Laxmi Ratan Mittal Biography

8/8/2019 Laxmi Ratan Mittal Biography

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PART I

LESSON NO. 1

ENTREPRENEUR AND ENTREPRENEURSHIP

WHO IS AN ENTREPRENEUR

An economic agent.

Economic development of a nation depends upon entrepreneurs.

Has knowledge, skills, initiative, drive and spirit of innovation.

Achieving goals. Seizes opportunities for economic benefits to oneself and to the society.


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THE CONCEPT OF ENTREPRENEUR

The word "Entrepreneur" is derived from the French verb

ENTREPREDRE. It means to undertake.

According to Joseph Schumepeter, "An entrepreneur in an advanced

economy is an individual who introduces something new in the economy

a method of production not yet tested by experience in the branch of

manufacture concerned, a product with which consumers are not yetfamiliar, a new source of raw material or of new markets and the like".

The functions of an entrepreneur according to Schumepeter: - 1.

Introduction of a new product, 2. Introduction of methods of production,

3. Developing new markets and finding fresh source of raw materials,

and 4. Making changes.

According to Cantillon "An entrepreneur is the agent who buys factors of

production at certain prices in order to combine them into a product with

a view to selling it at uncertain prices in future".


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To conclude an entrepreneur is the person, who bears risk, unites various

factors of production, to exploit the perceived opportunities in order to

evoke demand, create wealth and employment.

CHARACTERISTICS OF AN ENTREPRENEUR

Action oriented.

Highly motivated individuals who takes risks to achieve goals.Unwavering determination and commitment.

Creative and result oriented. They work hard in return for personal and

financial rewards.

Accept responsibilities with enthusiasm and endurance.

Have self confidence, they are dedicated, setting self determined goals.

Thinkers and doers, planners and workers.

Depends on the intelligence, imagination and strength of purpose of the

individual,


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QUALITIES OFAN ENTREPRENEUR

Essential qualities of entrepreneurs are as follows:

Success and AchievementyRisk Bearer

yOpportunity Explorer

yPerseverance

yFacing Uncertainity

yFeedbackyIndependence

yFlexibility

yPlanner.

ySelf Confidence

yMotivator.

yStress Taker

Above discussed qualities determines entrepreneurs are born not made.

In other words business family background, knowledge and skills,

education and experience is essential for a successful entrepreneur.


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DISTINCTION BETWEEN AN ENTREPRENEUR AND A MANAGER

A manager executes the plans of the

entrepreneur.Thus a manager

translates the ideas into practice.

As an innovation he is called as

change agent who introduces goods

and services to meet changing needs

of the customer

5. Innovation

A manager receives Salary as

reward for service rendered which isfixed and regular can never be

negative

Entrepreneur for his risk bearing

role he receives profits. It is notonly uncertain and irregular but can

at times be negative.

4.R

ewards

A manger being a servant does not

bear any risk involved in the

enterprise

An Entrepreneur bears all risks

and uncertainty involved in the

enterprise.

3.Risk

A manger is the servant in the

enterprise.

Entrepreneur bears all risks and

uncertainty involved in the

enterprise.

2.Status

But the main aim of a manager

is to render his service in an

enterprise already set up by

someone.

An entrepreneur starts a

venture by setting up a new

enterprise for his personal

gratification

1.Goal Management

A ManagerEntrepreneurPoint or Distinction


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10. Public bureaucracy

9. Customer relation8. Management

7. Marketing

6. Parallel opportunities

5. New product5. Co-ordination with outside

agencies

5. Innovation4. Engineering4.

Tackling labour problem4. Management

3. Acquiring and assembly of the

factory

3. Maintaining cordial employer

and employee relation

3.Decision making

2. Dealing with public bureaucracy2. Expansion of the enterprise2. Organisation

1. Management of share resource1. Diversification of Production1. Planning

Function important for

developing countries

Other FunctionPrimary function

FUNCTION OF ENTREPRENEUR


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Planning process involves the following steps:

Scanning of the best suitable idea.

Selection of product line.

Determination of type of business organisation (Individual or

partnership)

Estimation of the capital needed.

Selection of capital resources.Selection of location

Studying the government, rules, regulation and policies.

Selecting the way to fulfill the govt. formalities.

Study of availability of labour force.

Study of market and market strategy to be adopted.


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ORGANISATION:

Co-ordinates assembles and supervises land, labour and capital during the

promotion stage and at the performance stage, for optimum utilisation of the

resources. Efficient expansion and growth of the enterprise largely dependson the efficiency of the organisational network employed and monitored by

the entrepreneur.

DECISION MAKING Aruther H. Cole has described the entrepreneur as a

decision maker. As a decision maker he takes various decisions regarding

following matters:

Determination of the business objectives of the enterprise.

Decision regarding procurement of machine, material, men, money and

market.

Decision regarding requisition of efficient technology and new equipments.Decision regarding development of a market for the product.

Maintenance of good relations with public authorities and with society at

large.


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MANAGEMENT: The management with reference to entrepreneur

stands for not only the working of the venture but also managing of the

day-to-day problems. It includes future expansion and policies in the

long run. Direction of men, machine, material, money, organising of

land, labour and capital for the enterprise.

INNOVATION: Implies "doing of new things or doing of things that are

already being done in a new way". Schumepeter considered economicdevelopment as a desire dynamic change brought by entrepreneur by

instituting new combinations of production. According to him innovation

may occur in any one of the following five forms.

yLaunching of new product in the marketyIntroduction of new technology in the production

yCreation of new market

yDiscovery of new and better source of raw-material

y

Creation of monopoly or breaking up monopoly.


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RISK BEARING: An entrepreneur undertakes the responsibility for loss

that may arise due to unforeseen contingencies in future. He guarantees

interest to creditors, wages to labour and rent to the landlord and risk canbe insured.

UNCERTAINITY BEARING: Risk which cannot be insured against

and it is incalculable. Entrepreneur bears uncertainity refers to the

uncertain trends of market, trade credits etc. which by its nature cannotbe insured, nor capitalised nor salaried too.

Besides the above functions, the entrepreneur has to perform many other

activities at the later stage

y Diversification of production

y Expansion of the enterprise

y Maintaining cordial employer/employee relations

y Tackling of labour problems

y Co-ordination with outside agencies


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The functions of an entrepreneur with reference to the underdeveloped

countries include wide range of activities has been provided by Kilby.

y Management of scarce resources.

y Dealing with public bureaucracy (concessions licenses, taxes)

y Acquiring and overseeing assembly of the factory.

y

Industrial designing and engineering.y Marketing of product and responding to competitions.

y Perception of market opportunities (novel or imitative).

y Financial and production management.

y Management of customers and supplier relations.

y Management of scarce resources.y Innovation or creation of new product or service.


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TYPES OF ENTREPRENEUR

Following are the classification of entrepreneurs on the basis of common

characteristics.Entrepreneur

4. Drone

3. Cognitive3. Fabian

2. Large Scale2. Public2. Rational2. Imitative

1. Small Scale1. Private1. Empirical1. Aggressive /

innovative

D. On the basis

of Scale ofenterprise

C. On the basis

of ownership

B. Arthur

H. ColeClassification

A. Clarence

Danhof.Classification

IVIIIIII


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CONCEPT OF ENTREPRENEURSHIP

The term 'entrepreneurship' is often used synonymously with the term

'Entrepreneur' though, they are two sides of the same coin, conceptually

they are different.

Entrepreneurship, as the indivisible process flourishes, when the

interlinked dimensions of individual psychological entrepreneurship,entrepreneur traits, social encouragement, business opportunities,

Government policies, availability of plenty of resources and

opportunities converge towards the common good, development of the

society and economy.

Entrepreneurship is the process of identifying opportunities in the market

place, arranging the resources required to pursue these opportunities and

investing the resources to exploit the opportunities for long term


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gains. It involves creating wealth by bringing together resources in new

ways to start and operate an enterprise.

According to Cole "Entrepreneurship is the purposeful activity of an

individual or a group of associated individuals undertaken to initiate,

maintain and aggrandise profit by production or distribution of economic

goods and services".

According to Higgins "Entrepreneurship is meant to be the function of

foreseeing investment and production opportunities, organising an

enterprise to undertake a new production process, raising capital, hiring

labour, arranging the supply of raw materials, finding site, introducing a

new technique, discovering new resources or raw materials an selectingtop managers for day to day operations of the enterprise.

The above definitions highlights risk bearing, innovating and resource

organising aspects and an individual or group of people achieve goalthrough production or distribution of products or services.


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To conclude entrepreneurship is set of activities performed by an entrepreneur.

Thus, entrepreneur precedes entrepreneurship.

The relationship between entrepreneur and entrepreneurship is given in the

following table.

ENTREPRENEUR ENTREPRENEURSHIP

Person Process

Visualiser Vision

Organiser Organisation

Decision maker Decision making

Innovator Innovation

Risk bearer Risk bearing

Motivator Motivation

Creator Creation

Leader Leadership

Manager Management

Initiator Initiation

Planner Planning

Technician Technology

Communicator Communicator

Administrator Administration


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NATURE AND CHARACTERISTICS OF ENTREPRENEURSHIP

Above study of entrepreneurship has shown that the process of

entrepreneurship is indeed complex and also when we say entrepreneuris what an entrepreneur does experts have enlisted the characteristics of

entrepreneurship.

y Ability to create enterprise

y Organising functiony Innovation

y Risk bearing capacity

y Managerial and leadership-functions

y Gap filling


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Managerial andleadership activity

Organising factors

of production

Entrepreneurship

character

Ability to create

enterprise

Risk bearingcapacity

Innovative

ideas

Gap filling

function


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SCOPE OF ENTREPRENEURSHIP

Entrepreneurship and the economic development compliment each other.

An economic system of country determines the nature and scope of

entrepreneurship. Entrepreneurship can bring about drastic changes in

the very structure of the economy.

Entrepreneurship works in different ways in different economic systemssuch as capitalism, socialism and mixed economy.

CAPITALISM A capitalist economy represents free enterprise, means

freedom to save and invest, free competition, consumer sovereignty and

very less interference from the government.

Price of the product will be determined on the basis of the force ofdemand and supply with reference to cost of production. The

entrepreneur controls all the activities with reference to the process of

production and distribution. Entrepreneurs play vital and prominent role

in the enterprise because, he controls domestic market by assuming the

role of a competitor .


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SOCIALISM Private entrepreneurship is absent in a socialist economic

system. Economic and financial experts play important role in the

development of entrepreneurship in the system. Such entrepreneurship

mainly to serve the society not to mint money or to make profit only.

CENTRAL AUTHORITY in the socialism economy is appointed by

the Governmental to make policies, frame plans and procedures for the

proper and efficient mobilisation of resources, and mobilisation andallocation of resources into those industries of national prominence. In

this system of economy private entrepreneur has neither a role or

responsibility.

MIXED ECONOMYT

he mixed economy is characterised byco-existence of both the private and public sectors in, the same line of

production. Consumer goods are left to the private enterprises.

Government undertakes the production of capital goods.


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In a mixed economy, restrictions are placed by the Government to

eliminate the problems of monopoly capitalism. Government under

this type of economy curbs the growth of monopolies and encourage

competition.

Mixed economy has built in stabilisers which solve the problems of

production, pricing and distribution in a better manner, apart from

satisfying and helping in the various enterprise goals, mixed economyalso helps in reducing of inequality of incomes among people, fixation

of minimum wages etc. in an efficient and effective way.

Thus entrepreneurship plays a great and vital role in all major

economic systems. Its importance stands beyond challenges andmaking of huge profit in every economic system.


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Scope of

entrepreneurship

EnterpriseCapitalismSocialism

Mixed Economy

Fig: Scope of Entrepreneurship


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FACTORS AFFECTING ENTREPRENEURIAL GROWTH

Following are the factors of environment affecting entrepreneurial

growth. These conditions are grouped under two categories.

Economic conditions

Non economic conditions

ECONOMIC CONDITIONS

Economic conditions includes the capital, labour, raw material and

market.

Capital

Labour Raw material

Market


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NON-ECONOMIC CONDITIONS

Socio-cultural norms and values Degree of approval or disapproval of entrepreneurial behavior.

Family background, standard of education, technical knowledge

and in formation.

Financial stability, caste and religious affiliation.

Psychological conditions are as follows.

David McClelland's 'Theory of need achievement According to him

a constellation of personality characteristics, and high need

achievement is the major determinant of entrepreneurship.

Individual works in the society but remains different.

Impact of achievement motivation and training programmes

influence development of entrepreneurship.


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LESSON NO. 2

ENTREPRENEURSHIP MOTIVATION AND ENTREPRENEURSHIP

DEVELOPMENT PROGRAMME

INTRODUCTION TO MOTIVATION

Human behaviour is governed by needs and desires.

Entrepreneurs feel motivated when their needs and expectation are

satisfied as a result of working for the enterprise.


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DEFINITION OF MOTIVATION

According to Robert Dubin "something that moves the person to action

and continues him in the course of action already initiated.

According to Dalton E McClalland "motivation refers to the way in

which urges, drives, desires, striving, aspirations or needs direct control

or explain the behaviour of human being"

MOTIVATIONAL PROCESS

Motivation is the result of an interaction between human needs and

incentives., A person feels motivated when available incentives lead tothe satisfaction of his motives or needs. Various steps in the process of

motivation are described below.


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Motive

GoalBehaviour

Fig: Motivational Process

Awareness of need is the first step in the motivational process.

Motives are directed towards the realisation of certain goals, which

in turn determine human behaviour. This behaviour leads to goaldirected behaviour. In, order to satisfy and achieve goal. Individual

looks for a suitable action. He develops certain goals and makes an

effort to achieve them.


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MOTIVATION THEORIES

Motivation explains about human nature and human need. Maslow's

needs of hierarchy and McClelland acquired needs theory are

prominent theories among these theories which has relevance to

entrepreneurship.

MASLOW'S NEED OF HIERARCHY THEORY

yPsychological needs

ySafety and security needs

ySocial needs

yEsteem needs

Self Actualisation


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McCLELLAND'S ACQUIRED NEED THEORY (OR

ACHIEVEMENT MOTIVATION THEORY)

As a result of ones life experience a person experiences three types

of needs.

y Need for affiliation

y Need for powery Need for achievement

MOTIVATING FACTORS

Following are the factors motivate an entrepreneur. They are of twotypes

y Internal

y External


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INTERNAL FACTORS

y Desire to do something new

y Educational qualificationy Technical background

y No. of years of experience

y Occupational background

EXTERNAL FACTORS

y Government support and assistance

y Availability of factors of production

y Encouragement from already established business housey Promising demand for the product


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ENTREPRENEURSHIP DEVELOPMENT PROGRAMME

ENTREPRENEURSHIP DEVELOPMENT: INDIA'S

EXPERIENCE

Based on the belief that potential entrepreneurs can be identified and

trained, the entrepreneurship development programme (EDP) has been

designed to promote small enterprises by tapping this latent talent. The

programmes uniqueness lies in its integrated approach, which providesinstructions and counseling from selection through the actual operation

of enterprises.

In India in the 1960's a great deal of discussion centered up on whether

growth could resolve income and regional disparities and whether thefruits of development were being concentrated in a few areas and classes.

India's development strategy was altered in 1969, to give particular

emphasis to industrial promotion in relatively backward states and

districts. It was soon clear, however, that fiscal and financial incentives

by themselves would be insufficient.


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Technical assistance will also be required if non-traditional sources of

entrepreneurial talent were to be tapped. It was in response to this need

that Gujarat's financial institutions evolved a practical, result-oriented

programme to develop such entrepreneurs.

EDP was initiated in 1970 under a sponsorship of a state financial cum

promotional institution, the Gujarat industrial and investment

corporation.T

he programme was run by GHC, and its basic elementsand its characteristics were crystalised through repeated experience

experiments until 1987, when Gujarat's financial and institutions and

industrial promotions agencies jointly sponsored a separate centre for

entrepreneurship development to administer the programme. The centre's

success in turn convinced India's national financial institutions that theprogramme was relevant for other states and a national agency would be

needed. The entrepreneurship. Development Institute of India (EDI-I)

was set up in 1983 to conduct research offer consultancy and training and

assist state level agencies in carrying out their programme.


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EDP is characterised by an emphasis on operational rather than academic

training, flexible design of training programmes to meet the specific need

of the participants and active involvement of the financial and business

communities. The programme directly ties its training to the setting up ofenterprises and tailors its techniques and strategies to the socio-economic

and cultural contexts in which it operates. Costs are kept down and

training kept practical through the participation of established

entrepreneurs, businessmen and others within the field experience, whoparticipate in the programme at their own cost.

While each programme is adapted to local needs, the basic aspects of

EDP are the same and are summersied here. Selection of trainees is the

initial step in the entrepreneurial development the identification processis supervised by the programme's trainer motivators work in a very

personal manner. By contacting social workers, teachers, bankers and

other socially respected but non-political person, they develop a list of

suitable candidates.


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Application are distributed personally and individually interviews are

conducted. In urban areas newspapers advertisements or poster notices

might be used to attract application and forms are often distributed

through the mail.

At successive stages, applicants are evaluated, on the basis of behavioral

science techniques to determine the extent of their entrepreneurial

capacity. Testing is meant to measure, among other things, candidates

motivation to achieve, their capacity to take risks and resolve problems,the extent of their positive self image, and their interest in setting up

business by trying something new or unconventional. Personal

interviews conclude the selection process, permitting a committee that

includes trainer and business and academic experts to make a final

assessment of entrepreneurial aptitude and a determination of what will

be needed in training.


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Training EDP emphasises practical hands on experience. It is designed to

motivate participants, guide them in the selection of appropriate

opportunities and develop their management skills. The programme used

behavioral and psychological techniques to intensify the desire to

achieve, to develop the ability to define goals realistically and to fulfill

them, and to increase self awareness and confidence. In helping trainees

find appropriate enterprise EDP counsels trainees on available

opportunities and helps them to turn their interests with projects that may

already have been identified by technical consultancy agencies or areknown to be candidates for start up funding. Participating ,experts from

management schools and entrepreneur are on hand to explain to trainees

what will be required to manage a small business.

The training process is centered around a subject exercise, whichinvolves participants in the conduct of market surveys and the

preparation of project plans. Trainees are exposed to the thought

processes and field experience necessary to make a rational choice of

business product line, market mix, and related aspects of the projects.The exercise culminates with the com letion of a ro ect re ort.


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Ideally commercial banks and other supporting institutions are brought

into this process at an early stage. Finance can thus be raised for the

project, and a link thereby established between the completion of training

and support of financial institution for the implementation of the project.

At the meeting of the senior executives of the All India Financial

Institution held on 19 May 1979, it was felt that state level institution can

be the best agency for conducting EDP's.T

he state level interinstitutional group (IIG) would, therefore appear to be a suitable agency

to co-ordinate, monitor and follow up the entire programme at the state

level. As suggested at this meeting an advisory board of 10/12 persons

could be set up at the state level comprising representatives of the state

government, IDBI, IFCI, ICICI state level institutions, SISI, majornationalised banks and DIC's to work out the detailed programme and

review progress. This body could at best be a subcommittee of IIG, on

which all the institutions referred to above are represented. This plan

presuppose an adequate number of trained trainers to execute the plan.


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A "lead" institution, for a start, could commence with a few of the

districts under its charge and as it gains experience could gradually cover

the other districts for which it is responsible.

The activities of the state level committees will be supervised and

monitored by an All India Advisory Body. To prevent the body from

being too unwieldy it is suggested that it may comprise a representative

each from the DIC. SSI. The all India Financial institutions and a zonal

representative from the northern southern/eastern and western zones. Anorganisational chart of the operational machinery is given below:

Advisory body at the all India level coordinating body at the state level

(preferably a sub-committee of IIG) "lead" institutions at the

regional/district level.

The "lead" institution in turn will have their own organisational structure.

It may be mentioned that SBI has an EDP cell in each circle. "Lead"

institutions could form similar cells. ,


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The contribution of entrepreneurship development programmes is very

uneven among different regions and definite programmes need to be

chalked out to bring about some degree of uniformity and upgradation.

Before these problems are tackled, some important issues needimmediate attention for e.g. (1) structure and composition of

entrepreneurship development prograrnmes (2) area of operations

(3) fixing of priorities (4) follow up (5) spatial dispersal of the

entrepreneurship development programmes (6) training of trainees

(7) financing pattern.

Apart from these some of the operational problems experienced in the

course of implementing the entrepreneurship development programmes

are listed below:

Past experience has shown that the supporting agencies \ organisations

either tend to be slipshod in the first or are less interested in the third

phase which means that the programme fails to tap the entrepreneurial

potential of the area or trained entrepreneurs do not receive the support

and counseling which they need most.


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Most of the existing support organisations meant for maintenance

operation are not for innovative functions. There is also an element of

cynicism. A re-orientation in the attitude of supporting organisations is

called forth.

Post investment on the part of institutions as also trainees and wrong

selection of target groups contributed largely to the failure of a number

of entrepreneurship development programmes.

Experience revealed that entrepreneurial failures are mostly due to

incompetence and poor management.

It is also said that there is an inherent inability to identify the needs of

instructions and differences of opinion prevailed amongst the trainees.

It is also stated that there is a low institutional commitment for local

support to the entrepreneurs. There is also a very low level of

involvement in the marketing of the products of the units.


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Non availability of various inputs i.e. raw materials, power etc. and,

infrastructure support combined with poor follow up by the primary

monetary institutions resulted in the failing the entrepreneurship

development programmes.It is also stated that there is ill planned training methodology

inconsistency in the programme design, its content sequence and

theme and the focus of the programme is not clear.

Training institution do not have much concern for the objectiveidentification and selection of entrepreneurs and the follow up after

training.

Some of the institutions are still debating whether to have proper

identification and selection of entrepreneurs for preparing successful

entrepreneurs.Those involved in and concerned with the selection and follow up

activities have either limited manpower support or a narrow linkage

with other support agencies.


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It is also said that there is no standard curricula even in terms of a

broad module being adopted by interventions.

A majority of institutions engaged in the entrepreneurship developmentprogrammes are themselves not convinced of what they are doing as the

task is delegated by the government. As a result the social objective

aimed at is not achieved.

Perpetual ambiguity in the objective of entrepreneur development

programmes seems to have percolated to the grass root level with a

significant deterioration in terms of content and interest.


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Entrepreneurs are not necessarily born they can be developed through

education, training and experience. Entrepreneurs talent exists in every

society and in all sections of the society. In India socio-economic

environment hinders the emergence of entrepreneurial talent. In Indiatremendous talent exists if it is properly harnessed, can help accelerate

the pace of socio-economic development, balanced regional growth, self

and gainful employment such as realisation on the part of planners and

policy formulators has resulted in the emergence of Entrepreneurship

Development programme, Development of entrepreneurs meansinculcating entrepreneurial skills required for setting up and operating

business units. Entrepreneurship Development is an organised and on

going process. It's basic purpose is to motivate person for entrepreneurial

career.

Entrepreneurial development programme is a process which involves the

various steps.

In the pertaining phase selection of persons with the required potential

in terms of knowledge attitudes and motivation.


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Creating of infrastructure for training programme such as NIESBUD

Designing techniques for training

Selection and training process

Survey of environmentVarious strategies to make entrepreneurship development more effective

Success lies in providing each of the development point in a integrated

manner. Any partial assistance either in the form of finance or trainingdone would not bring the desired result.

Various organisations are working to promote entrepreneurship

development programme. National Institute for Entrepreneurship and

small Business Development (NIESBUD) co-ordinates activities ofvarious institution or agencies engaged in entrepreneurship development

of particularly in small industries. Industrial activities include effective

training strategies and methodology, standardising model syllabi for

training group


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OBJECTIVES OF ENTREPRENEURSHIP DEVELOPMENT

PROGRAMMES

Following are the important objectives:-

Analyse the environmental set up relating to small industry and

small business.

Selection of product and projectDevelop and strengthen entrepreneurial qualities.

Understand procedure of small scale industries.

Develop wide vision about the business.

Develop passion for integrity and honesty.

Understand the need of entrepreneurial discipline.


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There is need to develop management education and industrial training

in modem times, management education is being viewed as an effective

supplement. Facilities should be provided on an increasing scale for

sending talented young men and women to business schools abroad. New industrial training congress well equipped may as well be

established. Quite often the entrepreneur transforms himself to a

manager.

The development of backward regions/areas constitutes a new

challenge. Programmes for their development be drawn up and should

be effectively implemented. Such programmes await new entrepreneurs

whose technical expertise and managerial competence would bring

about the desired development and fulfill social needs.


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LESSON NO. 3

ENTREPRENEURIAL VALUES AND ATTITUDES

ENTREPRENEURIAL VALUES

Values are generalised and organised conception influencing the

behaviour and nature of human beings. It is a set of beliefs about variousaspects of the world. Values provide standards that guide behaviour.

Values are also reflective of a culture and are widely shared by those

belonging to that culture. Accordingly, values are the inner most layer of

the self which provides the goal and direction to an individual. In terms

of entrepreneurship, it means the cognitive functioning ofentrepreneurship. Values are also responsible for the selectively

organised perception and inter action which an individual has with his

outside world or the environment.


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Akhorie and Mishra (1988) considered the following four values

prominent among entrepreneurs. These are directed towards

InnovativenessIndependence

Outstanding performance

Respect for work

These values are important to distinguish between entrepreneurs

and nonentrepreneurs. We can develop entrepreneurship in the

society by introducing these values and strengthening them

through organised training.


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ENTREPRENEURIALATTITUDE

Those who have imbibed the above mentioned values generally develop

common 'tendencies' to act in any given situation. For example, thosewho value innovativeness develop tendency to use imagination fop

sensing opportunities. In selecting a goal or line of action or means of

tackling a situation they show a tendency to take certain amount of risk.

The tendencies to act in response to stimulus is called attitude. A group

of persons may decide similar or different course of action (Or a given

situation depending upon similar or different attitudes. Accordingly, the

attitude is defined as "an enduring organisation of motivational,

emotional, perceptual and cognitive process with respect to some aspect

of individual's work". Attitudes that show the entrepreneurial pre-dispositions play a significant part in making a successful entrepreneur.

The genesis of such attitudes, however, can be traced to the Value

system.


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Akhori and Mishra have considered the following attitudes as

closely related to entrepreneurship:

y Tendency to take moderate risk.y An eye for economic opportunity.

y Imaginative.

y Initiative.

y Believe that they can change the environment.

y Enjoy freedom of expression.

y Analysing situation and planning action.

Satisfaction from successful completion of task.


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LESSON NO. 4

ACHIEVEMENT MOTIVATION WORK DONE BY D.

McCLELLAND (Also known as The Kakinada

Experiment)

The need for achievement plays an. important role making an

entrepreneur as successful. It is a spirit that activates anentrepreneur to strive for success. In simple terms, need for

achievement is the desire to do well. The empirical evidences

support the hypotheses that need for achievement contributes to

entrepreneurial success. Hence, thin is ft need for developing

achievement motivation for developing entrepreneurship in aneconomy.


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How to develop achievement motivation? David McClelland, a well-

known behavioural scientist of USA holds the view that achievement

motivation can be developed through. ft" and experience. For this,

McClelland conducted his experiments with groups of businessmen in

three countries, i.e., Malawi, India and Equator. He carried out a

separate full-fledged training programme in India to instill achievement

motivation in the minds of entrepreneurs. His successful experiment is

popularly known as 'Kakinada Experiment'. Following is a briefdescription of the Kakinada Experiment

Kakinada is an industrial town in Andhra Pradesh. The experiment

started in January 1964. The main objective of the experiment was to

break the barrier of limited aspirations by inducing achievement

motivation. A total of fifty-two persons were selected from business

and industrial community of the town. They were given an orientation

programme at Small Industry Extension Training Institute (SIET),

Hyderabad. The participants were grouped into three batches.


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The training programme was designed in such a way that it could help

the trainees improve imagination and enable them introspect their

motivation Accordingly, the programme included the following items in

its syllabi:

The individuals strived to attain concrete and regular feedback.

The participants sought models of achievement to emulate.

The participants thought of success and accordingly set plans and

goals.

The participants were encouraged to dunk and talk to themselves in a

positive manner.


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The impact of this training programme on the participants behaviour

was observed after a period of two years. The observations were

encouraging. It was found that those attended the programme

performed better than those did not.' The participants need for usingThematic Apperception Test (TAT) assessed achievement. In this TAT,

ambition related pictures were displayed to the trainees and then they

were asked to interpret the picture and what is happening in the picture.

Thereafter, all the themes related to achievement were counted and,

thus, the final score represented one's need for achievement.

McClelland reached to this conclusion that the training programme

positively influenced the entrepreneurial behaviour of the participants.

As regards caste, the traditional beliefs and imitation of western

culture, they did not determine one's behaviour as an entrepreneur.

That the need for achievement motivation can be developed more

especially in younger minds is well supported by the cross country

experiments.


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For example, a junior Achievement Programme' is started in the United

States of America with a view to instill achievement motivation in the

minds of younger generation.

Similarly, in United Kingdom, 'Young Enterprise" programme has been

started with the same objective of inducing achievement motivation in

younger minds.

The above said experiments / programmes have made us to realise that

entrepreneurship is to be developed from a very young age. Accordingly,

efforts have been made to develop a school curriculum that would result

in a high need for achievement among the students. For this purpose, the

success stories drawn from history and legends of the indigenous cultureare introduced in course curriculum to induce in young minds the 'need

for achievement 'and strong desire to do something good/great they grow

up. This is because the younger minds are mom susceptible to change.


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LESSON NO. 5

INTRAPRENEURIAL LEADERSHIP CHARACTERISTICS

Within this overall corporate environment, there are certain individual

characteristics identified for a person to be a successful entrepreneur.

As summarized in Table, these include understanding the environment,

being visionary and flexible, creating management options,

encouraging teamwork while employing a multidiscipline approach,

encouraging open discussion, building a coalition of supporters, and

persisting.

An entrepreneur needs to understand all aspects of the environment.Part of this ability is reflected in the individual's level of creativity.

Creativity, perhaps at its lowest level in large organizations, generally

tends to decrease with age and education. To establish a successful

entrepreneurial venture, the individual must be


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INTRAPRENEURIAL LEADERSHIP

CHARACTERISTICS

y Understands the environment.y Visionary and flexible.

y Creates management options.

y Encourages teamwork.

y Encourages open discussion.

y Builds a coalition of supporters.

y Persists.

creative and have a broad understanding of the internal and external

environments of the corporation. The person who is going to establish asuccessful new intrapreneurial venture must also be a visionary leader a

person who dreams great dreams.

Although there are many definitions of leadership the one that best


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Although there are many definitions of leadership, the one that best

describes that needed for Intrapreneurship is: "A leader is like a gardener.

When you want a tomato, you take a seed, put it in fertile soil, and

carefully water under tender care. You don't manufacture tomatoes, you

grow them." Another good definition is that "leader ship is the ability to

dream great things and communicate these in such a way that people say

yes to being a part of ' the dream." Martin Luther King, Jr. said, "I have a

dream," and articulated that dream in such a way that thousands

followed, in spite of overwhelming obstacles. To establish a successfulnew venture, the intrapreneurial leader must have a dream and overcome

all the obstacles to achieve it by selling the dream to others.

The third needed characteristic is that the intrapreneur must be flexible

and create management options. An intrapreneur does not "mind thestore," but is open to and even encourages change. By challenging the

beliefs and assumptions of the corporation, an intrapreneur has the

opportunity to create something new in the organizational structure.


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The intrapreneur must possess a fourth characteristic: the ability to

encourage teamwork and use a multi disciplined approach. This also

violates the organizational practices and structures taught in mostbusiness schools and apparent in established corporate plans. Every new

company formation requires a broad range of business skills:

engineering, production, marketing, and finance. In forming a new

venture, recruiting those in the organization usually requires crossing

established departmental structure and reporting systems. To minimizethe negative effect of any disruption caused, the intrapreneur must be a

good diplomat.

Open discussion must be encouraged to develop a good team for creating

something new. Many corporate managers have forgotten the frank, open

discussion and disagreements that were a part of their educational

process. Instead, they spend time building protective barriers and

insulating themselves in their corporate empires.


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A successful new intrapreneurial venture can be formed only when the

team involved feels the freedom to disagree and to critique an idea in

an effort to reach the best solution. The degree of openness among the

team depends on the degree of openness of the intrapreneur.

Openness leads also to the establishment of a strong coalition of

supporters and encouragers. The intrapreneur must encourage and

affirm each team member, particularly during difficult times. This

encouragement is very important, as the usual motivators of career

paths and job security are not operational in establishing a new

intrapreneurial venture. A good intrapreneur makes everyone a hero,

Last, but not least, is persistence. Throughout the establishment of anynew intrapreneurial venture, frustration and obstacles will occur. Only

through the intrapreneur's persistence will a new venture be created

and successful commercialization result.

ESTABLISHING INTRAPRENEURSHIP IN THE


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ESTABLISHING INTRAPRENEURSHIP IN THE

ORGANIZATION

An organization desiring to establish an intrapreneurial environment

must implement a procedure for its establishment. Although this can be

done internally, frequently an organization finds it easier to use someone

outside to facilitate the process. This is particularly true when the

organization's environment is very traditional and has a record of little

change and few new products being introduced. The first step in thisprocess is to secure a commitment to intrapreneurship in the organization

by top, upper, and middle management levels. Without top management

commitment, the organization will never be able to go through all the

cultural changes necessary for implementation. Once the top

management of the organization has committed to intrapreneurship for asufficient period of time (1 to 3 years), the concept is introduced

throughout the organization. This is accomplished most effectively

through seminars, where the aspects of intrapreneurship are introduced

and strategies are developed to transform the organizational culture into

an intrapreneurial one General guidelines need to be established for


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an intrapreneurial one. General guidelines need to be established for

intrapreneurial venture development. Once the initial framework is

established and the concept embraced, intrapreneurial leaders need to

be identified, selected, and trained. This training needs to focus on

obtaining resources within the organization, identifying viable

opportunities and their markets, and developing the appropriate

business plan.

Second, ideas and general areas that top management are interested insupporting should be identified, along with the amount of risk money

that is available to develop the concept further. Overall program

expectations and the target results of each intrapreneurial venture

should be established. As much as possible, these should specify the

time frame, volume, and profitability requirements for the new venture,and the impact of the organization. Along with the intrapreneurial

training, a mentor/sponsor system needs to be established. Without

sponsors or champions, there is little hope that the culture of the

organization can be transformed into an intrapreneurial one.


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Third, a company needs to use technology to make itself more flexible.

Technology has been used successfully for the past decade by small

companies that act like they are big ones. How else could a small firm

like Value Quest Ltd. compete against very large money managementfirms except through a state-of-the art personal computer and access to

large data banks? Similarly, large companies can use technology to make

themselves responsive and flexible like smaller firms.

Fourth, the organization can firmly establish an intrapreneurial culture by

using a group of interested managers to train and share their experiences.

The training sessions should be conducted one day per month for a

specified period of time. Informational items about intrapreneurship in

general and about the specifics of the company's activities in developingideas into marketable products or services that are the basis of new

business venture units should be well publicized. This will require the

intrapreneurial team to develop a business plan, obtain customer reaction

and some initial intentions to buy, and learn how to coexist within the

organizational structure.


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Fifth, the organization needs to develop ways to get closer to its

customers.8 This can be done by tapping the database, hiring from

smaller rivals, and helping the retailer (see Table). Pepsi Co., Inc., is

spending about $20 million to create electronic profiles of about 9million Pizza Hut customers. Dannon is sharing its research with retailers

and tailoring much of its marketing effort to the individual chains.

Sixth, an organization that wants to become more entrepreneurial must

learn to be more productive with fewer resources. This has already

occurred in many companies that have downsized. Top heavy

organizations are out of date in todays hyper competitive environment.

To accommodate the large cutbacks in middle management, much more

control has to be given to subordinates at all levels in the organization.Not surprisingly, the span of control may become as high as 30 to I in

divisions of such companies. The concept of "lean and mean" needs to

exist if intrapreneurship is to prevail.


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METHODS FOR GETTING CLOSER TO THE CUSTOMER

How Big Marketers Can Act as Deftly as Small Companies ...

Tap the database Use purchase data to customize incentives and directmail based on demographics, location, product

preference, and price.

Hire from They excel at "guerrilla marketing"using local

promotions to get smaller rivals closer to customers

and break through advertising clutter.Help your retailer Create store specific marketing programs as Dannon

does for retailers selling its yogurt will win retailer

loyalty, differentiate your product, and bad local

sales.


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and Small Marketers Can Outwit the Giants

Find the missed Small marketers can often focus on a

relatively neglected product-suchopportunities astduct tape or dental floss and take

share from a bigger

player or increase sales in a tired

category.

Apply the Smaller marketers can get a big payoff

when top executives pay personal

personal touch attention to customers' letters, retailers

queries, and sales staff's

suggestions.Embrace technology The cost of database technology is

dropping, making direct-mail

marketing a viable tactic for small

marketers with tight budgets.

Seventh, the organization needs to establish a strong support structure for


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, g g pp

intrapreneurship. This is particularly important, since intrapreneurship is

usually a secondary activity in the organization. Since intrapreneurial

activities do not immediately affect the bottom line, they can be easily

overlooked and receive little funding and support. To be successful, these

ventures require flexible, innovative behavior, with the intrapreneurs

having total authority over expenditures and access to sufficient funds.

When the intrapreneur has to justify expenses on a daily basis, it is really

not a new internal venture but merely an operational extension of thefunding source.

Eighth, the support must also involve tying the rewards to the

performance of the intrapreneurial unit. This encourages the team

members to work harder and compete more effectively, since they willbenefit directly from their efforts. Because the intrapreneurial venture is

a part of the larger organization and not a totally independent unit, the

equity portion of the compensation is particularly difficult to handle.


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Finally, the organization needs to implement an evaluation system that

allows successful intrapreneurial units to expand and unsuccessful ones

to be eliminated. Just as occurs in an entrepreneurial firm, when a good

job is done, an intrapreneurial unit should be allowed to expand to fillmarket demands as warranted. The organization can establish constraints

to ensure that this expansion does not run contrary to the corporate

mission statement. Similarly, inefficient intrapreneurial venture units

should not be allowed to exist just because of vested interests.T

o have asuccessful intrapreneurial environment, the organization must allow

some ventures to fail even as it allows more successful ones to expand.


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LESSON NO. 6

IDENTIFICATION OF BUSINESS OPPORTUNITIES

INTRODUCTION

yStudy government rules and regulations regarding different business

opportunities.y Extensive study of promising investment opportunity.

y SWOT analysis of business potential (strength, weakness, opportunities

and threats)

yMarket survey.

SOURCES OF BUSINESS OR PRODUCT IDEAS


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SOURCES OF BUSINESS OR PRODUCT IDEAS

y Market characteristics.

y Import and Exportsy Emerging new technology and scientific know how

y Social and Economic Trends

y Product profile

y Changes in consumption pattern

y Revival of sick units

y Trade fairs and Trade journals

IDENTIFYING A BUSINESS OPPORTUNITY

Two major characteristics of a business opportunity should be

highlighted.

Good and wide market scope i.e. gap between present or likely demand

and supply.

An attractive, acceptable and reliable return on investment

B i t it d t b l d f th i i t f


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Business opportunity need to be analysed from the view points of

production, commercial, managerial, potential and prospective demand

for the product, technical viability etc.

STEPS IN IDENTIFICATION OF BUSINESS OPPORTUNITY

Identification of opportunity involves following steps.

Preliminary evaluation

Selection of product or service

Conduct a market survey

Contactual programmes to collect sufficient information about

proposed venture Succeeding in the market


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PRELIMINARY EVALUATION

As soon as entrepreneur realise regarding business opportunity, he has to

evaluate investment opportunities against set of specific criteria to selectthose project ideas which are commercially feasible. The criterias are:

y Is opportunity compatible with the promoter.

y

Is opportunity compatible with government regulations and priorities.y Whether raw materials are easily available.

y What is the size of the potential market.

y Whether cost justifies the project.

y What is the risk inherent in the project.

SELECTION OF PRODUCT OR SERVICE


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SELECTION OF PRODUCT OR SERVICE

Entrepreneur should identify the product, which he wish to manufacture.

While deciding about the, product following points should beconsidered:

y Potential demand for the product or service.

y Estimated volume of demand for the product

y Assess potential of existing competitor and estimate about probable

competitors.

y Study the scope for future demand.

y Infrastructural facilities power, transport etc.

y Current status of technology and scientific development in the field.y Availability of raw material and required labour.

y Government policies, legislation, controls.

y Environmental factor.


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y Degree of profitability for the product.

y Information regarding particular line of product.

y Locational advantage of the product.

y If product belongs to an ancillary unit and serves as majorcomponent for the parent industry. It provides a ready demand hence

selection of this type of product entails easy marketability.

y Selection of a product would also be assessed in favour of

availability of skilled and unskilled labour.y Study the various characteristic of the proposed product to be

produced.


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CONDUCT A MARKET SURVEY OR PURPOSE OF MARKET SURVEY

Market survey with reference to the availability of raw material,

equipments, marketing and distribution and consumer behaviour shouldbe conducted.

y Raw material availability:

y

Equipment, availability:y Marketing and Distribution:

y Consumer Behaviour.

CONTACT PROGRAMMES TO COLLECT SUFFICIENT

INFORMATION ABOUT PROPOSED VENTURE

Entrepreneur often need information and guidance, particularly in the

initial stages, on product potential, raw materials, policies, facilities,

procedures, finance formalities, incentives etc. It can be collected

through State Government agencies.

C i h l d l l i b h l f l i


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Contact with central and state level agencies set can be helpful in

collecting sufficient information about proposed venture. Industrial

Finance Corporation of India (IFCI) in collaboration with Industrial

Development Bank of India (IDBI) Industrial Credit and InvestmentCorporation of India (ICICI), state organisations and banks, have set up a

network of state level technical consultancy agencies. They offer a

package of professional and consultancy services to stimulate industrial

growth.

Entrepreneurship development programmes of 6 weeks duration are

designed to impart following information:

How to develop entrepreneurial capabilities. Identify viable projects for potential entrepreneurs.

Impart managerial skills.

Help and secure necessary financial and infrastructural related

assistance.

Th h i l l i l i h f h


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These technical consultancy agencies also monitor the progress of the

unit.

SUCCEEDING IN THE MARKET

There is no way your business will earn money and profit unless

customers buy product or service. The secret formulae for an

entrepreneurs success is to produce what customers will buy.

Following are the important characteristics, which help the entrepreneurto succeed in the market.

Study people and their needs before starting any project.

Identify unsatisfied needs.

Design product in such a way that it should satisfy the customer

better than the competitors product. Ensure that what customer feet about the product which

entrepreneur is offering.

Always look for newer and more effective ways of reaching a

customer.

Entrepreneurs must have clear vision goals and objectives well


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Entrepreneurs must have clear vision, goals and objectives, well

defined mission, and employees participation about the proposed

project.

Constant feed back of results as well as setting and adherence of high

standards gives an organisation a cutting edge over others. Planning,

foresight and analysis are also important qualities.

The process of systematic market research is used to develop products

or process and to provide value for money to the customers. This helps

to gain the market share.

Another important characteristic for successful business is acommitment to innovation which is vital in keeping ahead of the

competition and perhaps the most difficult one to achieve yet most of

the organisations just do not give due importance for the same.


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DEFINITION


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DEFINITION

The American Marketing Association (AMA) defines marketing research

as "the systematic gathering, recording and analyzing of data about

problems relating to the marketing of goods and services".

Richard D. Crisp defines Marketing Research as "the systematic

objectives and exhaustible search for the study of facts relevant to any

problem in the field of marketing".

Clark and Clark defines Marketing Research as "Marketing Research is

the careful and objective study of product design, markets and such

transfer activities as physical distribution, warehousing, advertising and

sales management.Marketing Research is a continuous process of investigation,

recommendation and follow up of marketing problems, which is

conducted by the marketing researcher. The Entrepreneur obtains the

information from the researcher and makes sound decisions.

PURPOSE OR OBJECTIVES


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PURPOSE OR OBJECTIVES

The contributions of market research are considerable. It facilitates both

the decision making and the operational tasks of an entrepreneur. Itcontributes towards achieving both consumer satisfaction and sales

profitability.

The purpose of conducting. Marketing Research are to:

Help in the selection of a right course of action.

Identify various opportunities or problems.

Evaluate the need of the customers.

Analyse the probable market for the product

Briefly study the competitors and the substitute products.

Identify the best sources of distributing the products. Estimate future sales and expected share of the market.

Study the acceptance of the product, package, price, colour, etc. by

the consumers

Analyse the effectiveness of advertisement.

Assess the sales representatives efficiency.

TECHNIQUES OF MARKET SURVEY


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TECHNIQUES OF MARKET SURVEY

The following techniques can be adopted for conducting market

research:

DeskResearchy Observation Method

y Experimentation

y Depth Interviewing

y Projective Techniques

MARKET RESEARCH PROCEDURE

Market Research procedure or process may broadly be as follows:

PROBLEM FORMULATION

It involves developing and understanding of the problem which requires

the attention of researchers. It may be either to identify the marketing problem area or to develop possible solutions or both. For Eg. The

researchers have to identify whether they have to conduct research on the

consumers, product, price, sales representatives, distribution channel

members, etc.



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Problem Formulation

Analysing the Sources

of Information

Preparation of Data

Collection Forms

Sample Designing

Collecting Data

Processing Data

Report Writing

ANALYSING THE SOURCES OF INFORMATION


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ANALYSING THE SOURCES OF INFORMATION

The information may be collected in terms of primary data or secondary

data. Primary sources provide data which are collected for some specificpurpose. They are collected from consumers, salesmen or dealers

through survey, observation, experimentation, etc.

The secondary source provide data which are collected not for specific

research objective of the company. These are readily available from other

sources like journals, government or private organisations, consumer

complaints, company records, etc.

Therefore, depending on the need, cost, time and usefulness, thecompany decides upon the source of information.

PREPARATION OF DATA COLLECTION FORMS


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PREPARATION OF DATA COLLECTION FORMS

A structured questionnaire has to be prepared which lists all relevant

question in a serial depending on the nature of information sought, thekind of respondents, data collection method used by the company, etc.

The questions should be framed in such a manner that it helps in cross

checking and comparison.

Questionnaires can be an open ended or closed ended questionnaire.

Openend questionnaire allows the respondent to answer in their own

words. It often reveals more answers because respondents are not

constrained in their answers. It is useful where explanations are required.

A closed end questionnaire gives options to the respondent, and, he can

make choice among the possible answers. Here, the respondent need not

think much as choices/options are given. It is easier for him to answer

the questions. It gives answers that are easy to interpret and tabulate. It

show how many people think in a certain way.

Mechanical Instruments like Eye Camera Psycho galvanometer Audio


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Mechanical Instruments like Eye Camera Psycho galvanometer, Audio

meter, etc can be used for conducting research where questions are not

asked, but the respondent is only observed.

SAMPLE DESIGNING

The researchers have to identify the respondents to be contacted & hence

a sample of respondents from the universe have to be selected, as it is not

easy to conduct an interview of the whole population.

A sample is a small number of items, parts or respondents chosen at

random from a large number and tending to have similar characteristics

nearly in the same proportion as in the universe i.e., the sample should berepresentative and proportionate.

Some of the sampling techniques are:


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RANDOM SAMPLE If a sample is drawn in such a manner that each

time an item is selected, each item in the population or universe has an

equal chance of being drawn, then the sample is a random sample.

Stratified sample When a universe or population is known to be

heterogeneous and when that heterogeneity has a bearing on the

characteristics being studies, the population may be divided into strata

and random samples of units drawn from each stratum. But to divide intostrata, some information regarding the population and its strata studied

should be available to the researcher.

SYSTEMATIC SAMPLE When a sample is obtained by drawing every

fifth item or every even item on a list, then the sample is systematic

sample. Here the first item selected is at random. The list of samples maybe from census, voters list, directory, etc.

CLUSTER SAMPLE it is a group or a block or an area of respondents

picked at random. It may be on the basis of area, age, income, colleges,

standard of living, etc.

COLLECTING DATA


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COLLECTING DATA

After the selection of sample, the researcher has to appoint people or

investigations to carry on investigation, They contact the respondents and

gather data according to the method suggested and direction given.

PROCESSING DATA

It involves tabulation, analysis and interpretation of data. In tabulation

the data collected are arranged in classes and are assigned weights or

grades.

In Analysing, the tabulated data are examined. The data of tables are com

and averages and percentages are computed by usage of statistical

techniques. This helps in understanding the data and in easyinterpretation.

In Interpretation, necessary conclusions are drawn according to the

problem formulated.

REPORT WRITING


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REPORT WRITING

A report contains analysis and conclusions based on the research data.

Depend on the quantity of report required, some reports may narrate the

whole report procedure where as others concentrate on the analysis andconclusions gives recommendations relevant to the research objective.

CONSTRUCTING THE RESEARCH PLAN

Data sources Secondary/Primary data

Research Approach Survey, observation, experimentation, depth

interview

Research Instruments Questionnaire or Mechanical instruments

Sampling plan Sampling unit, sample size and procedure

Contact Methods Telephone, mail, personal

LIMITATIONS OF MARKETING RESEARCH


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ONS O NG S C

In the fast changing Market environment the data collected becomes

historic and the research finding based on them becomes irrelevant i.e.

there will be time gap between collecting of information and actuallyputting it into practice.

It only provides a base for predicting future events and does not

guarantee any certainty in the happening of the event.

Some research conclusions may be of limitation as the tools and

techniques may not be suitable i.e., it is difficult to convert some answers

given in sentences into numerical terms.

Its use and effectiveness depends largely on the ability of the executivesto get the most value out of it.

It is merely a tool for decision making and is not a substitute for

decisions. It does not provide complete answer to marketing problems as

the answers may be wague or irrelevant

LESSON NO 8


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LESSON NO. 8

PROJECT FORMULATION

INTRODUCTION

The basic necessity of an entrepreneur is to decide upon a project. The

right project selected will lead an enterprise to a great success, while the

wrong or infeasible project will lead to the complete downfall of an

enterprise. Hence, a project is the foundation stone of a venture.

A project, generally, has been identified as any programme of action.

Thus there are research projects, agricultural projects, sub projects andprojects related to market equipment, technology, production, location,

etc.

MEANING AND DEFINITION OF PROJECT


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A project is a scientifically evolved work plan devised to achieve a

specific objective within a specified period of time. It presupposescommitment to tasks to be performed with well defined objectives,

schedule and budgets. Each project differ in size, nature, objectives and

complexity.

Project management scholars emphasises that a project is an unique andnon-repetitive activity which aims at systematically co-ordinating inputs

in the direction of intended outputs. The Encyclopaedia of Management

defines a project as an organised unit dedicated to the attainment of a

goal, the successful completion of a developed project on time, withinbudget, in conformance with pre determined programme specifications.

Another school of thought looks upon a project as a combination of

interrelated activities to achieve a specific objective.

Several economists and bankers have defined a project in different ways.


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p j y

The World Bank defines a Project as "an approval for a capital

investment to develop facilities to provide goods and services". Harrison

defines a project as "a non-routine, non-repetitive, one off undertakingnormally with discrete time, financial and technical performance goals."

A project according to Little and Mirless is "any scheme or a part of a

scheme for' investing resources which can be reasonably analysed and

evaluated as an independent unit. It may be any item of investment

activity which can be separately evaluated.

Thus, a project is a well-planned activity that includes a correct

consideration of alternatives, identification of key issues, broad

participation, compactness and enforceability. It should be neat, clear andspecific, whose objective may be to create, expand or develop certain

facilities to increase the production of goods or services to the

community.

An other simple definition is that a project is speculative imagination. It

requires a persons ability to speculate and imagine the future.

PROJECT FORMULATION


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Project formulation is the systematic development of a project idea for

the eventual purpose of arriving at an investment decision. It involves a

step by step investigation and development of project idea. It is a processinvolving the joint efforts of a team of experts. Each member of the

project team should be fully familiar with the broad strategy, objectives

and others ingredients of the project.

PROJECT REPORT

A project report is a written document pertaining to any investment

proposal. It contains relevant data, on the basis of which the project has

been appraised and found relevant to the entrepreneur.T

his project reportcan be shown to the bankers ' or other financial institutions to acquire

financial assistance. The efficiency of the project is decided by other

organisations and suppliers on the basis of the project report. It is also

used by the entrepreneur to check if he is deviating from what was

decided earlier.

A project report is prepared by an expert after detailed study and analysis


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p j p p p y p y y

of the various aspects of' a project. It acts as a guide to management,

specially at the initial stage to know whether the technical, commercial,

financial and economic conditions are feasible or not.

Fig. Showing Project Report with its contents

Project Report

TechnicalEconomic

Production Managerial Financial

PREPARATION OF A PROJECT REPORT


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PREPARATION OF A PROJECT REPORT

A project report should consist of information on economic, technical,

financial, managerial and production aspects.

Before the actual preparation of Project Report, the first step an

entrepreneur should take is to choose an idea. This idea should not only

be good for the market, but also for the enterprise. It means that the idea

selected should be viable, profitable and socially good. The idea chosen

is obtained from various sources like customers, competitors,

distributors, company employees, journals, magazines and by research

and development project, every, report must present the information on.

Later, observations have to be made with regard to the availability of rawpopulation, water, air, land, flora and fauna, effects material, labour,

machinery, technology, demand in the market, etc. pollution, other

environmental descriptions, etc.

The next stage is the scanning of Business Environment. The amount or


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quantity investment required have to be scanned. The location of the

enterprise is also to be taken into consideration. The background and

skill of the entrepreneur, the extent of marketing, possible chances ofproducing a substitute etc. should be scanned.

Finally, project is to be selected for conducting a detail study, for

preparing a project report.

Choosing an

idea

Observation Scanning of

business

environment

Preparation of

project report

STEPS OR GUIDELINES IN THE PREPARATION OF A PROJECT REPORT


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S S O GU N S N ON O OJ C O

An entrepreneur, to get the projection. Information about all items of

operating consults Commission. There are certain guidelines given by the

Planning Commission for preparing a project report. The guidelinesgiven by the Planning Commissions utilities, labour, repair and

maintenance, setting or the steps in the preparation of a project report can

be summarised as follows expenses.

General Information

Preliminary Analysis of alternatives

Project Description

Marketing Plan

Capital Requirement and Costs

Operating Requirements and Costs Financial Analysis

Economic Analysis

Miscellaneous Aspects

LESSON NO. 9


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SELECTION OF PRODUCT

INTRODUCTION AND MEANING OF A PRODUCTPeople satisfy their needs and wants with goods and services. These

goods, or services, or goods plus services, or just an idea refers to a

product. Therefore, a Product refers to all the things offered to a market.

Hence, product is one of important component of marketing in respect ofwhich an entrepreneur is required to take crucial decisions in a company.

DEFINITION

A product may be defined as "a set of tangible, intangible and associated

Attributes capable of being exchanged for a value with ability to satisfyconsumer and business needs".

According to Alderson "Product is a bundle of utilities consisting of

various product features and accompanying services".

Schwartz defines, as "A product is something a firm markets that will


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satisfy Personal want or fill a business or commercial need and includes

all the factors that may contribute to consumer's satisfaction". For e.g..

While purchasing the tangible product i.e., a vehicle, we are alsopurchasing. The intangible services like free services, etc.

The associated attributes or peripheral factors may include reputation of

the manufacturer, the. Warranty, credit facilities, delivery terms, the

brand name. The courtesy of salesmen, etc. For e.g. Johnson & Johnsonoffers not just the soap or powder but also mothers love.

Criteria for selecting a product


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Internal factors External factors

1.Cost 1. Demand of consumers

2.Experience 2. Competition :-

3.Differentiation a. Pore4.Financial strength b. Monopoly

5.Functional departments c. Oligopoly

6.Personal factors of an entrepreneur 3. Suppliers

4. Technological improvement

5. Demographic factors:-- Size of population

- Trends in birth and death rate

- A distribution

- Educational group

- Geographical distribution

- Occupation6. Economic conditions

7. Neutral environment

8. Political and legal role

9.Socio-cultural factor

CRITERIA FOR SELECTING A PRODUCT


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1. INTERNAL FACTORS

The factors within the organisation are called as internal factors. Theselection product, to a great extent depends upon the internal factors.

They are:

Cost

Experience Differentiation

Financial strength

Functional Departments

Personal factors of an entrepreneur2. EXTERNAL FACTORS

The forces outside the organisation also effect the decision for

selecting a product by an entrepreneur.They are:-

(a) Demand of consumers

(b) Competition


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(b) Competition

Pure competition

Monopolistic competition

OligopolyPure monopoly

(c) SuppliersMarket structure No. of Sellers Size of sellers Control over Product Entry into

prices industry

i Pure competition Many Small None Homogeneous Easy

ii. Monopolistic Many Varies Depends on extent Differentiated Relatively

Competition of differentiation easy

iii. Oligopoly Small Large Considerable ( Prices Fairly Difficult

tend to be stable) homogeneous

iv. Pure monopoly One Varies Maximum control No close substitute Difficult

(d) Technological improvements

(e) Demographic Factors


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(e) Demographic Factors

y Size of population

y Trends in birth and death rate

y Age distributiony Educational groups

y Geographical distribution

y Occupation

(f) Economic condition(g) Natural Environment

(h) Political and Legal rules

ySocio-Cultural Factors

BARRIERS TO THE SUCCESSFUL DEVELOPMENT OF NEW


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PRODUCTS/ WHY DO NEW PRODUCTS FAIL

The failure of a new product are generally considered on the basis of itslack of ability to generate the expected profit. Some of the reasons for the

failure of a new product are as follows:

(1) TECHNICAL PROBLEMS:- Too complicated a product or poor

performance of a product that is not superior to any of the existingproducts may fail.

(2) POOR TIMING:- Introducing a product when it is not required also

leads to failure of a product.

(3) PROHIBITIVE COSTS OF DEVELOPMENT:- Many ideas are

screened before selecting one good idea, which becomes very expensive.

(4) NICHE AND FRAGMENTED MARKETING :-Entrepreneurs


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now a days try to concentrate only on selected market segment, rather

than mass market, which means lower sales and profit.

(5) DEVELOPMENT TIME :-Many individuals may be working on

similar ideas. Only those who can develop these ideas faster than the

competitors have a chance to succeed.

(6) COMPETITORS :-Generally competitors imitate a successfulproduct, thereby reducing the sale of the product.

(7) GOVERNMENTAL CONSTRAINTS :-The rules and

regulations imposed by the government are ever changing, whichbecomes difficult for an entrepreneur.

LESSON NO. 10


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GOVERNMENT POLICY ON WOMEN ENTREPRENEURSHIP

Policies concerning Indian women would be in accordance with the provisions of the Constitution of India. The Constitution guarantees

certain fundamental rights besides freedom of speech, protection of life,

liberty and prohibition of discrimination or denial of protection etc.

Indian women enjoy these rights in the same manner as Indian men. For

instance, Article 14 of the Constitution provides equality before law' and

Article 15 'Prohibits any discrimination'. There is only one specific

provision in Article 15(3) which empowers the state to make 'any special

provision for women and children'. This is in violation of fundamentalobligation of non discrimination among citizens, inter aIia of sex.

Consequently, this provision has enabled the State to make special

provision for women, particularly in the field of labour legislation like

the Factories Act, the Mines Act and so forth.


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In the Seventh Five Year Plan', the Chapter on Socio-Economic

P f W 1985 90 d f h

Documents

Laxmi Ratan Mittal Biography