ENTERPRENEURIAL DEVELOPMENT

SUBJRCT CODE: U18MCBA502

UNIT – 1 INTRODUCTION
EVOLUTION OF THE CONCEPT OF ENTERPRENEUR
Entrepreneurship development is the process of enhancing the
entrepreneurial knowledge and skills via structured training programmes.
... The objectives of entrepreneurship development programme are to
increase the knowledge and skill of existing entrepreneurs and
encouraging others to become one.
The objective of entrepreneurship development programme are to
increase the knowledge and skill of existing entrepreneur and
encouraging others to become one.
Entrepreneur
An entrepreneur is an individual who creates a new business, bearing
most of the risks and enjoying most of the rewards. The entrepreneur is
commonly seen as an innovator, a source of new ideas, goods, services,
and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and
initiative necessary to anticipate needs and bringing good new ideas to
market. Entrepreneurship that proves to be successful in taking on the
risks of creating a start up is rewarded with profits, fame, and continued
growth opportunities. Entrepreneurship that fails results in losses and
less prevalence in the markets for those involved.
Evolution of the concept of Entrepreneur
The word 'entrepreneur' has been derived from the French verb,
'entreprendre', which means, "to undertake". In the early 16* Century
the Frenchmen who organized and led military expeditions were referred
to as 'entrepreneurs'. Around 1700 A.D. the term was used for architects
and contractors of public works.
EARLY PERIOD: The earliest definition of the entrepreneur as a go-
between is Marco Polo. He tried to establish trade route to the Far East.
He used to sign a contract with a venture capitalist to sell his goods. The
capitalist was the risk bearer. The merchant adventurer took the role of
trading. After his successful selling of goods and completing his trips, the
profits were shared by the capitalist and the merchant.
MIDDLE AGES: The term entrepreneur was referred to a person who
was managing large projects. He was not taking any risk but was
managing the projects using the resources provided. An example is the
cleric who is in charge of great architectural works such as castles,
public buildings, cathedrals etc.

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. The profit was taken (or loss was borne) by the
entrepreneur.

18th CENTURY: It was Richard Cantillon, French Economist, who

applied the term entrepreneur to business for the first time. He is
regarded by some as the founder of the term. He defined an
entrepreneur as a person who buys factor services at certain prices with
a view to sell them at uncertain prices in the future.
19th CENTURY: The entrepreneurs were not distinguished from
managers. They were viewed mostly from the economic perspective. He
takes risk, contributes his own initiative and skills. He plans, organizes
and leads his enterprise.

20th CENTURY: During the early 20th century Dewing equated the

entrepreneur with business promoter and viewed the promoter as one
who transformed ideas into a profitable business. It was Joseph
Schumpeter who described an entrepreneur as an innovator. According
to him an entrepreneur is an innovator who develops untried technology.

21th CENTURY: Research Scientists live De Bone pointed out that it is

not always important that an individual comes up with an entirely new
idea to be called an entrepreneur, but if he is adding incremental value
to the current product or service, he can rightly be called an
entrepreneur.

WHAT IS ENTREPRENEURSHIP?

Entrepreneurship is commonly thought of as the process of starting a

business. While this is true, in part, some nuances should be
considered.
Entrepreneurship is defined as “the pursuit of opportunity beyond the
resources currently controlled.” An opportunity is a proposed venture to
sell a product or service for which customers are willing to pay more than
the required investments and operating costs.”

10 CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS

1. Curiosity:
Successful entrepreneurs have a sense of curiosity that allows them to
continuously seek new opportunities. Rather than settling for what they
think they know, curious entrepreneurs ask challenging questions and
explore different avenues. In Entrepreneurship Essentials,
entrepreneurship is described as a “process of discovery.”

Without the drive to continuously ask questions and challenge the status
quo, valuable discoveries can easily be overlooked.

2. Structured Experimentation:
Along with curiosity comes the need for structured experimentation. With
each new opportunity that arises, an entrepreneur must run tests to
determine if it’s worthwhile to pursue.

For example, if you have an idea for a new product or service that fulfills
an underserved demand, you’ll have to ensure customers are willing to
pay for it. To do so, you’ll need to conduct thorough market research and
run meaningful tests to validate your idea and determine whether it has
potential.

3. Adaptability:
The nature of business is ever-changing. Entrepreneurship is an iterative
process, and new challenges and opportunities present themselves at
every turn. It’s nearly impossible to be prepared for every scenario.
Entrepreneurs need to evaluate situations and adapt so their business
can keep moving forward when unexpected changes occur.

4. Decisiveness:
To be successful, an entrepreneur has to make difficult decisions and
stand by them. As a leader, they’re responsible for guiding the trajectory
of their business, including every aspect from funding and strategy to
resource allocation.

Being decisive doesn’t always mean having all the answers. If you want
to be an entrepreneur, it means having the confidence to make
challenging decisions and see them through. If the outcome turns out to
be less than favorable, the decision to take corrective action is just as
important.

5. Team Building:

A great entrepreneur is aware of their strengths and weaknesses.

Rather than letting shortcomings hold them back, they build well-
rounded teams that complement their abilities.

In many cases, it’s the entrepreneurial team, rather than an individual,

that drives a venture toward success. When starting your own business,
it’s critical to surround yourself with teammates who have
complementary talents and contribute to a common goal

6. Risk Tolerance:
Entrepreneurship is often associated with risk. While it’s true that
launching a venture requires an entrepreneur to take risks, they also
need to take steps to minimize it.

While many things can go wrong when launching a new venture, many
things can go right. The key, according to Entrepreneurship Essentials,
is for entrepreneurs to actively manage the relationship between risk and
reward, and position their companies to “benefit from the
upside.”Successful entrepreneurs are comfortable with encountering
some level of risk to reap the rewards of their efforts; however, their risk
tolerance is tightly related to their efforts to mitigate it.

7. Comfortable with Failure:

In addition to managing risk and making calculated decisions,
entrepreneurship requires a certain level of comfort with failure.

It’s estimated that nearly 75 percent of new startups fail. The reasons for
failure are vast and encompass everything from a flawed business
model to a lack of focus or motivation. While many of these risks can be
avoided, some are inevitable.

Successful entrepreneurs prepare themselves for, and are comfortable

with, failure. Rather than let fear hold them back, the possibility of
success propels them forward.

8. Persistence
While many successful entrepreneurs are comfortable with the possibility
of failing, it doesn’t mean they give up easily. Rather, they see failures
as opportunities to learn and grow.
Throughout the entrepreneurial process, many hypotheses turn out to be
wrong, and some ventures fail altogether. Part of what makes an
entrepreneur successful is their willingness to learn from mistakes,
continue to ask questions, and persist until they reach their goal.

9. Innovation
Many ascribe to the idea that innovation goes hand-in-hand with
entrepreneurship. This is often true—some of the most successful
startups have taken existing products or services and drastically
improved them to meet the changing needs of the market.

Innovation is a characteristic some, but not all, entrepreneurs possess.

Fortunately, it’s a type of strategic mindset that can be cultivated. By
developing your strategic thinking skills, you can be well-equipped to
spot innovative opportunities and position your venture for success.

10. Long-Term Focus

Finally, most people think of entrepreneurship as the process of starting
a business. While the early stages of launching a venture are critical to
its success, the process doesn’t end once the business is operational.

In Entrepreneurship Essentials, it’s stated that “it’s easy to start a

business, but hard to grow a sustainable and substantial one. Some of
the greatest opportunities in history were discovered well after a venture
launched.”

Entrepreneurship is a long-term endeavor, and entrepreneurs must

focus on the process from beginning to end to be successful in the long
run.
Functions of a successful entrepreneur are;

1. Taking Initiative
2. Organizing Resources
3. Identifying Opportunities and Prospects
4. Risk-Taking
5. Decision Making
6. Technology Transfer and Adaptation
7. Innovation
8. Fostering Autonomy
9. Social Responsibility
10. Public Relations
11. Experience Sharing
12. Managerial Roles
13. Balanced Economic Development

These are explained below;

1. Taking Initiative

Entrepreneurship is a pro-active activity that takes such actions,

which others can’t even perceive.This unique function of
entrepreneurship provides our civilization with a wide variety of
products, ways of actions, production techniques, etc.Therefore,
taking initiative with such end and qualification is the prime
function of entrepreneurship in every ecnomy.

2. Organizing Resources

Organizing entails identifying those resources that are required to

transform a particular idea into reality. The resources include human and
nonhuman resources. Organizing in entrepreneurship will increase
productivity, promote new ventures, distribute and supervise work and
responsibility, and will remove barriers to work.

Entrepreneurship, thus, is the taping tool fur assuming indigenous skills

and resources for the productive purpose.

3. Identifying Opportunities and Prospects

Entrepreneurship searches those activities of value that have an

economic and social contribution.
It identifies new opportunities in the socio-economic arena which have
got profitable prospects therefore, entrepreneurs are called searchers of
hopes into blind spots and this function enormously indebted our society
to entrepreneurship.

4. Risk-Taking

Entrepreneurship takes the risk for the new venture.

For innovative actions in the field of production technology for new

products in a volatile market and new raw materials used in production.

Moreover, it also takes the risk for theft, robbery, snatching market fall
and hooliganism that may be involved with new entrepreneurship This is
a major function of entrepreneurship in developing countries.

5. Decision Making

Entrepreneurship is a new initiative therefore, it has to decide

multivariate issues that affect new ventures.

Entrepreneurship has to decide upon equipment to be used quality, price

and its variation, deficiency, capital structure, the feasibility of the
project, organizational structure, philosophy of management, etc. that
will guide, run and prosper the new venture or distinct attempt for
entrepreneurship.

We know that decision-making is a process and entrepreneurship to

make n a success, goes through this process.

6. Technology Transfer and Adaptation

Entrepreneurship throughout the world brings invented technology from

different comers of the world and makes it appropriate by making
required adjustments for local conditions.

This function of entrepreneurship involves identifying appropriate

technology with market potentials and adapts it into the local
environment.

Sometimes, the technology uses indigenous materials that reduce cost

and wastage of resources. This entrepreneurial function virtually makes
the world united in terms of homogeneous technology.
7. Innovation

Entrepreneurship innovates a new production process or technology,

market, sources of new materials, management, strategy or technique,
investment opportunity, etc. that Schumpeter (1934) calls as the
fundamental characteristics of entrepreneurship.

Under the context of the changing environment, the entrepreneur locates

the most feasible opportunity for the venture as well as improved or
distinct technology that gives competitive advantages or a new
opportunity to prosperity.

Innovation is a creative means to add new utilities to existing situations

or products. Entrepreneurship through innovation creates innovative
products or operations for human society.

8. Fostering Autonomy

Entrepreneurship is an exposure of creative faculty that provides

personal satisfaction and independence. The unique freedom to think
differently is the impetus for entrepreneurship.

Thus, entrepreneurship Fosters autonomy to advent something new of

value by the application of devoted efforts and time.

9. Social Responsibility

Entrepreneurship with its innovative technology somehow promotes

human efforts. It restarts closed industries with innovative managerial
strategies and techniques

It also motivates new entrepreneurs and attracts them to engage into an

entrepreneurial venture.

Entrepreneurship provides new products or ideas that give momentum

and diversity into society.

Therefore, entrepreneurship performs social responsibility that protects

the welfare, benefit and economic gain of the society. It also promotes
the community standard by providing jobs and amenities.

10. Public Relations

Entrepreneurship is a new venture that requires social acceptance by
the regulatory bodies and the public at large.

The government, as well as the persons’ who will be subject to

entrepreneurship, would be convinced through public relations to accept
and to allow the entrepreneur to execute an entrepreneurial venture.

12 Different types of Enterpreneurship

Entrepreneurs are people who establish a venture around innovation to

change the world. Entrepreneurs are innovators capable of taking risks and
possess specific skill sets like communication, leadership, business
management and technical skills. Entrepreneurship is establishing,
developing, organising and managing a business venture while bearing any
of its risks to generate profits. As there are different businesses, there are
also many types of entrepreneurship.

The different types of entrepreneurship

People have different visions, goals, dreams and aspirations for the type
of business they want to create. For some, hard work is the success
factor and for some having enough capital results in a successful
venture. Some entrepreneurs give social good priority over other
aspects.

Learning about the type of entrepreneurship a company follows can help

you decide whether you can survive their work culture. The type of
entrepreneurship affects the working environment and the qualities of
the entrepreneur. For example, if you are looking to work in a company
that fosters creativity and innovation, applying for a job in imitative or
social entrepreneurship will not serve the purpose. For you, the ideal
workplace would be companies following technology or innovative
entrepreneurship.

Here are 12 different types of entrepreneurship:

1. Small business entrepreneurship

Small businesses represent an overwhelming majority of Indian

entrepreneurial ventures. People who establish small business
entrepreneurship make profits to support their families and live a modest
lifestyle. As small businesses are small and lack the innovative factor,
they fail to attract venture capital for smooth running. These people
usually fund their ventures themselves or take up loans from friends and
family members. The employees are usually local people or family
members.

Local hairdressers, grocery shops, milk booths, plumbers, carpenters

and small boutiques are part of the small business entrepreneurship.

2. Large company entrepreneurship

Companies with a finite life cycle display large company

entrepreneurship. These companies sustain because of innovation and it
is the best choice for advanced professionals who know how to sustain
innovation. When you work in a large company, you are likely to be a
part of a large C-level executive team. The products these companies
offer are different variants around their core product. Small business
entrepreneurship witnessing accelerated growth can become large
company entrepreneurship in no time. This is also possible when a large
company acquires them.

3. Scalable startup entrepreneurship

This type of entrepreneurship starts with a unique idea that can bring a
change. From creating a business plan to launching it, scalable startup
entrepreneurship recognises what is missing in the market and creates a
solution. Such business usually receives funding from venture capitalists
who provide funding based on the uniqueness of the idea. They hire
specialised employees because they seek rapid expansion and high
returns.

4. International entrepreneurship

In international entrepreneurship, entrepreneurs conduct business

activities across the Indian national boundaries. This could either be
opening a sales office in another country or exporting goods from India
to a foreign country. International entrepreneurship is beneficial when
the demand for goods and services is declining in the domestic market
and the demand arises from the international market. Usually,
international entrepreneurs sell products in the Indian market until they
reach the maturity stage and then sell them in the foreign market to earn
profits.

5. Social entrepreneurship

Social entrepreneurship is a type of entrepreneurship in which

entrepreneurs recognise a social problem and tailor their activities to
create social value. Such entrepreneurs develop services, solutions or
products to solve critical social issues and bring about social change.
This social change could be related to environment conservation, animal
rights protection or philanthropic activities for the underserved
community. The motivating factor of social entrepreneurship is achieving
social benefits. Working in a social enterprise means prioritising
transformative social change while ensuring financial sustainability.

These organisations use ethical practices such as conscious

consumerism and corporate social responsibility to facilitate success.
Instead of making profits and earning wealth for the owners, social
entrepreneurship aims to make the world a better place to live.

Non-profit organisations are the best social enterprise examples.

6. Environmental entrepreneurship

It is also known as ecopreneurship and green entrepreneurship. Profit

generation and a concern for the environment drive the primary goal of
such businesses. An ecopreneur adopts highly environmentally
responsible business values and practices. They also try to replace the
existing product or services with products that are environmentally safe
to use. In short, environmental entrepreneurship prioritises the business
impact on people and the environment besides profits.

Impact blogging, publishing an audiobook and creating SaaS software

are a few examples of environmental entrepreneurship as they protect
the environment by not cutting trees.

7. Technopreneurship

Technopreneurship is what you get on uniting technology with

entrepreneurship. It is also known as technology entrepreneurship. A
technopreneur merges entrepreneurial talent and skills with the technical
prowess to develop a business that thrives on the intensive use of
technology. Technopreneurs undertake calculated risks that have
chances of earning profits. In short, these are entrepreneurs who have
the ability to revolutionise the prevailing economic conditions and
introduce breakthrough products for the customers. The foundation of
the products and services of such a business is technology. Such a
business prefers to employ creative and technology-savvy people who
are passionate about bringing technological change.
8. Hustler entrepreneurship

A hustler entrepreneur is a self-starter motivated by their goals and

aspirations to succeed in entrepreneurship. Such people start small and
work hard to grow their business. Instead of using money or capital to
achieve their business goals, they put in their best efforts. They never
wait for opportunities to come because they create opportunities.
Hustlers do not have a give-up attitude, have a big risk-taking appetite
and are always ready to face challenges.

9. Innovative entrepreneurship

The foundation of innovative entrepreneurship is inventions and new

ideas. These entrepreneurs can think about novel ways of doing
business and have the potential to turn a new idea into a successful
venture. They are business leaders and contribute significantly to the
economy. Moreover, such companies strive to make life better by
providing products, solutions and services which other companies have
not. Innovative entrepreneurship is ambitious and requires significant
investment to turn a new idea into a breakthrough service or product.

10. Imitative entrepreneurship

This entrepreneurship mimics or imitates existing business ideas and

works hard to improve them. Such companies imitate already functioning
products and services in the market, usually under a franchise
agreement. Such entrepreneurs have no interest in innovation, though
they are ready to work on and improve the existing processes. Imitative
entrepreneurship works by adopting current technologies worldwide and
modifying their existing technologies to suit the local conditions. Fast
food companies and multinational conglomerate companies are the best
examples of enterprises running on imitative entrepreneurship.

11. Researcher entrepreneurship

Researchers are those who conduct in-depth research on the market

and opportunities before launching their business. Such entrepreneurs
believe that with the right set of information and preparation, they have a
higher chance of achieving success in their entrepreneurial business.
Rather than their instinct, they rely on facts, data and logic. Before
launching their business, they require a detailed plan and in-depth report
of the research findings to minimise the probability of failure.
12. Cyberpreneurship

Cyberpreneurs or cyber entrepreneurs are people who leverage the

benefits of information technology to do business. They come up with
new ideas to provide products and services to customers via the
internet. These people understand the digital age and remove the hassle
of going to a physical store. Such entrepreneurship exists only online
and is known as a virtual business.

Ecommerce stores and over-the-top (OTT) entertainment platforms fall

in the category of cyberpreneurship.

Entrepreneurship is the ability and readiness to develop, organize and

run a business enterprise, along with any of its uncertainties in order to
make a profit. The most prominent example of entrepreneurship is the
starting of new businesses.
In economics, entrepreneurship connected with land, labour, natural
resources and capital can generate a profit. The entrepreneurial vision is
defined by discovery and risk-taking and is an indispensable part of a
nation’s capacity to succeed in an ever-changing and more competitive
global marketplace

Meaning of Entrepreneur
The entrepreneur is defined as someone who has the ability and desire
to establish, administer and succeed in a startup venture along with risk
entitled to it, to make profits. The best example of entrepreneurship is
the starting of a new business venture. The entrepreneurs are often
known as a source of new ideas or innovators, and bring new ideas in
the market by replacing old with a new invention.
It can be classified into small or home business to multinational
companies. In economics, the profits that an entrepreneur makes is with
a combination of land, natural resources, labour and capital.
In a nutshell, anyone who has the will and determination to start a new
company and deals with all the risks that go with it can become an
Entrepreneur.

Who is an Entrepreneur?
An entrepreneur is an individual who has an exclusive idea to initiate and
establish a new venture and bring a change in the world. An
entrepreneur is highly creative and innovative, takes a risk and endures
the unpredictability of business. The business started by entrepreneurs
with a new concept for the first time is known as Start-up. The
entrepreneur is an integral part of the operation, who builds and deploys
the other functions of the operations i.e. labour, land, and capital. Later
in the future, the entrepreneur becomes a businessman

WHICH OF THE 4 TYPES OF ENTREPRENEURS ARE YOU?

The four types of entrepreneurs:

 Coasting, opportunity comes to them (or it doesn’t)

 Conservative (very moderate use of resources, protecting
existing resources)
 Aggressive (proactive, all-in, actively seeks opportunity)
 Innovator/Revolutionary (attains growth through innovation)

COASTERS

The coasters don’t look for opportunity, things kind of “happen” and for
some, that works. It is more focused on right now, what’s in front of us.

CONSERVATIVE

The conservative entrepreneur operates on the principle “resources are

limited” and we thus, we have “be cautious.” This is slightly focused to
the future, but conservatively so, since ”you never know.”

AGGRESSIVE/PROACTIVE

The aggressive entrepreneur operates more on the idea that there are
many opportunities and uses whatever resources are there to achieve
those objectives. This is more focused on what’s next, what more can be
achieved and generating growth through personal action and conviction.

INNOVATOR/REVOLUTIONARY

The innovator not only seeks out opportunities that can be seized but
looks for opportunities that, with a bit of refinement, can be the best of all
worlds. This is the rebel, the artist, the non-conformist embracing all
that’s possible in the future (even at the sacrifice of the present).

Role of enterprenership in economic development

What is the Role of Entrepreneurship in Economic Development?

#1. Capital formation

#2. Improvement in per capita income
#3. Improvement in living standards
#4. Economic independence
#5. Backward and forward links
#6. Generation of Employment
#7. The exploitation of locally available resources & entrepreneurship
#8. Balanced Regional Development
#9. Reducing Unrest and Social Tension Amongst Youth
#10. Innovations in Enterprises

#1. Capital formation

Entrepreneurs mobilize the idle savings of the public through the issues
of industrial securities. Investment of public savings in industry results in
productive utilization of national resources. Rate of capital formation
increases which is essential for rapid economic growth. Thus, an
entrepreneur is the creator of wealth.

#2. Improvement in per capita income

Entrepreneurs explore opportunities and exploit them. They convert

talent and idle resources like land, labor, and capital into national income
and wealth as goods and services. They help increase the net national
product and per capita income in the country, which are important
indicators for measuring economic growth.

#3. Improvement in living standards

Entrepreneurs set up industries that overcome the scarcity of essential

commodities and introduce new products. The production of goods on a
large scale and the manufacture of handicrafts, etc., help in improving
the standard of living of a common man in the small scale sector. Offer
goods at these low costs and increase consumption diversity.
#4. Economic independence

Entrepreneurship is essential for national self-reliance. Industrialists help

to manufacture indigenous substitutes of hitherto imported products
thereby reducing dependence on foreign countries. Businessmen also
export goods and services on a large scale and thereby earn scarce
foreign exchange for the country. Such import substitution and export
promotion help to ensure the economic independence of the country
without which political independence has little meaning.

#5. Backward and forward links

An entrepreneur initiates change in which there is a chain reaction.

There are many backward and forward linkages in establishing an
enterprise. For example, the setting up of a steel plant creates many
ancillary units, and the demand for iron ore, coal, etc. expands. There
are backward relationships. By increasing the supply of steel, the plant
facilitates machine manufacturing, tube making, vessel manufacturing,
and the development of other such units.

Entrepreneurs create an atmosphere of enthusiasm and express a

sense of purpose. They give an organization its momentum.
Entrepreneurial behavior is critical to the long-term vitality of every
economy. The practice of entrepreneurship is as important for
established firms as it is for newcomers.

#6. Generation of Employment

At the beginning of the seventh five-year plan, the backlog of

unemployment was estimated to be around 44 million persons. At
present, the number of unemployed in the country is far greater than
what it was during 1985. Emphasis on modernization which usually
results in automation, use of high technology, and technology up-
gradation initiated during the 1980s and structural changes introduced
by the Government during the 1990s are likely to give much rise to
capital-intensive rather than labor-intensive industry.

It is feared that there will be very few additional job opportunities within
the fold of organized public and private sectors. Most of the job
opportunities in the future are likely to be emerging from the informal and
unorganized sectors of the economy. Entrepreneurship development
training which helps in strengthening the informal and unorganized
sector is expected to motivate enterprising people to opt for self-
employment and entrepreneurial career. It will, therefore, help in
solving the problem of increasing unemployment to some extent.

#7. The exploitation of locally available resources and entrepreneurship

India is considered rich in natural resources. Despite nearly five decades

of planned development, a large number of states remain economically
backward. Some large-scale industries started by out-of-state
entrepreneurs in economically backward regions can help as a model of
pioneering efforts. But ultimately the real strength of industrialization in
backward areas depends on the involvement of local entrepreneurship.
Activities: Increased activities of local entrepreneurs will also result in
construction. Use of abundant available local resources.

#8. Balanced Regional Development

Medium and large-scale industries can only be started with a huge

investment that is either available with well-established industrial houses
or needs to be drawn from the exchequer. Also, promoting such
industries does not help reduce inequalities of income and wealth. On
the other hand, an important advantage of small-scale industries is that
they can be started with little financial and resources and little or no
previous experience or entrepreneurial background.

#9. Reducing Unrest and Social Tension Amongst Youth

Many problems associated with youth unrest and social tension are
rightly considered to be due to youth not being engaged in productive
work. In the changing environment where we are faced with the problem
of recession in wage employment opportunities, the alternative to a
wage career is the only viable option. the country is required to invert the
youth with latent entrepreneurial traits from wage careers to self-
employment careers. Such an alternate path through  entrepreneurship
could help the country in defusing social tension and unrest amongst
youth

#10. Innovations in Enterprises

Business enterprises need to be innovative for their survival and better

performance. It is believed that smaller firms have a relatively higher
necessity and capability to innovate. The smaller firms do not face the
constraints imposed by a large investment in existing technology. Thus
they are both free and compelled to innovate. The National Science
Foundation, an organization in the USA found that small companies
produce four times more innovations per research dollar than do bigger
companies. Entrepreneurship development programs are aimed at
accelerating the pace of the small firm’s growth in India. an increased
number of small firms is expected to result in more innovations and
make the Indian industry compete in the international market.

Problems of women Entrepreneurs

Some of the problems faced by women entrepreneurs are as

follows: 

1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small.
However, women entrepreneurs suffer from shortage of finance on two
counts.

Firstly, women do not generally have property on their names to use

them as collateral for obtaining funds from external sources. Thus, their
access to the external sources of funds is limited.

Secondly, the banks also consider women less credit-worthy and

discourage women borrowers on the belief that they can at any time
leave their business. Given such situation, women entrepreneurs are
bound to rely on their own savings, if any and loans from friends and
relatives who are expectedly meager and negligible. Thus, women
enterprises fail due to the shortage of finance.

2. Scarcity of Raw Material:

Most of the women enterprises are plagued by the scarcity of raw
material and necessary inputs. Added to this are the high prices of raw
material, on the one hand, and getting raw material at the minimum of
discount, on the other. The failure of many women co-operatives in 1971
engaged in basket-making is an example how the scarcity of raw
material sounds the death-knell of enterprises run by women (Gupta and
Srinivasan 2009).

3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot
of money for canvassing and advertisement. Thus, they have to face a
stiff competition for marketing their products with both organized sector
and their male counterparts. Such a competition ultimately results in the
liquidation of women enterprises.

4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various
reasons. A single woman asking for room is still looked upon suspicion.
Cumbersome exercise involved in starting an enterprise coupled with the
officials humiliating attitude towards women compels them to give up
idea of starting an enterprise.

5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other
members of the family. Man plays a secondary role only. In case of
married women, she has to strike a fine balance between her business
and family. Her total involvement in family leaves little or no energy and
time to devote for business.

Support and approval of husbands seem necessary condition for

women’s entry into business. Accordingly, the educational level and
family background of husbands positively influence women’s entry into
business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is
the root cause of socio-economic problems. Due to the lack of education
and that too qualitative education, women are not aware of business,
technology and market knowledge. Also, lack of education causes low
achievement motivation among women. Thus, lack of education creates
one type or other problems for women in the setting up and running of
business enterprises.

7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of
India speaks of equality between sexes. But, in practice, women are
looked upon as abla, i.e. weak in all respects. Women suffer from male
reservations about a women’s role, ability and capacity and are treated
accordingly. In nutshell, in the male-dominated Indian society, women
are not treated equal to men. This, in turn, serves as a barrier to women
entry into business.

8. Low Risk-Bearing Ability:

Women in India lead a protected life. They are less educated and
economically not self-dependent. All these reduce their ability to bear
risk involved in running an enterprise. Risk-bearing is an essential
requisite of a successful entrepreneur.

In addition to above problems, inadequate infrastructural facilities,

shortage of power, high cost of production, social attitude, low need for
achievement and socioeconomic constraints also hold the women back
from entering into business.

Factors Affecting Entrepreneurial Growth

MAY 6, 2017
1. Economic Factors
2. Non-Economic Factors
Economic Factors
1. Capital

Capital is one of the most important factors of production for the establishment of an
enterprise. Increase in capital investment in viable projects results in increase in profits
which help in accelerating the process of capital formation. Entrepreneurship activity
too gets a boost with the easy availability of funds for investment.

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.
Capital is therefore, regarded as lubricant to the process of production.

France and Russia exemplify how the lack of capital for industrial pursuits impeded the
process of entrepreneurship and an adequate supply of capital promoted it.

2. Labor

Easy availability of right type of workers also effect entrepreneurship. The quality
rather than quantity of labor influences the emergence and growth of entrepreneurship.
The problem of labor immobility can be solved by providing infrastructural facilities
including efficient transportation.

The quality rather quantity of labor is another factor which influences the emergence of
entrepreneurship. Most less developed countries are labor rich nations owing to a dense
and even increasing population. But entrepreneurship is encouraged if there is a mobile
and flexible labor force. And, the potential advantages of low-cost labor are regulated
by the deleterious effects of labor immobility. The considerations of economic and
emotional security inhibit labor mobility. Entrepreneurs, therefore, often find difficulty
to secure sufficient labor.

3. 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 can an
entrepreneur be emerged

It is one of the basic ingredients required for production. Shortage of raw material can
adversely affect entrepreneurial environment. Without adequate supply of raw
materials no industry can function properly and emergence of entrepreneurship to is
adversely affected.

In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favorable these
conditions are, the more likely is the raw material to have its influence of
entrepreneurial emergence.

4. Market

The role and importance of market and marketing is very important for the growth of
entrepreneurship. In modern competitive world no entrepreneur can think of surviving
in the absence of latest knowledge about market and various marketing techniques.

The fact remains that the potential of the market constitutes the major determinant of
probable rewards from entrepreneurial function. Frankly speaking, if the proof of
pudding lies in eating, the proof of all production lies in consumption, i.e., marketing.

The size and composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the disadvantage of a
competitive market can be cancelled to some extent by improvement in transportation
system facilitating the movement of raw material and finished goods, and increasing the
demand for producer goods.

5. Infrastructure

Expansion of entrepreneurship presupposes properly developed communication and

transportation facilities. It not only helps to enlarge the market, but expand the
horizons of business too. Take for instance, the establishment of post and telegraph
system and construction of roads and highways in India. It helped considerable
entrepreneurial activities which took place in the 1850s.

Apart from the above factors, institutions like trade/ business associations, business
schools, libraries, etc. also make valuable contribution towards promoting and
sustaining entrepreneurship’ in the economy. You can gather all the information you
want from these bodies. They also act as a forum for communication and joint action.

Non-Economic Factors
1. Education

Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of
education has a significant role to play in inculcating entrepreneurial values.
In India, the system of education prior to the 20th century was based on religion. In this
rigid system, critical and questioning attitudes towards society were discouraged. The
caste system and the resultant occupational structure were reinforced by such
education. It promoted the idea that business is not a respectable occupation. Later,
when the British came to our country, they introduced an education system, just to
produce clerks and accountants for the East India Company, The base of such a system,
as you can well see, is very anti-entrepreneurial.

Our educational methods have not changed much even today. The emphasis is till on
preparing students for standard jobs, rather than marking them capable enough to
stand on their feet.

2. Attitude of the Society

A related aspect to these is the attitude of the society towards entrepreneurship. Certain
societies encourage innovations and novelties, and thus approve entrepreneurs’ actions
and rewards like profits. Certain others do not tolerate changes and in such
circumstances, entrepreneurship cannot take root and grow. Similarly, some societies
have an inherent dislike for any money-making activity. It is said, that in Russia, in the
nineteenth century, the upper classes did not like entrepreneurs. For them, cultivating
the land meant a good life. They believed that rand belongs to God and the produce of
the land was nothing but god’s blessing. Russian folk-tales, proverbs and songs during
this period carried the message that making wealth through business was not right.

3. Cultural Value

Motives impel men to action. Entrepreneurial growth requires proper motives like
profit-making, acquisition of prestige and attainment of social status. Ambitious and
talented men would take risks and innovate if these motives are strong. The strength of
these motives depends upon the culture of the society. If the culture is economically or
monetarily oriented, entrepreneurship would be applauded and praised; wealth
accumulation as a way of life would be appreciated. In the less developed countries,
people are not economically motivated. Monetary incentives have relatively less
attraction. People have ample opportunities of attaining social distinction by non-
economic pursuits. Men with organizational abilities are, therefore, not dragged into
business. They use their talents for non-economic end.

EDP Programmes
As the term itself denotes, EDP is a programme meant to develop entrepreneurial
abilities among the people. In other words, it refers to inculcation, development, and
polishing of entrepreneurial skills into a person needed to establish and successfully run
his / her enterprise. Thus, the concept of entrepreneurship development programme
involves equipping a person with the required skills and knowledge needed for starting
and running the enterprise.

Objective of EDP Programmes

a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.

b. Analyse environmental set up relating to small industry and small

business.

 c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small

enterprise.

Intrapreneurship in government

What is an example of intrapreneur?

An entrepreneur is a person who starts a new business and usually risks his own money
to start the venture. Examples of well-known entrepreneurs include Bill Gates, Steve
Jobs, Mark Zuckerberg, Pierre Omidyar, Arianna Huffington and Caterina Fake

What is government intrapreneurship?

Intrapreneurs are employees who don't let bureaucratic barriers stop them from
driving constructive change. ... Here are some of the strategies that
successful intrapreneurs employ to make a difference in government, plus a look at how
some of the best leaders foster intrapreneurship in their organizations.
UNIT-2 ENTREPRENURIAL MOTIVATION

Motivation Theories

Motivation is a state-of-mind, filled with energy and enthusiasm, which drives a person to
work in a certain way to achieve desired goals. Motivation is a force which pushes a person
to work with high level of commitment and focus even if things are against him. Motivation
translates into a certain kind of human behaviour. 

It is important to ensure that every team member in an organization is motivated. Various

psychologists have studied human behaviour and have formalized their findings in the form
various motivation theories. These motivation theories provide great understanding on how
people behave and what motivates them.

Motivation is a huge field of study. There are many theories of motivation. Some of the
famous motivation theories include the following:

1. Maslow’s hierarchy of needs

Abraham Maslow postulated that a person will be motivated when his needs are fulfilled. The
need starts from the lowest level basic needs and keeps moving up as a lower level need is
fulfilled. Below is the hierarchy of needs:

 Physiological:  Physical survival necessities such as food, water, and shelter.

 Safety:  Protection from threats, deprivation, and other dangers.

 Social (belongingness and love):  The need for association, affiliation, friendship, and
so on.

 Self-esteem:  The need for respect and recognition.

  Self-actualization:  The opportunity for personal development, learning, and
fun/creative/challenging work.  Self-actualization is the highest level need  to which a
human being can aspire.

The leader will have to understand the specific need of every individual in the team and
accordingly work to help fulfil their needs. 

2. Hertzberg’s two factor theory

Hertzberg classified the needs into two broad categories namely hygiene factors and
motivating factors.

Hygiene factors are needed to make sure that an employee is not dissatisfied. Motivation
factors are needed for ensuring employee's satisfaction and employee’s motivation for higher
performance. Mere presence of hygiene factors does not guarantee  motivation, and presence
of motivation factors in the absence of hygiene factors also does not work.

3. McClelland’s theory of needs

McClelland affirms that we all have three motivating drivers, and it does not depend on our
gender or age. One of these drives will be dominant in our behaviour. The dominant drive
depends on our life experiences. 

The three motivators are:

 Achievement: a need to accomplish and demonstrate own competence People with a

high need for achievement prefer tasks that provide for personal responsibility and
results based on their own efforts.  They also prefer quick acknowledgement of their
progress.
 Affiliation: a need for love, belonging and social acceptance People with a high need
for affiliation are motivated by being liked and accepted by others.  They tend to
participate in social gatherings and may be uncomfortable with conflict.
 Power: a need for control own work or the work of others People with a high need for
power desire situations in which they exercise power and influence over others.  They
aspire for positions with status and authority and tend to be more concerned about
 4. Vroom’s theory of expectancy

Victor Vroom stated that people will be highly productive and motivated if two conditions
are met:  1) people believe it is likely that their efforts will lead to successful results and 2)
those people also believe they will be rewarded for their success.

People will be motivated to exert a high level of effort when they believe there are
relationships between the efforts they put forth, the performance they achieve, and the
outcomes/ rewards they receive.

5. McGregor’s theory X and theory Y

Douglas McGregor formulated two distinct views of human being based on participation of
workers. The first is basically negative, labelled as Theory X, and the other is basically
positive, labelled as Theory Y. Both kinds of people exist. Based on their nature they need to
be managed accordingly.

 Theory X:  The traditional view of the work force holds that workers are inherently
lazy, self-centred, and lacking ambition.  Therefore, an appropriate management style
is strong, top-down control.
 Theory Y:  This view postulates that workers are inherently motivated and eager to
accept responsibility.  An appropriate management style is to focus on creating a
productive work environment coupled with positive rewards and reinforcement.

What are factors of motivation?

Factors of motivation are strategies, incentives, recognitions and any other elements that
increase an employee's overall motivation to perform their duties at work. You can
implement several different factors of motivation within your team or for yourself to increase
productivity and satisfaction.

However, because each person is different, it's important to first take time to better
understand what motivates specific groups of employees. For example, some employees may
be motivated by bonus incentives, while others may find motivation in the opportunity to
gain more paid-time-off (PTO) days.

Motivation refers to the process that guides and maintains behaviors that help employees
work towards a particular goal or effectively perform tasks. The most common types of
motivation include:
  Extrinsic motivation: This type of motivation refers to factors that are outside of the
person, such as bonuses, social recognition and praise.
 Intrinsic motivation: Intrinsic motivation is a type of motivation that occurs within
the individual. For example, personal gratification and a feeling of accomplishment are
two types of intrinsic motivations.

13 factors of motivation

The following are several factors to consider to keep both you and your team motivated:

1. Leadership style

Supervisors, managers and other leaders within a company play a significant role in their
employees' motivation. The appropriate leadership styles encourage employees to develop
objectives and goals in their positions, work towards those goals and help employees
maintain that motivation throughout the course of their time at the organization.

To be effective, leaders must determine the best leadership styles for each type of employee,
as not all employees respond well to all leadership styles.

The most common leadership styles include:

 Autocratic
 Democratic
 Coaching
 Authoritative
 Affiliative
 Laissez-faire
 Transformational
 Servant

Understanding these styles and catering your leadership style to your team's needs ensures
you effectively motivate them in the workplace. You can also let your manager know the type
of leadership style that best motivates you to help them be a better leader and keep you
motivated.

2. Recognition and appreciation

Appreciation and recognition are two important components of motivation within an

organization. Offering recognition and praise not only makes employees feel accomplished
and appreciated, but it also reinforces good performance and encourages employees to
continue repeating the actions that led to the performance. The more employee behavior is
positively recognized, the more likely they are to repeat these behaviors and remain
motivated in the workplace.
3. Meaning and purpose

Employees who find a sense of meaning and purpose in their work often have higher levels of
motivation than those who don't. Employees want to know that what they do is actually
contributing to the organization's success and that their duties and accomplishments support
the company's overall growth.

It's helpful to ensure you understand how your role plays an integral part in your company's
processes and success and that your work has meaning beyond simply completing tasks on
time to earn a paycheck.

4. Positive company culture

A company's culture can greatly impact employee motivation in the workplace. Many
employees feel more valued and enjoy their work more when there is a strong company
culture that supports employees and brings them together on a regular basis.

Areas to focus on when increasing the positivity of company or team culture include the
wellbeing of employees, inclusion and equality among employees and compassion towards
employees. You can also contribute positively as an employee and get more involved with
your company's culture to keep yourself motivated.

5. Professional development opportunities

Employees often feel more motivated at work when there are ample opportunities for growth
and professional development. Giving employees opportunities to increase their skills and
become more efficient in their positions instills a sense of accomplishment and pride that acts
as a strong motivator for employees. Plus, offering employees the chance to hone their skills
can ultimately impact an organization's overall success, making it a win-win situation for all
involved.

6. Job advancement opportunities

Another way in which employees become more motivated in the workplace is when a clear
path of job advancement is emphasized. Employees who feel that they are stuck in one
position and have no opportunity to grow within a company are more likely to become burnt
out and look for other job opportunities.

Ensuring employees understand a clear plan of progression within their position in the
workplace can instill motivation to work towards a promotion, which can ultimately increase
employee productivity. If you're unsure whether you have opportunities to advance, speak
with your manager and inquire about what's available to you.

7. Financial benefits

While financial benefits aren't a motivator for all employees, they can enhance many
employees' overall motivation in the workplace. Putting in place different opportunities for
employees to enjoy financial benefits for hard work is a great way to boost motivation and
give employees a sense of accomplishment and appreciation. Examples of financial
motivators include bonuses, raises, promotions, competitive benefits packages and additional
paid time off.

8. Flexible work schedules

Offering employees the opportunity to create their own schedules or work flexible hours is
another great way to instill motivation in your team. Flexible schedules allow employees to
better accommodate family needs, holidays and other personal daily responsibilities that more
rigid schedules often don't.

For example, some employees work better in the mornings, while others do their best work in
the afternoons or evenings. Giving them the option to choose their schedules allows
employees to set up their workday in a way that is conducive to their preferences and needs
and can keep employees motivated to accomplish their daily work goals.

9. Pride

Most employees want to feel proud of the work they complete and themselves as members of
an organization. Team leaders can create a work environment that offers employees
opportunities to feel proud of their work on a regular basis, which can ultimately promote
increased motivation and productivity.

10. Open communication

When employees feel that they can openly communicate with other employees and
management, they are often more motivated in the workplace. Feeling closed off from others
can lead to feelings of isolation and leave employees questioning if management cares about
their success.

Ensuring there is an open line of communication among employees of all levels can help
alleviate issues quickly, encourage employees to communicate when they're experiencing
challenges and keep employees motivated by fostering a sense of connection.

11. Staying up-to-date on company matters

Keeping employees up-to-date on the latest company matters ensures that they feel part of
something larger than just their day-to-day job. Rather than simply going to work to receive a
paycheck, employees who feel connected to their organization are more likely to enjoy their
work and feel a sense of motivation in supporting the organization's success.

Taking time each week or month to inform team members of the organization's latest
information is a great way to keep everyone up-to-date and ensure employees are engaged
within the workplace.

12. Job security

Employees are often more motivated when they know they have job security with a company.
It's important to regularly inform team members of their job security and to know that they
are a valuable asset to the company.
13. A positive work environment

Similar to a positive work culture, a positive work environment can also increase employee
motivation. Work environment refers to both physical and non-physical factors that directly
impact the environment of the workplace.

Creating open spaces that entice the senses, implementing specific areas of the workplace that
are committed to the wellbeing of employees and allowing employees to communicate with
each other throughout the day can all work to increase motivation in a team.

Three theories of motivation

The following are a few of the most well-known theories of motivation that can be
implemented in the workplace:

1. Hertzberg's two-factor theory

Frederick Hertzberg designed a theory regarding employee satisfaction that focuses on two
primary factors: motivation and hygiene. Hygiene factors are considered to decrease
employee motivation and include issues such as working conditions, administrative and
company policies, status, security, salary, interpersonal relationships and supervision. When
employees feel dissatisfied in any of these areas, employee motivation typically decreases.

Motivation factors included in Hertzberg's theory include the work itself, growth,
recognition, advancement, achievement and responsibility. When employees feel a sense of
satisfaction and inclusion in all or most of these areas, their motivation is likely to increase.

2. McClelland's theory of needs

Another well-known theory that centers on employee motivation is McClelland's theory of

needs. According to David McClelland, every individual experiences one of three primary
driving motivators. These motivators include the need for achievement, the need for power or
the need for affiliation. Understanding which team members respond to which motivators is
key when implementing this theory.

Common characteristics of individuals in each motivator category include:

 Affiliation: Individuals who want to be part of a group and liked by others, prefer

collaboration over competition or independent work and don't enjoy uncertainty or
high risk are often motivated by affiliation factors.
 Achievement: Individuals who have a strong drive to set and accomplish goals, enjoy
working alone, are willing to take calculated risks and want to receive regular feedback
on their accomplishments and progress are often motivated by achievement in the
workplace.
 Power: Individuals who prefer to influence and oversee others, enjoy competition,
status and recognition and like to win arguments are often motivated by power in the
workplace.
3. Vroom's theory of expectancy

Vroom's theory of expectancy, sometimes referred to as expectancy theory, is based on the

separation of performance, effort and outcomes. This theory assumes that employee behavior
comes from conscious choices made in the pursuit of minimizing pain and maximizing
pleasure. Vroom emphasized the importance of individual factors that influence motivation,
such as skills, personality, experience and abilities. He used three variables to account for an
individual's motivation, which include:

Expectancy

This refers to the concept that increasing the effort put forth during a task will increase the
overall performance. Expectancy is influenced by an employee's access to resources, skill set
and support to complete the job. For example, a person believes that the more effort they put
into their work, the more support they receive from others to continue excelling in their work.

Instrumentality

This variable refers to the idea that the intended outcome will be achieved if a person
performs better. Instrumentality is affected by whether the individual has a good
understanding of how performance impacts outcome, trust in management and transparency
when it comes to management deciding who achieves a certain outcome. For example, a
person believes that recycling more often at work leads to fewer overall resources being used
by the organization.

Valence

This variable is the perceived value the employee places on the outcome of their work. For
valence to be effective, the employee should be motivated to achieve an outcome and be able
to understand its importance. For example, a writer might not be motivated to write an article
that won't be read by many people but may prioritize an article that millions of people would
read.

Entrepreneurial traits are the typical characteristics, abilities and thought patterns
associated with successful entrepreneurs. While some entrepreneurs are born with these traits,
others can develop them. These include: Being a good leader. Being optimistic

What is a small scale industry give an example?

Small scale industries (SSI) are those industries in which manufacturing, providing
services, productions are done on a small scale or micro scale. For example, these
are the ideas of Small scale industries: Napkins, tissues, chocolates, toothpick,
water bottles, small toys, papers, pens.

Role of entrepreneurs in economic development of India

Economic development essentially means a process of upward

change where by the per capita income of a country increases over a
long period of time.
The economic history of the presently developed countries like
America, Germany, and Japan leads to support the fact that the
economy is an effect for which entrepreneurship is the cause. The
crucial role played by the entrepreneurs in the development of the
western countries has made the people of under-developed
countries too much conscious of the significance of ntrepreneurship
for economic development. Now people have begun to realise that
for achieving the goal of economic development, it is necessary to
increase entrepreneurship both qualitatively and quantitatively in
the country. It is only active and enthusiastic entrepreneurs who
fully explore the potentialities of the country’s available resources
land, tech., capital, material etc.

The role of entrepreneurship in economic development varies from

economy to economy depending upon its material resources,
industrial climate and the responsiveness of the political system to
the entrepreneurial function. The entrepreneurs contribute more in
favourable opportunity conditions.

1. In underdeveloped/developing regions, due to lack of funds and

skilled labour, the atmosphere is less conducive for innovative
entrepreneurs.
2. Under the conditions of paucity of funds and the problem of
imperfect market, the entrepreneurs are bound to launch their
enterprises on a small scale. Also initiator entrepreneurs are
preferred in such regions. Thus, initiation of innovations introduced
in developed regions on a massive scale bring about rapid
economic-development in underdeveloped/developing regions.
3. Further India aims at decentralized industrial structure to reduce
regional imbalances in levels of economic development.
4. Generation of employment
5. Balanced regional development
6. Improvement in standard of living
7. Backward and forward linkages
8. Creator of wealth (securities, issues etc.).
Thus, small scale entrepreneurship in such industrial structure
plays an important role to achieve balanced regional development,
generation /creator of wealth etc.

Entrepreneurs initiate and sustain the process of

economic development in the following ways:
1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the
issues of industrial securities. Investment of public savings in
industry results in productive utilization of national resources. Rate
of capital formation increases which is essential for rapid economic
growth. Thus, an entrepreneur is the creator of wealth.

2. Improvement in Per Capita Income:

Entrepreneurs locate and exploit opportunities. They convert the
latent and idle resources like land, labour and capital into national
income and wealth in the form of goods and services. They help to
increase net national product and per capita income in the country,
which are important yardsticks for measuring economic growth.

3. Generation of Employment:
ADVERTISEMENTS:

Entrepreneurs generate employment both directly and indirectly.

Directly, self-employment as an entrepreneur offers the best way for
independent and honorable life. Indirectly, by setting up large and
small scale business units they offer jobs to millions. Thus,
entrepreneurship helps to reduce the unemployment problem in the
country.

4. Balanced Regional Development:

Entrepreneurs in the public and private sectors help to remove
regional disparities in economic development. They set up
industries in backward areas to avail various concessions and
subsidies offered by the central and state governments.
Public sector steel plants and private sector industries by Modis,
Tatas, Birlas and others have put the hitherto unknown places on
the international map.

5. Improvement in Living Standards:

Entrepreneurs set up industries which remove scarcity of essential
commodities and introduce new products. Production of goods on
mass scale and manufacture of handicrafts, etc., in the small scale
sector help to improve the standards of life of a common man.
These offer goods at lower costs and increase variety in
consumption.

6. Economic Independence:
Entrepreneurship is essential for national self-reliance.
Industrialists help to manufacture indigenous substitutes of
hitherto imported products thereby reducing dependence on foreign
countries. Businessmen also export goods and services on a large
scale and thereby earn the scarce foreign exchange for the country.

Such import substitution and export promotion help to ensure the

economic independence of the country without which political
independence has little meaning.

7. Backward and Forward Linkages:

An entrepreneur initiates change which has a chain reaction. Setting
up of an enterprise has several backward and forward linkages. For
example- the establishment of a steel plant generates several
ancillary units and expands the demand for iron ore, coal, etc.

These are backward linkages. By increasing the supply of steel, the

plant facilitates the growth of machine building, tube making,
utensil manufacturing and such other units.

Entrepreneurs create an atmosphere of enthusiasm and convey a

sense of purpose. They give an organization its momentum.
Entrepreneurial behavior is critical to the long term vitality of every
economy. The practice of entrepreneurship is as important to
established firms as it is to new ones.
Objectives of EDP:
The major objectives of the Entrepreneurship Development Programmes
(EDPs) are to:
a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.

b. Analyse environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small

enterprise.

f. Know the sources of help and support available for starting a small scale
industry.

g. Acquire the necessary managerial skills required to run a small-scale

industry.

h. Know the pros and cons in becoming an entrepreneur.

i. Appreciate the needed entrepreneurial discipline.

j. Besides, some of the other important objectives of the EDPs are to:

k. Let the entrepreneur himself / herself set or reset objectives for his / her
enterprise and strive for their realization.

l. Prepare him / her to accept the uncertainty in running a business.

m. Enable him / her to take decisions.

n. Enable to communicate clearly and effectively.

o. Develop a broad vision about the business.

p. Make him subscribe to the industrial democracy.

q. Develop passion for integrity and honesty.

r. Make him learn compliance with law.

Meaning: EDP
As the term itself denotes, EDP is a programme meant to develop
entrepreneurial abilities among the people. In other words, it refers to
inculcation, development, and polishing of entrepreneurial skills into a person
needed to establish and successfully run his / her enterprise. Thus, the concept
of entrepreneurship development programme involves equipping a person with
the required skills and knowledge needed for starting and running the enterprise.

Definition: EDP

According to N. P. Singh (1985), “Entrepreneurship Development Programme

is designed to help an individual in strengthening his entrepreneurial motive and
in acquiring skills and capabilities necessary for playing his entrepreneurial role
effectively. It is necessary to promote this understanding of motives and their
impact on entrepreneurial values and behaviour for this purpose.” Now, we can
easily define EDP as a planned effort to identify, inculcate, develop, and polish
the capabilities and skills as the prerequisites of a person to become and behave
as an entrepreneur.

Phases of Entrepreneurial Development Programme (EDP)

All the EDPs mainly consist of three phases, which are illustrated as below:

1) Pre-Training Phase : 
This step can be considered as the introductory phase in which the
entrepreneurship development programmes are launched. A wide spectrum of
activities are performed in this phase arc described below :

i) Identification of suitable location where the operations can be initiated like a

district.

ii) Selection of an individual as a course coordinator or project leader to

coordinate the EDP activities.

iii) Organisation of basic infrastructural facilities related to the programme.

iv) Conducting the environmental scanning or industrial survey in order to look
for better business opportunities.

v) Developing various plans associated with the programme, like :

a) Promotional activities by using electronic or print media, posters, leaflets,
etc.
b) Contacting business experts, different agencies, NGOs that can become a part
of the programme, directly or indirectly.
c) Printing the application forms and availing them in different locations with
the instructions.
d) Establishing selection committee for screening of candidates.
e) Preparing budget and getting it approved from the management and arranging
other activities which are related to the programme.
f) Arranging and deciding the need-based elements in the syllabus of training
programme and to contact guest faculties for the training session.
vi) Looking for the assistance of various agencies such as DICs, banks, SISI,
NSIC, DM and so on.
vii) Conducting industrial motivational campaigns to increase the number of
applications.

2) Training Phase : 
The main function of any EDP is to impart training to future entrepreneurs and
guiding them for establishing the enterprise. The normal duration of the
entrepreneurship development programme is 4-6 weeks and it is usually a full
time course. The objectives, training inputs and the centre of focus are
explained in the programme design.
Commonly, it is considered that the trainees do not have enough information
about the change because of which new programme is prepared. Each trainee
should appraise himself at the termination of the training programme to have a
clear view about his/her future endeavours.

Training Phase - Programme Design

Objectives Focus Inputs
Promoting and
sustaining the skills
of entrepreneurship Entrepreneur. Behavioral inputs.
and building up
the confidence.    
 Business opportunity
guidance,
information and project
planning inputs, technical
Enterprise inputs. Guiding for
Helping in establishment enabling business
establishing the new Creating enterprise. opportunities. information
enterprise through and project planning and
decision-making.   technical opinions.
Enterprise
Successful and management, first-
profitable operation hand knowledge of
of enterprise. factory layout, Management inputs, plant
Industrial exposure business sites, etc. visit/in-plant training
Performing Information related Management suggestions
profitable and to factory layout, industrial visit or training.
successful plant location,
operations, exposure organisation  
various industrial management and so
knowledge. on.  

3) Post-Training Phase : 
This phase is also referred as the phase of follow-up assistance. In this phase,
the candidates who have completed their programme successfully are provided
post-training assistance. This phase is very important as after the completion of
training programme, most of the entrepreneurs face a lot of hardship in the
business plan implementation. Thus, with the help of various counselling
sessions, the training organisations try to extend their support to trainees.
Members like State Financial Corporation, commercial banks, training
institutions and District Industries Centre constituted all together to assist the
entrepreneurs on the basis of mentioned goals :
 To assist trainees in a meaningful manner so that trainees can realize their
business plan.
 To analyse the development made by trainees in the project
implementation.
 To evaluate the post-training approach.
 To provide escort services to the trainees with the help of various
promotional and financial institutions.
What is entrepreneurial competency?
Entrepreneurial competencies are defined as individual characteristics that
include both attitudes and behaviors, which enable entrepreneurs to achieve and
maintain business success. ... Thus entrepreneurs generally possess higher level of
entrepreneurial competency than non-entrepreneurs.

What are the major entrepreneurial competencies?

Entrepreneurship competencies combine creativity, a sense of initiative, problem-
solving, the ability to marshal resources, and financial and technological knowledge.
These competencies enable entrepreneurs and entrepreneurial employees to
provoke and adapt to change.

What are entrepreneurial competencies? Name any three. 

Entrepreneurial competencies are the skills necessary for an entrepreneur to

 venture into an enterprise

 organize and manage an enterprise ably and competently
 realize the goal for which the enterprise is established
These competencies help and entrepreneur to successfully venture into an
enterprise.

These can be broadly classified under the following categories.(Choose any three
of the following competencies)
 Behavioral competencies
i. Initiative
ii. Systematic planning
iii. Creativity and innovation
iv. Risk taking and Risk Management
v. Problem solving
vi. Persistence
vii. Quality performance
viii. Information management
ix. Persuation and influencing abilities
 Enterprise launching competencies
 Enterprise managing competencies.

What are entrepreneurial traits? 

Entrepreneurial traits are the typical characteristics, abilities and thought patterns
associated with successful entrepreneurs. While some entrepreneurs are born with
these traits, others can develop them. These include:

1. Being a good leader

2. Being optimistic 
3. Being confident
4. Being passionate 
5. Being disciplined
6. Being proactive
7. Keeping an open mind
8. Being competitive
9. Being kind

1. Being a good leader

An entrepreneur is expected to manage a business and most professionals in this

position are responsible for its start-up as well. Typically, entrepreneurship involves
finding and building relationships with investors, overseeing employees and
monitoring operations. To perform these activities well, you need to be an effective
leader. 

Leadership is the ability to lead others. An effective leader mobilizes people to

achieve goals and is perceived as a leader by their followers. There are ways in
which you can cultivate this trait, such as: 

Learning from your experiences

While it is normal to make mistakes when managing a team, you can identify the
pros and cons of your leadership style while you work and use your findings to
improve how you lead others. 

Researching the different leadership styles

For example, the democratic style of leadership, which involves more collaboration
between leaders and followers in the process of decision making, can be effective
during the initial stage of setting up a business. It can give an employer better
insights for decision making when hiring a large staff of experts is not possible. 

Learning about the leaders in your industry

You can learn how industry leaders manage their key stakeholders and use the
leadership tactics that work for your own business. 

Developing an approach to leadership that works for you

By considering new styles of leadership and evaluating your leadership style, you
can find a leadership style that suits you and your business. 
2. Being optimistic

Optimism can be described as focusing on the positives and being emotionally

resilient to the negatives. An entrepreneur who organizes, manages and operates a
business is likely to face many setbacks over time. For example, as you start your
business, you will need to complete a lot of paperwork concerning licenses, tax
forms, business plans and bank accounts. In the process of getting these documents
ready, there could be many issues that check your progress, such as delays in
getting a license or structural issues in your business plan.

Being optimistic can help you to overcome these problems quickly instead of
becoming demotivated by them. Like the other important entrepreneurial traits,
optimism is a quality that you will need to develop and maintain in your career. There
are ways in which you can cultivate optimism, such as:

 Surrounding yourself with optimism by hiring optimistic workers, including

inspirational quotes into your interior design or listening to upbeat music

 Developing an optimistic outlook that influences the way you do things in your
business and impacts your decision-making process

 Starting to look at everyday events as business opportunities

 Identifying the positives in a problematic situation and focusing on them while

you troubleshoot

 Finding a career coach who can help you to develop your optimism

 Catching yourself being negative and reframing your mindset. For example,
you can start looking at issues that check your progress as learning
experiences that can prepare you for greater success in the future.

3. Being confident

Confidence is a subjective belief that you have what is needed for something.
Entrepreneurs ask banks for loans, hire workers, motivate teams and build
relationships with clients and suppliers, so it is important for an entrepreneur to be
confident in their ability to do all these things well. 

Being confident can help your business. Key stakeholders are more likely to respond
favorably to your proposals if you project your confidence. You can use several
tactics to become more confident, such as: 
  Cultivate a belief in yourself and your abilities. Make a list of your successes
and remind yourself of them in times of doubt. For example, remind yourself
that you are producing something that people want to buy or remind yourself of
the things that you have already done to make your business more profitable. 

 Plan and perform your daily activities with the mindset that you will
successfully complete them even if there are setbacks.  

 Research how confidence can be communicated through body language and

verbal communication and use these techniques to improve how you project
yourself.

 Role-play situations such as negotiations with key suppliers or discussions

with investors by practicing your message delivery, learning to answer typical
questions and handling feedback professionally. 

 Hire a career coach who can help you to develop your confidence. 

 Spend time with friends who have a positive impact on the way that you feel
about yourself.  These social experiences can amp up your confidence.

 Learn new hard and soft skills to improve your work performance. This will
help you become more self-assured at work.

 Make changes that can improve your appearance such as dressing well,
exercising regularly and eating healthily to boost your confidence. 

4. Being passionate

Being passionate about building and running your business can make it easier to put
in the effort needed for a successful enterprise. If you need to boost your
professional passion, consider these tips: 

 Try to think of your job as more than just a livelihood and cultivate a genuine
love for what you do. You can remind yourself of why you decided to start your
own business or think of the positive impacts that your business has on
yourself, your employees, your clients or your community. 

 Start each business day by reminding yourself of all the things that you look
forward to doing such as closing a deal or hiring a new employee. 
  Learn how to communicate your passion when you engage with employees,
suppliers or investors. Your enthusiasm for what you do can make your major
stakeholders feel more enthusiastic too, which could help your business.

5. Being disciplined  

Being disciplined can help you to achieve success as an entrepreneur.

Entrepreneurs are expected to work independently, set their own goals and
overcome setbacks. To do these things well, being disciplined is essential. You can
use the following advice to become more disciplined: 

 Train yourself to be a self-starter who initiates and completes tasks without the
need for oversight. 

 Give yourself a small reward each time you meet a goal. This will motivate you
to reach your targets without getting distracted.

 Develop a work ethic that fuels your determination to work hard to achieve
your professional goals. Keep in mind that many entrepreneurs who have built
successful startups have spent more time at work than most of their
employees.  

6. Being proactive

A proactive person anticipates opportunities and threats and tries to address them
while a reactive person simply reacts to situations. As an entrepreneur, it is always
better to be proactive instead of being reactive. Here are some ways in which you
can become more proactive:

 Combine research with active listening to understand the needs of key

stakeholders (your customers, employers and business partners). 

 Identify threats in events and develop solutions before these issues become
more severe.  

 Analyze your business operations regularly. Identify the areas that can be
improved and improve these areas. 

 Try to develop long-term solutions to address the main causes of issues

instead of developing short-term solutions that are ineffective.
  Use verbal and written communication to show employees that you welcome
their feedback. This will help you to identify areas that need to be improved or
policies that need to be explained more clearly to workers. 

7. Keeping an open mind

Keeping an open mind involves the willingness to listen to the opinions and ideas of
others. Typically, entrepreneurs start businesses in competitive industries that have
already established market leaders. To succeed in this position, it is necessary to
see business opportunities in everyday events and look for ways to improve
business offerings. Consider the following tips to develop this trait: 

 Be willing to listen to others instead of refusing to accept that someone else

could have a valuable opinion. This can increase your pool of ideas and
insights. 

 Encourage coworkers or customers to provide feedback and consider their

opinions to make a product or service better. 

 Use new ideas or insights about workflows, customer service or employee

engagement to improve a product or service offering. 

8. Being competitive

Competitiveness is a key trait among successful entrepreneurs. With globalization

and virtualization, industries are growing more competitive. To maintain a lucrative
business, it is essential to develop a competitive attitude. Consider the following
advice to develop your competitiveness: 

 Keep track of what your competitors are doing with market research and
market-monitoring services, and ensure that you do not fall behind in terms of
development. 

 Identify the business tactics that work for your competitors as well as the ones
that do not work, and use these tactics to improve your business. 

 Use product improvements, pricing, marketing and distribution to make your

products more competitive in the market. For example, you can price a new
product in a market with several established brands at a relatively low price
and invest in creative advertising to motivate customers to switch brands and
try your product. 
  Develop customer analyses and use your findings to keep improving your
products or services by making them more adapted to customer needs. 

 Use employee analyses to develop incentives such as benefits, severance

packages and performance-based rewards to attract the best talent to your
team. 

9. Being kind

While kindness is not usually considered an important trait in entrepreneurs, it can

help you in maintaining success. For example, while it is easy to focus on meeting
your KPIs on sales, failing to consider the well-being of your employees or
overlooking the impact that a production process has on your community could
cause you problems over time or allow your competitors to gain an advantage. You
can use the following tips to develop kindness: 

 Assess the working conditions of your full-time employees regularly and

ensure that they have the basics they need to perform well.

 Reevaluate your employee benefits periodically to make sure that you are
providing a package that can actually help workers as well as attract the best
talent. 

 Be proactive in improving your manufacturing or distribution processes to

make them less damaging to the environment and more sustainable. 

 Foster a supportive, healthy company culture through strong policies that

discourage bullying, sexual harassment or gender-based discrimination.
How to Develop Entrepreneurial Competencies? – Answered!
competency results in superior performance. This is exhibited by
one’s distinct behaviour in different situations. The popular
Kakinada experience conducted by McClelland and winter (1969)
has proved beyond doubt that the entrepreneurial competency can
be injected and developed in human minds through proper
education and training. Competency finds expression in human
behaviour.

How to develop and sharpen the entrepreneurial competency

is suggested in the following method or procedure consisting
of four steps:
1. Competency Identification and Recognition

2. Competency Assessment

3. Competency Mapping

4. Development Intervention

A brief description about each of these follows in turn:

1. Competency Identification and Recognition:
Acquisition of a new behaviour like entrepreneurial behaviour
begins with understanding, identifying and recognizing of what
entrepreneurial behaviour means. In other words, the first step
involved in developing the entrepreneurial competency is first to
identify and recognize the set of competencies required to
effectively behave like an entrepreneur.

2. Competency Assessment:
Once the set of competencies is identified and recognized to
behave like an entrepreneur, the next step is now to see what
entrepreneurial competencies the person actually possesses. In
other words, the actual competencies possessed by an
entrepreneur are examined against the required set of
competencies to effectively behave or act like an entrepreneur.

Where one stands with respect to a set of required competencies to

act like an entrepreneur or what is the level of one’s competence
can be ascertained by asking the relevant questions to a
competence.

3. Competency Mapping:
Now, the actual competencies possessed by an entrepreneur are
compared with the competencies required to become a successful
entrepreneur to ascertain the gap in the entrepreneurial
competencies of an entrepreneur (Cooper 2000). This is called in
the human resource training and development lexicon as
‘Competency Mapping.’ In other words, this is just like ‘training
needs identification’ in case of HR training.

This is presented as follows:

A popular performance tool used to map the (entrepreneurial)

competency is based on “Skill to Do / Will to Do’ chart.”Skill to Do’
refers to the entrepreneur’s / individual’s ability to do the job and to
Do’ refers to the entrepreneur’s individual’s desire or motivation to
do the job.

In other words, the ‘Ability to Do / No Ability to Do’ dimension of this

comes within the purview of the “Entrepreneurial Competence’ and
the “Will to Do /No Will to Do’ dimension comes within the purview
of the ‘Entrepreneurial Commitment.’

This may result in four possible situations as shown in the

following Figure 11.2:

These four situations mean the following:

(A) Ability to Do / Will to Do:
Among all four situations, this is the ideal one. The entrepreneur is
fully able, i.e. qualified and is performing his job as designed and
desired. He is supposed to be star or ideal performer as an
entrepreneur.

(B) No Ability to Do / Will to Do:

In this situation, the entrepreneur is putting out his efforts to perform
the job, but is not getting the desired results out of his efforts. It
means he is lacking ability or skill to perform the job. Thus, it implies
that the entrepreneur needs training, or say, ‘competency building.

(C) Ability to Do / No Will to Do:

Here, the entrepreneur is qualified or possesses the ability to do his
job but is not willing to perform the same. This implies the lack of
desire or motivation. Thus, the entrepreneur needs to be motivated
to perform his job.
(D) No Ability to Do / No Will to Do:
The entrepreneur has deficiency in both ability and will (motivation).
In a sense, he is just like deadwood and his entrepreneurial job is in
jeopardy. Thus, the entrepreneur either needs to continue like this
or disappear from the entrepreneurial role.

4. Development Intervention:
After understanding, internalising and practicing a particular
behaviour or competence, one needs to make an introspection of
the same in order to sharpen and strengthen one’s competency.
This is called ‘feedback’.

In simple terms, feedback means to know the strengths and

weaknesses of one’s new behaviour. This helps one know how the
new behaviour has been rewarding. This enables one to sustain or
give up the exhibition of a particular behaviour or competence in his
future life.

UNIT- 3 PROJECT PROCES GUIDELINES

Project Identification

Project identification is a process in the initiating phase of project life cycle for

identifying a need, problem, or opportunity. Once identified, a project is initially
documented objectively defining what was identified. This identification can be the
result of a organization's strategic planning, of a company's normal operations, as
the response to an unexpected event, or to a need.

What are the stages in project identification?

Identification Stage diagram
1. Initiation.
2. Feasibility.
3. Analysis.
4. Identification close out
What is project and its classification?
 A project is an economic activity with a well-defined objective with certain durations
and gains to entrepreneurs hence project cannot take place at a single level it is
classified majorly at 3 different levels

Project Classifications (Class Categories and Class Codes)

You define project classifications to group your projects according to categories you
define. A project classification includes a class category and a class code. The
category is a broad subject within which you can classify projects. The code is a
specific value of the category.

For example, if you want to know the market sector to which a project belongs, you
can define a class category with a name such as Market Sector. You can define
class codes for this category such as Waste Cleanup, Risk
Analysis, and Environmental Engineering.

You can create a report that displays projects classified by a particular category. For
example, if you classify your projects by market sector, you can create reports
showing which market sectors generate the most revenue. Or, your marketing
department could run a report to determine which markets need to be pursued more
aggressively.

Defining class categories and class codes

   To define class categories and class codes:
1. Navigate to the Class Categories and Codes window.
2. Enter a unique Class Category name and a Description.
3. Specify whether the class category is mandatory for every project you
define.
Enable if all projects must have a code assigned to this class category. Do not
enable if this class category is optional. If you do not enable this option, you
cannot use this class category in your AutoAccounting rules.
5. Specify whether you want to use the class category in your AutoAccounting
rules.
Classification of Projects

IT projects are classified as “Small,”“Medium,”“Large,” or as “Super

Projects.”

 Small Projects (1-3 weeks)

 Medium Projects (3-6 weeks)
 Large Projects (6-12 weeks)
 Super Projects (13 weeks or more)

Projects are classified based on their complexity and resource

requirements. For example, a very complex project requiring all available
resources (e.g. the implementation of a ERP module) will likely require
12+ weeks, where as a much smaller project may take only 1 week. The
maximum number of projects that can be scheduled during each quarter
must not exceed 12 weeks. The exception will be “Super Projects” in
which case the project must be fully vetted to understand what resources
will be required (internal vs. external) and for what duration.

Project Classification

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

within a specified period of time. It is an individual or collaborative enterprise that is
carefully planned to achieve a particular aim.

Following are the major types of project –

(1) Quantifiable and Non-quantifiable projects: Projects for which a plausible

quantitative assessment of benefits can be made art called “quantifiable projects”.
Projects concerned with industrial development, power generation fall in this
category.

On the contrary, Projects for which a plausible quantitative assessment of benefits

cannot be made are called “Non-quantifiable projects”. Non-quantifiable projects are
those where such assessment is not; possible e.g., Health education, defense etc.

(2) Sectoral projects: Sectoral projects have their specific sectors, such as

Agriculture and similar sector Irrigation and power sector. Sectoral means relating to
the various economic sectors of a society or to a particular economic sector.

 Industry and Mining sector,

 Transport and Communication sector,
  The social services sector,
 Miscellaneous sector.

(3) Techno-Economic projects: This type of classification includes factors intensity-

oriented classification, causation• oriented classification, and magnitude-oriented
classification.

 factor intensity-oriented classification: capital intensive or labor intensive.

 causation-oriented classification: demand-based or raw material based
projects.
 Magnitude-oriented classification: large-scale, medium-scale or small-scale
projects.

Project Selection Process 

The 3 main questions that need to be answered are, 

 Who are the persons responsible for the selection and review of projects?

 How can we consider the right projects are selected?

 How can be ensuring that we are doing the right projects as per our
organization's vision and strategy?
Once we ensure we answer the questions we are on right track in the project
selection. Want to know what it takes to become a successful project manager then
take up the Online PMP Certification at StarAgile institute.
Let us consider how we are going to answer by considering the project selection
processes.
Step1: Identification of the projects - Whether it is investment projects, or customer-
oriented, or defined scope projects or enhancement projects there are a lot of types
of projects. So the first step is the project identification that is identifying the nature of
the project. Then comes, whether the project is aligned to the organizational vision
and strategy etc.
Step2: Prioritizing and evaluation of the projects - We have several mathematical
formulae for evaluating the projects such as Net Present Value, Internal Rate of
Return, Benefit/Cost Ratio, Opportunity Cost, Payback Period and Initial Risk
Assessment, etc. Once we are evaluated and are making a substantial profit we can
prioritize the projects based on our assessments.
Step3: Selection and Initiation of the projects - For some of the project customers
demand proof of concepts or demo of how the project will run and how we can
complete the projects. In this step, we may make a Proof of Concept or demo which
not only helps the customer but supplier organization also. Based on our evaluation
we initiate the selected projects for successful completion.
Step4: Review of projects - In this step we track, manage, control, and constantly
monitor the progress of the project till its closure. This is very important as the
lessons learned in this step helps us in the future in making the selection of projects
decision.
Types of Project Selection Methods

These 8 methods are called as Benefits measurements methods.

1. Benefit/Cost Ratio - It is the ratio of the cost incurred in present value in the
project to the benefit received in the current value.
2. Economic Model - It calculates the value creation of the organization while
defining the return of revenue.
3. Scoring Model - This model scoring is done for the projects based on the weights
of importance and priorities. The project with the highest summed up weights is
selected.
4. Payback period - It is the ratio of the total cash to the average per period cash.
5. Net Present Value - It is the difference between the project's current values of
cash inflow to the current value of the cash outflow.
6. Discounted Cash Flow - This evaluates the future value of money when
compared to the current value.
7. Internal Rate of Return - It is the annualized effective compounded return rate or
the discount rate that makes the net present value of all cash flows (both positive
and negative) from a particular investment equal to zero.
8. Opportunity Cost - It is the cost that is not coming to us when selecting another
project. For example, the project with the least opportunity cost is selected.

We will also see what are the constrained optimization methods of calculations that
we need to select the projects. The techniques in constraint optimization methods
are Linear programming, Non-linear programming, Integer programming, Dynamic
programming, and Multiple objective programming. To know more about the various
project selection methods with real-world example register for Online PMP
Certification Training at StarAgile

The Five Stages of a Project formation

Every major work project goes through five phases. The length and details may vary
from project to project, but all will still follow the same basic framework. While
some project methodologies such as agile approaches compress or repeat the
following stages in faster, iterative cycles, the work of each phase is visible and
distinct in every project. 

The Five Stages

The formal stages of a project are as follows:

1. Initiation: project team formation, project chartering, and kick-off

2. Planning: finalizing the project scope, defining the detailed work breakdown,
assessing risk, identifying resource requirements, finalizing the schedule, and
preparing for the actual work
3. Execution: performing the actual work required by the project definition and
scope
4. Monitor and control: the actual management, reporting, and control of the
resources and budgets during the execution phase
5. Project close: delivery of the project, assessment of lessons learned,
adjournment of the project team
A project manager will lead their team through these five phases in succession—
regardless of project size—until the project is complete. For agile or iterative
development-type projects, planning and execution take place in short spurts or
sprints, with the stages repeating until the project is completed to the customer's
satisfaction. 
Project finance is the funding (financing) of long-term infrastructure, industrial
projects, and public services using a non-recourse or limited recourse financial
structure. The debt and equity used to finance the project are paid back from the
cash flow generated by the project.
Project finance is complex and involves many risks. That’s why it’s important to
understand the context when embarking on international development initiatives. To
help executives navigate opportunities and minimize risks, here are eight critical
factors that will ensure better international project finance outcomes.

Eight critical factors of project financing

1. Understand the project scope and location. Front-end planning (FEP)
assists in identifying the risks that can plague infrastructure projects. In the
model defined in the American Society of Technical Engineers 2016 paper,
“Infrastructure Project Scope Definition Using Project Definition Rating
Index,” [1] the authors unveil research across 26 projects and 64 industry
professionals over 30 organizations. Among the considerations in the building
environment that encompass both scope and location, the model assesses
risks such as right-of-way concerns, utility adjustments, environmental
hazards, logistic problems, and permitting requirements for projects under
consideration. Government, political, and social implications can be assessed
using different tools, but an engineering assessment is among the priorities
that cannot be overlooked.  
2. Recognize the value of origination capabilities. All origination research
efforts are not equal. Lending to a homeowner, lending to large corporations,
and lending to small or medium sized businesses have known operational and
risk analytics from which to draw. International infrastructure lending requires
different skillsets. The ability of the origination firms to successfully address
scope and location variables should be considered.
3. Define a market entry strategy. The crux of this step is understanding the
many risks inherent in international project finance in the U.S. and abroad.
They include: knowing and assessing the competition; performing due
diligence for selected contractors; understanding the potential dangers based
on individual country dynamics; the stability of the country’s currency;  the real
need and value of the project; the specific variables within each industry
segment; the true availability of capital including interest rates; operating
challenges; the political environment; product liability or design issues;
established track records of similar projects;  knowing the key players; and
any additional information about sponsor and supplier experience and
management ability.
4. Review all project documentation carefully. This risk is a language risk. All
of the prevention and research done elsewhere may be undone by a contract
that is not studied carefully by lawyers who are trained to read these
documents. These attorneys should be familiar with international law as well
 as the nuances of engineering, political, legal and social language
interpretation down to the dialect levels within countries.
5. Optimize existing value chain finance tools including the US Export-
Import Bank,    USAID’s Development Credit Authority and more. This
step requires intimate knowledge of available financial tools including some of
the newer financial vehicles offered by global fintech entrepreneurs [2], which
are disrupting the status quo across project finance as well as many other
practices worldwide. 
6. Create a system of checks and balances to manage stakeholders,
access bankability of projects, review payment mechanisms, identify
and monitor performance standards and establish termination
clauses. Taking all of the risks into consideration from the previous steps, the
players in this market must work diligently to manage all the moving parts
before, during, and after the project.
7. Become an expert in PPPs (Public Private Partnerships), including
knowledge of the process, benefits and legal framework. Ever since the
worldwide financial crisis of 2008, governments have looked to private
financing to meet their infrastructure funding needs. Benefits of private
enterprise are offset by potential risks. [3] Meanwhile, “… the PPP model has
proven to be successful: they subsequently [since 2008] increased to $79
billion per year during FY07-11. PPPs have now spread across the globe: 134
developing countries implemented new PPP projects in infrastructure between
2002 and 2011.” [4]
8. Identify, evaluate and monitor risks. Although this step looks repetitive,
stressing the need for a continuing analysis of risk to investors (lenders),
country decision makers  (borrowers), and analysts (market entry strategists)
cannot be overstated.