intimately linked to
company and impacts its performance
• Micro environment includes:
– Supplier
– Customers
– Marketing Intermediaries
– Share holders
– Public Perception/ Media
– Employees
135
Macro Environment
• Macro Environment also refers to general
environment or remote environment.
• Macro environment are more uncontrollable
than micro environment
• Adaptation is only solution to uncontrollable
Macro environment.
• Macro environment factors include(STEEP):
– Socio Cultural and Demographics
– Technological factors
– Economic and physical development
– Political and legal development
136
Conclusion
• Business Environment refers to all factors
that impact any business
• Scanning of environmental factors is
extremely important for success and
sustainability
• Environmental factors are internal and
external
• External factors include micro and macro
factors.
137
2.3 Economic, Social, and
Technological Analysis
• Introduction
– Economic , social and technological factors
are external factors on which business has no
control.
– These are also known as Macro factors
because they general for all business
– Apart from economic, social and technological
analysis, Ecological and political analysis is
also the part of macro environment
138
Economic Analysis
• Business has its closest relation from economic
environment, as it obtains all its input from
economy and provide all its output to economy.
• State of economy usually in flux
• The main factors that affect economic
environment are:
– Economic Conditions
– Economic Policies
– Economic Systems
139
Economic Conditions
• The economic condition of any country refers to
set of economic factors that have great influence
on business organization and its functioning
• These include:
– Gross domestic product(GDP)
– Foreign exchange reserve
– Growth of foreign trade
– Strength of Capital etc.
• All the above factors help in improving pace of
economic growth.
140
Economic Policies
• Policies framed by government for developments in
economy. It includes:
– Industrial Policy
– Fiscal policy
– Monetary policy
– Foreign Investment Policies
– Export – Import Policies (EXIM policies)
• The government keeps on changing these policies for
development in economic scenario, political expediency
and the changing requirement.
• Every business has to strictly follow these policies and
adapt the required changes
141
Economic system
• The world economy is primarily governed
by three types of economic systems:
– Capitalist Economy
– Socialist Economy
– Mixed Economy
• The type of economy system influences
business
142
Other factors of Economic
Environment
1. Capital : Capital is one of the most important perquisites to establish an
enterprise. Availability of capital facilitates for the entrepreneur to bring
together the land of one, machine of another and raw material of yet another to
combine them to produce goods.
2. Labour : The quality rather quantity of labour is another factor which
influences the emergence of entrepreneurship. Most less developed countries
are labour rich nations owing to a dense and even increasing population. But
entrepreneurship is encouraged if there is a mobile and flexible labour force.
4.Raw Materials : The necessity of raw materials hardly needs any emphasis for
establishing any industrial activity and its influence in the emergence of
entrepreneurship. In the absence of raw materials, neither any enterprise can
be established nor an entrepreneur can be emerged. Of course, in some cases,
technological innovations can compensate for raw material inadequacies.
4. Market : The fact remains that the potential of the market constitutes the
major determinant of probable rewards from entrepreneurial function. The size
and composition of market both influence entrepreneurship in their own ways.
5. Infrastructure : Expansion of entrepreneurship presupposes properly
developed communication and transportation facilities. 143
Social Analysis
• Social environment includes factors like:
– Customs
– Traditions
– Value
– Beliefs
– Poverty
– Literacy
– Life expectancy etc.
• Societal Values and lifestyle changes over the time, and this change
influence business too
• Change in culture and lifestyle may come from:
– Medical( healthy eating, exercising etc.)
– Science (Global warming, going green)
– Economic ( long hours working, women work force)
– Cultural diversity
– Technology( biodegradable plastic) etc.
• Demographics refers to size, density, distribution, age and growth rate of
population 144
Technological Analysis
145
Conclusion
• Economic, socio and technological factors
are macro factors
• Economic factors include economic
policies, system and conditions
• Socio environments includes, cultural,
demographic, values, beliefs, etc
• Technological factors refers to systematic
application scientific knowledge to
practical tasks
146
Competitive Advantage
• Introduction:
– Competition plays a vital role in sustainability
of business
– It is competition that contribute to
performance of firm , such as innovations, a
cohesive culture, or good implementation.
– Competitive advantage was introduced in
1985 essentially as companion of competitive
strategy
147
Competitive Strategy
• Competitive strategy aims to establish a
profitable and sustainable position against the
forces that determine industry competition
• Choice of competitive strategy depend on:
– Attractiveness of industries for long-term profitability
and the factors that determine it
– Relative competitive position within an industry
• Competitive strategies can regulate both the
above factors
148
Cont..
– Competitive advantage focusses on industry
while competitive strategy focuses on firm
– Competitive strategy refers to obtain
competitive position in Industry
149
Structural Analysis of Industries
150
Structural Analysis of
Industries….
• Pharmaceuticals, soft drinks, and data base publishing
are examples of low competitive forces
• rubber, steel, and video games are examples of high
competitive forces
• The five forces determine industry profitability because
they influence the prices, costs, and required investment
of firms in an industry :-the elements of return on
investment.
• The strength of each of the five competitive forces is a
function of industry structure, or the underlying
economic and technical characteristics of an industry.
151
Porter’s five Forces
• The bargaining power of buyers / customers : This could be
captured through some metrics like the buyer’s concentration as
compared to the Industry’s concentration, degree of product
differences, customer’s switching cost, customer’s volume vs
industry output, price sensitivity, buyer’s profits and last but not the
least decision maker’s incentives. Higher is the bargaining power of
the customer, lower is the industry attractiveness.
• The intensity of competitive rivalry: This threat is captured by
a number of metrics like the growth rate of the industry, the ratio of
cost structure to the value added, cost of over-capacity, degree of
output differences among competitors, impact of brand and its
conversion to sales, concentration among the leading players,
switching costs, Information flow, Information sharing complexity,
diversity of competing businesses and last but not the least exit
barriers. Higher is the intensity, lower is the industry attractiveness.
152
• The threat of substitutes: This threat attempts to understand to what
extent there is a possibility of the industry’s output, namely the
manufactured product or the delivered services being substituted by some
other category of products or services. Higher is the treat of substitutes,
lesser is the attractiveness of the industry.
• The threat of the entry of new competitors: Factors could be issues
surrounding brand identity, economies of scale, switching costs for the
customers, proprietary product differences, capital intensive nature of the
industry, absolute cost advantages, access to distribution channels, access to
skilled work-force, government policy surrounding new entrants and
potential retaliation or fallouts. It needs to be noted that higher is the
threats of entry of new competitors, as easily comprehended, automatically,
lower is the industry attractiveness.
153
• The bargaining power of vendors / suppliers: This
force of Porter’s framework tries to explore the impact of
the bargaining power of the industry’s suppliers and how
much they can force the industry to share the benefits of
value creation through this bargaining power. Factors
are covered in terms of differentiation of inputs,
switching cost of the suppliers, relationship specific
investments required, presence of substitute inputs,
supplier’s industry concentration, importance of volume
to the suppliers, cost relative to the total purchases in the
industry, impact of supplier’s inputs to overall cost
structure or differentiation, potential for backward
integration and threats of forward integration. Higher
the force lower the industry atractiveness 154
Conclusion
• What is competitive advantage?
• Competitive advantage guided by two aspects
• Industry structure
• Relative position of firm
• Industry structure is based on five forces:
• the entry of new competitors
• the threat of substitutes
• the bargaining power of buyers
• the bargaining power of suppliers
• the rivalry among the existing competitors
• What is competitive Strategy?
155
• A competitive analysis is the process
of identifying your competitors and
evaluating their strategies to determine
their strengths and weaknesses relative to
your own business, product, and service.
The goal of the competitive analysis is to
gather the intelligence necessary to find a
line of attack and develop your go-to-
market strategy.
156
Reasons to conduct Competitive
analysis
• To understand market
conditions
• To evaluate strength and
weaknesses
• Develop strategies
157
Selection of competitors
• 1. Customer (WHO)
Who are your target customers (and
companies)?
• 2. Problem (WHAT)
What core problem does your product
solve for your target customers?
• 4. Product Category (HOW)
How do you solve this problem? Are you
solving this problem with a unique
technology or process? 158
Competitor types
159
Types of competitors
• Direct competitors:
– Direct Competition = same customer + same problem +
same/similar solution E.g.Uber and Ola
– Different Problem = same customer + different
problem + same/similar solution (online courses )
– Different Customer = different customer +
same/similar problem + same/similar solution (J&J
and other personal care product company)
– Different Solution = same customer + same problem +
different solution (Hand wash and sanitizer)
160
Generic Competitive Strategies
• Sustainable competitive advantage helps firm to position itself well
and earn good returns irrespective of structure of industry
• Following two types of competitive advantage a firm can possess
• Low cost
• Differentiation.
• The two basic types of competitive advantage combined with the
scope of activities for which a firm seeks to achieve them lead to three
generic strategies for achieving above-average performance in an
industry:
• Cost leadership
• Differentiation
• Focus
– Cost focus
– Differentiation Focus
161
Generic Competitive
Strategies…
162
Generic Competitive
Strategies…
163
Generic Competitive
Strategies…
164
Examples to gain Competitive
advantages examples
• Technology: Mail chimp offers one of the most
comprehensive Email Marketing services in the industry.
• Innovations: Amazon
• Experience: Starbucks
• Customization: Instapage
• Personal touch : Nutella
• Economies of scale: IKEA
• Variety: IKEA
• Distribution: Patanjali
• Patents and copy right: Disney
165
Conclusion
• Competitive Analysis
• Direct Competition
• Different Problem
• Different Customer
• Different Solution
• These main strategies are divided in 5
types:
1. Type 1: Low Cost -Strategy
2. Type 2: Best Value-Strategy
4. Type 4: Differentiation
4. Type 4: Focus- Low Cost
5. Type 5: Focus –Best value 166
2.5 & 2.8 Legal Requirement for
Establishing New Unit and Raising Fund
• Introduction
• Legal requirement for establishing a unit
varies according to type of enterprise, size
of business and type of product
• Types of enterprise are:
Sole Proprietorship
Partnership Firm
Limited liability Company
Corporations
167
2.5 & 2.8 Legal Requirement for
Establishing New Unit and Raising Fund
• Size of business:
Micro Scale
Small scale
Medium scale
• Type of product
Consumer product
Industrial product
168
Sole Proprietorship
Advantage Disadvantage
• Total Control of the • Risk to the Assets of Sole
Owner Owner
• Simplicity of • Potential Difficulty in
Organization Obtaining Loans
• Least Regulated of all • Lack of Continuity
Business
• Registration with Local
Bodies
• Various Tax Benefits
169
Joint Partnership
• Key Features:
– The partners’ conduct in carrying out
provisions of the partnership agreement
– The relationship of the parties
– The abilities and contributions of each party
to the partnership
– The control each partner has over the
partnership income and the purposes for
which the income is used.
170
Joint Partnership
• Greater Opportunity for • Potential for Conflict
Business between Partners:
• Tax Advantages • Unlimited Personal
• A Simple Form of Liability
Business • Legal Liability
• Lack of Continuity
171
Limited Liability Company
• The limited liability company is a hybrid
type of business structure. It contains
elements of both a traditional partnership
and a corporation.
• A limited liability company consists of one
or more members/owners who actively
manage the business of the limited liability
company. There may also be non-member
managers employed to handle the
business. 172
Limited Liability Company ….
• The members/owners in • Potential for conflict
such a business enjoy a among the
limited liability, similar to members/owners
that of a shareholder in a • Complicated and requires
corporation. more paper work
• Easier to attract investors • Limited liability
to the limited liability companies are to far
company more state regulations
• offers a relatively flexible
management structure
173
Corporations
• A corporation is a creation of law. It is
governed by the laws of the state where it
was incorporated and of the state or states
in which it does business
• Complex
• More state regulated
174
Corporations
• One of the most important • Loss of Individual Control
advantages to the corporate form
of business structure is the • Technical Formalities
potential limited liability of the • the profits of a
founders of and investors in the
corporation corporation, when
• A corporation can have a distributed to the
perpetual existence. shareholders in the form
• Unlike a partnership, in which no of dividends, are subject
one may become a partner without
the consent of the other partners, to being taxed twice
a shareholder of corporate stock
may freely sell, trade, or give away
his or her stock unless this right is
formally restricted by reasonable
corporate decisions. 175
Conclusion
• There are different types of enterprise
• Every enterprise has separate legal
requirement
176
2.5 Legal Requirement for
Establishing New Unit
Part 2 Introduction
177
Legal Requirement for
Establishing New Unit
• Following legal requirements are fulfilled
for the establishment of a new business
unit :
(1) Incorporation and Registration : There
found various forms of business proprietorship
in the private sector such as sole-trader,
partnership, Joint Hindu family and company
etc. In case of sole-proprietorship, partnership
and Joint Hindu family, registration is not
compulsory, while in case of
company, incorporation and registration is 178
INCORPORATION OF A
COMPANY
• Company is established through legal
procedure and have a separate legal entity
from its owners.
• Legal procedure of establishment a
company is termed as incorporation.
• For this purpose, registration of company
has to be made with the Registrar of
companies.
179
INCORPORATION OF A
COMPANY….
• An entrepreneur is required to submit an application for registration
with following documents:
– Application form duly filled in and signed by an
authorized person
– Memorandum of Association : The Memorandum
of Association, is the charter of the company. This includes
its objectives, its name, the address of its registered office,
the capital which the company is authorised to raise, the nature
of liability of members as well as the names, addresses and
agreement of people who agree to form a company.
– Articles of Association : The other important document is the
articles of association which contains the rules and regulations
relating to the internal management of the company. However, it
is not necessary for a public company limited by shares to file the
articles of association. If such public company does not file
Articles of Association, it is deemed to have adopted ‘Table A’ of
schedule I of the Act. 180
Content of MOM & AOA
• The memorandum of association of every company must contain the following clauses :-
• Name clause
• Domicile clause
• Doctrine of the ultra-vires
• Liability clause
• Capital clause
• Association clause
 The Article of association of every company must contain the following clauses :
– The important items covered by the AA include :-
1. Powers, duties, rights and liabilities of Directors

1. Powers, duties, rights and liabilities of members
4. Rules for Meetings of the Company
4. Dividends
5. Borrowing powers of the company
6. Calls on shares
7. Transfer and transmission of shares
8. Forfeiture of shares
9. Voting powers of members, etc
181
INCORPORATION OF A COMPANY
• Written consent of the directors : Written consent
of the directors who are agreed to act in that capacity,
duly signed by each director, along with a written
undertaking by them to take the necessary qualification
shares, if any, as provided in the articles.
• A copy of agreement with any individual for appointment
as a managing director, or a whole-time director or
manager.
• A statutory declaration stating that all the
legal requirements of the Act precedent to incorporation
have been complied.
• A letter of intent under Industries (Development
and Regulation) Act, 1951, if the company s business
comes with the purview of this Act. 182
INCORPORATION OF A
COMPANY
• Address of registered office of the company. However
a company may file registered address within 40 days of
its registration.
• At the time of registration, the prescribed registration
fees and filing fee for each document filed for
registration are to be paid to the Registrar’s office. After
receiving these documents, Registrar scrutinize
these documents and if he is satisfied that all the
documents are in order, he shall enter the name of the
company in the register of companies and issue a
certificate of incorporation.
183
CAPITAL SUBSCRIPTION
• Next step in the registration of a company is to
raise capital for the proposed company.
Company obtain the necessary capital by selling
shares to the public. Following procedure is
adopted for this purpose :
– Permission of public issue from ‘The Securities
and Exchange Board of India.
– Agreements with the underwriters, brokers and
share issue managers.
– Filing a copy of prospectus with the Registrar.
– Invite the public to purchase the shares of the
company by putting the prospectus in circulation.
– Receiving applications for shares through the
company’s banker. 184
CAPITAL
SUBSCRIPTION ...
– Formal resolution of allotment, if the subscribed
capital is at least equal to minimum subscription of
90% of capital issue.
– In case, minimum subscription is not received, the
entire amount with application would have to be
refunded at the end of 120 days from the circulation
of prospectus.
– Issue of allotment letters and share certificates.
– In case a company having a share capital, but not
issuing a ‘prospectus’, filing a ‘Statement in lieu of
Prospectus’ with the Registrar at least three days
before the first allotment resolution.
185
COMMENCEMENT OF
•
BUSINESS
A public company cannot commence business immediately after
incorporation unless it has obtained a certificate of commencement
of business from the Registrar. Following documents have to be filed
for this purpose :
– Shares payable in cash have been allotted to the extent of the minimum
subscription
– Every director has paid in cash the application and allotment money on
the shares taken by him;
– No money is liable to be refundable to the applicants for failure to apply
or obtain permission for the shares or debentures to be dealt in on any
recognized stock exchange.
– A statutory declaration duly verified by one of the directors or the
secretary in the proscribed form that the above conditions have been
complied with has been filed with the Registrar.
– The Registrar will scrutinize those documents and if he is satisfied, he
shall issue a “certificate of commencement of Business, This certificate
is conclusive evidence that the company can commence its business and
use its borrowing powers 186
Legal Requirement for Establishing New
Unit…
• Small Unit Registration Certificate : The entrepreneur of a small scale
unit should seek registration of his selected project unit with the Directorate
of industries. This will make the entrepreneur and his unit eligible
for availing Government assistance. A unit is normally
registered provisionally first and accorded permanent registration later.
• Registration under the Factories Act : An entrepreneur must
registered his enterprise under the ‘Factories Act, 1948’, before starting the
manufacturing unit. Factories Act contains provisions regarding licensing
and registration of factories, working hours, health, safety and
welfare measures, employment of women and young persons, annual
leaves, dangerous operations etc. The Act fixes the minimum age of
persons who can enter a factory for work at 14 years. The Act, lays down
the provisions regarding cleanliness, ventilation, overcrowding, lighting,
explosive gases, dust, fume, fencing of machinery etc.
• Import License : If imported raw-material and other equipments are
necessary for the new business enterprise, then he should obtain the import
license from the export-import controller.
• Permission of Finance Ministry : For the agreement Of foreign
collaboration, an entrepreneur must obtain the permission of finance
ministry. 187
Unit …
• No Objection Certificate (NOC) : The unit must obtained all
necessary clearances. For example, NOC from Pollution
Control Board is obtained if required.
• Industries (Development and Regulation) Act, 1951 : The
licensing policy for industries is determined under this Act. The Act
states that the Central Government may specify the requirements
which shall be complied by small scale industrial undertakings to be
regarded as a small scale or an ancillary industry. This may be done
by the Central Government with a view ascertaining which small
scale or ancillary industrial undertaking needs supportive measures,
exemptions or other favorable treatment under this Act to enable
them to maintain their viability and strength.
• Foreign Exchange Regulation Act : All foreign collaborations
required the approval of the government and are subject to the
regulations under the Foreign Exchange Regulation Act. All
investment by foreign companies in India is permitted only with the
approval of the Reserve Bank of India. The Reserve Bank
of India’s approval is again based on the approval of the 188
Unit…
• Registration of Trademark : According to Trade
and Merchandise Marks Act, 1958 (India) the mark’ “includes a
device, brand, heading, label ticket, name signature, word, letter
or numeral or any combination thereof.” The purpose of registration
of trademark is that the consumer may distinguish the product
of manufacturer/service provider from others and
therefore ‘deceptively similar’ trademarks are not allowed to be used
because they can cause confusion to users. Once a trademark is
registered as per provisions of Trade and Merchandise Marks Act,
1958 and Trademarks Act, 1999 no one else can use similar
trademark on any of its packing. The trademarks are registered for
unlimited period and helps in the promotion of sales.
• Registration under the Sales-tax Authority : An entrepreneur
should get registered his enterprise in the sales-tax department of
the state government and obtain certificate for this purpose. Besides
above mentioned legal formalities, an entrepreneur have to fulfil
some other formalities also depending on the nature of product
produced by the new business unit. For example he has to get 189
registered his unit under the Service Tax Act, Food and
Determining Capital Resources
Sources of
capital
Fixed Capital Working Capital
Equity share Loan

Government Share Public Deposits
Preference Share Trade Credits
Debentures Commercial Papers
Retained Earning Lease Financing
Long term Loan
190
2.6 Venture Capital Sources and
Documents required
• Introduction
– Recap of last session
– Venture capital Meaning
– Importance Venture capital
– Characteristic of venture Capital
– Who are venture capitalist
– Stages of Venture capital
– Methods of venture capital
191
Suggested Readings
House
192
Sources of funds for an
Entrepreneur
193
Venture Capital
194
Venture capital
• An activity by which investors support entrepreneurial
talent with finance and business skills to exploit market
opportunities and thus obtain long term capital gains
• Venture capital is a form of intermediation particularly
well suited to support the creation and growth of
innovative, entrepreneurial companies
• Venture capital as the provision of risk bearing capital,
usually in the form of a participation in equity, to
companies with high growth potential.
• the venture capital company provides some value added
services in the form of management advice and
contribution to overall strategy
195
Characteristics of Venture
capital
• Equity-based financing
• Funding linked to managerial assistance
• Rewards through capital gains rather than
running (dividend) yields
• Investment in young and start-up
companies hence
• Long-term, patient investment.
• Illiquidate investment
196
Venture Capitalist
• A venture capitalist (VC) is a person who
makes such investments, these include
wealthy investors, investment banks, other
financial institutions other partnerships.
• Venture Capitalists generally: –
– Finance new and rapidly growing companies –
Purchase equity securities
– Assist in the development of new products or
services
– Add value to the company through active
participation. 197
Stages of Capital Venture
Financial Meaning Period Risk Activity to
Stage (Funds Perception be financed
locked in
years)
Seed Money Low level 7-8 Extreme For
financing supporting a
needed to concept or
prove a new idea or R&D
idea. for product
development
Start Up Early stage 5-9 Very High Initializing
firms that operations or
need developing
funding for prototypes
expenses
associated
with
marketing
198
and product
Stages of Capital Venture…
Financial Meaning Period Risk Activity to be
Stage (Funds Perception financed
locked in
years)
First stage Early sales and 4-7 High Start
manufacturing funds. commercials
production and
marketing
Second stage Working capital for 4-5 Sufficiently Expand market
early stage companies high and growing
that are selling product, working capital
but not yet turning a need
profit .
Third stage Also called Mezzanine 1-4 Medium Market

financing, this is expansion,
expansion money for a acquisition &
newly profitable product
company development
for profit
making
company 199
Stages of Capital Venture…
Financial Meaning Period (Funds Risk Activity to be
Stage locked in Perception financed
years)
Fourth Stage Also called 1-4 Low Facilitating

bridge public issue
financing, it is
intended to
finance the
"going public"
process .
200
Buy – out / Buy – in Financing
• It is a recent development and a new form of investment by venture
capitalist. The funds provided to the current operating management to
acquire or purchase a significant share holding in the business they manage
are called management buyout.
• Management Buy-in refers to the funds provided to enable a manager or a
group of managers from outside the company to buy into it.
• It is the most popular form of venture capital amongst later stage financing.
It is less risky as venture capitalist in invests in solid, ongoing and more
mature business. The funds are provided for acquiring and revitalizing an
existing product line or division of a major business. MBO (Management
buyout) has low risk as enterprise to be bought have existed for some time
besides having positive cash flow to provide regular returns to the venture
capitalist, who structure their investment by judicious combination of debt
and equity. Of late there has been a gradual shift away from start up and
early finance towards MBO opportunities. This shift is because of lower risk
than start up investments.
201
Turnaround Finance
• It is rare form later stage finance which most of the
venture capitalist avoid because of higher degree of risk.
When an established enterprise becomes sick, it needs
finance as well as management assistance for a major
restructuring to revitalize growth of profits. Unquoted
company at an early stage of development often has
higher debt than equity; its cash flows are slowing down
due to lack of managerial skill and inability to exploit the
market potential. The sick companies at the later stages
of development do not normally have high debt burden
but lack competent staff at various levels. Such
enterprises are compelled to relinquish control to new
management. The venture capitalist has to carry out the
recovery process using hands on management 202
in 2 to 5
Methods of Venture Financing
• A pre-requisite for the development of an active
venture capital industry is the availability of a
variety of financial instruments which cater to
the different risk-return needs of investors. They
should be acceptable to entrepreneurs as well.
– Venture capital financing took in forms of
– Equity and quasi equity
– Conditional Loan
– Income notes
– Convertible Debentures
– Cumulative Convertible Preference Share
203
Methods of Venture Financing…
• Equity: All VCFs in India provide equity but generally their contribution
does not exceed 49 percent of the total equity capital. Thus, the effective
control and majority ownership of the firm remains with the entrepreneur.
They buy shares of an enterprise with an intention to ultimately sell them
off to make capital gains.
• Quasi Equity: A form of finance that combines some of the benefits of
equity and debt
• Conditional Loan: It is repayable in the form of a royalty after the venture
is able to generate sales. No interest is paid on such loans. In India, VCFs
charge royalty ranging between 2 to 15 percent; actual rate depends on other
factors of the venture such as gestation period, costflow patterns, riskiness
and other factors of the enterprise.
• Income Note : It is a hybrid security which combines the features of both
conventional loan and conditional loan. The entrepreneur has to pay both
interest and royalty on sales, but at substantially low rates
• Other Financing Methods: A few venture capitalists, particularly in the
private sector, have started introducing innovative financial securities like
204
participating debentures, introduced by TCFC is an example
• Venture capital
is fills the gap
between
borrowing like
banks and
equity
• Venture capital
can really boost
the economy
Conclusion • Venture
capitalist
provide fund for
venture 205
Conclusion
S.No. Topic

Fund
206
SEBI
Process of
Regulation
venture
for Venture
capital
Capital
Sources of Venture
Venture Capital
capital In India
India
207
208
Process of Venture Financing
Deal Generation
Initial
Screening
Due Diligence
Valuation
Approval &
Structuring
Post Investment
Structuring
Exit
209
Process of Venture Financing…
• Deal Generation: Identifying and
persuasion for through lucrative deals
• Initial screening: weeding out unwanted
proposals
• Due diligence: Understanding integrity of
project
• Valuation: Understanding and valuating
financial information contained in
business plans submitted to them more
clearly 210
Process of Venture Financing…
• Approval and structuring: This stage of the
investment cycle involves consideration of three
broad areas: the types of financial instruments
used (equity, preferred stock or debt); the
specific covenants included in the term sheet or
the subscription agreement; and, the release of
funds in stages to limit the downside risk of an
investment
• Monitoring: Monitoring the venture
• Exit: Venture capitalists typically seek to
multiply their initial investment by a factor of 5–
10 times on exit 211
• In 1972, the Bhatt
committee offshoot
the concept venture
capital
• In 1976, the Industrial
Development Bank of
India (IDBI) followed
suit and established a
division to provide
seed capital for
innovative projects
• In 1984, the National
Technology Policy led
the stance in the
Seventh Five-year
212
Venture capital in India …
• In 1984, the Industrial Credit and Investment
Corporation of India (ICICI), at that time a DFI,
set up a separate VC division
• In 1985, the Government established Rs100m
venture fund to support pilot projects attempting
to commercialize indigenous technology
• 1986–1995,The first stage of genuine VC activity
took place in India
• After 1995, Foreign investment took the lead
213
• VCFs in India can be categorized into following
five groups:
 Those promoted by the Central Government
controlled development finance institutions.
ICICI Venture Funds Ltd.
IFCI Venture Capital Funds Ltd (IVCF)
SIDBI Venture Capital Ltd (SVCL)
 2) Those promoted by State Government controlled
development finance institutions.
Punjab Infotech Venture Fund
Gujarat Venture Finance Ltd (GVFL)
Kerala Venture Capital Fund Pvt Ltd.
 Orissa Venture Capital Fund
214
 Those promoted by public banks.
– Canbank Venture Capital Fund
– SBI Capital Market Ltd
 Those promoted by private sector
companies.
– IL&FS Trust Company Ltd
– Infinity Venture India Fund
 Those established as an overseas venture
capital fund.
– Walden International Investment Group
– HSBC Private Equity management Mauritius215
SEBI (Venture Capital Fund)
Regulations, 1996
• VCF, Venture Capital Fund means a fund established in
the form of a trust or a company including a body
corporate and registered under these regulation which:
i. has a dedicated pool of capital
ii. raised in a manner specified in the regulations
iii. invests in accordance with the regulations
• VCU, Venture Capital Undertaking means a domestic
company:
i. whose shares are not listed on a recognized stock exchange
in India
ii. which is engaged in the business for providing services,
production or manufacture of article or things or does not
include such activities or sectors which are specified in the
negative list by the Board with the approval of the Central
Government by notification in the Official Gazette in this 216
Regulations, 1996…
• Obligations of Venture Capital fund:
– Venture Capital fund shall not carry out any other
activity than that of venture capital fund
– Venture capital shall disclose investment strategy at
the time of making investments
– VCF shall disclose the duration of the life cycle of the
fund
– VCF shall not get its units listed on any recognized
stock exchange till the expiry of three years from the
date of issuance of units by VCF
– VCF cannot invite offers from the public for
subscribing for its units and shall only receive monies
by the way of private placement of the units 217
• VCF shall enter into the placement
memorandum and subscription agreement
which contains terms and conditions subject to
which money is proposed to be raised from the
investors. A copy of the placement memorandum
and subscription agreement will be placed with
the Board along with the actual money collected
• VCF shall maintain its books of accounts,
records and documents for a period of 8 years
218
• Minimum Investment in Venture Capital:
– Venture Capital Fund may raise money from Indian,
foreign, nonresident Indian, by way of issue of units
– Investments below Rs.5 lakhs from any investor shall
not be accepted other than employees, principal
officer, directors of venture capital fund or employees
of fund manager or asset management company
– Venture capital fund shall invest minimum of Rs.5
crores in each of the schemes launched or fund set up
219
• Scheme of VCF can be wound up in the following
circumstances:
 In case of trust :
 Period of scheme mentioned in the placement memorandum is over
 In the opinion of the trustees and in the interest of the investors
scheme should be wound up
 75% of the investors in the scheme pass a resolution that the
scheme should be wound up
 If SEBI so directs in the interest of the investors.
 In case of company:
 wound up in accordance with the provisions of the Companies Act,
1956
 In case of a body corporate:
 wound up as per the statute under which it is incorporated
220
SEBI (Foreign Venture Capital
Investor) Regulations, 2000
• Registration:
– Application to be made to the Board in Form A with the application fee.
The applicant should be granted the necessary permission by RBI to
make investments in India. The certificate of registration is granted in
Form B by the Board
• Investment criteria:
– Investor shall disclose his investment strategy
– Can invest all his funds in one venture capital
• Obligations:
– Maintain books of account and records for a period of 8 years
– The foreign investor shall appoint a custodian for custody of the
securities , Custodian shall monitor the investment , Furnish periodic
reports to the Board , Furnish information as required/ called for by the
Board
– enter into an agreement with a designated bank for operating the
foreign currency account 221
Conclusion
• VC can help in the rehabilitation of sick units.
• VC can assist small ancillary units to upgrade
their technologies
• VCFs can play a significant role in developing
countries in the service sector including tourism,
publishing, health care etc.
• They can provide financial assistance to people
coming out of universities, technical institutes,
etc. thus promoting entrepreneurial spirits.
222
Conclusion
S.No. Topic

Fund
223
Entrepreneurship
Development
Unit 3
Pooja Tripathi
Assistant Professor
224
225
Unit 3: Entrepreneur Behavior
S.N Topic
o.
3.1 Innovation & Entrepreneur
3.2 Entrepreneurial Behavior and Psycho Theories
3.3 Social Responsibility
3.4 Entrepreneurship Development Programme

(EDP)
3.5 Role of EDP
3.6 Relevance and Importance of EDP
3.7 Role of government in organizing EDP’s

Critical evaluation 226
Suggested Readings
House
227
3.1 Innovation &
Entrepreneur
Introduction:
• Identify the nature of innovation and appreciate its role in
entrepreneurial activity
• evaluate the stakeholder benefits that result from the opportunities
identified and exploited
• understand the categories and dimensions of innovation and the
features of the innovation process
• understand innovation and the market breakpoints that often
provide the spur to new developments
• compare the alternative innovation stances
228
Suggested Readings
House
229
3.1 Innovation &
Entrepreneur
• Innovation is the process by which the
opportunities that have been identified through
individual and organizational creativity are
exploited.
• According to few authors, innovation and
entrepreneurship must co-exist for individuals
and organizations to be considered to be
enterprising.
• Innovation plays important role in creating new
business activity, generating growth and for
survival of existing business
230
Popular Definition of
Innovation
• Innovation is the successful exploitation of new ideas
(Innovation Unit, Department of Trade and Industry UK,
2004)
• Innovation is the specific tool of entrepreneurs, the
means by which they exploit change as an opportunity
for a different business or service. It is capable of being
presented as a discipline, capable of being learned,
capable of being practised (Drucker, 1985)
• Companies achieve competitive advantage through acts
of innovation. They approach innovation in its broadest
sense including both new technologies and new ways of
doing things (Porter, 1990)
• Turning opportunity into ideas and putting these into 231
Concept of Innovation
• Invention is not essential
• It is not just about having ideas.
• Every function of the organization can
contribute to innovation by adding value
for stakeholders
• Technology and non-technological
developments are included.
• Both step change and incremental
improvements are valuable in improving
organizational performance 232
Benefits of Innovation
• Customer benefits from innovation
– Tangible benefits may be like a product with a
larger range of functions, better durability, or
better design, is easier to use or is lower
priced than the competition for a similar
specification
– Intangible benefits may be like efficient
customer service, a better experience, and a
feeling of greater satisfaction or enjoyment
from the purchasing and usage process.
233
Benefits of Innovation…
• Organization benefits from innovation
– Satisfied customers are always boon to any
company
– increased wealth in case of Private
organization
– Increased effectiveness and efficient in case of
public or not-for-profit organizations
• Other stakeholder’s benefits from
innovation
– E.g. community gets efficient products
234
Alternative categories of
innovation
• Various alternative categories of
Innovation was identified by Utterback
(1994)
• These categories are also known as 4 “Ps”
of innovation
• These are:
– Product innovation
– Process innovation
– Position innovation
– Paradigm innovation 235
Need of innovation process
• The need for market and technological
scanning
• To manage finances high cost
• To manage the uncertainty and and
unpredictability
• To coordinate among different
departments
• For proper planning
236
Drivers of Innovation
• Technology
push: new
technology leads
to innovation
• Market pull:
Customer needs
leads to
innovation
237
Conclusion
• Innovation and Entrepreneurship
• Benefits of Entrepreneurship
• Concept of Entrepreneurship
• Alternative categories of entrepreneurship
• Need of Innovation Process
• Drivers of Innovation
238
Introduction
• In the last session , following was covered:
– Innovation and Entrepreneurship
– Benefits of innovation
– Concept of innovation
– Alternative categories of innovation
– Need of Innovation Process
– Drivers of Innovation
• Today:
– Models of Innovation
– Process of Innovation 239
Innovation Models
• Following two models will be discussed
under this heading:
• Booz, Allen and Hamilton (1982) model of
Innovation
– It is very popular model
• Rothwell (1992: 102)
– This model is to remove limitation of above
model and hence is newer
240
Booz, Allen and Hamilton
(1982) model
• It involves a systematic, linear process
involving a number of stages, with
decision points at each stage.
• For each stage (e.g. idea generation,
setting criteria for screening, etc.), it is
necessary to develop a set of operating
principles, and apply the appropriate tools
and techniques for choosing the option to
pursue.
241
(1982) model…
• Lower cost activities should be
preferred
• Delay the most expensive activities
• Technology push and market pull are
treated differently
• Overall process should be broken in
smaller roles and responsibilities
242
(1982) model..
243
(1982) model..
• Disadvantage of model are:
– Conflict due to separation of activities
– Delay in decision making
– Very cumbersome , difficult for incremental
innovation
– Process focuses on internal activities only
244
Rothwell (1992: 102) Model of
Innovation
• Parallel activity
• Integration of the functional
responsibilities and activities
• recognition of the role and
specialist contributions of outside
organizations
• Use of ERP type system software
245
Innovation process
C
o
n
si
d
eri
n
g
aSearc
h
n
i
d
n
cg
f
h
o
o
r
o
O
sip
n
p
go
altern
rt
au
tn
ivestragcy
o
p
t
i
o
n
s
I
m
p
l
e
m
e
n
t
i
n
g
t
h
e
p
l
a
n
246
Searching for Opportunity
• Deep reflection of small information is
better than superficial analysis of large
information
• Collection as many ideas as one can
• Follow funnel approach
• Final idea accepted should be:
– Feasible for commercialization
– successfully completed the various stages of
the innovation process
247
Considering and choosing
alternative strategic options
• Fit with business strategy
– Match with overall strategy
– Follow generic strategy
– Apart from adding value to customer and
organization, it should add to assets and resources of
company
• Portfolio management
– Breakthrough innovations
– Incremental innovations
– A continuous improvement
– Limited curiosity research
248
Implementation plan
• The implementation stage of the
innovation strategy is concerned with
managing and supporting the innovation
process:
– Practice and repeat the process
– Specific strategy
– Multifunctional teams
– More market research to become more
customer driven & engineering tools to
– Prototyping
249
Conclusion
• Models of Innovation
– Booz, Allen and Hamilton (1982) model of
Innovation
– Rothwell (1992: 102)
• Process of Innovation
– Identification
– Verification
– Implementation
250
3.2 Entrepreneurial
Behavior and Psycho
Theories
• Introduction :
– Entrepreneurial Behavior
– Psychological characteristics are
important for entrepreneurship research
– Following theories will be discussed:
• The need for achievement
• Locus of control
• Risk-taking propensity
251
Suggested Readings
House
252
Entrepreneurial Behavior
• Characteristic
• Deals with environment
• Motivation
• Creative and Innovative
253
CHARACTERISTICS OF
ENTREPRENEURIAL BEHAVI
OUR
(1) Initiative Behavior : It is the entrepreneur who
takes or imitate the first move towards setting up of an
enterprise. Entrepreneur basically is an innovator who
carries out new combinations to initiate and accelerate
the process of economic development.
(2) Challenge accepting behavior : Entrepreneurs take
problem as a challenge and put in their best for finding
out the most appropriate solution for the same. They
will first of all understand the problem and then evolve
appropriate strategy for overcoming the problem.
(4) Assertive Behavior : An assertive person knows
what to say, when to say, how to say and whom to say.
He believes in his abilities and ensures that others fall
in line with his thinking, aimed at promoting the 254
CHARACTERISTICS OF
ENTREPRENEURIAL BEH
AVIOUR
(4) Persuasive Behaviour : A successful
entrepreneur through his sound arguments and logical
reasoning is in a position to convince others to do the
works the way he wants them to do. It is not physical
but intellectual force he will use for convincing others.
(5) Effective Monitoring : Entrepreneurs ensure
that everything is carried out in their organisations as
per their wishes. They ensure regular monitoring of the
working so that the goals of the organisation are
achieved in best possible manner.
(6) Looking for Opportunity : An entrepreneur is
always on the look out or searching for opportunity and
is ready to exploit it in the best interests of the 255
CHARACTERISTICS OF
ENTREPRENEURIAL BEH
AVIOUR
(7) Persistence : An entrepreneur is never disheartened
by failures. He believes in the Japanese proverb ‘Falls even
times, stand up eight’. He follows Try-Try Again for overcoming
the obstacles that come in the way of achieving goals.
(8) Information Seeker : A successful entrepreneur always keep
his eyes and ear open and is receiptive to new ideas which can help
him in realising his goals.
(9) Quality Consciousness : Successful entrepreneurs do
not believe in moderate or average performance. They set high
quality standards for themselves and then put in their best for
achieving these standards. They believe in excellence, which is
reflected in everything they do.
(10) Recognizing the importance of Business
Relationships : Entrepreneur acts to build repport or friendly
relationships with customers. He sees interpersonal relationships
as a fundamental business resource. He places long-term goodwill256
Psychological factors to effect
the entrepreneurial behavior.
(1) Achievement Motive : Achievement motive is most important for an
entrepreneur. It is this motive which motivates people to do something
different and extraordinary so that one may feel that he has achieved or created
something which others are not able to do..lt motivates an entrepreneur to take
an initiative for innovation. It also makes one personally responsible for his
actions and performances. It helps to develop self-reliance and develops the
spirit of risk-taking which is very -essential part of entrepreneurial behaviour,
one will not establish a unit unless he is prepared to take risk.
(2) Desire to Influence Others : Strong desire of the need for power, helps
a person to become a successful institution builder, Thus, it is necessary that an
entrepreneur must have the ability of self-management with a strong will
power. Thus, they possess a strong desire towards the need of influencing
others.
(4) Desire for Independence : Entrepreneur possesses strong desire for
independence and it is only due to this desire that they are motivated to start a
new business. According to psychologists, the feeling of independence is
acquired by them through the family atmosphere. Due to this they do not want
to work under anyone rather they like to work independently. 257
the entrepreneurial behavior…
(4) Innovation : This is an important psychological factor
Of entrepreneurs. Generally, an entrepreneur does those acts which are
not taken up by other persons. They transform the creative ideas into
useful applications. Accordmg to Schumpeter, a person is an
entrepreneur only when he is an innovator, engaging himself in an
innovative behaviour. Thus, innovative behaviour is an
entrepreneurial behaviour,
(5) Hope for Success : Entrepreneurs are always hopeful for future
success. They work for being successful which enlightens them with the
confidence, positive attitude and high energy level. Hope for success
makes their behaviour strong and stable.
(6) Calculated Risk Taking : Entrepreneur is a person who
is always in a position to accept challenging job, He works on
those projects only, which are risky but have a probability of
success through their efforts. He does not rely on those ventures, which
totally depends on chance. In other words, the entrepreneur belives 258
the entrepreneurial behavior…
(7) Immediate feed back : Entrepreneur wants immediate feedback
of the progress of his entrepreneurial targets so that he can improve the
way of achieving the targets and his behaviour changes according to the
situations.
(8) Self-Efficacy : An entrepreneur has a drive for self-efficacy. They
want to become the problem solver, instead of problem avoiders. They
do not want to copy others but they want others to copy them. Further
they feel proud of their achievements and live in the present.
(9) Self-Expression : The desire for self-expression appears to be a
common thread and may help explain why so many men and women
prefer to work for themselves than for someone else.
(10) Self Confidence : Entrepreneurs believe in themselves. They
have confidence that they can outdo anyone in their field. They tend
not to accept the status quo, believing instead that they can change the
facts. Often, they insist the odds are better than the facts would justify.
They have winning habits. On the basis of self-confidence, they become 259
3.2 Entrepreneurial
Behavior and Psycho
Theories
• Need for achievement
– McClelland first identified the need for achievement
as a personality trait.
– McClelland proposed that achievement motivation is
the key to entrepreneurial behavior
– The need for achievement is usually referred to as a
learned, stable characteristic where satisfaction is
acquired by aiming for and accomplishing higher
levels of excellence.
– High achievers typically choose situations that are
linked with responsibility, moderate risk-taking,
knowledge of results of decisions, new instrumental
activity and anticipation of possibilities in the future.260
3.2 Entrepreneurial
Behavior and Psycho
Theories
• Locus of control
– The theory of locus of control was developed by Rotter in the
1960s
– The concept emerged from Rotter’s ‘social learning theory’ of
what affect does a person’s perception of control have on their
behavior
– The theory of locus of control looks from different angles at the
individual’s understanding of the social environment and the
knowledge gained from different situations. The locus of control
of an individual can be either external or internal.
– The locus of control is understood as a determinant of the
expectation of success.
– Studies have shown a reasonably important association between
internal locus of control and the likelihood of becoming an
261
entrepreneur.
3.2 Entrepreneurial
Behavior and Psycho
Theories
• Risk-taking propensity
– A Risk taker is an individual who pursues a
business idea even when the probability of
succeeding is not high. Stereotypic
impressions of an entrepreneur assume that
an entrepreneur is usually a risk-taker.
However, research shows that an
entrepreneur takes only calculated risks.
262
3.2 Entrepreneurial
Behavior and Psycho
Theories
• Psychodynamic model by Kets de Vries
• This says that people tend to be self-employed and
become successful because of “troubled
childhood”.
• Risk taking propensity
• This theory contends about one’s willingness to
accept risk.
263
3.3Social Responsibility
• Introduction
– Concept of Social responsibility
– Need of Social responsibility
– Changes of Social Responsibility
264
Suggested Readings
House
265
• Social responsibility of
business refers to what the
business does over and
above Statutory
requirement, for benefit of
society.
• According to Johan Wempe,
“Ethical Entrepreneurship,
in a nutshell, amounts to the
achievement of ethical goals
through entrepreneurship”.
• Other popular terms are
‘Social Entrepreneurship’,
‘Social Corporate
Entrepreneurship’, and
‘Corporate Social
Responsibility’. 266
Responsibility towards different
interest groups
267
• Satisfy Customers
• Understand Needs and
wants of Customers
• Increase productivity
• Reduce prices
• Improve quality of
service
• Smoothening
distribution process
• Regular R& D
• Products should not have
any adverse effect
268
• Fair and responsible
return on capital
invested
• A part in profit or
bonus payment
scheme
• Political and
economic security for
investment through
government stable
law
269
• Boost the moral of
Employees employees
• Fair wages
• Best working
conditions
• Establishing fair work
standards and norms
• Provision of labour
welfare facility
270
Government or
Administrative • Pay dues and Taxes
Bodies
honestly
• It will be law abiding
citizen
• Sell goods and
services on
reasonable prices
• Not purchase political
support
271
• Should contribute
towards local
community
• Appropriate step to
avoid pollution
• Rehabilitation of
population disabled
by business
• Assisting in overall
development of
community
272
Environment
• Energy Efficiency and
Savings
• Waste Management
• Travel and
Transportation
• Sustainable
Procurement
• Sustainable Events
• Environmental
Management Systems
273
Legal
Accountabil
ity
Transparen
t
Social
commitmen
t
274
Social Responsibility
275
Growth and Survival
276
Social Responsibility
• Stressful
business
environments
• Limited time to
focus on ethical
issues
• No moral
guidance
• Lack of 277
• Concept of
Social
responsibilit
y
• Need of
Social
responsibilit
y
• Changes of
Social 278
Examples of social
responsibility
• Introductory
• i. harmful; ii. • Conclusion
appreciated; iii.
adulterated; iv. base;
v. business ethics
https://www.investopedia.c
om/terms/s/socialresponsi
bility.asp
https://blog.smile.io/10-examples-social-r
esponsibility-as-customer-retention-tool/
279
3.4 Entrepreneurship
Development Programme
(EDP)
• Concept of EDPs
• Objectives of EDPs
• Misconceptions
• Pre-requisites
• Evolution
• Components of EDP
• Stages of EDPs
• Objectives of
Trainings
280
Suggested Readings
House
281
3.4 Entrepreneurship
Development Programme
(EDP)
• Entrepreneurship Development Programme
(EDP) is a programme which helps in
developing the entrepreneurial abilities. The
skills that are required to run a business
successfully is developed among the people
through this programme.
• EDP means a programme designed to help a
person in strengthening his entrepreneurial
motive and in acquiring skills and capabilities
necessary for playing his entrepreneurial role
effectively.
282
Developing Project
achievement planning
motivation Developing
and and
developmen managerial
sharpening t and and
of guidance on Operational
entrepreneu
rial
industrial capabilities.
opportunitie
traits and s
behaviour
283
For EDPs
1. Stimulation
2. Support
4. Sustaining
efforts
4. Human
factor
5. Environment.
284
• Join an EDP, all
your problems are
solved
About EDPs • EDP means only
training
• Higher the
number, better the
EDP
• EDP success is the
sole responsibility
285
• In sixties , many motivational
programmes were conducted
EDPs by Small Industries Service
Institute and SIET Institute
• These programs were not
EDPs but just supportive
programs
• It was visualized that creation
of all external facilities is not a
sufficient condition for the
promotion of
entrepreneurship.
• Equally important are the
qualities of the individual who
responds to the external
opportunities (i.e. availability
of funds, financial incentives, 286
Features of the programme
• Identification and careful selection of entrepreneurs for
training;
• Developing the entrepreneurial capabilities of the trainee
• Equipping the trainee with the basic managerial
understanding
• Ensuring a viable industrial project for each potential
entrepreneur
• Helping him to secure the necessary financial,
infrastructural and related assistance
• Training cost is highly subsidized and only token fee is
charged. A deposit is, however, taken to ensure
commitment of participants.
287
Entrepreneurial Development Cycle
288
Components of EDP
• Selection of potential entrepreneur

• Training
• Support system
• Production Process
• Monitoring
• Follow-up
289
• Stages of EDP
• Objective of
EDP
• Role of EDP
290
Stages in EDP
Initial or pre training Stage: It is the stage when all

the preparation required for training is done
Training or Development Stage: It is the stage when

actual training is undertaken and execution is done.
Post-Training or Follow-up stage: It is a stage when

entire training is over and individuals are supported
for funds,initial Infrastructure etc.
291
Stages in EDPs
292
Objectives of EDP Training
• Strengthen their entrepreneurial quality/motivation
• Analyze environment related to small industry and small
business
• Select project/product
• Formulate projects
• Understand the process and procedure of setting up of
small enterprise
• Know and influence the sources of help/support needed
for launching enterprise
• Acquire the basic management skills
• Know the pros and cons of being an entrepreneur
• Acquainting and appreciating social
responsibility/entrepreneurial disciplines. 293
• Concept of EDPs
• Objectives of EDPs
• Misconceptions
• Pre-requisites
• Evolution
• Components of EDP
• Stages of EDPs
• Objectives of
Trainings
294
3.5 Role of EDP
• Role of EDP
• Role at different
EDP cycle
• Role at different
stages
• Factors
impacting EDP
programme
295
Suggested Readings
House
296
3.5 Role of EDP
(1) Eliminating Poverty and Unemployment: Most of the under
developed countries are confronted with the chronic problem of
unemployment. EDPs can help these unemployed people in getting self-
employment and at the same time generating employment opportunities for
others. Various programs initiated by the government like NREP (National
Rural Employment Programme, IRDP (Integrated Rural Development
Programmel etc. are aimed at tackling unemployment problem.
(2) Balanced Regional Development: Successful EDPs help in accelerating
the pace of industrialisation resulting in the reduction of concentiation of
economic power. Small scale units can be set up in remote areas with little
financial resources and it helps in achieving balanced regional development.
EDPs aimed at promoting small scale units are more useful for balanced
regional development than medium and large scale units.
(4) Economic Growth: The relevance of EDPs can be clearly understood by
their role in the economic development of developing countries like India. Such
programmes create many entrepreneurs who are able to establish small and
micro enterprises which require less investment in funds. It increases new
investment and bring innovations. All these activities in 297
turn stimulate the
economic growth.
3.5 Role of EDP…
(4) Optimum use of Locally Available Resources: The EDPs
can help in harnessing locally available resouces by training and
educating the entrepreneurs. Since abundant resources are available
locally, proper use of these resources will help in creating a healthy
base for sound economic growth and rapid industrialisation. EDPB
also help in minimising excessive scraps, defective output
and wastage in the production process.
(5) Promote Innovations: Entrepreneurial
Development Programmes initiate the people for innovations and
creativity. EDPs have become a vital strategy for harnessing the vast
untapped human skills, to channelise them into accelerating
industrialisation.
(6) Defuses Social Tension: Every youth feels frustrated if he
does not get employment after completing his education. The surplus
young energies can be diverted to self-employment careers to help
the country. This may defuse social tension and unrest among youth.
298
3.5 Role of EDP…
(7) Development of Entrepreneurship Qualities: Thus the EDPs
are needed to induce achievement motivation and
develop entrepreneurial characteristics or competencies among young
persons through training with a view to making them successful
future entrepreneurs.
(8) Preventing Industrial Slums: More industrial units are located
in highly congested areas and it leads to creation of industrial slums.
EDPs help in removal of these slums as entrepreneurs are provided
with various schemes, incentives, subsidies and infrastructural facilities
to set up their own entreprises in all the places. It will help in
controlling industrial slums and also reduces pollution, traffic
congestion and overcrowding in developed areas.
(9) Fulfilment of Dreams: EDP is necessary to motivate
the potential entrepreneurs to convert their dreams into action.
(10) Successful Launching of New Units: EDP
develops motivation, competence and skills necessary for
299
Entrepreneurial Development Cycle
300
Stimulatory Role
1. Entrepreneurial education
2. Planned publicity for entrepreneurial opportunities.
4. Identification of potential entrepreneurs through
scientific methods
4. Motivational training to new entrepreneurs
5. Help and guide in selecting products and preparing
project reports
6. Making available techno-economic information and
product profits.
7. Evolving locally suitable new products and processes.
8. Availability of local agencies with trained personnel
for entrepreneurial counselling and promotions.
9. Organizing entrepreneurial forum
301
Support Role
1. Registration of unit
2. Arranging finance
4. Providing land, shed, power, water etc.
4. Guidance for selecting and obtaining machinery
5. Supply of scarce raw materials.
6. Getting licences / import licences
7. Providing common facilities
8. Granting tax relief or other subsidy
9. Offering management consultancy
10. Help marketing product
302
Sustaining Role
1. Help modernization
2. Help diversification/expansion / substitute
production.
4. Additional financing for full capacity utilization
4. Deferring repayment/interest.
5. Diagnostic industrial extension/consultancy source.
6. Production units/ legislation/policy change
7. Product reservation / creating new avenues for
marketing
8. Quality testing and improving services
9. Need - based common facilities centre
303
Components of Training
Programme
304
Role of EDP and Stage of
Entrepreneurship
305
Role of EDP and Stage of
Entrepreneurship
Beginning Stage •The motivational training that includes the preliminary knowledge of production, marketing and financial management.
Stability Stage •Advance level of management inputs to shoulder the increasing managerial responsibility.
Growth Stage •Strengthening management skills
Further growth stage •Latest inputs of economy
306
• Stage of
Startup/
Process
• Variability in
Audience
Background
EDP TRAININGand
Environment 307
Stages of EDPs
Of EDP
308
https://www.youtube.com/watch?v=TcNp
oc-lF0M
(rich dad poor dad summary, risk
managent)
309
3.6 Relevance and Importance
of EDP
• Recap video
• Relevance and
Importance of
EDPs
310
3.6 Relevance and Importance
of EDP
311
Suggested Readings
House
312
3.6 Relevance and
Importance of EDP
313
Examples
Vijay Shekhar Sharma
314
Paytm example
14000 +
employees
and 4 Million
offline
merchants
Paytm raising
up to $2 Relevance and 10 million +
billion;
valuation may Importance of Customers
soar to $18 EDP Benefitted
billion
Many CSR
activities
initiated by
Paytm for
will fare of
Society 315
Example
316
Oyo Rooms
17000+
employees
14 million
Capital Relevanc +
raised $ e and customers
700 million Importan were
dollors ce of EDP benefitted
by 2018
CSR
activities
317
Entrepreneurship Development
Model
• Pre-requisites for EDP :
– Fulfilling infrastructural needs
– Nurturing entrepreneurs to grow and survive
– Cooperation through out
• Survey of Entrepreneurial Opportunities
– Identification of demand
– Opportunity analysis
• Selection of Entrepreneurs
– The selection procedure to be adopted by an organization
should be based on sound theoretical background and
standardized tests administered by experts.
– When the entrepreneurs are rightly selected, chances of
drop-outs are minimized and entrepreneurial training
become effective in the achievement of goals and objectives.
318
Entrepreneurship Development
Model
• Inputs for Entrepreneurship Development Training
– Motivational input
– Economic inputs
– Financial input
– Skills and knowledge inputs
– Technological inputs
– Government polices and other inputs
• Support System
– Individuals and organizations which provide assistance to
entrepreneurs constitute a support system.
• Follow-up
– It is as important to take up follow-up measures after
conducting entrepreneurial development courses.
319
• Relevance
and
Importance
of EDPs
• ED Model
320
3.7 Role of government in
organizing EDP’s
Introduction
• Role of EDPs EDPs EDPS
government in EDPS
EDPs
general f
l e o
• Role of EDPs Ro
government at
different levels EDPS
EDPs
• Details of different
institutions
321
Suggested Readings
House
322
organizing EDP’s
• Support of law and regulation
• Governments can give needed information and capital
• Make available to better technology
• Carry out planning, draw policy, and establish strategy
• Provides incentives, subsidies, promotional schemes,
concession on Excise duty
• Develop infrastructural facilities like develop
transportation, power and water facilities
• Launch the capital and money markets in which lenders
could have assurance.
• Prevent serious and long-lasting recessions
323
organizing EDP’s
• Role of
government can
be divided into
three levels
District Level
State Level
All India Level
324
325
Role at District level
• District Industries Centers (DICs) work at
district level
• District Industries Centers (DICs) provide full
assistance to the entrepreneurs who are going to
start the business on their own and in their
regional places. These centers provide service
and support to small entrepreneurs under a
single roof at both pre and post investments
• Registration of small industries is done at the
district industries centre and PMRY (Pradhan
Mantri Rojgar Yojana) is also implemented by
DIC.
• Management of DIC is done by the state 326
Role at District level
1. To spot the entrepreneurs: DICs conducting
various motivational programmes so that they can
find new entrepreneurs throughout the districts. It is
done particularly under some schemes and with the
association of SIS’s and TCO’s for conducting
Entrepreneurial programmes.
2. Purchase of fixed assets: To purchase fixed
assets, the DICs suggest loan applications of the
prospective entrepreneur to some of the concerned
financial and development institutions like NSIC, SISI
etc., DCI’s also recommend commercial banks so that
to meet the working capital requirement of SSI to run
operations daily. 327
Role at District level…
4. Offers subsidies and other incentives: DCIs
help the rural people to subsidies offered by the
government on various schemes
4. Guidance of import and export: Government
provides various types of incentives for import and
export on particular goods and services. The license to
the importer and exporter is issued on the basis of
recommendation of DIC.
5. Entrepreneurial training programmes: DCIs
allow a lot of training programmes for the rural
entrepreneurs who are new to the business world and
also recommend other institutions to take part in such
training programs. These are intended to give better
assistance to the new entrepreneurs. 328
Role at District level..
6. Provides employment for
unemployed educated ones: The DICs
have introduced a scheme to guide the
unemployed educated youth by providing
them facilities for selfemployment. The
age limits between 18 to 45 years with
minimum qualification of metric or
technical trade. The technocrats and
women are given importance through this
schemes. 329
• Economic
Investigation.
• Plant and Machinery.
@ • Research, education
District level and training.
• Raw materials.
• Credit facilities.
• Marketing assistance.
• Cottage industries.
330
• Role of government in
general
• Role of government at
different levels
331
• Role of government at
different levels
• Important institutes
• Critical evaluation
332
Role at State level
• The State-level Institutes/ Centers for
Entrepreneurship Development endeavored to
carry out Entrepreneurial Development
Programs at the grass-root level and to provide
the human resources support to various State
and district level organizations engaged in the
entrepreneurship development work.
• All the state governments facilitate technical and
other support services to entrepreneurs through
their Directorates of Industries, and District
Industries Centers.
333
Role at State level…
• The State-level organizations :
 Provide industrial extension motivation
services
 Business opportunities guidance
 Project counselling
 Helped in initiating entrepreneurship process
at school level in the career planning of the
youths of the country.
334
Role at State level…
 Conducts number of workshops, seminars,
conferences and brought out publications
based on research, and as aids for training of
entrepreneurs.
 The organisations also produced a number of
video films as audio-visual aids for training
the entrepreneurs
 Motivating entrepreneurs towards enterprise
setting and operating the same in sound and
healthier lines.
335
Role at All India level/ Central
level
• The first step of all-India financial institutions
including IFCI was the establishment of
Entrepreneurship Development Institute of
India (EDII) in March, 1983, at Ahmedabad as a
resource organisation at the national level.
• The Central Government also established in
1983 the National Institute for Entrepreneurship
and Small Business Development (NIESBUD) at
New Delhi, with the objective of co-ordinating
activities related to entrepreneurship and small
business development.
336
Role at All India level/ Central
level…
(a)Institutional entrepreneurship activities
(b)Generating, sharpening and sharing knowledge
through research documentation and publication
(c)Creating and developing a cadre of professionals in the
body of knowledge, which can now be rightly called
discipline of "entrepreneurship" to emerge and flourish
(d)Developing new products, market segments for
carrying the entrepreneurship development in priority
areas and sections of the people
(e) Providing various concessions and subsidies to
entrepreneurs
(f) Providing credit facilities to facilitate EDPs
337
Important Central Level
Institutes
338
Important Central Level
Institutes
Small Industries
Service Institute
(SISI)
Entrepreneurship
Development Institute
of India (EDII)
National Entrepreneurship
Development Board (NEDB)
National Institute for

Entrepreneurship and Small
Business Development (NIESUBD)
339
Important State level Institution
340
Important State level
Institution…
District Industrial Centers
(DIC)
Technical Consultancy
Organisation (TCO)
Khadi and Village

Industries Commission
(KVIC)
341
• Role of
government
at different
levels
• Important
institutes
• Critical
evaluation 342
3.9 Critical evaluation
• Critical
evolution
• Issues in
EDPs
• Summing up
unit 4
343
Critical evaluation
• Hundreds of EDPs are conducted by some
686 organizations to impart
entrepreneurial training to participants in
thousands.
• The main objective of EDPs is to make the
EDP trainee an enterprise creator.
• Thus , its important to check whether
objectives are full filled or not, thus
retrospective evaluation is need for
understanding performance of EDPs 344
Critical evaluations
• The Gujarat Industrial and Financial
Corporation were the pioneers in evaluating the
effectiveness of the EDPs.
• Most recent evaluation study on EDPs is carried
out by the ‘Entrepreneurship Development
Institute of India, Ahmedabad
• The critical evaluation discussed here: Dinesh N.
Awasthi and Jose Sebastian, Evaluation of
Entrepreneurship Development Programmes,
New Delhi: Sage Publications, 1996, pp. 175.
345
Critical evaluations …
346
Important analysis
• Effectiveness of the EDPs is around 26 per cent, while
expected start-up rate is slightly around 42 per cent
• Out of 440 trainees who could not be contacted
personally during the field survey, according to the
secondary sources, viz., family, friends, and neighbours,
17 per cent of them have already given up the idea of
venture launching as they are engaged in some other
activities.
• The effectiveness of EDPs is not very good. It means
there are some problems or lapses here and there in
conducting the EDPs’. Therefore, there lies the need for
looking at the problems and constraints of EDPs.
347
Other Evaluations
• Roughly three out of ten who receive training are able to
start their own enterprise
• Start-up rates vary across target groups:
• Better in Science and Technology group than general
group
• Better in women
• A considerable degree of variation in the start-up rates is
observed across states. There are deviations from
expected behaviour. The authors note: ’One would
expect a state like Andhra Pradesh to have performed
better given its industrial growth in the recent past.
Similarly, given the law and order situation in Punjab, or
the nonentrepreneurial culture in states like Kerala and
West Bengal, one would have reconciled even with a low
348
start-up rate. But these states have performed well’
Other Evaluations…
• EDPs have been quite successful in promoting
first generation entrepreneurs.
• It is also noticed that little over two-thirds of the
’Starters’ belong to traditionally non-business
communities. Patidars (40 per cent), artisan
castes (18 per cent) and Kshatriyas (5 per cent)
account for roughly two-thirds of the
entrepreneurs in Gujarat. Also, it does not
appear that the admission process to EDPs has
consciously aimed at any particular community
composition.
349
Other Evaluations…
• It is seen that the performance of trained
entrepreneurs (TEs) vis-A-vis non-trained
entrepreneurs (NTEs-Comparison Group) has
been significantly superior and the rate of
sickness in the ventures launched by - them has
also been lower than the national average.
• The profile of a ’Starter’:
– 40+ age (indicative of maturity)
– has some work experience
– hails from a middle class family
– has clarity of objectives (in terms of venture
launching). 350
Other Evaluations …
• As is to be expected, the discouraging
attitude of the support system and tardy
post-programme follow-up appear to be
the major bottlenecks in the success of the
programmes.
• EDPs more systematically and
meticulously are able to produce better
results despite the many hurdles within
which they operate.
351
Issues with EDPs
• Structure and Composition of EDPs: The
structure and content of EDPs, taking into
account the regional variations, need to be
streamlined. The programme should have a
practical content and needs a lot of inter-
institutional organisational arrangement to
make it a success.
• Areas of Operation: As has been stated
earlier, in North-Eastern Area, entrepreneurial
development activities are lacking the support
activities of the financial institutions. In these
areas, programmes have to be linked with 352
Issues with EDPs
• Fixing Priorities: Another area of fixing the
priorities of EDPs is to consider their working in
terms of efficiency and social need (justice) cri
teria. Evaluation of EDPs have revealed that
those who have business experience, education
and skills are proving successful entrepreneurs.
• Lack of specialists' support:
Entrepreneurship is a comparatively new area of
study requiring inter-disciplinary efforts by
people from different disciplines
353
The operational problems of
EDP
• Inherent inability
• Diverse opinions
• No proper strategy
• Low institutional commitment
• No local support
• Non-availability of inputs
354
The operational problems of
EDP
• Poor Follow-up
• No adequate research facilities
• Planned training methodology
• No clear-cut objective
• Lack of clarity in approach
• Lack of creativity and commitment.
355
Summing up unit 3
S.N Topic
o.
3.1 Innovation & Entrepreneur
3.2 Entrepreneurial Behavior and Psycho Theories
3.3 Social Responsibility
3.4 Entrepreneurship Development Programme

(EDP)
3.5 Role of EDP
3.6 Relevance and Importance of EDP
3.7 Role of government in organizing EDP’s

356
Critical evaluation
• Critical evaluation
of EDPs
• Issues in EDPs
• Summing up Unit
4
357
Steve jobs
• https://www.youtube.
com/watch?v=YAyc2
bYRYP4
358
4.1 Role of an entrepreneur
in economic growth as a
Innovator
• Introduction to
UNIT 4
• Objective of this
unit
• Role of an
entrepreneur in
economic growth
as a Innovator
359
Entrepreneurship
Development
Unit 4
Pooja Tripathi
Assistant Professor
360
361
Unit 4: Role of Entrepreneur
S.N Topic
o.
4.1 Role of an entrepreneur in economic growth as a
Innovator
4.2 Role of an entrepreneur in generation of
employment
4.3 Role of an entrepreneur in complimenting and
supplementing Economic Growth
4.4 Role of an entrepreneur in Bringing About Social
Stability
4.5 Role of an entrepreneur in Balanced Regional
Development of Industries
4.6 Role in Export promotion and Import
substitution
362
4.7 Role of an entrepreneur in foreign exchange
4.1 Role of an
entrepreneur in economic
growth as a Innovator
363
Suggested Readings
House
364
Story
• Japanese love eating
fish
• But water close to
japan have not held
fishes for decades
• So to feed the
Japanese population
the big fishing boats
moved further to
bring fish
365
Cont.
• Further they go to bring fishes, longer time
it would take to reach back and thus lesser
were the fresh fishes.
• Japanese did not like the taste
• To solve this problem , they started
keeping freezers on their boat.
• This allowed them to bring fishes from
more further destinations
• But Japanese could differentiate between
fresh and frozen fish taste. 366
Cont.
• The frozen fish were bought at lower rate.
• So fishing companies installed fish tank
• They could now store the fish.
• But, after little thrashing around, the
fishes stop moving and were dull and
tired, but alive
• Unfortunately, the Japanese could
differentiate the taste and could
understand that fishes were not fresh
• Japanese wanted lively taste of fish and
367
Cont.
• So, to keep the fish tasting fresh the Japanese
fishing companies still used fish tank but now
they started putting one shark in the tank. This
led fish to keep moving and thus fresh fishes
were obtained.
• Moral of the story: We all need a “shark” to keep
are lives moving. Our “shark” is the challenges
that we face in our day today life.
• For an entrepreneur , the main motivating factor
which urges them to continue in their
entrepreneurial pursuit is challenge.
368
Important roles of an
entrepreneur
Innovator
369
Examples of Innovation
• Potato Chips Inventor: George Crum, a chef
at the Carey Moon Lake House in Saratoga
Springs What they were trying to make: A plate
of fried potato. How it was created: One day, a
customer sent back his plate of potatoes many
times and kept asking for them to be more fried
and thinner. Crum lost his temper, sliced the
potatoes insanely thin and fried them until they
were hard as a rock. To the chef's surprise, the
customer loved them and wanted more! And this
is how potato chips came into existence.
370
Economic Development
Increase in
real per
capita
income
Increase in
Gross
domestic
product
371
• According J.A. Schumpeter rate of nation
depends on its rate of innovation which intern
depends on the rate of increase in the number of
entrepreneurs.
• An innovator who introduces new combinations 372
Entrepreneurs are innovators
• They observe an opportunity.
• They create new goods and services.
• They improve existing products.
• Innovate process, markets etc
373
As innovator, activities
performed by an Entrepreneur
• An entrepreneur brings about new
combinations
• An entrepreneur uses his technical
knowledge for continuous technical
progress
• Entrepreneur focuses on purposeful
and systematic innovation.
374
Improvement
in per capita
income and
economic
independence
Technical Increase
advance Ways in capital
ment through formation
which
Innovation
used as
tool for
economic
growth by
Improved entreprene Generation
ur of
standard employmen
of living t
Balance
d growth
375
• Entrepreneurship that is needed to put money in
people’s pockets, increase domestic demand and
generate tax revenues.
• The additional danger is that if there is no scope for
entrepreneurship in the formal economy individuals
will turn to the informal economy.
• Informal economy has no protection for employees
leads to exploitation like , such as child labour, unfair
wages and criminality
376
4.2 Role of an
entrepreneur in
generation of
employment
377
Suggested Readings
House
• https://www.entrepreneur.com/article/29
9785
• http://mustaphamuktar.blogspot.com/
2013/03/the-role-of-entrepreneurship-
towards.html 378
• Recap of last session
• Unemployment occurs when a
person who is actively searching an
employment is unable to find work.
Unemployment is often used as a
measure of the health of the
“Unemployment economy.
is not just a social • Employment in government sector is
problem but also
a human
very limited
problem.”H.W.Su • Unemployment leads to several other
rger
problem:
– Poverty
– Social instability
– Reduction in economic growth
– Depression etc.
• The only solution: Entrepreneurs 379
“Schumpeter effect”
• The process of entrepreneurship activity
reducing unemployment situation in the
economy is termed “Schumpeter effect”.
• Unemployment is negatively related to
new-firm startups, that is, as new
businesses are established employment of
resources is stimulated and
unemployment reduces substantially.
380
Types of Entrepreneurial
Opportunity Created by an
Entrepreneur
• Self Employment
• Generation of employment in its
own unit
• Ancillary employment
381
Types of employment
Types of employment
Informal Formal Household
382
Entrepreneurship and role in
Employment
383
Role of an entrepreneur in
generation of employment
Employ Scale
Join Establishin
Formal ment up
with g
entrepren
operating potentia within
eurship cofound
team l of 10- 1-
ers
20 2years
Multiplier
Graduat
effect
e
Join a Perform Manage a

departm s part of
Formal team that
employ ent as departm sets a
ment employe ent project for
e Activity 5-10 years
384
12 Potential areas
• Technology and entrepreneurship can be combined to
provide employment in following 12 sectors:
• Agriculture
• Manufacturing
• Construction
• Transport
• Communication
• Trade, hotels, and restaurants
• Financial intermediation
• Real estate
• Public administration
• Education
• Health
• Other services
385
• Entrepreneurship
plays very important
role in
entrepreneurship
• It generate
employment by self
employment, hiring
and creating ancillary
employment
• Employment
generated is of three
types
• Formal employment
is more crucial than 386
• Activities
undertaken for
supplementing and
complementing
economic growth
• Advantages of
entrepreneur
• Challenges faced
by entrepreneur
387
4.3 Role of an
entrepreneur in
complimenting and
supplementing Economic
Growth
388
Suggested Readings
House
• http://ndl.iitkgp.ac.in/document/
MDl5cHdNUUlnd0lnZHNoQXlvOG5lS05t
SzMvQjFRZ01MUnFpV3pCVEVIcz0
389
New enterprise and Economic
Development
• Aid or business support
• Political change and infrastructure
development:
• Low- and high-displacement companies
• Export markets and cash crops
• The multiplier effect
• Small-firm support or infrastructure
development
390
Advantages of Entrepreneurs
• a) Enormous personal financial gain
• b) Source of employment
• d) Development of more industries,
especially in rural areas or regions
disadvantaged by economic changes, for
example due to globalization effects
• Encouragement of the processing of local
materials into finished goods for domestic
consumption as well as for export
391
Advantages of Entrepreneurs
• Income generation and increased economic
growth
• Healthy competition thus encourages higher
quality products
• More goods and services available
• Development of new markets
• Promotion of the use of modern technology in
small-scale manufacturing to enhance higher
productivity
• Reduction of the informal economy
392
Improveme
nt of living
standard
Improvemen Supplier of
t in physical raw
quality material
Role of an
entrepreneur in
complimenting and
supplementing
Economic Growth
Earning Production
Foreign of finished
exchange goods
Marketin
g activity
393
Challenges in entrepreneurial
growth
• Access to finance
• Access to skills and education
• Women entrepreneurship
• Infrastructure weakness
• Bribery and corruption
• War and terrorism
• Quality and service perception
394
• Activities
undertaken for
supplementing and
complementing
economic growth
• Advantages of
entrepreneur
• Challenges faced
by entrepreneur
395
• https://www.youtube.com/watch?v=iCtb
Ooctn9whttps://www.youtube.com/watch
?v=iCtbOoctn9w
(importance of entrepreneur for
economy)
• https://www.youtube.com/watch?v=KEu
TpRkZqiY&t=7s
• https://www.youtube.com/watch?
v=_LtLhPRiWAM
396
Introduction
• Recap of last
session
• Introduction to
new topic
• Ways in which
entrepreneurs
bring in social
stability
397
4.4 Role of an
entrepreneur in Bringing
About Social Stability
398
Suggested Readings
House
399
4.4 Role of an
entrepreneur in Bringing
About Social Stability
• Establishing Self Sufficient Society:
– The entrepreneur increases the production in
the business enterprises
– Fulfill the requirements of the local
community
– Encourage Savings
– Capital formation
– Contribute towards export promotion and
import substitution, etc.
400
Cont.
• Establishing Ethical Values of Society
– Stresses maintaining moral values, ideals, and
Standards in the conduct of persons associated with
various business activities
• Contribution to Social Development
– Best possible utilization of physical and human
resources, with the utmost economy, providing
employment to local people and also fulfilling
his social responsibility
• Changes in Social Framework
– The entrepreneurs bring out changes in the social
framework through innovative activities.
• End of Evils
– Employment brings in creativity and keep them occupied 401
Cont.
• Reduce poverty by providing employment
• Creates social infrastructures like, schools, colleges,
health care centers, vocational institutions, banking and
insurance facilities, roads and buildings etc. consequent
upon establishment of industries
• Establishment of large enterprises leads to concentration
of economic power in a few hands in the society. Such
concentration has its own evils in the form of monopolies
and monopolistic exploitation of the consumers and the
society as a whole. Hence developing a large number of
“small entrepreneur” helps in even distribution of
economic power in a wider range, ultimately bringing
about social stability.
• Social Changes
402
• Introduction to new
topic
• Ways in which
entrepreneurs bring
in social stability
• Introduction to next
topic
403
• https://www.youtube.com/watch?v=IQwl
VzQ0KUA
• https://www.youtube.com/watch?v=3ekV
daJOycs
• https://www.youtube.com/watch?v=yUN
h9R5TPbo
404
• Recap of what is
taken in previous
session
• Introduction to the
topic
• Need of Balanced
regional development
• Role of Entrepreneur
in balanced regional
development
405
4.5 Role of an
entrepreneur in Balanced
Regional Development of
Industries
406
Suggested Readings
House
• https://iasbaba.com/geography-strategy-
regional-planning/
407
• Balanced regional
development refers to
equal development of all
region of the countries.
• Such development
ensures balanced
exploitation of
resources, equal
opportunity for
employment, equal
infrastructural
development etc.
• The regional balance
implies uniform
distribution pattern of
the planned investment
among different regions
408
Need for Balanced Regional
Development
• Economic • Non-Economic
Considerations Considerations
– Utilisation of local – Socio-Political
resources Arguments
– Expansion of – Strategic
employment Considerations
opportunities
– Utilisation of Infra-
structural Facilities
409
Role of Entrepreneurs in
Regional Development
• Knowledge of Market conditions:
Entrepreneurs establish industries in those
Areas, where most of the factors are favorable to
him. As a result, the balanced development of
industries become possible.
• Advantages of government policies and facilities:
Establishing industries in rural and backward
regions and availing concessional finance,
investment subsidy, transport subsidy and the
like are provided by the government to reduce
regional disparity.
410
Cont.
• Utilization of different resources:
Optimum utilization of resources availed
across the countries
• Social changes: The society has become
industry oriented, misbeliefs have
reduced, several obsolete traditions have
come to an end. As a result, the
entrepreneurs do not hesitate to bear risks
and establishing industries in far flung
areas.
• Help removing regional disparity 411
• Introduction to the
topic
• Need of Balanced
regional
development
• Role of
Entrepreneur in
balanced regional
development
• Introduction to
upcoming topic
412
https://www.youtube.com/watch?v=B3fcZ2rvWIU
https://www.youtube.com/watch?v=dbH
MN_mIMAo
https://www.youtube.com/watch?v=jGbzd
SSeA9o
413
• Recap of last
topic
• Introduction to
today’s topic
• The Role of
Entrepreneurs in
Export
Promotion and
Import
Substitution
• Conclusion 414
4.6 Role in Export
promotion and Import
substitution
415
Suggested Readings
House
416
Export
• Exporting refers to the process of the
sending or transporting the merchandise,
i.e., the goods and services abroad,
especially for the purpose of the trading.
• In International trade, the term exports
refer to the selling of goods and services
produced in the home country to the other
markets de or sale.
417
Need for export
• Limited business
• Cost of production is high in the foreign markets
• To avoid political or other risks of investment
• Foreign country’s government against foreign
investment
• When the enterprisers orientation in the foreign
country or the foreign market is of the temporary
in nature
418
Advantage of Export
• For entrepreneur • For export
• Provides the • Source of foreign
management with the exchange
operation control • Less competition
• the locational within domestic
advantages players
• Easy way to tap • Scale of economies
foreign market • Economic growth
419
Import
• Importing refers to the process of bringing
or carrying from an outside source or
especially to bring in the merchandise, i.e.,
the goods and services from the foreign
country, for the purpose of the trade or
sale. In other words, it is referred to as the
buying or bringing in the goods or the
services from a foreign country
420
Export Promotion
• Export Promotion refer to the various incentive
programs designed to attract more firms into the
exporting by offering the help in product and
market identification and development, pre-
shipment and post-shipment financing, training,
payment guaranty schemes, trade fairs, trade
visits, foreign representation, etc.
• The government provides following services for
export promotion:
– providing information about current opportunities in
the world market
– providing specialized assistance to design
– implementation of the marketing programmes etc. 421
The Role of Entrepreneurs in
Export Promotion and Import
Substitution
• The export development is important to the firm
and to the economy as a whole.
• Government of India take all necessary actions
to develop the exports.
• The export strategies can be achieved with the
help of the wide ranging facilities, infrastructure,
financing, income tax relief, trade facilitation,
etc., as well as by granting exemptions of the
indirect taxes, involving the granting of the
customs and central excise duty exemptions on
the raw materials, inputs, etc. which are used in
422
the export products.
Cont.
• The export incentives provided for the export
promotion with the aim to increase the
profitability of export business. These are as
following:
– Duty Exemption/Duty Drawback
– Income Tax Concession
– Awards
– Other Incentives:
• The Cash Compensatory Support (C.C.S)
• Another important incentive was the system of
Import Replenishment (REP) licenses
• The International Price Reimbursement Scheme
(IPRS) 423
Other support
• PRODUCTION ASSISTANCE: Government has taken
number of the measures to enhance the production base, in order to
improve the productive efficiency, quality, and cost effectiveness of the
products. These includes, providing of the raw materials and other inputs of
required quality of reasonable prices; facilities to establish and expand
productive capacity, including import of capital goods and technology;
facilities to modernize the productions facilities provision of infrastructure
for the growth of the export oriented industries, etc
• MARKETING ASSISTANCE: Schemes and
facilities which assist in export marketing are
mentioned below:
– Market Development Assistance
– Foreign Exchange
– Trade Fairs and Exhibitions
– Export Risk Insurance
– Finance
– Quality Control and Pre-shipment Inspection
– The Institutional Assistance 424
– India Brand Equity Fund
IMPORT FACILITIES FOR
EXPORTERS
• Export Promotion Capital Goods Scheme: Under this
scheme, a manufacturer exporters, merchant exporters tied to
supporting manufacturers and service providers are eligible to
import the capital goods (CG), both new and second hand, including
spares up to specified limit, and computer systems at a
concessional/zero rate of customs duty subject to the export
obligation.
• Duty Exemption Scheme: Duty Exemption consists of the Duty Free
License and Duty Entitlement Pass Book (DEPB.
– Duty Free License: The Duty Free License includes, the Advance
License, Intermediate License and the Special Imprest License.
– Duty Entitlement Pass Book: Under the DEPB scheme, an exporter is
eligible to claim credit as a specified percentage of FOB value of exports
made in freely convertible currency. Any item, except those in the
negative list, is allowed to import without payment of customs duties
against the credit under a DEPB. Third party exports are also admissible
for grant of DEPB. Third party exports are also admissible fro grant 425of
DEPB
Cont.
• EPZs, EOUs, and SEZs : As the part of the export
promotion drive, government has, from time to time, introduced
several schemes to promote units primarily devoted to exports.
These include Export Processing Zones (EPZs), Hundred Per cent
Export-Oriented Industrial Units (EOUs), and different categories of
Technology Parks (TPs). In the year 2000, a scheme of Special
Economic Zones (SEZs) was also introduced. These schemes are
explained below, the benefits of which can also be taken by the
entrepreneurs:
– Export Processing Zones: Such zones are provided with well
developed infrastructural facilities. Industrial plots/sheds are normally
made available at concessional rates. Units in these zones are allowed
foreign equity even up to 100 per cent. EPZ units can import capital
goods, raw materials, etc. for export production without payment of
duty.
– Free Trade Zones: Goods imported to a free trade zone may be re-
exported without any processing, in the same form. A Free Port is one in
to which imports and from which exports are free from trade barriers. A
FTZ may be a part of or adjacent to a port; the rest of the port being426
Cont.
• Export Oriented Units: Hundred per cent export-oriented unit
(EOU) refers to an industrial unit which offers for exports its entire
production, excluding permitted levels of rejects.The EOUs did not
get the benefits of the built in facilities of the zones. EOUs enjoyed
most other facilities and incentives as were available to the EPZ
units. An EPZ/EOU unit had to be a net foreign exchange earner
• SEZs: Any State Government or corporate body may set up an
SEZ. The only laws which will operate in these zones will be the
labour laws and the banking laws. The SEZs are different from the
EPZ, as in the SEZs there will not be any inspector raj and once
commodities go in, nobody will ask any questions until they come
out, clarified the Minister. Units in the SEZs may also do domestic
sales by paying all relevant duties. However, they have to be net
foreign exchange earners.
427
Import Substitution
• The Import Substitution can be defined as the
substitution of domestic source of the supply for
the foreign source of supply. It has been clear
from this definition that the import substitution
implies that:
– Development or creation of the new source of supply
or productive capacity if there is no domestic supply
– Expansion of the domestic production/supply if the
domestic supply is insufficient
– Protection of the domestic industries from the foreign
competition if competitive disadvantage of the
industries, especially the infant ones, is encouraging
the foreign source of supply.
428
Cont.
• Import Substitution is one of the important planks of the
commercial economic policy of the developing countries.
• Reduce the import requirements and thereby to narrow
down or remove the trade deficit.
• The following aspect of a policy of emphasizing import
substitution has been cited below:
– It had led to a multiplicity of collaboration for the same basic
product, however simple it may have been.
– It has led to the repeated renewal of the same collaboration
usually without any up-dating of technology.
– Proposals for up-dating technology were evaluated as if the
complete production envisaged was substitution of imports.
– The claims of import substitution were often exaggerated or
other manipulations hidden
429
• Introduction to
today’s topic
• The Role of
Entrepreneurs in
Export Promotion
and Import
Substitution
• Introduction to next
topic
430
• Recap of previous
session
• Need of Foreign
exchange
• Strategies to earn
Foreign exchange
• Conclusion of unit
4
431
4.7 Role of an
entrepreneur in foreign
exchange
432
Suggested Readings
House
433
Need of Foreign Currency
• The following is the main importance of imports for Indian
economy.
– (i) To Meet the Shortage of Essential Consumer
Goods :– Indian economy can meet the shortage of essential
consumer goods like foodgrains, edible oils, sugar etc. through
imports. For example, in 1994 due to less production of
sugarcane in the country, there was shortage of sugar. To meet
this shortage of sugar, it was imported in huge quantity from
foreign countries.
– (ii) To meet the Need of Capital Goods :– India needs many
capital goods like machinery, equipments etc., for its industrial
development. Out of these some capital goods can not be
produced at all in India. In this way, the need of capital goods
like machinery can be met through imports.
434
Need of Foreign Currency
– (iii) To obtain Important Inputs :– For industrial
and agricultural development of India, many
important inputs like petrol, chemical fertilizers,
minerals etc. are needed. These cannot be produced in
sufficient quantity in the country. Thus, their shortage
can be met through imports
– (iV) To determine value of Goods and
services :– The value of one currency will not be the
same as that of another. This is why Foreign Currency
is the spine of international investments and global
trading. Without it, it would be nearly impossible to
determine the value of goods and services imported
and exported by different countries to each other. .
435

• An entrepreneur can help the country
increasing country’s reservoir by following
two way:
– Entrepreneurs who offer their products and
services to the international market positively
contribute to the foreign exchange earnings of
a country.
– Entrepreneurs help to conserve foreign
exchange reserves by producing goods for
domestic use, which reduces the need for
imports. 436
• Strategies to earn foreign exchange:
– Devise ways in which to create goods or
services that people in other countries want to
buy.
– Attract foreign investors: if the entrepreneurs
are successful enough, they may attract
foreign investors. The investors will be buying
shares in the company. In this case too,
foreign exchange will flow into the country as
foreigners buy local currency to use to buy the
shares in the company. 437
• Producing goods for domestic use:
– Look for imported products
– Learn the technology
– Produce at domestic country
– Agricultural products like tea, coffee, wheat,
sugar, cotton, etc. and other industrial and
consumer products play an important role in
earning foreign exchange.
• Tourism
438
• Government is encouraging our export
businesses and also providing assistance
to the exporters for increasing their
exports.
• Government has established so many
institutions for encouraging the
entrepreneurs to the exportable goods.
439
Unit 4: Role of Entrepreneur
S.N Topic
o.
4.1 Role of an entrepreneur in economic growth as a
Innovator
4.2 Role of an entrepreneur in generation of
employment
4.3 Role of an entrepreneur in complimenting and
supplementing Economic Growth
4.4 Role of an entrepreneur in Bringing About Social
Stability
4.5 Role of an entrepreneur in Balanced Regional
Development of Industries
4.6 Role in Export promotion and Import
substitution
440
4.7 Role of an entrepreneur in foreign exchange
• Need of Foreign
exchange
• Strategies to earn
Foreign exchange
• Conclusion of unit 4
441
• Unit One Recap
• Video of
Founder, Oyo
Rooms
• Takeaways
• Conclusion
442
Unit 1: Revision
S.No. Topic
1 The Entrepreneurship : The concept & Definitions
2 Emergence of Entrepreneurial class
3 Emergence of Entrepreneurial class in India
4 Theories of Entrepreneurship
443
• Problem Solver
• Innovation
• Social Infrastructure
• First subject matter
• Think big
• Good product
• Vision
• Proper Planning
444
• Unit 2 Recap
• Video of Ronnie
Screwwala
• Takeaways
• Conclusion
445
Unit 2: Promotion of Venture
S.No. Topic

Fund
446
447
Thankyou
Ms. Pooja Tripathi
448
• http://www.ijstm.com/images/short_pdf/
1495175847_L1126ijstm.pdf
• Exports make it possible for developing
countries to overcome the limitations of
their domestic markets in exploiting
economies of scale and ensuring full
capacity utilization.
• https://www.youtube.com/watch?v=fynD
JsDHKjw
(innovation)
• https://www.youtube.com/watch?v=Kka8
efWMerk
(unit 2) 449
• https://www.youtube.com/watch?v=TcNpoc-lF0M (rich dad poor dad
summary, risk managent)
• https://www.youtube.com/watch?v=CHFo70ZUUZI&t=254s Competitive
strategy
• https://www.investopedia.com/terms/r/reservecurrency.asp ( foreign
currency)
• https://www.youtube.com/watch?v=nlOp3lSChhE&t=91s
• https://www.youtube.com/watch?v=rD0-bNZk7vY (employment)
450
• https://www.youtube.com/watch?v=f4vFI
wtI51w (short
movie on idea generation)
• https://www.youtube.com/watch?v=2Vcb
EdBulgo
• https://www.youtube.com/watch?v=EpW
_BRjG020
• https://www.youtube.com/watch?v=Fqch
5OrUPvAhttps://www.youtube.com/watc
h?v=Fqch5OrUPvA
(how to write business plan) 451
• 4.9
https://www.youtube.com/watch?v=rgqe
Xrk3hQg
• 4.10
• https://www.youtube.com/watch?v=UXp
EwTwX6W4
• https://www.youtube.com/watch?v=abF7
zalJu5c
452
• https://www.youtube.com/watch?v=44zU
IE3QQNA
453

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Entrepreneurship

1.1 The Entrepreneurship : The concept

1.3 The Entrepreneurship : Definitions

1.4 Emergence of Entrepreneurial class

1.5 Emergence of Entrepreneurial class

1.6 Theories of Entrepreneurship

1.7 Theories of Entrepreneurship

1.8 Case Study

– Leadership V/s Entrepreneurship (

It is process of creating Enterprise It is an overall business activity

Set Goal Achieve Goal

Entrepreneurs hold all the right to Management doesn’t enjoy

Enterprise/ market Social System

Less achievement oriented High Achievement oriented

Highly Innovative Not much innovative

 complicated, ambiguous and changeable

• Francis A. Walker’s views:

S.no. Time Details

1 18th Greatly changed in favor of entrepreneurship

• By 1858 Britain had whole of India under its rule. It

• Setting up of the First Indian

 Classical theories of economic entrepreneurship Theory

• The supporters of sociological theory says

2.1 Opportunity Analysis

2.2 External Environment Analysis

2.4 Economic, Social, and Technological Analysis

2.4 Competitive analysis

2.5 Legal Requirement for Establishing New Unit and Raising

2.7 Forms of Ownership

Micro Environment Macro Environment

– The important items covered by the AA include :-

1. Powers, duties, rights and liabilities of Directors

Fixed Capital Working Capital

Equity share Loan

Third stage Also called Mezzanine 1-4 Medium Market

Fourth Stage Also called 1-4 Low Facilitating

2.1 Opportunity Analysis

2.2 External Environment Analysis

2.4 Economic, Social, and Technological Analysis

2.4 Competitive analysis

2.5 Legal Requirement for Establishing New Unit and Raising

2.7 Forms of Ownership

2.1 Opportunity Analysis

2.2 External Environment Analysis

2.4 Economic, Social, and Technological Analysis

2.4 Competitive analysis

2.5 Legal Requirement for Establishing New Unit and Raising

2.7 Forms of Ownership

3.2 Entrepreneurial Behavior and Psycho Theories

3.3 Social Responsibility

3.4 Entrepreneurship Development Programme

3.6 Relevance and Importance of EDP

3.7 Role of government in organizing EDP’s

• Selection of potential entrepreneur

Initial or pre training Stage: It is the stage when all

Training or Development Stage: It is the stage when

Post-Training or Follow-up stage: It is a stage when

Growth Stage •Strengthening management skills

Further growth stage •Latest inputs of economy

Vijay Shekhar Sharma

National Institute for

Khadi and Village