RAMAKRISHNA MISSION VIVEKANANDA COLLEGE (AUTONOMOUS)

MYLAPORE, CHENNAI-4

DAY COLLEGE

DEPARTMENT OF COMMERCE
III B.COM. A

ENTREPRENEURIAL DEVELOPMENT
(20UCOAM19)

ASSIGNMENT

NAME

ROLL NO

CLASS

SUBMITTED TO: Dr. A.V.S. Raamkumar

 SUBJECT ENTREPRENEURIAL DEVELOPMENT
SUBJECT CODE UCOAM19/BM19
NATURE Major
SEMESTER VI
MAXIMUM MARKS 75

UNIT I
Entrepreneurship: Meaning – Types – Qualities of an Entrepreneur – Classification of Entrepreneurs –
Factors influencing Entrepreneurship – Functions of Entrepreneurs.
UNIT II
Entrepreneurial Development Agencies: Commercial Banks – District Industries Centre – Small Industries
Development Organisation – Micro Small and Medium Enterprises – Industrial Finance Corporation of
India Limited – Technical Consultancy Organisations – National Small Industries Corporation Limited.
UNIT III
Project Management: Business Idea Generation Techniques – Identification of Business Opportunities –
Feasibility Study – Marketing – Finance – Technology – Legal – Preparation of Project Report – Tools of
Appraisal. Model Project Proposals of Entrepreneurs.
UNIT IV
Entrepreneurial Development Programmes (EDPs): Meaning – Need – Major Objectives – Phases of EDPs
– Role of EDPs – Achievements – Role of Government in organizing EDPs.
UNIT V
Entrepreneurial Growth and Economic Development: Role of Entrepreneurs in Economic Development –
Small Scale Entrepreneurs: Meaning and Definition – Ancillary Units – Tiny Sector – Reasons for the
Significance of SSIs in Economic Development – Incentives offered by Governments to SSIs – Problems
of SSIs in India. Women Entrepreneurs – Problems Faced by Women Entrepreneurs – Governmental and
Institutional Schemes for Women Entrepreneurs.

BOOKS FOR REFERENCE

1. Srinivasan N.P. – Entrepreneurial Development
2. Saravanavel – Entrepreneurial Development
3. Vasant Desai – Project management
4. Jayashree Suresh – Entrepreneurial development
5. Holt – Entrepreneurship – New Venture Creation
6. P.C. Jain – Handbook for New Entrepreneurs
7. J.S. Saini & S.K. Dhameja – Entrepreneurship and Small Business
8. Dr. C.B. Gupta & Dr. S.S. Khanka – Entrepreneurship and Small Business

QUESTION PAPER PATTERN

Pattern Total Questions To answer Marks per Question Total Marks
Section A 12 10 2 20
Section B 7 5 5 25
Section C 4 2 15 30

INSTRUCTIONS TO THE QUESTION PAPER SETTER

Section-A: Minimum 2 Questions to be asked from each of the five Units
Section-B: Minimum 1 Question to be asked from each of the five Units
Section-C: Minimum 1 Question to be asked from any four Units
UNIT I
 ENTREPRENEURSHIP

Definition:
In the opinion of A.H. Cole, "Entrepreneurship is the purposeful activity of an individual or a group of
associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of
economic goods and services".

Meaning:
Entrepreneurship is the process of identifying opportunities in the market place, arranging the resources
required to pursue these opportunities and investing the resources to exploit the opportunities for long term
gains. It involves creating wealth by bringing together resources in new ways to start and operate an enterprise.

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 start-up entrepreneurship: This type of entrepreneurship starts with a unique idea that can
bring a change. From creating a business plan to launching it, scalable start-up 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) Intrapreneurship: Intrapreneurship is a structure that permits an employee to behave like an
entrepreneur within a business or other organization. Self-driven, proactive, and action-oriented
individuals, known as intrapreneurs, take the initiative to explore new goods and services. An
intrapreneur knows that failure does not have the exact personal costs as it does for an entrepreneur
because the company bears the costs of failure. However, intrapreneurship is a way companies motivate
their employees to have an entrepreneurial spirit.

Factors influencing Entrepreneurship:

Following are the factors of environment affecting entrepreneurship. These conditions are grouped under two
categories:
1) Economic conditions.
2) Non-economic conditions.

1) Economic conditions:
(i) Capital: It is the essence of enterprise. Availability of capital facilitates mobility of land, machine,
material etc. is required to produce goods. Therefore, capital is a lubricant which smoothens the working
of vehicle called enterprise. Increased capital investment, capital output ratio results in profit, which
ultimately goes up to capital formation.
(ii) Labour: Quality and quantity of labour influence the entrepreneurship mobility, dexterity and
immobility. Low-cost labour- and capital-intensive technology-oriented enterprises influence
entrepreneurship.
(iii) Raw material: Availability of raw material, nature of industrial establishment, technological innovation
and mobility of raw material encourages or curbs the development of entrepreneurship.
(iv) Market: The potential of the market constitutes the major department of probable rewards from
entrepreneurial function. The size and composition of market monopoly in a particular product influence
entrepreneurship.

2) Non-economic conditions:
Sociologists and psychologists view that the influence of economic factors on entrepreneurship largely depend
upon the existence of non-economic factors. Such factors are:
(i) Social conditions are as follows:
➢ Socio-cultural norms and values.
➢ Degree of approval or disapproval of entrepreneurial behaviour.
➢ Family background, standard of education, technical knowledge and information.
➢ Financial stability, caste and religious affiliation.

(ii) Psychological conditions are as follows:

➢ David Mcdellond's 'Theory of need achievement' - According to him a constellation of personality
characteristics, and high need achievement is the major determinant of entrepreneurship.
➢ Individual works in the society but remains different.
➢ Impact of achievement motivation and training programmes influence development of entrepreneurship.
(iii) Political/Government Action:
➢ Government encourage entrepreneurship by creating basic facilities, utilities and services and by
providing incentives and concessions.
➢ Government provides the prospective entrepreneurships a facilitative socio-economic setting.
➢ Entrepreneurship development is based on the Government interest in economic development of the
society.
Above discussed factors are interlocking, mutually dependent and mutually reinforcing.

Definition of an Entrepreneur:
According to J.B. Say, "An Entrepreneur is the economic agent who unites all means of production, land of
one, the labour of another and the capital of yet another and thus produces a product. By selling the product
in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit".

Meaning of an Entrepreneur:
The word "Entrepreneur" is derived from the French verb ‘entrepredre’. It means to undertake. In the early
16th century, the Frenchmen who organised and led military expeditions were referred as 'Entrepreneur'. In
the early 18th century French economist Richard Cantillo used the term entrepreneur to business. Since that
time the word entrepreneur means one who takes the risk of starting a new organisation or introducing a new
idea, product or service to society. An entrepreneur is an organiser who combines various factors of production
to produce a socially viable product. To conclude an entrepreneur is the person who bears risk, unites various
factors of production, to exploit the perceived opportunities in order to evoke demand, create wealth and
employment.

Qualities of an Entrepreneur:
1) Spirit of Enterprise: Entrepreneur should be bold enough to encounter risk arising from the venture
undertaken. Entrepreneur should not get discouraged by setbacks or frustrations emerging during the
course of entrepreneurial journey.
2) Self Confidence: Entrepreneur should have a self confidence in order to achieve high goals in the
business. The negativities like inconvenience, discomfort, disappointments, rejections, frustrations and
so on should not weaken his steely resolve to make the venture a grand success.
3) Flexibility: Entrepreneur should not doggedly stick to decisions in a rigid fashion. Entrepreneur should
change the decisions made already in the light of ever-changing business environment.
4) Innovation: Entrepreneur should contribute something new or something unique to meet the changing
requirements of customers namely new product, new method of production or distribution, adding new
features to the existing product, uncovering a new territory for business, innovating new raw material
etc.,
5) Resource Mobilisation: Entrepreneur should have the capability to mobilise both tangible inputs like
manpower, money materials, technology, market, method, etc., which are scattered over a wide area and
certain intangible inputs like motivation, morale and innovativeness cannot be purchased in the market
outright. Entrepreneur has to marshal all these tangible and intangible inputs to produce a product
successfully. Thus, entrepreneurship is a function of gap filling and input completion.
6) Hard work: Entrepreneur should put in strenuous efforts and constant endeavours to accomplish the
goals of the venture successfully. They have to courageously face uncertainties, risks and constraints.
 They should not blame the uncontrollable factors for the misfortunes experienced during the course of
their entrepreneurial venture. They should spend their energy in addressing the issues to stay successful.
7) Leadership: Entrepreneur should be able to influence team members by showing sympathy and
empathy so as to enable them to contribute positively towards the goals of the venture. Entrepreneur
should lead others from the front and by personal example and should walk the talk and effectively take
all the followers to activate the goals of the venture.
8) Foresight: Entrepreneur should have a foresight to visualise future business environment. In other
words, Entrepreneur should foresee the likely changes to take place in market, consumer attitude,
technological developments etc., and take timely actions accordingly.
9) Analytical Ability: Entrepreneurs should not make decisions on the basis of own prejudice or personal
likes and dislikes. Entrepreneur should be able to objectively analyse the situation and act accordingly.
They should abstain from taking emotional or hasty decisions when they are overwhelmed by emotions.
In simple words Entrepreneur should take rational decisions after examining the various aspects of a
problem.
10) Decision Making: Entrepreneur has to take timely and correct decision with regard to nature and type
of product to be produced, type of technology to be adopted, type of human assets to be employed,
location of the enterprise, size of the unit, volume of production and so on. The very success of any
enterprise hinges on prompt, correct and relevant decisions made by the entrepreneur. Entrepreneur
should rationally examine the various factors influencing the decision and take appropriate decisions
after giving due weight to all the risks embedded in various factors.

Functions of Entrepreneurs:
I. Promotional Functions:
1) Discovery of Idea: The first and foremost function of entrepreneur is idea generation. A person may
conceive his own ideas or develop the ideas contributed by others. Ideas can be generated through
several ways like own experience and exposure of entrepreneur, keen observation of environment,
education, training, market survey, environmental scanning and so on. After the ideas were collected,
entrepreneur has to weigh objectively each and every idea and finally select an idea which is worth
pursuing commercially.
2) Determining the business objectives: Entrepreneur has to develop business objectives in the backdrop
of nature of business and type of business activity i.e., nature of business, manufacturing or trading, type
of business organisation chosen so that he/she can organise the venture in accordance with the objectives
determined by him/her.
3) Detailed Investigation: Entrepreneur has to analyse in detail the product proposes to produce. In other
words, Entrepreneur should investigate commercial feasibility of the product proposed to be produced
and conduct market study to ascertain the potential demand for the product. Besides, Entrepreneur has
to probe the sources of supply of various inputs required for manufacturing the proposed product, their
respective prices and other terms and conditions.
4) Choice of form of enterprise: Entrepreneur has to choose the appropriate form of organisation suited
to implement the venture. There are various forms of organisation namely sole proprietor, partnership,
company and co-operatives etc. which are in existence. The selection of appropriate form of organisation
is made after considering the factors like nature of product to be produced, size of investment, nature of
activities, size of organisation, nature of liability of owners, retention of control, degree of risk involved,
scale of operations, stability and so on.
5) Fulfilment of the formalities: Having chosen the appropriate type of organisation, entrepreneur has to
take necessary steps to establish the form of organisation chosen. As regards sole trader, the formalities
are barest minimum. In the case of partnership firm, entrepreneur has to arrange for partnership deed
 and he has to get the deed registered. There are lot of formalities to be fulfilled in the case of registration
of company and co-operative form of organisation. Promoter has to take all necessary steps for
establishing the form of organisation.
6) Preparation of Business Plan: Entrepreneur has to prepare a business plan or project report of the
venture that he is proposing to take up. This plan helps entrepreneur to achieve various objectives
formulated within a specified period of time.
7) Mobilisation of funds: Entrepreneur has to take steps to mobilise capital needed to implement the
venture. Entrepreneur has to estimate the fixed capital and working capital required for running the
project. Then the entrepreneur has to initiate steps to build funds from various channels like own funds,
borrowing from close circles, banks, financial institutions, venture capitalists, issue of shares and
debentures, term loans and so on to finance his fixed capital requirement.
8) Procurement of Machines and Materials: Entrepreneur has to locate the various sources of supply of
machineries and equipment and materials. Entrepreneur has to collect details from the various sources
of supply and screen them for selecting the best source of supply.

II. Managerial Functions:

1) Planning: Under planning, entrepreneur has to lay down the objectives, goals, vision, mission, policies,
procedures, programmes, budget, schedules etc., for enabling the venture to proceed towards established
destinations.
2) Organising: Entrepreneur puts in place suitable organisational structure to perform various managerial
functions namely choosing the type of organisation, creating department, fitting the human resources to
appropriate organisation slots, defining and delegating authority, distributing responsibility and creating
accountability for efficient performance of activities.
3) Directing: In the realm of directing, entrepreneur has to motivate, lead, guide and communicate with
subordinates on an ongoing basis in order to accomplish pre-set goals. The process of directing involves
issuing orders and instructions, guiding, counselling and mentoring of employees, supervising
employees, maintaining discipline, motivating employees and providing leadership.
4) Controlling: Entrepreneur has to put in mechanism to evaluate the performance of employees across
the organisation. The various steps involved in control function includes fixing performance standards,
measuring the actual performance, comparing actual performance with standards, finding out causes for
deviation if any, undertaking corrective measures to bring actual performance to standards set. He/she
may use various control techniques like account, auditing, management information system, network
analysis, cost control, financial tools etc.,
5) Coordination: Entrepreneur has to evolve mechanism to pull together the diverse functions performed
by various departments or teams and direct them towards the established goals of the organisation for
accomplishment.

III. Commercial Functions:

1) Production or Manufacturing: Under production function, entrepreneur has to take decision relating
to selection of factory site, design and layout, type of products to be manufactured, research and
development, product design etc., The efficient and effective performance of production function
depends on the proper production planning and control to a major extent.
2) Marketing: Entrepreneur has to carry out following functions pertaining to marketing aspect namely
consumer research, product planning and development, standardisation, packaging, pricing,
warehousing, distribution, promotion etc., The very success of marketing function is very much linked
with selection of appropriate marketing mix. The term marketing mix denotes the combination of four
components namely product, price, promotion and physical distribution in the case of physical products
 and three more components are included in the case of service products namely people, process and
physical evidence.
3) Accounting: Entrepreneur has to arrange to prepare trading and profit and loss account in order to know
the profit or loss incurred out of operation of the business and prepare balance sheet to know the financial
status of business at a particular day. Besides, cash flow and fund flow statements are prepared to ensure
the adequacy of funds and cash for meeting various working capital needs of the business.
4) Finance: In the sphere of financial function, an entrepreneur has to take decisions like choosing the
right type of financing, framing the best dividend policy, acquiring of funds, efficiently managing fixed
and current assets, maximising shareholders wealth and investing of funds efficiently and effectively.
5) Human Resource Management: Entrepreneur has to estimate the manpower needs of the enterprise
and accordingly decide the size of manpower required for various slots of organisational structure. After
determining the required man power the entrepreneur has to organise the performance of following
functions pertaining to human resources namely arranging for recruitment, selecting manpower,
induction and training, determining compensation structure and incentives, designing motivation
programmes, structuring well-being measures for employees, putting in place safety mechanism at work
place, performance evaluation and career advancement and structuring social security programmes.

Classification of Entrepreneurs:
I. Classification According to Function:
1) Innovative Entrepreneur: Innovative entrepreneur is one who is always focussed on introducing a new
project or introducing something new in the venture already started. They constantly observe the
environment around them; collect information and analyse them in order to contribute something a new
in the venture. Their innovation may take the form of brand-new product, upgraded product, discovering
untapped market, new method of production, reengineering of existing product, new method of
distribution of product, simplification of complex process, adoption of a distinct process and so on.
2) Imitative Entrepreneur: Imitative entrepreneur is one who simply imitates existing skill, knowledge
or technology already in place in advanced countries. A simply reengineer or redesign the products
developed in advanced countries and produce a version suited to their local conditions. For example,
many electronic products invented in advanced countries are simply reengineered in developing
countries. Similarly expensive medicines developed in advanced countries are simply reengineered by
changing the composition of elements or changing the process of production.
3) Fabian Entrepreneur: These entrepreneurs are said to be conservatives and sceptical about plasticising
any change in their organisation. They are of risk-averse type. They do not simply change to the changes
happening in the environment. But they adapt themselves to the changes only as a last resort when they
fear that non-adaptability to changes will inevitably lead to loss or collapse of the enterprise. Their
dealings are governed by customs, religion, tradition and past practices handed down to them by their
ancestors. They would like to follow in the footsteps of predecessors. Example; Narasus coffee.
4) Drone Entrepreneur: Drone entrepreneurs are those who are totally opposed to changes unfolding in
the environment. They used to operate in the niche market. They are similar to fabian entrepreneur in
doggedly pursuing their conventional practices. The main difference between fabian entrepreneur and
drone entrepreneur lies in the fact that while fabian entrepreneur adapts to changes eventually as a last
resort, drone entrepreneur never adapts himself or herself to change. Example: Gopal Tooth powder.

II. Classification According to Type of Business:

1) Business Entrepreneur: Business entrepreneur is called solo entrepreneur. He/she is the one who
conceives an idea for a new product/service and establishes a business enterprise to translate his idea
 into reality. He/she may establish small or large enterprise to commercially exploit his/her idea. He/she
takes up production, operations and pursues marketing activities.
2) Trading Entrepreneur: Trading entrepreneurs are those who restrict themselves to buying and selling
finished goods. They may be engaged in domestic and international trade. Their core strength lies in
distribution and marketing. They get their income by way of commission and marketing.
3) Industrial Entrepreneur: These are entrepreneurs who manufacture products to cater to the needs of
consuming public after identifying the need left unfulfilled by the manufacturer hitherto. They may be
small, medium and large entrepreneurs. Industrial entrepreneurs mobilise the resources of various types
and create an entity to manufacture the products or service. They add utility to products rolled out by
them which is termed as value addition.
4) Corporate Entrepreneur: Corporate entrepreneur is called promoter. He/she takes initiative necessary
to start an entity under corporate format. He/she arranges to fulfil the formalities to start a corporate
entity under Company law. Corporate entrepreneur assembles all the resources and put in place
organisation to run the business on a day-to-day basis. In corporate form of organisation, ownership and
management are separated. Corporate entities are registered under the Companies Act or under the Trust
Act. Corporate entrepreneurs install a team of experts to manage the entity on a day-to-day basis.
5) Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who raise farm
products and market them. They use the various inputs like labour, fertilizer, insecticide, water
technology, etc., to raise the products and market their products either directly or through cooperative
entities or through brokers or through tie up with large retailers. Those who raise allied products like
poultry, meat, fish, honey, skin, agricultural implements, flower, silk, fruits, prawn etc., are called
agricultural entrepreneur. In short, these entrepreneurs pursue their venture in agriculture and allied
sector.
6) Retail Entrepreneurs: Retail entrepreneurs are those who enter into venture of distributing the end-
product to final consumer while wholesale entrepreneurs take up the venture of distributing the product
to retailer. They used to buy the goods in small quantities from numerous wholesalers and make it
available different products of different brands under one roof to end consumer.
7) Service Entrepreneurs: Service entrepreneurs enter into the venture of supplying service products to
end consumers. Hoteliers, airlines, banking, insurance and financial service providers, repair service
organisation, bus operators, train service, advisory organisation, advertising firms, manpower supplier,
etc., come under service entrepreneur’s category.

III. Classification based on Technology Adopted:

1) Technical Entrepreneur: Technical entrepreneurs are such of those craftsmen like welder, fitter,
moulder, draughtsman, turner, carpenter, goldsmith, tailor, photographer, repairer, weaver, sculptor,
potter, wiremen or so on who start small ventures. They turnout products/service of high quality. They
simply focus on production rather than on marketing. This type of entrepreneur demonstrates their
creative talents by producing innovative products. Their strength lies in skill or knowledge of producing
specialised product.
2) Non-technical Entrepreneur: Non-technical Entrepreneurs are those who do not possess any technical
competence to produce the goods or service but have special talents to market the products successfully
or expertise to distribute the products produced by technical entrepreneur effectively to channel
members and end consumers.
3) Professional Entrepreneur: Professional entrepreneur is one who is having a rich expertise in starting
a venture but lack interest in continuing the venture as a manager or as a owner. He/she simply sells out
the venture started by him to someone else after its successful take-off. They keep on conceiving new
ideas to develop alternative projects. In short, these entrepreneurs have got professional expertise in
starting the venture and exiting it after the establishment.
IV. Classification in Terms of Motivation:
1) Pure Entrepreneur: Pure entrepreneurs are individuals who are propelled to enter into venture by
psychological and economic motives. Their egos do not permit them to work for somebody else. They
nurture desire of starting a particular venture and earning high profit there from and thus attaining a
social status. They apply their knowledge, skill and insight in making the venture a great success in
order to earn maximum profit out of the venture. Example Dhirubai Ambani, Jamshadji Tata, T.V.
Sundaram Iyengar, Seshadriji, Birla, Narayanamurthi, Azim Premji and so on.
2) Induced Entrepreneur: An induced entrepreneur is one who is inspired to take up entrepreneurial
activity thanks to entrepreneurship friendly policies put in place by the Government. In other words,
concessions, incentives and soaps provided by the government drive them to enter into venture.
Government provides a great deal of support in the form of loans, subsidies, nominal rate of interest, tax
breaks, tax holidays, training, import of technology from abroad, concessions for export-oriented item,
allotment of sheds, and lands at subsidised price etc. impel the potential entrepreneurs to start the
venture.
3) Motivated Entrepreneur: Motivated entrepreneurs are those motivated to take up venture by the desire
for self-fulfilment. They are motivated to produce and market product or service by sheer prospect of
making huge profit. They are further motivated to develop the venture to a saleable stage so that he/she
can sell the venture at a super profit to certain entrepreneurs(buyers) who do not like to take risks in
setting up a new venture but desire to buy well developed venture promising great profit prospects.
4) Spontaneous Entrepreneur: These entrepreneurs have natural inclination to start venture. They are
supposed to be bold, optimistic and enterprising persons. They have passion for meeting the challenges.
Their inner urge and inborn traits drive them to commence their ventures.

V. Classification Based on Development Stage:

1) First Generation Entrepreneur: First generation entrepreneur is one who starts venture by virtue of
his knowledge, skill, talent and competence. He/she innovates a product/service by technical expertise
possessed by him/her. These entrepreneurs do not have any family background or prior exposure to the
venture initiated by them. They are self-made entrepreneurs.
2) Modern Entrepreneur: Modern entrepreneur is one who keenly observes the dynamics of the market
with eagle eye and identify the unfilled gaps, if any in product/service marketed. He/she takes initiative
in starting the venture to cater to the unmet needs of the market.
3) Classical Entrepreneur: Classical entrepreneur is one who starts his own venture as a family business.
They are called life timers. They engage in business as a matter of routine. Their prior exposure to
business environment impels them to commence venture of their own. Entrepreneurs from the business
families are called classical entrepreneurs. For instance, where son of provision merchant starts his own
provision shops, the former is called classical entrepreneur.

VI. Classification According to Area:

1) Urban Entrepreneur: Entrepreneur who commences his entrepreneurial activity in urban areas like
State Capital, District Headquarters, Towns, Municipalities etc., They may be industrial entrepreneur or
corporate entrepreneur or retail entrepreneur.
2) Rural Entrepreneur: These are people who start venture in rural locations. They are provided a lot of
economic and fiscal incentives to start their venture in rural and semi urban areas in order to check the
exodus of rural people to urban centres in pursuit of employment opportunity. Thanks to their immediate
access to material, labour or other facilities at low cost. As a result, the cost of operation of rural ventures
tends to be low. Agricultural and trading entrepreneurs prefer to set up their venture in rural areas.
VII. Classification According to Ownership:
1) Private Entrepreneur: Ventures started by individual either singly or collectively at their own risk
after mobilising various resources in order to earn profit are called private entrepreneurship.
2) State Entrepreneurship: Trading/industrial ventures started by Government under various formats like
company, corporation, departments, board denotes state entrepreneurship.
3) Joint Entrepreneurship: Ventures started and owned by both private individuals and government
denote joint ownership.

VIII. Classification Based on Gender:

1) Men Entrepreneurs: When business enterprises are owned, managed, and controlled by men, these are
called 'men entrepreneurs.'
2) Women Entrepreneurs: Women entrepreneurs are defined as the enterprises owned and controlled by
a woman or women having a minimum financial interest of 51 per cent of the capital and giving at least
51 per cent of employment generated in the enterprises to women.

IX. Other Classifications:

1) Ecopreneur / Green Entrepreneur: Profit generation and a concern for the environment drive the
primary goal of such entrepreneurs. 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.
2) Technopreneur: 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.
3) Hustler / Challenger: 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.
4) Researcher: 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.
5) Buyer Entrepreneur: These types of entrepreneurs do not start business ventures on their own. Instead,
they analyse and find enterprises that may be more successful shortly. They then purchase such ventures
and make management or structural changes to improve the particular enterprise's products or services.
Doing this helps them to grow their business and earn more profit. Buyer entrepreneurship is not
considered risky because buyers usually buy well-established business ventures. Typically, buyers have
better vision and expertise to acquire enterprises that are most likely to be successful.
6) Cyberpreneur: 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.
7) Life-Timers: These entrepreneurs take business as an integral part to their life. Usually, the family
enterprise and businesses which mainly depend on exercise of personal skill fall in this type/category of
entrepreneurs.

Entrepreneur Vs Entrepreneurship:

Basis Entrepreneur Entrepreneurship

An entrepreneur is an individual or group
of individuals who are having a particular Entrepreneurship is a risky activity of
Meaning innovative idea and takes every step to commencing a business or start-up of a new
turn that idea into business and turn into business.
profits while taking risks.
Tangibility Entrepreneur is tangible. Entrepreneurship is intangible.
An entrepreneur is a person who has an Entrepreneurship is a process which gives
Understanding
idea and give shape to it. shape to the idea.
Business An entrepreneur is the one who start the Entrepreneurship is an activity which an
Venture business and turns an idea into reality. entrepreneur undertakes to start a business.
Entrepreneur is an innovator who chase Entrepreneurship is a process through
Representation
the dream till the dream becomes true. which it is done.
He is an organizer, innovator, risk- bearer, It means organization, innovation, risk-
motivator, creator, visualizer, leader, bearing, motivation, creation, vision,
Dimensions technician, decision-maker, planner, leadership, technology, decision-making,
programmer, administrator, planning, programme, administration,
communicator, etc. communication, etc.

Entrepreneur Vs Intrapreneur:

Basis Entrepreneur Intrapreneur

An intrapreneur is nothing but an entrepreneur
An entrepreneur is an individual who
who operates within the boundaries of an
conceives the idea of starting a new
organisation. He is an employee of a large
venture, takes all types of risks, not
Meaning organisation, who is vested with authority of
only to put the product or service into
initiating creativity and innovation in the
reality but also to make it an
company’s products, services and projects,
extremely demanding one.
redesigning the processes, workflows and systems.
Intrapreneur is forced to think independently but
Thinking Entrepreneur is a free thinker. within scope of business activities undertaken in
the enterprise.
Entrepreneur is an independent Intrapreneur is dependent on the entrepreneur. He
Dependency
person. is an employee.
Intrapreneur does not engage in fund mobilization.
Fund Entrepreneur has to mobilize funds to
But can access funds mobilized by the
Mobilization finance the venture.
entrepreneur.
 Intrapreneur does not share in profits of venture.
Entrepreneur is rewarded by profit for
Reward But gets perquisites, salary, incentives, etc., for the
the risk bearing exercise.
service.
Intrapreneur does not bear any risk in the venture
Entrepreneur bears the risk involved and does not even share the risk inherent in the
Risk Bearing
in the venture undertaken. project or work assigned. However, Intrapreneur is
accountable for the task or project assigned.
Intrapreneur is a salaried employee. Intrapreneur
Entrepreneur is owner, and doesn’t works within control put in place in the
Status
report to anybody in the venture. organization and is made accountable for the
activities undertaken.
Entrepreneur operates mostly outside
Operation Intrapreneur operates within the enterprise.
the enterprise.
An entrepreneur does not cause brain
Brain Drain An intrapreneur cause brain drain.
drain.
Approach Intuitive. Restorative.
Resources Uses own resources. Uses resources provided by the enterprise.
Creating a leading position in the Changing and renewing the existing organizational
Works for
market. system and culture.

Entrepreneur Vs Manager:

Basis Entrepreneur Manager

Entrepreneur refers to a person who creates an Manager is an individual who takes the
Meaning enterprise, by taking financial risk in order to responsibility of controlling and
get profit. administering the organization.
The main motive of an entrepreneur is to start a The main motive of a manager is to
venture by setting up an enterprise. He render his services in an enterprise
Motive
understands the venture for his personal already set up by someone else i.e.,
gratification. entrepreneur.
A manager is the servant in the
Status An entrepreneur is the owner of the enterprise.
enterprise owned by the entrepreneur.
An entrepreneur being the owner of the
A manager as a servant does not bear
Risk Bearing enterprise assumes all risks and uncertainty
any risk involved in the enterprise.
involved in running the enterprise.
A manager gets salary as reward for the
The reward an entrepreneur gets for bearing
services rendered by him in the
Rewards risks involved in the enterprise is profit which
enterprise. Salary of a manager is
is highly uncertain.
certain and fixed.
Entrepreneur himself thinks over what and how A manager simply executes the plans
to produce goods to meet the changing demands prepared by the entrepreneur. Thus, a
Innovation
of the customers. Hence, he acts as an innovator manager simply translates the
also called a 'change agent' entrepreneur's ideas into practice.
An entrepreneur needs to possess qualities and A manager needs to possess distinct
qualifications like high achievement motive, qualifications in terms of sound
Qualifications
originality in thinking, foresight, risk-bearing knowledge in management theory and
ability and so on. practice.
 An entrepreneur requires creative talent, Manager requires conceptual skills and
Skills
intuition and urge for innovation. human relations skills.

“Entrepreneurs are not born, they are made”

An entrepreneur is an individual who sets up a business, assuming the risk and rewards of the venture. Now
the question arises, are entrepreneurs born with business acumen or an individual can hone his skills to become
a successful entrepreneur? It is a matter of nature versus nurture. A couple of decades ago we could have
easily accepted the fact that entrepreneurs are born looking at the history of success stories of the likes of
Dhirubai Ambani, Ratan Tata and Seth Shiv Narayan Birla to name a few. Back then there was no lack of
ideas or funding-rather there was a dearth of driven, capable and obsessional entrepreneurs.
But with the advent of digital revolution, learning and developing certain skill sets is just a click away. Sharp
focus on objective and an insatiable desire to succeed can move an entrepreneurial venture to great heights.
Truly, a burning desire has devious ways of transmuting itself into its physical equivalent.
The entrepreneur of today works backwards on his vision. Through the process of visualization, he first creates
a mental picture of a successful venture. Once a goal is set he tries to simplify his plans. Once the plans are
simple and achievable for the mind, they are easy to execute. If opportunity doesn’t knock, the entrepreneur
of today creates one! The success stories of most start-ups today is backed by this adventurous vision of either
the newly qualified confident youth or an experienced professional who dares to take the untrodden path and
work on his dream project as an entrepreneur. All these new-age entrepreneurs take the plunge into business
after careful analysis of the venture they wish to setup. Some of them even have back-up plans for survival in
case their venture doesn’t take off well or requires more time, money or even change of strategies. This think-
and win-attitude can surely be cultivated and we are sure you’ll agree with us that it can be built and honed
rather than being born with it.
The ‘have it or not’ view will only categorize people in two groups: those who own an entrepreneurial
enterprise or get it in legacy and the rest of us. The success stories in recent times have shown us that for
starting an entrepreneurial journey, one doesn’t need a god father and ‘business’ background of the family but
the right acumen, vision and analysing power. These are the qualities that make an entrepreneur successful
and these qualities are not inherent always but can be acquired through education and experience. The
entrepreneurs of today are made from their obstacles, failures and all the miniscule successes they achieve in
the journey of entrepreneurship. Most importantly, they are made from their past and present work
experiences.
Another important quality of entrepreneurship is innovation, which is not one of those qualities that can be
inherited. This innovation can be in any field - a new product, a new technology, a new source or even in the
creation of a new market. If we take an example and a classic case of entrepreneurial vision and creation of a
definite market, the rising fuel prices led to the innovation and popularization of battery-operated automobiles.
When rest of the mankind sees a problem, an entrepreneur sees opportunities.
To conclude, we can confidently say that gone are the days when entrepreneurs were born, new-age
entrepreneurs are made and really sturdy ones!

“Entrepreneurs are born, not made”

Both genetic evidence and survey data support the notion that a substantial proportion of entrepreneurial
behaviour is genetically determined. Put simply, much entrepreneurial behaviour is inherited. The
entrepreneurial personality that drives risk-taking, innovation, and the founding of new firms isn't something
one can buy from the shelf at Wal-Mart or Macy's. Nor can the salient features of an entrepreneurial
personality easily be taught or learned, whether at Harvard or even from one's parents.
The truth is that far more entrepreneurs, the people who found their own firms and put themselves, their
resources, and even their families at risk, are born rather than made. The confident driven individuals who
become entrepreneurs typically have different genetic endowments than those who are not entrepreneurial.
And these distinctive genetic endowments tend to produce the distinctive personality traits that characterize
entrepreneurs.
Entrepreneurs are different. Most are hardwired genetically to react differently than other individuals to
external stimuli that portray risk, danger, excitement, and change. Depending upon the personality trait, up to
60 percent of a trait may be inherited from one's ancestors. Individuals who inherit certain gene sequences are
simply more likely to become entrepreneurs than others.
Indeed, entrepreneurial activity is a matter of probabilities and tendencies. Some individuals simply are more
likely to undertake entrepreneurial activities by virtue of their personality traits. In turn, entrepreneurial
personality traits (optimism, extroversion, high energy levels, self-confidence, competitiveness, a motivating
vision, and willingness to take and even seek out risks) have a significant genetic basis.
It is axiomatic that one can buy an education, but one cannot buy genes. Like height, one cannot purchase
entrepreneurial genes that somehow are injected into one's body, miraculously transforming personality and
character.
Some individuals are not well situated to become entrepreneurs, but not simply because they lack financing,
or have insufficient education and knowledge, or are badly located geographically. It is their own personality
traits, which are at least partially dependent upon their own genetic endowments that reduce the chance they
will ever become entrepreneurs.
Thus, the characteristics of entrepreneurs cannot be taught or learned, they are innate traits with which a person
must be born. Hence, Entrepreneurs are born, not made.
UNIT II
 ENTREPRENEURIAL DEVELOPMENT AGENCIES

I. Commercial Banks:
There is no gainsaying the fact that activities of banks reflect their unique role as the engine of growth in any
economy. Banks especially commercial and specialized ever remain crucial to the growth and development
of entrepreneurship, and their operations provide a solid backing capable of encouraging entrepreneurs in
viable and profitable ventures. The role of banks goes beyond their traditional functions which if entrepreneurs
avail themselves of could be of tremendous assistance in meeting their desired needs.
There are several ways banks could get involved in small and medium scale enterprise finance, ranging from
the creation or participation in SMEs finance investment funds, to the creation of special unite for financing
SMEs.
Along the lines of the main functions of banks mentioned above, their role in entrepreneurship development
and enterprise financing can be categorized as follows:
1) Statutory Role:
These consist in the main the functions for which banks were created in the first place. Such roles are for
example accepting of deposit and safekeeping of same, transfer of money, giving of loans and advances, etc.
By accepting deposit of customers especially entrepreneur-customers, the banks will be providing security for
customers’ money and giving them opportunity to use their deposit to borrow more money from the banks to
finance the running of their enterprises. By funds transfer, money is moved from one account to another and
from one place to another. A good payment system which provides speedy fund transfers is vital for the
efficient working of an economy. And with the development of information technology in banks, the speed of
service delivery has improved while the cost of doing business has reduced tremendously. The services have
enabled entrepreneurs to make transactions outside their immediate environment without necessarily having
to carry money about.
2) Financing Role:
The primary reason that banks want deposits is to enable them grant loans and advances from which they earn
interest income. Extension of credit to the economy for the financing of business enterprises is the core link
that banks have to the real sector, acting like a catalyst and contributing to the growth of the economy of the
country. This is because timely availability of adequate funds at reasonable rates of interest with tailormade
repayment conditions and lesser or no insistence for collateral security, etc., to those with technical skill and
potential entrepreneurship but not coming forward on a higher economic plane for want of sufficient capital,
can go a long way in entrepreneurship development. By financing entrepreneurs’ production, consumption
and commercial activities, banks lubricate the process of economic growth with multiplier effect across all
sectors of the economy. Sickness, mainly arising out of inadequacy of funds, can easily be cured by the banks
through their positive lending policy. This way, commercial banks can also help such potential entrepreneurs
sustain against financial crisis. The various methods by which banks can lend money to entrepreneurs include
overdraft, medium- and long-term loans, debt factoring, invoice discounting, asset finance including
commercial mortgages and equity finance.
3) Funds Mobilization Role:
The commercial banks facilitate entrepreneurship development by attenuating uncertainty and absorbing risk
in arranging capital needed by the people for undertaking self-employment activities. The banks broaden the
spectrum of their assets and liabilities suiting to the needs and preferences for the liabilities and assets of the
investors and savers in the society through the process of savings-intermediation; and thus lessen the risk and
uncertainty in arranging capital for the potential entrepreneurs.
4) Business Investment Promotion Role:
Because of the specialized and professional status of banks, they are in a position to play investment promotion
roles to entrepreneurs. Such roles may include management of investment for customers, advice on sustainable
lines of investment to follow by analysing the pros and cons of each investment alternatives to the
entrepreneur-customer.
5) Advisory, Guarantee and Consultancy Role:
In addition to the normal lending and other service, banks now also engage in business advisory, guarantee
and other consultancy services which help immensely in the promotion and financing of entrepreneurship
activities in the country. It is well known fact that some enterprises/businesses fail simply because of
mismanagement, faulty investment decisions, inefficient capital and foul planning etc. Through consultancy
and merchant banking functions, the banks may further make earnest efforts in entrepreneurship development
by (i) ensuring advisory services in matters of production, finance and marketing, (ii) imparting training in
behavioural sciences and other pertinent matters, (iii) helping the identification of technically feasible and
economically viable schemes and the formulation of bankable project proposals for self-employment, and (iv)
getting vivid technical and legal formalities completed and securing other vital inputs to the potential
entrepreneurs. Besides, entrepreneurship development programmes (EDP) conducted by Khadi and Village
Industries Commission, District Industrial Centres, Small Industries Service Institutes, Industrial
Development Bank of India, etc., may also be potential areas through which the banks can help
entrepreneurship development. Through equipment leasing, the banks may further ensure 100 per cent
financing of the projects of the potential entrepreneurs without involving huge risk of transfer of ownership
title under direct loaning on the one hand and imposing lesser financial burden on the borrowers on the other.
6) Other areas:
Other areas in which banks could offer advisory and consultancy services to the SMEs include methods of
control systems or measures to be adopted by the enterprises with respect to defined lines of business or trend
of challenges. Advice on methods of raising capital or reorganization of a company to bring about the desired
level of efficiency. Advice on tax and tax related matters. Status enquiry services could be offered to effect
credit purchases within the domestic market or overseas. The banks could also perform a great role in
entrepreneurship development by organizing, sponsoring and supporting entrepreneurship education and
training programmes either directly or in conjunction with other organizations and stake holders.
The major areas in which commercial banks may make their debut in entrepreneurship development are
ancillary, tiny and. small industries, agro-based village and cottage industries and allied agricultural activities.
Business and trade as well as professions may also serve a good base whereon the banks may motivate people
to become entrepreneurs in the capacity of self-employed people. Thus, there is an immense scope for the
commercial banks to play their positive role in the entrepreneurship development.

II. District Industries Centre (DIC):

The District Industries Centres (DICs) programme was started on May 1, 1978 with a view to provide
integrated administrative framework at the district level for promotion of small-scale industries in rural areas.
The DICs are envisaged as single window interacting agency with the entrepreneur at the district level.
Services and support to small entrepreneurs are provided under a single roof through the DICs. Before
establishing DICs, a potential entrepreneur must visit various organisations in order to obtain the necessary
support and facilities, and in many instances, most of them will be located outside of their neighbourhood. So,
there were a lot of delays, as well as the entrepreneur having to incur many expenses which they can’t afford.
Due to these inconveniences, several agencies of the state authority have now been assigned appropriately in
charge to the DIC. Thus, an entrepreneur may obtain all of the help they require in setting up their business
from a single institution, namely DIC. Since 1993-94, the management of the DICs is done by the State
Governments.
Structure of DICs - A DIC consists of:
1) A General Manager.
2) Four Functional Managers - Three of the functional managers would be in the economic investigation
domain, credit and village industries. Whereas the fourth functional manager may be with the
responsibility in any of the areas such as raw materials marketing, training etc. based on the particular
requirements of that district.
3) Three Project Managers - Based on the needs in the area of the district concerned they provide technical
service. Their role is to work for modernization and up gradation of technology in small units.
Objectives:
1) To spot the new and potential entrepreneurs and render assistance for them to kick start their ventures.
2) To extend financial and organisational support to strengthen the rural and cottage industries.
3) To improve the efforts of industrialisation in all rural areas.
4) Generate more employment opportunities for the people.
5) To centralise all the procedures required to start ventures by the entrepreneurs anew and reduce their
time and efforts obligatory to acquire permissions, licenses, registrations, incentives etc.
6) To ensure that all the benefits and schemes offered by the Central Government reach the entrepreneurs
appropriately.
7) To reduce the industrial and economic imbalance in the country and obtain its equality in every district.
8) To strengthen the rural industrialisation and enhance the development of handicrafts.
9) To promote export and marketing activities in the Districts through Export Guidance Cell available in
the DICs.
10) To endorse awards to MSMEs and artisans offered by the State and Central Government.
Functions:
1) Identification of suitable schemes: This is one of the main functions of the district industries centre as
schemes are beneficial in attracting people to set up industries. Schemes like District Industries Centre
Loan scheme, Prime Minister’s Employment Guarantee Program, etc., encourage entrepreneurs.
2) Preparing feasibility reports: The techno-economic feasibility reports that the district industries
centres prepare are reports which analyse the performance of a product, industrial processes, or services
that are needed to improve certain areas in the industry.
3) Arranging for credit: One needs some capital to set up an industry and keep it working. This lump sum
amount is not present with every entrepreneur. Therefore, arranging for ways to acquire credit becomes
one of the main functions of the district industries centre.
4) Preparation of industrial profile: This report helps identify the advantages and disadvantages of
setting up an industry in the district. It also checks the availability of infrastructure and raw materials
required for the industry.
5) Guidance and advice to entrepreneurs: Providing knowledge of existing opportunities helps
entrepreneurs. It helps in the industrialization of the district and generates employment opportunities.
6) The focal point of industrialization: The district industries centre acts as a focal point as they provide
clearances and licenses, facilitate loans, grant awards, etc.
7) Training Courses: The DIC also offers training classes for smaller and modest business owners. It
functions as a go to contact point for start-ups and small industry service institutions.
8) Machinery and Equipment: The District Industries Centre advises where one can purchase machinery
and tools and can also organise for the delivery of machinery on a rental basis.
9) Raw Materials: The District Industries Centre gathers information about the resources needed by
various units and arranges bulk purchases of those products. As a result, small business operations may
obtain raw materials at inexpensive costs.
10) Khadi and Village Industries: District Industries Centres concentrate on the improvement of Khadi
and village businesses, as well as other small producers. It also maintains a strong working relationship
with the State Khadi Authority and organises training courses for rural artisans.
Role of DICs:
District Industries Centres exist only to promote and support the businesses of their respective states. The
Department of Commerce and Industry in each state forms DICs. Alongside DICs, Sub-District Industries
Centres provide assistance. DIC's responsibilities include:
1) DIC assists an entrepreneur in the DIC programs and guarantees continuous support during the
establishment of their business.
2) DIC offers young business owners a single-window clearing system that allows them to settle their
business-related problems quickly.
3) DIC encourages the expansion and development of many manufacturing industries in rural and urban
communities.
4) Under the Stand-up India Scheme, DIC provides financing for MSMEs, start-ups and growing
companies.
5) DIC provides self-employed individuals with machinery and tools to help them with their businesses.
6) DIC also carries out a periodic assessment of their programs and schemes to ensure proper
implementation and operation.
Activities of DICs:
1) DICs allot sheds in Electrical & Electronic Industrial Estates.
2) Provides clearance of licenses etc. through Single Window Meeting.
3) Conducts Motivational Campaigns.
4) Helps in the distribution of Project profiles among entrepreneurs.
5) Grants subsidies to Small Scale Industries (SSIs) units.
6) Implements Prime Minister’s Rozgar Yojana (PMRY).
7) Provides marketing and raw material assistance via Small Industries Development Corporation
(SIDCO).
8) Organizes Industrial Cooperative Societies.
9) Recommends Awards to SSI units and loan applications to banks under KVIC (Khadi and Village
Industries Commission) Scheme.
10) Helps in the Registration of Handicrafts/Cottage industries & SSI units (Permanent/Provisional).
11) Provides rehabilitation of sick SSI units.
12) Undertakes training programs for Entrepreneur Development.
Schemes under DICs:
1) Prime Minister’s Employment Generation Program (PMEGP): The objective of this centrally
sponsored scheme of Ministry of Micro, Small & Medium Enterprises, and Government of India being
implemented since October, 2008 is to provide gainful self-employment opportunities to educated
unemployed one’s through industrial activities, services and business.
2) Seed Money Scheme: The scheme focuses to encourage an unemployed person to take up self-
employment ventures through industry, service and business, by providing soft loans to meet part of the
margin money to avail institutional finance.
3) DIC Loan Scheme: The aim of the scheme is to generate employment opportunities including self-
employment to small units located in towns and rural areas with the population of less than 1 lakh and
with the investment on plant & machinery below 2 Lakhs. Such identified micro units falling within the
purview of the Small Scale Industries Board and Village Industries, handicrafts, handlooms, Silk & Coir
Industries are covered for financial assistance in the form of margin/seed money under the scheme.
4) Entrepreneurship Development Training Program: The objective of training educated unemployed
persons to take up self-employment ventures or skilled wage employment. Entrepreneurs are given
guidance related to industry/service/business activities & skill upgradation. Entrepreneurs are also
guided in respect of choice of activity, necessities of land, project report, obtaining various no objection
certificates, licenses and marketing strategy.
5) District Award Scheme: To encourage entrepreneurs in establishing small scale enterprises and also to
extols them for their success and achievements, the State Government has started honouring such
entrepreneurs with District Award Scheme at the district level. Proprietors / Partner’s / Directors of
enterprises who have obtained EM registration with the concerned District Industries Centre at least
three years earlier and in production for two continuous years are eligible for the award. These awards
are given to them under the scheme of this District Award scheme.
6) PMRY Scheme: PMRY (Prime Minister Rozgar Yojana) scheme was introduced on the auspicious day
of 2nd October, 1993, the birth Anniversary of Mahatma Gandhi all over the country. The main objective
of the PMRY scheme was to provide easy subsidized financial assistance to educated unemployed youth
for starting their own businesses in the fields like manufacturing, business & service and trade sectors.
Firstly, the scheme was aimed at providing self-employment to one million educated unemployed youth
in the country by making up 7 lakh micro enterprises through inducting service and business ventures
within 2 ½ years. The scheme was successfully captured the imagination of the youth. Overwhelmed
with the response and ever-increasing need, the Government has confirmed to make it as a permanent
scheme and framed modalities & guidelines for its successful implementation and to fulfil the purpose
for which it is designed.
In India, District Industrial Centres perform an important role in Entrepreneurial Development. DICs Provide
complete assistance and support to entrepreneurs to start and develop the industries. This government program
is yielding better results when compared with the past programmes in terms of generating self-employment.
This process will cause to reduce the regional imbalance among developed and developing areas of the
country.

III. Small Industries Development Organization (SIDO):

Small Industries Development Organization (SIDO), established in 1954, is a subordinate office of the
Department of SSI (Small Scale Industries) & Auxiliary and Rural Industry (ARI). It is an apex body and
nodal agency for formulating, coordinating and monitoring the policies and programmes for promotion and
development of small-scale industries.
Structure and Network:
The Development Commissioner (Small Scale Industries) is the head of the SIDO. He is assisted by various
directors and advisers in evolving and implementing various programmes of training and management,
consultancy, industrial investigation, possibilities for development of different types of small-scale industries,
industrial estates, etc. The main functions of the SIDO are performed through a national network of institutions
and associated agencies created for specific functions. At present, the SIDO functions through 27 offices, 31
Small Industries Service Institutes (SISIs), 37 Branch Small Industries Service Institutes (Br.SISIs), 37
Extension Centres, 4 Regional Testing Centres (RTCs), 7 Field Testing Stations (FTSs), 19 Autonomous
bodies which include 10 Tool Rooms (TRs) and Tool Design Institutes (TDI), 3 Product-cum-Process
Development Centres (PPDCs), 2 Central Footwear Training Institutes (CFTIs), 1 Electronics Service and
Training Centre (ESTC), 1 Institute for Design of Electrical Measuring Instruments (IDEMI), 2 National Level
Training Institutes, 1 Departmental Training Institute and 4 Production Centres. All small-scale industries
except those falling within the specialized boards and agencies like Khadi and Village Industries (KVI), Coir
Boards, Central Silk Board, etc, fall under the purview of the SIDO.
Objectives:
1) To formulate policy for promotion of SSI.
2) To coordinate policies of state governments.
3) To collect and disseminate information.
4) To provide wide range of extension services through allied institutions.
5) To promote facilities for technology upgradation.
6) To offer consultancy services.
The main functions performed by the SIDO in each of its three categories of functions are:
1) Functions Relating to Co-ordination:
➢ To evolve a national policy for the development of small-scale industries,
➢ To co-ordinate the policies and programmes of various State Governments,
➢ To maintain a proper liaison with the related Central Ministries, Planning Commission, State
Governments, Financial Institutions etc., and
➢ To co-ordinate the programmes for the development of industrial estates.
2) Functions Relating to Industrial Development:
➢ To reserve items for production by small-scale industries,
➢ To collect data on consumer items imported and then, encourage the setting of industrial units to produce
these items by giving coordinated assistance,
➢ To render required support for the development of ancillary units, and
➢ To encourage small-scale industries to actively participate in Government Stores Purchase Program by
giving them necessary guidance, market advice, and assistance.
3) Function Relating to Extension:
➢ To make provision to technical services for improving technical process, production planning, selecting
appropriate machinery, and preparing factory lay-out and design,
➢ To provide consultancy and training services to strengthen the competitive ability of small-scale
industries,
➢ To render marketing assistance to small-scale industries to effectively sell their products, and
➢ To provide assistance in economic investigation and information to small- scale industries.
Services provided by SIDO:
1) Entrepreneurial Development: SIDO has initiated some activities in respect of the development of
entrepreneurship. They include organization of training programmes for engineer entrepreneurs,
unemployed graduates, diploma holders and science graduates. Other activities for the development of
entrepreneurship include preliminary and advanced courses for entrepreneurial development amongst
students, the war widows, scheduled castes, schedules tribes, ex-servicemen and people from backward,
rural, tribal and hilly areas.
2) Workshop Services: SIDO offers a comprehensive range of technical processes, production planning,
selection of machinery, use of modem machines and processes, preparation of factory layouts and
designs, materials handling etc.
3) Modernization of selected industries: The SIDO has been implementing a programme of
modernization of selected industries and others on the basis of concentration in certain areas. SIDO has
arranged seminars, workshops, industrial clinics, modernization courses, etc. It has conducted quick and
intensive in plant studies with a view to assisting selected small-scale units in implementing the
suggestions made by various study teams.
4) Consultancy Services, Management Development and Training: SIDO has rendered consultancy
services in order to improve competitive strength of small entrepreneurs. Such services include
management, cost accounting, personnel management documentation etc.
5) Exhibitions and Technical Publicity: SIDO has taken up the publicity efforts for information and
guidance of existing and prospective entrepreneurs on the policies relating to the development of small
industries. SIDO has been running a monthly Journal 'Laghu Udyog Samachar' in Hindi and English.
The publications of SIDO relate to the new programmes of the DICs, the entrepreneurial development
programme of the Department of Small-Scale Industries, the development of ancillary industries etc.
6) Ancillary Development: The SIDO has been providing necessary institutional support to the
programme of the growth of ancillary units. The Bureau of Public Enterprises has issued fresh guidelines
to public sector undertakings to encourage the growth of ancillary units.
7) Government's Stores Purchase Programme: The SIDO has been encouraging the small-scale units to
participate in the Government's Stores Purchase Programme. It gives them the necessary guidance,
market advice and assistance in fulfilling various formalities.
8) Economic Information Services: The SIDO has been furnishing the requisite economic information to
large number of entrepreneurs, artisans, and technocrats in selecting new items of production or in the
expansion of their existing activities.

IV. Industrial Finance Corporation of India (IFCI):

IFCI was established as a statutory corporation on 1st July 1948 by a special Act passed in the Parliament,
IFCI Act, 1948. It was converted into a public limited company on July 1, 1993. Its main object is to provide
medium- and long-term credit to eligible industrial enterprises in corporate sectors of the economy,
particularly to those industries to which banking facilities are not available.
Objectives:
1) The primary role of IFCI is to provide 'direct financial assistance' on medium- and long-term basis to
industrial projects in the corporate and co-operative sectors. The objectives of the corporation are stated
below.
2) To provide long and medium-term credit to industrial concerns engaged in manufacturing, mining,
shipping and electricity generation and distribution.
3) The period of credit can be as long as 25 years and should not exceed that period;
4) To grant credit to a single concern up to a maximum amount of rupees one crore. This limit can be
exceeded with the permission of the government under certain circumstances;
5) Guarantee loans and deferred payments;
6) Underwrite and directly subscribe to shares and debentures issued by companies;
7) Assist in setting up new projects as well as modernization of existing industrial concerns in medium and
large-scale sector;
8) Assist project under co-operatives and in backward areas.
Functions:
1) Granting loans and advances for the establishment, expansion, diversification and modernization of
industries in corporate and co-operative sectors.
2) Guaranteeing loans raised by industrial concerns in the capital market, both in rupees and foreign
currencies.
3) Subscribing or underwriting the issue of shares and debentures by industries. Such investment can be
held up to 7 years.
4) Guaranteeing credit purchase of capital goods, imported as well as purchased within the country.
5) Providing assistance, under the soft loans scheme, to selected industries such as cement, cotton textiles,
jute, engineering goods, etc.
6) Providing technical, legal, marketing and administrative assistance to any industrial concern for the
promotion, management and expansion of the industrial concern.
7) Providing equipment (imported or indigenous) to the existing industrial concerns on lease under its
'equipment leasing scheme'.
8) Procuring and reselling equipment to eligible exiting industrial concerns in corporate or co-operative
sectors.
9) Rendering merchant banking services to industrial concerns.
Major Services provided by IFCI:
1) Finance for new projects and expansion, diversification and modernisation programmes.
2) Equipment finance and advances against Usance Bills.
3) Merchant banking.
4) Promotional services, mainly through sponsored organisations and supported activities in the form of
technical consultancy services, risk capital assistance, upgradation of managerial skills,
entrepreneurship development, development banking and industrial economics, etc.
Role of IFCI:
1) Soft Loan Assistance: This scheme provides soft loan assistance to existing industries in small and
medium sector for developing technology through in-house research and development.
2) Entrepreneur Development: IFCI provides financial support to EDPs (Entrepreneur Development
Programmes) conducted by several agencies all-over India. In co-operation with Entrepreneurship
Development Institute of India.
3) Industrial Development in Backward Areas: IFCI also take measures to promote industrial
development in backward areas through a scheme of concessional finance.
4) Subsidised Consultancy: The IFCI gives subsidised consultancy to Small Entrepreneurs for
➢ Meeting the Cost of Project.
➢ Promoting Ancillary Industries.
➢ Conducting Market Research.
➢ Reviving Sick Units.
➢ Implementing Modernisation.
➢ Controlling Pollution in Factories.
5) Management Development: To improve the professional management the IFCI sponsored the
Management Development Institute in 1973. It established the Development Banking Centre to develop
managerial, manpower in industrial concern, commercial and development banks.
V. Technical Consultancy Organisations (TCOs):
A network of Technical Consultancy Organisations (TCOs) was established by the All India Financial
Institutions (AIFIs) in the seventies and the eighties in collaboration with state level financial/development
institutions and commercial banks to cater to the consultancy needs of small industries and new entrepreneurs.
At present, there are 18 TCOs operating in various states, some of them covering more than one state. These
17 TCOs are:
1) Andhra Pradesh Industrial and Technical Consultancy Organization Ltd.
2) Bihar Industrial and Technical Consultancy Organization Ltd.
3) Gujarat Industrial and Technical Consultancy Organization Ltd.
4) Haryana-Delhi Industrial Consultants Ltd.
5) Himachal Consultancy Organization Ltd.
6) Industrial and Technical Consultancy Organization of Tamil Nadu Ltd.
7) Jammu and Kashmir Industrial and Technical Consultancy Organization Ltd.
8) Karnataka Industrial and Technical Consultancy Organization Ltd.
9) Madhya Pradesh Consultancy Organization Ltd.
10) Maharashtra Industrial and Technical Consultancy Organization. Ltd.
11) North-Eastern Industrial Consultants Ltd.
12) North-Eastern Industrial and Technical Consultancy Organization Ltd.
13) North-India Technical Consultancy Organization Ltd.
14) Orissa Industrial and Technical Consultancy Organization Ltd.
15) Rajasthan Consultancy Organization Ltd.
16) U.P. Industrial Consultants Ltd.
17) West Bengal Consultancy Organization Ltd.
Functions:
Initially, TCOs’ functions were focused on pre-investment studies for small and medium scale enterprises.
Over the years, they have diversified their functions to include the following:
1) Preparing project profiles and feasibility profiles.
2) Undertaking industrial potential surveys.
3) Identifying potential entrepreneurs and provide them with technical and management assistance.
4) Providing assistance in modernisation.
5) Undertaking market research and surveys for specific products.
6) Supervising the project and where necessary, render technical and administrative assistance.
7) Undertaking export consultancy for export-oriented projects based on modern technology.
8) Conducting entrepreneurship development programmes.
9) Offering merchant banking services.
10) Conducting technology upgradation and rehabilitation programmes.
11) Organising information cell and data bank concerning industrial and economic activities and provide
these to entrepreneurs.
12) Developing industry clusters.
13) Providing vocational training.
VI. National Small Industries Corporation Ltd (NSIC):
The National Small Industries Corporation Ltd. (NSIC), an ISO 9000 certified company, since its
establishment in 1955, has been working to fulfil its mission of promoting, aiding and fostering the growth of
small-scale industries and industry related small-scale services/businesses in the country. Over a period of six
decades of transition, growth and development, the NSIC has proved its strength within the country and abroad
by promoting modernization, upgradation of technology, quality consciousness, strengthening linkages with
large and medium enterprises and enhancing export projects and products from small-scale enterprises.
Structure and Network:
The policy guidelines to the NSIC are provided by the Board of Directors consisting of a full-time Chairman-
cum-Managing Director, two Functional Directors, two Government Nominee Directors, one SIDBI Nominee
Director, and six Non-official part-time Directors. At present, the NSIC operates through 11 Zonal Offices,
45 Branch Offices, 7 Sub-offices, 9 Technical Services Centres, 6 Training Centres, 14 SC ST Hub Offices,
3 Marketing Business Parks and a Legal & Recovery Cell supported by a team of over 5000 professionals
spread across the country. To manage operations in Gulf and African countries, the NSIC operates from its
offices in Dubai and Johannesburg.
Objectives:
1) To build corporation reach and support in the sustainable growth of MSMEs.
2) To support and enhance the workforce in the industries by upgrading skills.
3) To ensure a hygienic working environment.
4) To train people and create self-employment that develops the nation.
5) To improve businesses’ efficiency, profits, and productivity.
6) To facilitate the MSMEs with lease equipment, huge machinery, and raw materials.
Functions:
NSIC provides a wide range of services, predominantly promotional in character, to small-scale industries. Its
main functions are to:
1) Provide machinery on hire-purchase scheme to small-scale industries.
2) Provide equipment leasing facility.
3) Help in export marketing of the products of small-scale industries.
4) Participate in bulk purchase programme of the Government.
5) Develop prototype of machines and equipment to pass on to small-scale industries for commercial
production.
6) Distribute basic raw material among small-scale industries through raw material depots.
7) Help in development and up-gradation of technology and implementation of modernization programmes
of small-scale industries.
8) Impart training in various industrial trades.
9) Set up small-scale industries in other developing countries on turn-key basis.
10) Undertake the construction of industrial estates.
Benefits of NSIC:
1) Supporting MSMEs through loans and schemes.
2) Mentoring documentation processes and helping in all aspects of the business.
3) Supports financially at best interest rates and assures complete guidance.
4) It offers credits and provides an option to switch banks for credits.
5) It offers raw materials, equipment, and other machinery.
6) It helps in technology development and skills upgradation.
7) It provides training and ensures self-employment for people.
Schemes of NSIC:
1) Single Point Registration for Government Purchase: NSIC enlists Micro & Small Enterprises
(MSEs) under Single Point Registration Scheme (SPRS) for participation in Government Purchases.
The units enlisted under Single Point Registration Scheme of NSIC are eligible to get the benefits under
Public Procurement Policy for Micro & Small Enterprises (MSEs) Order 2012 as notified by the
Government of India, Ministry of Micro Small & Medium Enterprises, New Delhi vide Gazette
Notification dated 23.03.2012 and amendment vide order no. S.O. 5670(E) dated 9th November 2018.
The enlistment under SPRS is completely online (www.nsicspronline.com).
2) Consortia and Tender Marketing: Small Enterprises in their individual capacity face problems to
procure & execute large orders, which deny them a level playing field vis-a'-vis large enterprises. NSIC
forms consortia of Micro and Small units manufacturing the same product, thereby pooling in their
capacity. NSIC applies the tenders on behalf of single MSE/Consortia of MSEs for securing orders for
them. These orders are then distributed amongst MSEs in tune with their production capacity.
3) MSME Global Mart B2B Web Portal for MSMEs: Information today is becoming almost as vital as
the air we breathe. We need it every minute of our working lives. With increase in competition and
melting away of international boundaries, the demand for information is reaching new heights. NSIC,
realizing the needs of MSMEs, is offering Infomediary Services which is a one-stop, one-window
bouquet of aids that will provide information on business, technology and finance, and also exhibit the
core competence of Indian SMEs through digital presence. The corporation is offering Infomediary
Services through its MSME Global Mart www.msmemart.com; which is a Business to Business (B2B)
web portal. The services are available through Annual Membership.
4) Marketing Intelligence: Collect and disseminate both domestic as well as international marketing
intelligence for the benefit of MSMEs. This cell, in addition to spreading awareness about various
programmes / schemes for MSMEs, will specifically maintain database and disseminate information.
5) Exhibitions and Technology Fairs: To showcase the competencies of Indian MSMEs and to capture
market opportunities, NSIC participates in select International and National Exhibitions and Trade Fairs
every year. NSIC facilitates the participation of the small enterprises by providing concessions in rental
etc. Participation in these events exposes MSMEs to international practices and enhances their business
prowess.
6) Buyer-Seller meets: Bulk and departmental buyers such as the Railways, Defence, Communication
departments and large companies are invited to participate in buyer-seller meets to enrich small
enterprises knowledge regarding terms and conditions, quality standards, etc required by the buyer.
These programmes are aimed at vendor development from MSMEs for the bulk manufacturers.
7) Credit Support: NSIC facilitates credit requirements of small enterprises in the following areas:
➢ Financing for procurement of Raw Material (Short term).
➢ Financing for Marketing Activities (Short term).
➢ Credit Facilitation Through Bank.
8) NSIC Technical Services Centres: NSIC offers small enterprises the following support services
through its Technical Services Centres and Extension Centres:
➢ Advise on application of new techniques
➢ Material testing facilities through accredited laboratories.
➢ Product design including CAD.
➢ Common facility supports in machining, EDM, CNC, etc.
➢ Energy and environment services at selected centres.
➢ Classroom and practical training for skill upgradation.
 Micro, Small and Medium Enterprises (MSMEs)

MSMEs are engaged in low scale activities such as clay pot making, fruits and vegetable vendors, transport
(three-wheeler tempos and autos), repair shops, cottage industries, small industries, handlooms, handicraft
works etc. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (came into force
w.e.f., October, 2006) addressed the issues relating to its definition, credit, marketing and technology
upgradation. In accordance with the provisions of Micro, Small and Medium Enterprises Development Act
2006, the micro, small and medium enterprises are classified as follows:

Investment in Plant and Machinery

Type of Unit Turnover
or Equipment
Micro Enterprise Does not exceed 1 crore rupees Does not exceed 5 crore rupees
Small Enterprise Does not exceed 10 crore rupees Does not exceed 50 crore rupees
Medium Enterprise Does not exceed 50 crore rupees Does not exceed 250 crore rupees

Role and Significance of MSMEs:

1) Employment Potential - MSMEs generate more employment opportunities than large business
concerns. They are mostly labour intensive; thus, they provide more employment opportunities to a
larger number of people in India.
2) Low Production Cost - MSMEs do not require skilled labourers or professionals to run the organisation.
It employs cheap labour and thus minimizes the overhead. These units are more cost efficient than large
scale units, thus facilitates production of goods at low cost.
3) Low Investment - MSMEs do not require a huge capital to start the unit. It can employ locally available
resources within the reach of the owner. They help to perfect and promote traditional family skills and
handicrafts. These industries facilitate the growth of local entrepreneurs and self-employed professionals
in small towns and villages.
4) Quick Decision Making - MSMEs need not hire professional managers to run the management on a
day-to-day basis. In most cases, owner himself manages the enterprises. Hence, timely decision making
becomes easy and effective.
5) Supplementary Role - MSMEs play a complementary role to serve as a feeder to large scale industries.
They supply accessories, spare parts and components to large scale industries.
6) Establishment of Socialistic Pattern of Society - MSME sector contributes towards the establishment
of socialistic pattern of society by reducing the concentration of income and wealth. It enables and
empowers people of small means to take up a gainful industrial activity, and thereby helps to achieve
equitable distribution of wealth.
7) Balanced Regional Development - By encouraging MSMEs in industrially backward areas of India,
balanced development can be achieved across all regions. It will also help greatly in preventing the
people from migrating to cities and towns in pursuit of employment.
8) Promotion of Self Employment and Self Reliance Spirit - MSMEs help to a great deal in developing
a class of entrepreneurs. It promotes self-employment and a spirit of self-reliance in the society, thereby
contributing an increase in per capita income or economic development.
9) Higher Contribution to Economic Growth - MSMEs play a significant role in the economic growth
and contribute to 29.7 per cent of GDP and 49.66 per cent of exports. The sector offers employment to
nearly 60 million people through 28.5 million enterprises, after the agriculture sector.
Problems associated with MSME:
1) Finance: One of the severe problems faced by MSME is that of non-availability of adequate finance to
carry out its operations. Generally, these businesses begin with a small capital base. Many of the units
in the small sector lack the credit worthiness required to raise as capital from the capital markets. As a
result, they heavily depend on local financial resources and are frequently the victims of exploitation by
the money lenders. These units frequently suffer from lack of adequate working capital, either due to
delayed payment of dues to them or locking up of their capital in unsold stocks. Banks also do not lend
money without adequate collateral security or guarantees and margin money, which many of them are
not in a position to provide.
2) Raw materials: Another major problem of MSME is the procurement of raw materials. If the required
materials are not available, they have to compromise on the quality or have to pay a high price to get
good quality materials. Their bargaining power is relatively low due to the small quantity of purchases
made by them. Also, they cannot afford to take the risk of buying in bulk as they have no facilities to
store the materials. Because of general scarcity of metals, chemicals and extractive raw materials in the
economy, the small-scale sector suffers the most. This also means a waste of production capacity for the
economy and loss of further units.
3) Managerial skills: These businesses are generally promoted and operated by a single person, who may
not possess all the managerial skills required to run the business. Many of the small business
entrepreneurs possess sound technical knowledge but are less successful in marketing the output.
Moreover, they may not find enough time to take care of all functional activities. At the same time, they
are not in a position to afford professional managers.
4) Marketing: Marketing is one of the most important activities as it generates revenue. Effective
marketing of goods requires a thorough understanding of the customer’s needs and requirements. In
most cases, marketing is a weaker area of small organisations. These organisations have, therefore, to
depend excessively on middlemen, who at times exploit them by paying low price and delayed
payments. Further, direct marketing may not be feasible for small business firms as they lack the
necessary infrastructure.
5) Quality: Many MSMEs do not adhere to desired standards of quality. Instead, they concentrate on
cutting the cost and keeping the prices low. They do not have adequate resources to invest in quality
research and maintain the standards of the industry, nor do they have the expertise to upgrade
technology. In fact, maintaining quality is their weakest point, when competing in global markets.
6) Capacity utilisation: Due to lack of marketing skills or lack of demand, many firms have to operate
below full capacity due to which their operating costs tend to increase. Gradually this leads to sickness
and closure of the business.
7) Global competition: Apart from the problems stated above MSME are not without fears, especially in
the present context of globalisation. These enterprises face competition is not only from medium and
large industries, but also from multinational companies which are giants in terms of their size and
business volumes.
UNIT III
 PROJECT MANAGEMENT

Project - Meaning:
A project is a scientifically evolved work plan devised to achieve a specific objective within a specified period
of time. The dictionary meaning of a project is that it is a scheme, design, a proposal of something intended
or devised to be achieved.

Project - Definition:
The World Bank defines a Project as "an approval for a capital investment to develop facilities to provide
goods and services".

Project Management - Meaning:

In simple terms, project management means the process of leading a team to hit goals or complete deliverables
within a set timeframe. Project management involves project documentation, planning, tracking, and
communication — all with the goal of delivering work successfully within the constraints of time, scope, and
budget.

Project Management - Definition:

According to the Association for Project Management (UK), "Project management is the application of
processes, methods, skills, knowledge and experience to achieve specific project objectives according to the
project acceptance criteria within agreed parameters".

Classifications of projects:
1) Quantifiable projects - Quantifiable projects are those projects on which quantitative assessment of
benefits can be made. E.g.: Power generation projects.
2) Non-Quantifiable projects - Where quantifiable assessment is not possible in a project then it is known
as non-quantifiable project. E.g.: Defence projects.
3) Sectorial projects - In India, Planning Commission of India has accepted the sectorial basis as the
criterion for classification of project. E.g.: Agriculture and Allied Sector, Irrigation and Power Sector,
Industry and Mining Sector, Transport and Communication Sector, Social Service Sector,
Miscellaneous Sector, etc.
4) Techno-economic projects - Projects may be classified as follows on the basis of their techno-economic
characteristics:
➢ Factor Industry-oriented classification - Projects may be classified as capital intensive or labour
intensive. Ex: Investment made in plant and machinery.
➢ Causation-oriented classification - When causation-oriented classification is used, projects are
classified as demand based or raw materials-based project. The availability of certain raw
materials skills, or other inputs makes the project raw material based.
➢ Magnitude-oriented classification - The size of investment forms the basis for magnitude-
oriented projects. Projects may be classified as large-scale projects, medium-scale projects and
small-scale projects.
 ➢ Financial Institutions' classification - All India and State Financial Institutions classify the
projects according to their age and experience and the purpose for which the project is being taken
up. Financial Institutions classify projects into:
• New projects.
• Expansion projects.
• Modernisation projects.
• Diversification projects.
These projects are invariably profit oriented.
5) Service projects - The ultimate aim of these is not to make profit but to serve the society. E.g.:
Educational projects.

Project Life Cycle:

The Project Life Cycle is the sequence of phases through which a project progresses. The number of phases
and sequence of the cycle may vary based on the company and the type of project undergone. As part of a
project, however, they should have a definite start and end, and they are constrained by time. The lifecycle
provides the basic foundation of the actions that has to be performed in the project, irrespective of the specific
work involved.

Stages in Project Life Cycle:

1) Defining Stage - This is the first phase in project life cycle. At this stage, project specifications are
defined, objectives are established, terms are formed and tasks and responsibilities are assigned.
2) Planning Stage - At this stage plans are developed so as to determine what to do, when to do it, who
will to do it, what is the level of quality to be maintained etc., It involves preparation of schedules,
budgets, deciding resources and forecasting risks.
3) Executing Stage - Under executing stage, project so planned is implemented. At this stage, the
following are analysed:
➢ Is the project on schedule, on budget and meeting specifications?
➢ What revisions / changes are necessary?
4) Delivering Stage - It involves two activities namely:
➢ Delivering the project product to customer. It involves customer training and transferring
documents.
➢ Re-deploying project resources. After delivery of the product, the resources are redirected to other
projects and new assignments.

Business Idea:
A business idea could be an invention, a new product or service, or a solution to an existing problem. It is a
business seed, which expands into a business tree. A business idea can emerge either from within the
organization or from outside the organization.
Sources of Business Idea:
1) Surveys - Business ideas can be generated from market surveys indicating or showing which sector is
viable or possibly void of products. People can check the market to come out with appropriate
conclusions on which sectors are not flooded or occupied.
2) Training - Business ideas can be acquired through training individuals where they are equipped with
necessary skills and knowledge from schools and such other institutions of training.
3) Experience - An idea can also be generated from experience. Experience in itself comes from constant
touch on a particular aspect. For instance, an individual might have an experience in accounting through
his or her occasional involvement with accounting issues.
4) Hobbies - Hobbies are what one is fond of doing most of his or her time. At least each and every one
finds something interesting and comfortable doing every time. Well, that might be a source of a business
idea.
5) Talents - A business idea can also come from individual talents. You are best in what you are talented
in and this might form a good base for starting a business if you spot an idea in that area. For instance,
if you are talented to play football, you might spot an idea in supplying football kits to customers in the
market.
6) Strengths of an individual - An individual's strength can also serve as a source of idea which is tuned
to an idea for carrying out business. For instance, if you have a particular strength in helping out clients
through consultations, that could form a base to start a business.
7) Market gaps - Spotting a gap in the market can also form an idea. A market gap in this case is used to
mean some important area that is not occupied. Sometimes, a particular area in the market may be empty
with nobody really providing some goods or services needed by customers. This is what can be formed
to an idea.
8) Events - A business can also be generated through attending events in which new ideas are exchanged.
For instance, an event that is scheduled in some other place can be very good opportunity to find out
what is missing in that particular place and by providing such products, you satisfy customers’ needs
which is one of the reasons of doing business.
9) Media - An idea can also come from the media. Reading magazines, newspapers and such published
materials that contain business related issues can help one generate an idea. An idea can still come from
the other media sources like television stations and radios. Discussions related to business topics can be
very useful in generation of an idea.
10) Shows and exhibition - An idea can also be extracted from shows and exhibitions. By seeing what other
people presents in the shows and exhibitions, an individual can come up with an idea of providing
something like what he or she has seen others do.
11) Recognizing needs - An idea can also be generated from recognition of what customers need in the
market. If for instance customers are frequently demanding maize flour instead of maize itself, one can
come in to provide the maize flour demanded by customers.
12) Merging existing businesses - Business people can also come up together to merge their business as a
new development towards achieving or getting more customers or for provision of better services to
customers.
13) Listening to what people say - A business idea can also be generated through listening from other
people's thoughts. This is more so important when you socialize with great minds or such people who
have tried out businesses or those who actually are in businesses.
Idea Generation:
Idea generation is the creative process that a company uses in order to find out solutions to the problems faced
by it. It is the process of creating, developing, and communicating ideas which are abstract, concrete, or visual.
The process includes the process of constructing through the idea, innovating the concept, developing the
process, and bringing the concept to reality.

Idea Generation Techniques:

1) Scamper - Scamper is an idea generation technique that utilizes action verbs as stimuli. It is a well-
known kind of checklist developed by Bob Eberie that assists the person in coming up with ideas either
for modifications that can be made on an existing product or for making a new product. SCAMPER is
an acronym with each letter standing for an action verb which in turn stands for a prompt for creative
ideas.
➢ S – Substitute
➢ C – Combine
➢ A – Adapt
➢ M – Modify
➢ P – Put to another use
➢ E – Eliminate
➢ R – Reverse
2) Brainstorming - Brainstorming is an idea generating process for developing creative solutions that
encourages as many alternatives as possible while withholding criticism. In a brainstorming session, a
group of people gets together in a room, in a relaxed environment, where everyone would be free to
stretch their minds and think beyond the ordinary. A group leader narrates the issue or problem to be
addressed. The purpose of brainstorming is to be an idea-generating process that opens up as many
alternatives as possible as other people’s remarks act to stimulate others in a sort of chain reaction of
ideas. Thus, there are two principles that underlie brainstorming. One is differed judgment, by which all
ideas are encouraged without criticism and evaluation. The second principle is that quantity breeds
quality.
3) Mind mapping - Mind mapping is a graphical technique for imagining connections between various
pieces of information or ideas. Each fact or idea is written down and then connected by curves or lines
to its minor or major (previous or following) fact or idea, thus building a web of relationships. It was
Tony Buzan, a UK researcher, who developed the technique “mind mapping” discussed in his book ‘Use
your Head’ (1972). Mind mapping is utilized in brainstorming, project planning, problem solving and
note taking. As is the case with other mapping methods, the intention behind brain mapping too is to
capture attention and to gain and frame information to enable sharing of concepts and ideas.
4) Role playing - In the role-playing technique, each participant can take on a personality or role different
from his own. As the technique is fun, it can help people reduce their inhibitions and come out with
unexpected ideas.
5) Brain writing - Brain writing is easy. Instead of asking the participants to shout out ideas, they are told
to pen down their ideas pertaining to a specific problem or question on sheets of paper, for a small
number of minutes. After that, each participant can pass their ideas over to someone else. This someone
else reads the ideas on the paper and adds some new ones. Following another few minutes, the individual
participants are again made to pass their papers to someone else and so the process continues. After
about 15 minutes, you or someone else can collect the sheets from them and post them for instant
discussion.
6) Collaboration - As the term indicates, collaboration is about two or more people joining hands in
working for a common goal. Designers frequently work in groups and engage in collaborative creation
in the course of the whole creative process.
7) Reverse thinking - As the term ‘reverse thinking’ itself suggests, instead of adopting the logical, normal
manner of looking at a challenge, you reverse it and think about opposite ideas. For example: ‘how can
I double my fan base?’ can change into ‘how do I make sure I have no fans at all? You may notice that
the majority of participants would find it easier to produce ideas for the ‘negative challenge’ simply
because it is much more fun. However, don’t spend too much time on the reverse idea-generation –
about 10 to 15 wrong ideas is fine. After one session is over, you can either continue in the reverse idea
atmosphere with a new challenge or else do the reversal once more to make it stronger. An example for
the latter is “I am never going to update any of my social networks” changing into “I am going to always
update all of my social networks.”
8) Visualization and visual prompts - Visualization is about thinking of challenges visually so as to better
comprehend the issue. It is a process of incubation and illumination where the participant takes a break
from the problem at hand and concentrates on something wholly different while his mind subconsciously
continues to work on the idea. This grows into a phase of illumination where the participant suddenly
gets a diversity of solutions and he rapidly writes them down, thereby creating fresh parallel lines of
thought.
9) Storyboarding - Storyboarding has to do with developing a visual story to explain or explore.
Storyboards can help creative people represent information they gained during research. Pictures, quotes
from the user, and other pertinent information are fixed on cork board, or any comparable surface, to
stand for a scenario and to assist with comprehending the relationships between various ideas.
10) Accidental genius - Accidental genius is a relatively new technique that utilizes writing to trigger the
best ideas, content and insight.
11) Socializing - If employees only hang around with colleagues and friends, they could find themselves in
a thinking rut. Let them utilize all those LinkedIn connections to begin some fantastic conversations.
Refreshing perspectives will assist with bringing out new thinking and probably, one or two lightning
bolts. Socializing in the context of ideation can also be about talking to others on topics that have nothing
whatsoever to do with the present problem.
12) Focus Groups - A group called 'focus group' consisting of 6-12 members belonging to various socio-
economic backgrounds are formed to focus on some particular matter like new product idea. The focus
group is facilitated by a moderator to have an open in-depth discussion. The mode of the discussion of
the group can be in either a directive or a non-directive manner. The comment from other members is
supplied with an objective to stimulate group discussion and conceptualize and develop new product
idea to meet the market requirement. While focusing on particular matter, the focus group not only
generates new ideas, but screens the ideas also to come up with the most excellent idea to be pursued as
a venture.
13) Problem Inventory Analysis - Problem Inventory analysis though seems similar to focus group
method, yet it is somewhat different from the latter in the sense that it not only generates the ideas, but
also identifies the problems the product faces. The procedure involves two steps: One, providing
consumers a list of specific problems in a general product category. Two, identifying and discussing the
products in the category that suffer from the specific problems. This method is found relatively more
effective for the reason that it is easier to relate known products to a set of suggested problems and then
arrive at a new product idea.
14) Environmental Scanning - Environmental scanning is an analysis and evaluation process, which is
used by the businesses to understand their current environment. The process includes systematic surveys
and interprets relevant data to identify external opportunities and threats.
Business Opportunity:
Business opportunity can be referred as a business concept, that, if turned into a tangible product or service
offered by a business enterprise will result in profit. Business Opportunity can be defined as an attractive and
excellent project idea which an entrepreneur search for and accepts such idea as a basis for his investment
decision. A good business opportunity must be capable of being converted into feasible projects.

Identification of Business Opportunities:

Identification of a business opportunity involves following steps:
1) Preliminary evaluation.
2) Selection of product or service.
3) Conducting a market survey.
4) Contactual programmes to collect sufficient information about proposed venture.
5) Succeeding in the market.

1) Preliminary Evaluation - As soon as entrepreneur realises regarding business opportunity, he has to

evaluate investment opportunities against set of specific criteria to select those project ideas which are
commercially feasible. The criteria are:
➢ Compatibility with the promoter - The entrepreneur must conform that the project undertaken
should be compatible with men, material, money and market available at his disposal. Project
beyond the capacity of the entrepreneur are bound to fail.
➢ Compatibility with government regulations and rules - Entrepreneur should not violate
government regulations and priorities. He must carefully take into account all related rules and
regulations of the government regarding investment, license, reservation of certain categories of
items etc.
➢ Easy availability of raw materials - Cost and availability factors of raw materials should be
considered carefully. Scarcity of raw materials will cause delay in production process.
➢ Potential market - Potential market, nature of competition, competitors, availability of
substitutes, barriers and the possibility of entry of substitutes and technological developments
taking place in the industry should be assessed and evaluated by the entrepreneur.
➢ Cost of the project - The cost of the project should be reasonable in the sense that a desired profit
margin can be realised from a competitive price. A study of the cost structure under raw material
cost, labour cost, direct expenses, factory overheads, administrative expenses, selling and
distributive overheads, and after sales services costs will give a good idea regarding different types
of cost.
➢ Inherent risk in the project - Risk related to the project such as changes in demand, technological
developments, entry of substitutes, competition and seasonal variations should be assessed before
working on a project.

2) Selection of Product or Service - Entrepreneur should identify the product which he wish to
manufacture. While deciding about the product following points should be considered:
➢ Potential demand for the product or service.
➢ Estimated volume of demand for the product.
➢ Potential of existing competitor and estimate about probable competitors.
➢ Scope for future demand.
➢ Infrastructural facilities - power, transport etc.
➢ Current status of technology and scientific development in the field.
 ➢ Availability of raw material and required labour.
➢ Government policies, legislation, controls.
➢ Environmental factors.
➢ Degree of profitability for the product.
➢ Information regarding particular line of product.
➢ Locational advantage of the product.
➢ Various characteristics of the proposed product to be produced.

3) Conducting a Market Survey - Market survey with reference to the availability of raw material,
equipment, marketing and distribution and consumer behaviour should be conducted.
➢ Raw material availability:
• Search for leading suppliers of raw material required for the concerned product.
• Study the price policy of various suppliers and analyse impact of price fluctuations on
production.
• Fix time for order execution.
• Study local and outside source of raw materials-the advantages and disadvantages.
• Thorough analysis of credit facilities, advance payments, terms and conditions for suppliers.
➢ Equipment availability:
• Identify major manufacturer here and abroad.
• Comparative features of various manufacturers.
• Price structure of different brands.
• Repair maintenance and after sales service facilities.
• Guarantees and warranties by suppliers.
• Technical and skilled staff requirement.
• Machinery and delivery schedules.
➢ Marketing and Distribution:
• Selection of best channel of distribution.
• Advertising and publicity programme for the product.
• Product positioning.
• Outstanding features of product or service.
• Market features and practices-credit facility, minimum order, incentives.
• Business terms, commission, stocks, warehouse facilities.
➢ Consumer Behaviour:
• Motivate buyers to buy new product.
• Analyse the buyers purchasing power.
• Analysis of consumption pattern to capture the major market share.
• Understand the preference for durability, service, economy.
• Understand consumer characteristics of different region and devise appropriate sales
message, accordingly.

4) Contactual Programmes to collect sufficient information about proposed venture - Entrepreneur

often need information and guidance, particularly in the initial stages, on product potential, raw
materials, policies, facilities, procedures, finance formalities, incentives, etc. Contact with central and
state level agencies set can be helpful in collecting sufficient information about proposed venture.
Industrial Finance Corporation of India (IFCI) in collaboration with Industrial Development Bank of
India (IDBI) Industrial Credit and Investment Corporation of India (ICICI), state organisations and
banks, have set up a network of state level technical consultancy agencies. They offer a package of
 professional and consultancy services to stimulate industrial growth. They also monitor the progress of
the unit. Entrepreneurship development programmes of 6 weeks duration are designed to:
➢ Develop entrepreneurial capabilities.
➢ Identify viable projects for potential entrepreneurs.
➢ Impart managerial skills.
➢ Help and secure necessary financial and infrastructural related assistance.

5) Succeeding in the Market - There is no way your business will earn money and profit unless customers
buy product or service. The secret formulae for an entrepreneur’s success is to produce what customers
will buy. Following are the important tips which help the entrepreneur to succeed in the market:
➢ Study people and their needs before starting any project.
➢ Identify unsatisfied needs.
➢ Design product in such a way that it should satisfy the customer better than the competitors
product.
➢ Ensure that what customer feel about the product which entrepreneur is offering.
➢ Always look for newer and more effective ways of reaching a customer.
➢ Entrepreneurs must have clear vision, goals and objectives, well defined mission, and employee
participation about the proposed project.
➢ Constant feedback of results as well as setting and adherence of high standards gives an
organisation a cutting edge over others. Planning, foresight and analysis are also important
qualities.
➢ The process of systematic market research is used to develop products or process and to provide
value for money to the customers. This helps to gain the market share.
➢ Commitment to innovation is vital in keeping ahead of the competition and perhaps the most
difficult one to achieve yet most of the organisations just do not give due importance for the same.

Feasibility Study:
Feasibility study refers to a structured and systematic analysis of the various aspects of a proposed
entrepreneurial venture designed to determine its workability. A well-prepared feasibility study can be an
effective evaluation tool to determine whether an entrepreneurial idea is a potentially successful one. It is the
first stage in the project formulation process. It is the appraisal of a project within the limitations of internal
and external constraints.

Elements of Feasibility Study:

I. Marketing Feasibility - Marketing feasibility involves testing of business idea as to its marketing
viability. It is done by conducting marketing studies. Various marketing considerations that are to be
considered include:
1) Demand - Identifying the market potential in terms of current demand for the product and projected
future demand. The entrepreneur should use relevant statistical criteria for this purpose. For example, a
potential text book publisher may find out the number of students enrolled in the concerned subject,
percentage of textbook users and the proportion of demand.
2) Economic Conditions - Data relating to general economic trends such as per capita income, level of
consumption expenditure, inventories, new orders, etc., have to be considered.
3) Place - Identifying the target market place where products can be distributed, size, channels, etc.
4) Price - The cost and profit at different price levels have to be taken into considerations. Data concerning
price structure, discount patterns and sources of market information have to be collected.
5) Competition - The competitors, both direct (from similar products) and indirect (from substitutes) have
to be analysed. It helps in identifying the strengths, strategies, etc. of the competitors, and hence,
strategies superior to the competitors can be analysed.
6) Promotion Plans - Role of personal selling, advertising, sales promotions, etc.

II. Financial Feasibility:

Once the business idea is tested as to its marketing feasibility, the next step is financial feasibility. The
entrepreneur after ascertaining the feasibility of a commercial proposition should chalk out a plan estimating
the long and short-term requirements of capital. Financial feasibility considers start-up costs, working capital
requirements, equity requirements, loans, break-even analysis, collateral, credit references, equipment and
building financing. Thus, it involves assessment of the financial requirements, both fixed capital and working
capital. Its aim is to test the financial soundness of the idea selected for analysis. Financial considerations help
the project to evaluate the different measures of commercial profitability and the magnitude of financing
required. It requires the assembly of the market and technical cost estimated into various proforma statements.
The financial considerations include:
➢ Assessment of total cost, initial capital requirements and cash flows relating to the project timings.
➢ A financial analysis showing returns on investments, returns on equity, break-even volume and price
analysis.
➢ Supporting schedules for financial projection, stating the assumption made as to the collection period of
sales, inventory levels, payment period of purchases and expenses, and the element of production cost,
selling, administrative and financial expenses.
➢ The details with regards to sources of fund such as equity shares, preference shares, debentures, long
term loans, bank loans, trade credit and other sources.

III. Technical Feasibility:

It is also known as techno-economic feasibility. In technical feasibility study, one can ascertain whether a
business idea is feasible, whether it can be transformed into a product and also whether a business opportunity
really exists. This study evaluates the choice of technology, production process and the location of business.
In the simplest sense, technical feasibility implies to mean the adequacy of the proposed plant and equipment
to produce the product within the prescribed norms. As regards know-how, it denotes the availability or
otherwise of a fund of knowledge to run the proposed plants and machinery. It should be ensured whether that
know-how is available with the entrepreneur or is to be procured from elsewhere. In the latter case,
arrangement made to procure it should be clearly checked up. If project requires any collaboration, then, the
terms and conditions of the collaboration should also be spelt out comprehensively and carefully. This study
provides an opportunity for a consideration of the effect of various technical alternatives on employment,
ecology, infrastructure demands, capital services, balance of payments and other factors. Technical
considerations include:
➢ A description of the product, including specifications relating to its physical, mechanical and chemical
properties, as well as the uses of the product.
➢ A description of the selected manufacturing process, showing detailed flow charts and presenting the
alternative process which may have been considered and the justification for the adoption of the selected
process.
➢ A determination of the plant size and production schedule, which includes the expected volume for a
given time period on the basis of start-up and technical factors.
➢ Selection of machinery and equipment, including specifications, equipment to be purchased and its
origin, quotations from suppliers, delivery dates, terms of payment and a comparative analysis of
alternatives in terms of cost, reliability, performance and spare parts availability.
➢ An identification of plants location and a design of the plant layout.
➢ A study of the availability of raw materials, terms of payment, sources of supply and continuity of
supply.
➢ An estimate of labour requirements and the supervision required for the manufacture of the product.
➢ A determination of the type and quantity of waste to be disposed of, waste disposal methods, its costs
and the necessary clearance from proper authorities.
➢ A study of availability of servicing facilities like machine shops, electric repair shop, etc.
➢ A determination of availability of other inputs like water, power, transport, communication facilities.
➢ An estimate of the production cost of the product.

IV. Legal Feasibility:

An entrepreneur has to ascertain the legality of his business idea. Hence, he should be aware of the various
laws which are applicable to his business idea. Such laws vary from industry to industry. E.g., If the product
is chemical, then the clearance from the Pollution Control Board, Environment Clearance under Environment
Protection Act etc have to be obtained. Also, in case of foreign technical collaboration, one needs to be aware
of the legal provisions in force from time to time specifying the list of products for which only such
collaboration is allowed under specific terms and conditions. The entrepreneur, therefore, contemplating for
foreign collaboration should check these legal provisions with reference to their projects. Three tasks are to
be performed for successful verification of legal feasibility. They are:
➢ Legal Framework Analysis Applicable on Project.
➢ Evaluating legal readiness of obtaining authority.
➢ In-depth Legal Analysis of the Main Project Issues.
One also needs to take care of certain factors while dealing with Legal Feasibility. These are:
➢ Project Financial Aspects.
➢ Commercial Viability.
➢ Project Bankability.
➢ Land and Existing Asset Usage.
➢ Alternate Ownership Claims on Land.
➢ Other User Rights.
➢ Issues Concerning Employment.
➢ Tax and Accounting Issues.

V. Other Elements:
1) Managerial Feasibility - The various forms of ownership structure have to be evaluated and the
selection made after due care and thought. These are long term critical decisions as they determine the
risk, responsibility and control of the entrepreneur as well as the division of profits. As per Indian law,
there are four main ownership forms of organization: Sole proprietorship, Partnership, Joint stock
company, and Co-operative societies.
2) Organizational Feasibility - This involves assessment of the number and skills of staff required for the
project. For this purpose, an appropriate organisation structure is decided. Then the skills and talents
required to man the structure are determined. It includes considerations such as:
➢ Activity analysis involving anticipated work flow and the activities involved in the project.
➢ Grouping of activities into tasks which employees can perform effectively.
➢ Classification of tasks as the building blocks of the organisation structure.
➢ Determining inter-relationship between different positions to decide the chain of command.
3) Locational Feasibility - The selection of a suitable location is very important for the proper and
profitable functioning of an enterprise. Proper decision as to the location of the plant enables the firm to
operate with maximum efficiency at minimum cost. Shifting of plant from one place to another place
involves huge expenditure. Hence, the entrepreneur must be very careful while selecting the suitable
area and place where the business unit is to be established.

Project Report:
Project report is a written document that summarises a business opportunity and defines how the identified
opportunity is to be seized and exploited. It is a scheme, design, a proposal of something intended or devised.
It helps in identifying and clarifying many of the issues that need to be addressed as an entrepreneurial venture
organized, launched and managed. It acts a blue print and road map for operating the ongoing business. Thus,
a project report is a written document pertaining to any investment proposal. It contains relevant data, on the
basis of which the project has been appraised and found relevant to the entrepreneur. This project report can
be shown to the bankers or other financial institutions to acquire financial assistance. The efficiency of the
project is decided by other organisations and suppliers on the basis of the project report. It is also used by the
entrepreneur to check if he is deviating from what was decided earlier. A project report is prepared by an
expert after detailed study and analysis of the various aspects of a project. It acts as a guide to management,
specially at the initial stage to know whether the technical, commercial, financial and economic conditions
are feasible or not. Thus, a project report should consist of information on economic, technical, financial,
managerial and production aspects.

Preparation of Project Report:

Before the actual preparation of Project Report, the steps an entrepreneur should take are as follows:
1) Choosing an Idea - The idea should not only be good for the market, but also for the enterprise. It
means that the idea selected should be viable, profitable and socially good. The idea chosen is obtained
from various sources like the customers, competitors, distributors, company employees, journals,
magazines and by research and development.
2) Observation - Observations have to be made with regard to the availability of raw material, labour,
machinery, technology, demand in the market, etc.
3) Scanning of Business Environment - The amount or quantity investment required have to be scanned.
The location of the enterprise is also to be taken into consideration. The process includes systematic
surveys and interprets relevant data to identify external opportunities and threats. The background and
skill of the entrepreneur, the extent of marketing, possible chances of producing a substitute, etc., should
be scanned.
4) Preparation of Project Report - Finally, project is to be selected for conducting a detail study, for
preparing a project report.

Contents of Project Report:

1) General Information - A project report must provide information about the details of the industry to
which the project belongs to. It must give information about the past experience, present status, role,
priority, problems and future prospects of the industry.
2) Preliminary Analysis of Alternatives - The report should next present data on the gap between demand
and supply for the outputs which are to be produced, data on the capacity that would to be available
 from the projects are in production or under implementation at the time the report is prepared, a complete
list of all existing plants in the industry, giving their capacity and level of production actually attained,
a list of all projects for which letters of intents/licenses have been issued and a list of pro- posed projects.
All options that are technically feasible should be considered at this preliminary stage. The location of
the project as well as its implication should also be shown. An account of the foreign exchange
requirements should also be taken. The profitability of different options should also be given. The rate
of return on investment should be calculated and presented in the report. Also, the alternative cost
calculations against the returns should be presented.
3) Executive Summary - A project report must state the objectives of the business and the methods
through which the business can attain success. The overall picture of the business with regard to capital,
operations, methods of functioning and execution of the business must be stated in the project report. It
must mention the assumptions and the risks generally involved in the business.
4) Organization Summary - The project report should indicate the organization structure and pattern
proposed for the unit. It must state whether the ownership is based on sole proprietorship, partnership
or joint stock company. It must provide information about the bio data of the promoters including
financial soundness.
5) Project Description - A brief description of the project must be stated and must give details about the
following:
➢ Location of the site.
➢ Raw material requirements.
➢ Target of production.
➢ Area required for the work shed.
➢ Power requirements.
➢ Fuel requirements.
➢ Water requirements.
➢ Employment requirements of skilled and unskilled labour.
➢ Technology selected for the project.
➢ Production process.
➢ Projected production volumes, unit prices.
➢ Pollution treatment plants required.
6) Marketing Plan - The project report must clearly state the total expected demand for the product. It
must state the price at which the product can be sold in the market. It must also mention the strategies
to be employed to capture the market. If any, after sale service is provided that must also be stated in
the project. It must describe the mode of distribution of the product from the production unit to the
market.
7) Capital Structure and Operating Cost - The project report must describe the total capital requirements
of the project. It must state the source of finance, it must also indicate the extent of owners’ funds and
borrowed funds. Working capital requirements must be stated and the source of supply should also be
indicated in the project. Estimate of total project cost, must be broken down into land, construction of
buildings and civil works, plant and machinery, miscellaneous fixed assets, preliminary and preoperative
expenses and working capital.
8) Technical Aspects - Project report provides information about the technology and technical aspects of
a project. It covers information on Technology selected for the project, Production process, capacity of
machinery, pollution control plants etc.
9) Project Implementation - Every proposed business unit must draw a time table for the project. It must
indicate the time within the activities involved in establishing the enterprise can be completed.
Implementation schemes show the timetable envisaged for project preparation and completion.
10) Social Responsibility - The proposed unit draws inputs from the society. Hence its contribution to the
society in the form of employment, income, exports and infrastructure. The output of the business must
be indicated in the project report.
11) Financial Analysis - The purpose of this analysis is to present some measures to assess the financial
viability of the project. A proforma Balance Sheet for the project data should be presented. Depreciation
should be allowed for, on the basis specified by the Bureau of Public Enterprises. Foreign exchange
requirements should be cleared by the Department of Economic Affairs. The report should take into
account income-tax rebates for priority industries, incentives and subsidy for backward areas,
accelerated depreciation, etc. The report most also analyse the sensitivity of the rate of return to changes
in the level and pattern of product prices
12) Economic Analysis - Social profitability analysis needs some adjustment in the data relating to the costs
and returns to the enterprise. The enter- prise should try to assess the impact of its operations on foreign
trade. Indirect costs and benefits should also be included in the report. If they cannot be quantified, they
should be analysed and their importance emphasised.
13) Miscellaneous Aspects - Other aspects relevant to the enterprise, which is collected, should also be
included. For e.g., cash flow statements, methods of accounting, use of computers or any new
technology used, must be specified.

Project Appraisal:
Project appraisal is the structured process of assessing the viability of a project or proposal. It involves the
conduct of a costs and benefits analysis of different aspects of proposed project with an objective to adjudge
its viability. It helps in selecting the best project among available alternative projects. Financial institutions
appraise projects before lending finance to them so as to assess their credit worthiness. For appraising a
project, its economic, financial, technical, market, managerial and social aspects are analysed. Thus, it is a
process of calculating the feasibility of the project before committing resources to it.

Objectives of Project Appraisal:

➢ To make a systematic and comprehensive review of various aspects of a project and determine if it will
meet the objectives of the company.
➢ To extract relevant information for determining the success or failure of a project.
➢ To apply standard yardsticks for determining the rate of success or failure of the project.
➢ To determine the expected costs & benefits of the project.
➢ To arrive at specific conclusions regarding the project.

Methods of Project Appraisal:

1) Economic Analysis - Under economic analysis, the project aspects highlighted include requirements
for raw material, level of capacity utilization, anticipated sales, anticipated expenses and the probable
profits. It is said that a business should have always a volume of profit clearly in view which will govern
other economic variables like sales, purchases, expenses and alike. It will have to calculate how much
sales would be necessary to earn the targeted profit. Undoubtedly, demand for the product will be
estimated for anticipating sales volume. Therefore, demand for the product needs to be carefully spelled
out as it is, to a great extent, deciding factor of feasibility of the project concern. In addition to above,
the location of the enterprise decided after considering a gamut of points also needs to be mentioned in
the project. The Government policies in this regard should be taken into consideration. The Government
 offers specific incentives and concessions for setting up industries in notified backward areas. Therefore,
it has to be ascertained whether the proposed enterprise comes under this category or not and whether
the Government has already decided any specific location for this kind of enterprise.

2) Financial Analysis - Finance is one of the most important pre-requisites to establish an enterprise. It is
finance only that facilitates an entrepreneur to bring together the labour of one, machine of another and
raw material of yet another to combine them to produce goods. In order to adjudge the financial viability
of the project, the following aspects need to be carefully analysed:
➢ Assessment of Fixed Capital Requirements - Fixed capital, normally called ‘fixed assets’, are
those tangible and material facilities which purchased once are used again and again. Land and
buildings, plants and machinery, and equipment’s are the familiar examples of fixed assets/fixed
capital. The requirement for fixed assets/capital will vary from enterprise to enterprise depending
upon the type of operation, scale of operation and time when the investment is made. But, while
assessing the fixed capital requirements, all items relating to the asset like the cost of the asset,
architect and engineer’s fees, electrification and installation charges, depreciation, pre-operation
expenses of trial runs, etc., should be duly taken into consideration. Similarly, if any expense is to
be incurred in remodelling, repair and additions of buildings should also be highlighted in the
project report.
➢ Assessment of Working Capital Requirements - In accounting, working capital means excess
of current assets over current liabilities. Generally, 2:1 is considered as the optimum current ratio.
In short, working capital is that amount of funds which is needed in day today’s business
operations. In other words, it is like circulating money changing from cash to inventories and from
inventories to receivables and again converted into cash. This circle goes on and on. Thus, working
capital serves as a lubricant for any enterprise, be it large or small. Therefore, the requirements of
working capital should be clearly provided for. Inadequacy of working capital may not only
adversely affect the operation of the enterprise but also bring the enterprise to a grinding halt.
Hence, this implies that Financial Planning is required before selecting a project. Financial planning
means to prepare the financial plan. A financial plan is also called capital plan. A financial plan is an
estimate of the total capital requirements of the company. It selects the most economical sources of
finance. It also tells us how to use this finance profitably. Financial plan gives a total picture of the future
financial activities of the company.
Financial Resources (FR) + Financial Techniques (FT) = Financial Planning

3) Market Analysis - Before the production actually starts, the entrepreneur needs to anticipate the
possible market for the product. He/she has to anticipate who will be the possible customers for his
product and where and when his product will be sold. This is because production has no value for the
producer unless it is sold. In fact, the potential of the market constitutes the determinant of probable
rewards from entrepreneurial career. Thus, knowing the anticipated market for the product to be
produced becomes an important element in every business plan. Anticipating the potential market is
named as ‘demand forecasting’ in Managerial Economics. This analysis may also include test marketing.
The test marketing is a tool used by the companies to check the viability of their new product or a
marketing campaign before it is being launched in the market on a large scale. The market test is
generally carried out to ascertain the probable market success in terms of new product’s performance,
the level of acceptance of the product, customer satisfaction, and the efficiency of the marketing
campaign.

4) Technical Feasibility -While making project appraisal, the technical feasibility of the project also needs
to be taken into consideration. In the simplest sense, technical feasibility implies to mean the adequacy
 of the proposed plant and equipment to produce the product within the prescribed norms. As regards
know-how, it denotes the availability or otherwise of a fund of knowledge to run the proposed plants
and machinery. It should be ensured whether that know-how is available with the entrepreneur or is to
be procured from elsewhere. In the latter case, arrangement made to procure it should be clearly checked
up. If project requires any collaboration, then, the terms and conditions of the collaboration should also
be spelt out comprehensively and carefully. In case of foreign technical collaboration, one needs to be
aware of the legal provisions in force from time to time specifying the list of products for which only
such collaboration is allowed under specific terms and conditions. The entrepreneur, therefore,
contemplating for foreign collaboration should check these legal provisions with reference to their
projects. While assessing the technical feasibility of the project, the following inputs covered in the
project should also be taken into consideration:
➢ Availability of land and site.
➢ Availability of other inputs like water, power, transport, communication facilities.
➢ Availability of servicing facilities like machine shops, electric repair shop, etc.
➢ Coping with anti-pollution law.
➢ Availability of work force as per required skill and arrangements proposed for training-in-plant
and outside.
➢ Availability of required raw material as per quantity and quality.

5) Management Competence - Management ability or competence plays an important role in making an

enterprise a success or otherwise. Strictly speaking, in the absence of managerial competence, the
projects which are otherwise feasible may fail. On the contrary, even a poor project may become a
successful one with good managerial ability. Hence, while doing project appraisal, the managerial
competence or talent of the promoter should be taken into consideration. Research studies report that
most of the enterprises fall sick because of lack of managerial competence or mismanagement. This is
more so in case of small-scale enterprises where the proprietor is all in all, i.e., owner as well as manager.
Due to his one-man show, he may be jack of all but master of none.

Tools of Project Appraisal:

1) Payback Period - One of the most commonly used techniques for evaluating investment proposals is
the cash pay back or payback period. It attempts to calculate the period known as payback period known
as payback period required to recover the initial investment out of cash flow after tax. This method is
relatively easy since the cash flow doesn't need to be discounted. Its major weakness is that it ignores
the cash inflows after the payback period, and does not consider the timing of cash flows. Also, this
method overlooks time value of money. This method, sometimes, is also called as the pay-out or pay off
or replacement period method.
Payback Period = Original investment / CFAT p.a.
CFAT - Cash Flow After Tax

2) Return on Investment (ROI) - Return on investment (ROI) is defined as the ratio of profit (net of
depreciation and taxes) to initial capital outlay. The figure is compared to the cost of capital. If the
project yields the desired ROI, it will be accepted and vice versa. It is also known as Average or
Accounting Rate of Return (ARR).
ROI = (Annual average net earnings / Average investment) X 100
Average investment = (Initial investment – Scrap value)/2
3) Discounted Payback Period - The discounted payback period is a capital budgeting procedure used to
determine the profitability of a project. A discounted payback period gives the number of years it takes
to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing
the time value of money. The metric is used to evaluate the feasibility and profitability of a given project.
Discounted payback period = Initial investment / Discounted CFAT p.a.

4) Net Present Value (NPV) - Net present value method (also known as discounted cash flow method) is
a popular capital budgeting technique that takes into account the time value of money. It uses net present
value of the investment project as the base to accept or reject a proposed investment in projects like
purchase of new equipment, purchase of inventory, expansion or addition of existing plant assets and
the installation of new plants etc. In this method, the discount rate should be equal to the company’s
weighted average cost of capital. Net present value is the difference between the present value of cash
inflows and the present value of cash outflows that occur as a result of undertaking an investment project.
It may be positive, zero or negative. These three possibilities of net present value are briefly explained
below:
➢ Positive NPV - If present value of cash inflows is greater than the present value of the cash
outflows, the net present value is said to be positive and the investment proposal is considered to
be acceptable.
➢ Zero NPV - If present value of cash inflow is equal to present value of cash outflow, the net
present value is said to be zero and the investment proposal is considered to be acceptable.
➢ Negative NPV - If present value of cash inflow is less than present value of cash outflow, the net
present value is said to be negative and the investment proposal is rejected.
Advantages of this method are that it reflects the time value of money and maximizes shareholder's
wealth. Its weakness is that its rankings depend on the cost of capital; present value will decline as the
discount rate increases.

5) Profitability Index (PI) - This method is a variant of the NPV method. It is also known as benefit cost
ratio or present value index. It is also based on the basic concept of discounting the future cash flows
and is ascertained by comparing the present value of cash inflows with the present value of cash
outflows.
PI = Present value of cash inflows / Present value of cash outflows
Accept or Reject Criterion:
➢ Accept the project if the PI is more than 1.
➢ Reject the project if the PI is less than 1.
The major disadvantage in this method is that it requires cost of capital to calculate and it cannot be used
when there are unequal cash flows. The advantage of this method is that it considers all cash flows of
the project.

6) Internal Rate of Return (IRR) - IRR is the rate of return at which the sum of discounted cash inflows
equals to the sum of discounted cash outflows. In other words, it is the rate at which the NPV of the
investment is zero. It is called as Internal Rate of Return because it mainly depends on outlay and
proceeds associated with the project and not on any rate determined outside the investment. This method
is also known as marginal rate of return method.
IRR = Lower rate + [(Positive NPV / Difference in calculated present values) X Difference in rate]
The major weakness is that when evaluating mutually exclusive projects, use of Internal rate of return
may lead to selecting a project that does not maximize the shareholders' wealth.
Project Proposal:
A project proposal is a written document outlining everything stakeholders should know about a project,
including the timeline, budget, objectives, and goals. Project proposals are used to tell the story of why a
project idea should be executed and supported. They are typically created for the purpose of securing funding
or buy-in, winning new clients, extending an existing client’s contract or convincing someone to allocate
resources to a new initiative. It should establish what the project is, what you’re aiming to achieve with it,
how you plan on getting there and why it’s worthwhile. As the project's foundation, project proposals are vital
for creating clarity around the goals. They define the priorities and requirements of a project before and when
a stakeholder gets involved.

Types of Project Proposal:

1) Solicited Project Proposal - A solicited project proposal is sent in response to a Request for Proposal
(RFP). An RFP is a document that gets sent to a qualified organization. It announces a project, describes
it and asks for a bid. RFPs are competitive and often put businesses up against top candidates. They
come with highly specific directions and require thorough research and sharp persuasive writing skills.
2) Unsolicited Project Proposal - An unsolicited project proposal is just that — unsolicited. It’s a bit like
the cold call version of a proposal. In this situation, no one has asked for your proposal and there is no
RFP involved. However, under the right circumstance, a well-executed unsolicited project proposal can
be a game-changer. A possible downside to unsolicited project proposals is not having clear knowledge
of a stakeholder’s needs. Maybe you've identified a problem and the solution to it. While the opportunity
presents itself, you need resources to bring your idea to life. This is when you might turn to an unsolicited
project proposal.
3) Informal Project Proposal - In the case of an informal project proposal, a client may reach out with an
informal request for a project proposal to be sent to them. Once completed, you can respond with your
pitch. However, because this isn’t an official RFP, the rules aren’t as well established. This means that
this type of proposal most likely isn’t going to come attached with much context. The writer will need
to do a lot of solo research.
4) Renewal Project Proposal - A renewal is used when a project has run its course and needs to start
again. The research that goes into this type of proposal typically stems from the success data of the last
project. In this project proposal format, the goal is to highlight ideal past results produced via the project.
If the results are of worth, you should work to persuade the backer of the project of your capabilities to
produce similar or even better future results.
5) Continuation Project Proposal - Continuations are usually done on a calendar basis when a project is
entering a new phase or new resources are needed to ensure the project can continue. These proposals
don’t require as much work as the project has already been approved and is up and running.
6) Supplemental Project Proposal - Along the lines of a continuation proposal, a supplemental proposal
is needed in situations where you may have gone over budget or need more resources than you originally
requested. Essentially, the project scope has grown beyond initial expectations. The goal of this proposal
is to persuade the stakeholders to contribute more by proving the value of adding resources.
 Model Project Proposals of Entrepreneurs

Project Proposal Example 1 - Social Media Marketing

Executive Summary:
Romeo Cafe is one of the best cafes in Manhattan. However, they currently don’t have a social media presence,
making it difficult for them to reach new people, specifically millennials.
As discussed in our last email, the team at Magic Inc. would be creating and handling their Instagram and
Twitter accounts in order to expand their reach. We’d be posting artistic posts related to the items on their
menu, customer testimonials, reels from their cafe, and more.
We aim to help Romeo Cafe reach 8k organic followers within the next 8 months, and we anticipate that this
would help increase the cafe’s revenues by 40% by the next 12 months.
Project Background:
Magic Inc. is a social media marketing agency located in San Diego. We have been working with restaurants,
fashion brands, cafes, retailers, hotels for the last 7 years. Our main goal is to help the clients adapt to the
modern age and grow their business with the help of the latest social marketing trends.
We believe that social media is something that can take your business to new heights, and it is that one thing
every business should try its hands at. This philosophy certainly makes us an excellent fit for your cafe.
Solutions and Approach:
Our plan is to create and manage your Instagram and Twitter accounts. These social media accounts would
help you reach the millennials, as these are the platforms where they’re hanging out the most. Here’s
everything we’d be doing as a part of your social media marketing:
➢ Post artistic photos of items in your menu, clicked by one of our professional photographers.
➢ Engage in conversations related to your niche on Twitter.
➢ Post funny and original memes related to food, cafes, and everything in between.
➢ Post Instagram reels shot at your cafe.
➢ Get influencers to promote your cafe on Instagram.
➢ Create viral social media campaigns.
Financials:
We will charge $4000 every month to manage your Instagram accounts. This cost includes the following:
➢ Professionally clicked photographs.
➢ Witty copies for social media.
➢ Videos that showcase the essence of your cafe.
➢ Beautifully designed posts.
➢ Influencer marketing.
➢ Responding to queries that arrive on social media.
➢ Every other aspect of your social media accounts.
Additional Documents:
Magic Inc. has attached the following documents:
➢ A list of our employees who’ll be working on the social media accounts.
➢ A page of testimonials from other clients who had used our services.
Conclusion:
In a nutshell, Magic Inc. can help Romeo Cafe expand its reach by creating social media accounts and
managing them effectively and efficiently. Magic Inc. aims to help the cafe reach 8000 organic followers
within the next 8 months. We anticipate that this would increase the cafe’s revenues by 30% by the next 12
months.

Project Proposal Example 2 - Freelance Writing

Executive Summary:
'The Destination' is one of the best travel agencies in Brooklyn. However, their blog is not getting enough
readers, and they’re getting very low email open rates due to a lack of quality content.
As discussed in our last email, I, Nicholas, would provide you with consistent, high-quality blog posts every
week according to a pre-decided content calendar. I’d also be writing persuasive content and CTAs for your
email newsletters, helping you get better email open rates.
Project Background:
I’ve been working as a freelance content writer for the last 12 years, and I’ve helped several other clients like
you. I strongly believe that great writing must come from deep within, and every writer should have the ability
to connect with their reader. This philosophy of mine helps me write exceptionally, which is why I think I’d
be a great fit for your organization.
Solutions and Approach:
The following solutions are for 3 months. Once we’ve established a working relationship, we can discuss the
rest later on. Here’s what I plan to do after you accept the proposal:
➢ Write and publish blog posts on topics related to traveling and what that customers are searching for on
Google. The goal of these blog posts will be to achieve a good ranking on the search engine.
➢ Improving your SEO efforts and ensuring that the blogs revolve around the key questions of your
customers.
➢ The frequency of the blogs would be twice a week, which could be modified in the future, depending
on your requirements.
➢ Creating content for your email newsletters and sharing the blogs and other relevant company
information within them. (Frequency: Twice a Month)
Financials:
The following estimate is based on a 3-month plan, as outlined earlier in this proposal.
Description Quantity Price per Post/Newsletter Total Cost for 3 Months
Blog Posts 2 posts a week $120 $2880
Content for Email Newsletters Twice a week $80 $1920
Total Costs $4800
Additional Documents:
I have attached the following documents:
➢ Some samples of my writing.
➢ A page of testimonials from other clients who had used my services.
Conclusion:
In a nutshell, I can help ‘The Destination’ get more visitors to their website by writing quality blog posts and
email newsletters. As a result, I aim to increase the travel agency’s leads by 15% in the next three months.

Project Proposal Example 3 - Web Design

Executive Summary:
ZigZag & Co. is planning to launch a robust mobile app for food delivery in the next 6 months. However, they
currently don’t have a specific website for the same.
As discussed in our last phone call, the team at Crazy Hazy Inc. would be creating a website for the new app.
Their website would feature details on how to download the app, the company’s journey, testimonials from
their customer, a help centre, and most importantly, a blog.
We anticipate that this would help increase the downloads by 30% within the next 10 months of launch.
Project Background:
Crazy Hazy Inc. is a digital marketing agency located in Los Angeles. They have been working with different
start-ups, mostly in the technical niche, for the last 4 years. Their main goal is to help the startups achieve
their dreams and provide them with the best services at an affordable price. This vision certainly makes us an
excellent fit for your start-up.
Solutions and Approach:
Our plan is to create a minimal website that suits the look and feel of the app. The website would go live
within two months after you accept our project proposal. The main goal of the website is to increase brand
awareness about your app. The website will have the following components:
➢ A fun yet informative blog where we’d be posting a minimum of 4 blogs every week. The niche of the
blogs would be food, cooking, and other similar things.
➢ An ‘Our Journey’ page that showcases everything people need to know about the app and the journey
of its founders.
➢ A help centre and a page that features details on how to download the app.
➢ A customer testimonials page that features all the good things the customers have said about your app,
along with their photos.
➢ A contact page with your company’s address, contact number, and a signup form.
Pricing:
We’ll be charging $3000 to build this website. The cost involves the following components:
➢ Two years’ registration of the domain with the name of your app.
➢ Hosting space on our servers.
➢ The entire design and creation of the website.
➢ Troubleshooting assistance even after delivery (Free for 4 months and then chargeable).
Additional Documents:
Crazy Hazy Inc. has attached the following documents:
➢ A list of our employees who’ll be working with you and creating your website.
➢ A page of testimonials from other clients who had used our services.
Conclusion:
Crazy Hazy Inc. can help your company, ZigZag & Co., spread awareness about its brand by creating a robust
and user-friendly website for the same. We anticipate that this would help increase the downloads by 30%
within the next 10 months of launch.
UNIT IV
 ENTREPRENEURIAL DEVELOPMENT PROGRAMMES (EDPs)

Meaning:
Entrepreneurial Development Programme (EDP) refers to a programme, which is designed to help a person
in strengthening his entrepreneurial motive and in acquiring skills and capabilities required for performing his
role effectively. Thus, it aims at developing entrepreneurial motives and skills and thereby it helps in playing
entrepreneurial role effectively.

Definition:
According to N.P. Singh, Entrepreneurship Development Programme is "a programme designed to help an
individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for
playing his entrepreneurial role effectively."

Entrepreneurship Development (ED):

Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs through
several classroom coaching and programs, and training. The main point of the development process is to
strengthen and increase the number of entrepreneurs.

Need for EDPs:

1) Creation of Employment Opportunities and Alleviation of Poverty: Unemployment is one of the
most important problems confronting developing and underdevelopment countries, EDP’s enable
prospective entrepreneurs in the setting up of their own units, thus enabling them to get self-
employment. With the setting up of more and more units by entrepreneurs, both on small and large scale,
numerous job opportunities are created for the others. Entrepreneur in this way get an opportunity to
lead an independent and honourable life and at the same time they enable others in getting gainful
employment. Several schemes like Nehru Rozgar Yojna, National Rural Employment Programme
(NREP), Integrated Rural Development Programme (IRDP) etc. have been initiated by the government,
of India in this direction. The thrust of all these schemes is to eliminate poverty and generate gainful
employment opportunities for the unemployed. Thus, entrepreneur can play an effective role in reducing
the problem of unemployment.
2) Capital Formation: It is not possible to set up an enterprise without adequate funds. Entrepreneur as
an organizer of factors of production employs his own as well as borrowed resources for the setting up
of his enterprise. Entrepreneur mobilizes idle savings of the public and put them to productive use. In
this way he helps in capital formation, which is so essential for the industrial and economic development
of a country. Various development banks like ICICI, IFCI, IDBI; SFCs, SIDCs take initiative in
promoting entrepreneurship through assistance to various agencies involved in EDP and by providing
financial assistance to new entrepreneurs.
3) Balanced Regional Development: Small scale units can be set up in industrially backward and remote
areas with limited financial resources. Successful EDP’s assist in accelerating the pace of
industrialization in the backward areas and reduce the concentration of economic power in the hands of
a few, Entrepreneurs feel like taking advantage of the various concessions and subsidies offered by the
state and central government. Success story of entrepreneurs set right example for others to follow and
 this accelerates the pace of industrialization in the backward areas. Setting up of more units leads to
more development of backward areas and balanced regional development.
4) Use of Local Resources: In the absence of any initiative local resources are likely to remain unutilized.
Proper use of these resources can result in the progress or development of the area and that too at lower
cost. Alert entrepreneurs seize the opportunity and exploit it in the best interests of the area and industry.
Effective EDPs can help in the proper use of local resources by providing guidance, assistance, education
and training to the prospective entrepreneurs.
5) Improvement in Per Capita Income: Entrepreneurs are always on the lookout for opportunities. They
explore and exploit the opportunities. Entrepreneurs take lead in organizing various factors of production
by putting them into productive use through the setting up of enterprises. More enterprises will lead to
more production, employment and generation of wealth in the form of goods and services. It will result
in the increase in the overall productivity and per capita income in the country. EDPs play a positive
role in the setting of more units and thus help in generation of more employment and income.
6) Improvement in the Standard of Living: Entrepreneurs by adopting latest innovations help in the
production of wide variety of goods & services. By making efficient use of the resources, they start
producing more of better quality and that too at lower costs. This enable them to ensure easy availability
of better-quality products at lower prices to the consumers which result in the improvement in the
standard of living of the people. EDPs provide the necessary support to entrepreneurs by educating them
about the latest innovations and market trends.
7) Economic Independence: Entrepreneurs enable a country to produce wide variety of better-quality
goods & services and that too at competitive prices. They develop substitutes of the goods being
imported and thus prevent overdependence on foreign countries and at the same time help in the saving
of precious foreign exchange. Through sale of their surplus products in foreign market entrepreneurs
enable a country to earn foreign exchange, which is so essential for meeting developmental needs of the
economy. Export promotion and import substitution thus help in promoting economic independence of
the economy.
8) Preventing Industrial Slums: Industrially developed areas are faced with problem of industrial slums,
which result in over burdening of civic amenities and adverse impact on the health of people. Dispersal
of industries can help in the overcoming of this grave problem. EDPs can help in preventing spread of
industrial slums by providing various incentives, subsidies and infrastructural support to entrepreneurs
for setting up their enterprises in industrially backward areas. This will also help in reducing pollution
and overtaxing of civic amenities.
9) Reducing Social Tension: Unemployment amongst the young and educated people is emerging as the
major cause of social unrest. People are bound to feel frustrated if they fail to get gainful employment
after completion of their education. EDPs can help in channelizing the talent of this section of society
in the right direction by providing proper guidance, training and assistance for setting up their
enterprises. This results in generation of self-employment and prevention of social tension, unrest etc.
10) Facilitating Overall Development: An entrepreneur acts as a catalytic agent for change which results
in chain reaction. With the setting up of an enterprise the process of industrialization is set in motion.
This unit will generate demand for various types of inputs required by it and there will be so many other
units which will require the output of this unit. This leads to overall development of an area due to
increase in demand and setting up of more and more units there. Moreover, success of one entrepreneur
sets the right type of example for others to follow. Entrepreneurs, thus, create an environment of
enthusiasm and convey a sense of purpose. This gives future impetus to the overall development of that
area.
11) Helps in searching and exploiting opportunities: There are many opportunities for entrepreneurs in
various fields like electronics, medicine, engineering, agriculture, food technology and packing,
 communication, etc. EDPs help in searching such opportunities and provide necessary information,
guidance and assistance in the search and exploiting these opportunities.
12) Enhancing managerial abilities: Entrepreneur development programmes help the entrepreneurs to
enhance their organizing and managerial abilities so that they can run their enterprise efficiently and
successfully. This is done through organizing educational, management, training and orientation
programmes. Various specialized agencies like National Institute for Entrepreneurship and Small
Business Development (NIESBUD), New Delhi and Entrepreneurship Development Institute of India
(EDII), Ahmedabad are engaged in entrepreneurship programmes.

Major Objectives of EDPs:

1) To give knowledge about government plans and programs: An entrepreneurial development
program provides knowledge about government plans and programs to new investors. It gives ways to
know how to use the government schemes properly before launching a company or business. This is
followed by acquainting them with procedure for approaching them, applying and obtaining support
from them.
2) To provide training to operate a business: With entrepreneurial development programs, entrepreneurs
can get ideas on how to operate their business in markets easily. Moreover, they enable an entrepreneur
to overcome challenges and establish a balance between various components of a business.
3) To encourage self-employment tendencies: The program will induce people to self-employment, so
that they can become a master in their business. Self-employment provides employment to various
persons that help boost the economy.
4) To develop managerial skills: Entrepreneurs require managerial skills when they want to launch a
company. A development program will teach them how to improve their skills efficiently. Furthermore,
it provides ways to plan the operations in markets which help to attain top levels. The program will
guide new entrepreneurs to manage everything in a business without any difficulties.
5) To help know the availability of resources: Entrepreneurs should know the availability of resources
because they contribute more to business growth in markets. Having proper knowledge about resources
lets an entrepreneur allocate them correctly for a business that helps obtain optimal results.
6) To help understand the business environment and market: Before starting a company, entrepreneurs
should understand the business environment and market. This will help increase the business growth,
which gives methods to reach next levels. Also, an entrepreneur can implement the best strategies based
on the market and business environment. Such types of programmes give a broader view about the
business to the interested persons. These programmes also aim at providing general knowledge of
entrepreneurship such as factors affecting small-scale industries, the role of entrepreneurs in economic
development, entrepreneurial behaviour and the facilities available for establishing small-scale
enterprises.
7) To create awareness about marketing: Marketing is important for any company to generate high
conversion rates. A development company allows entrepreneurs to know more about marketing plans
including networking events in detail. They will help connect with customers quickly and help establish
a brand or service.
8) To help know business opportunities in different sectors: Entrepreneurs should know the business
opportunities in different sectors when they want to launch a new company. A development program
provides ways to gather more details through networking events or other channels. It allows
entrepreneurs to start a company or business in a particular sector.
9) To promote small and medium industries: A development program is suitable for those who want to
start micro small and medium enterprises with innovative ideas. It even shows methods to promote them
through various ways that help accomplish goals with optimal results.
10) To make successful entrepreneurship: The primary objective of a development program is to make
successful entrepreneurship in markets. It provides guidelines on various things such as funding,
marketing, business plan, growth opportunities, etc.
11) To help know the uncertainties and problems of a business: Entrepreneurs should know the
uncertainties and problems of a business. A development program will help understand them with more
attention.
12) To develop the Entrepreneurial Motivation: The training inputs under this aim at inducing and
increasing the need for achievement among the participants. Efforts are made to inject confidence and
positive attitude behaviour among the participants towards business. Motivation may be of any kind
such as internal or external, financial or non-financial, etc. It is an activation and direction of energy. It
ultimately tries to make the participants to start their own business after the completion to development
programme.
13) To help select project: One of the major problems for an entrepreneur is to take decision regarding
selection of a product or project. This decision needs to be taken very carefully because all the future
efforts are related with it. EDP helps and guides the entrepreneurs for solution of the problem for
selection of the project or product.
14) To help formulate project: Project report is a key area for every entrepreneur. This plays a significant
role at the initial stage of the project, EDP also contributes in understanding the process and procedure
to formulate a project.
15) To give exposure to project feasibility study: Under this head the programmes provide guidelines for
the effective analysis of feasibility or viability of a particular project in relation to marketing,
organisation, technical, financial and social aspect. This knowledge helps the entrepreneurs in future for
feasibility study of their project.
16) Other Objectives:
➢ To make people learn compliance with law.
➢ To acquaint and appreciate the needed social responsibility / entrepreneurial discipline.
➢ To identify and train potential entrepreneur.
➢ To conduct research and study on the effectiveness of the various programmes, schemes, market
potential of various business opportunities, etc.

Phases of EDPs:
An Entrepreneurship Development Programme involves 3 phases. They are:
(i) Pre-training Phase.
(ii) Training Phase.
(iii) Post-training or Follow-up Phase.

(i) Pre-training Phase:

The success of EDP depends on the training and promotional ground work carried out by the training
organisation. Various activities undertaken by an organisation are:
(a) Designing of Course Curriculum - At the time of designing innovative course curriculum, utmost care
is taken to ensure that it must meet the requirements of the programme. The main thrust is on the
following subjects:
➢ Introduction to entrepreneurship - An attempt is made to generate knowledge about
entrepreneurship knowledge is imported about various factors affecting small scale business, the
role of entrepreneurs in economic development, entrepreneurial behaviour and the facilities
available for setting up enterprises.
 ➢ Motivation training - It is an attempt made to increase the need of achievement and confidence
amongst the participants which helps the individual to build right attitude and behaviour towards
the business. An earnest attempt is made for prompting and preparing entrepreneurs for starting
their own enterprises.
➢ Management and technical skills - The basic aim of this module is to impart management and
technical-know-how required by the participants to operate their business efficiently and
effectively. The knowledge would be regarding functional areas like production, marketing,
finance, etc.
➢ Support System and Procedure - Entrepreneurs about be informed about the support available
from various agencies and institutions for setting up and running of enterprises. They are to be
made aware about the procedure of applying and obtaining assistance from the institutes.
➢ Fundamentals of project feasibility study - The participants are provided guidelines on the
effective analysis of viability or feasibility of the project in view of marketing organisation,
technical financial and social aspects. Knowledge is provided for preparing project and feasibility
report.
➢ Plant visit - To know about the real-life situations in business, plant visits are arranged. Such trips
provide participants with opportunities to learn about entrepreneur’s behaviour, personality,
thoughts and aspirations.
(b) Selection of faculty or resource persons - The success of EDP depends upon the calibre of the faculty
or resource persons. The identification and finalisation of terms and conditions with the faculty thus
becomes very important for the conduct of EDP. Expert faculty can be invited from various colleges,
universities, consultancy firms, banks, financial institutions and firms engaged in R&D.
(c) Insertion of Advertisement - Information regarding forthcoming EDPs along with relevant details is
flashed through various Medias of advertisement. Normally advertisement is given in the local
newspaper to attract the local talents. It can also be through Medias like press releases, handbills,
meetings with trade unions, etc. An earnest effort is made to attract maximum number of prospective
entrepreneurs for EDPs.
(d) Selection of Potential Entrepreneurs - For the success an EDP it is essential that only those
participants take part who really have qualities to be potential entrepreneurs. The selection of
prospective entrepreneurs can be made on following basis:
➢ On the basis of information available from application form.
➢ On the basis of written examination to check the aptitude.
➢ On the basis of personal interview of the candidate.
Utmost care should be exercised in selecting entrepreneurs for EDPs. It should be designed in such a
manner that it restricts admission to EDP to those who are supposed to possess the requisite traits or
qualities of potential entrepreneurs. Failure to make proper identification and selection of potential
entrepreneur will result in wastage in time, effort and money on the organising and conduct of EDP.

(ii) Training Phase:

The main aim of training programme is to develop motivation and requisite skills amongst the potential
entrepreneurs. Both theoretical and practical knowledge is imported to the trainees. The basic purpose
of training is to develop, ‘Need for achievement’ amongst the trainees. Entrepreneurial training can be
imparted by the following methods:
(a) Individual Training - A single individual is selected for training under this method. This method of
training is most suited where a complicated skill is to be taught to an individual
(b) Group Training - This method is more suitable for a group of individuals with a similar type of work
and where similar general instructions are to be given to all.
(c) Lecture Training - Here the instructor communicates in theory the practice to be followed by the
trainees. Whatever are the queries, clarifications or doubts of the trainees, these are cleared on the spot.
(d) Written Instruction - This method aims at providing written material for future reference by the
learners. This method is generally adopted where a standardised production system is followed.
(e) Demonstration - This method aims at providing practical exposure to the trainees by the trainer for
better understanding. Trainer while giving demonstration explains at length minute details of the
performance of the work.
(f) Conference - Here experts in different fields share their ideas aimed at providing knowledge to trainees
for improving their effectiveness.
(g) Meetings - This method aims at providing opportunity to the trainees to discuss various problems
confronting them. It also enables them to exchange ideas and views on various issues and finally arrive
at firm conclusions based on discussion.

(iii) Post Training or Follow up Phase:

EDPs aims at developing the right type of calibre and motivation amongst the potential entrepreneurs
so as to enable them to set up their own enterprises. The success or failure of EDPs depends upon to the
extent to which the objectives of EDPs are perfect and how far it has been achieved. Through follow up
we can know about our past performance, weakness, if any, and draw up plans for removing these
bottlenecks in future. Appraisal can also help us in knowing as to what extent entrepreneurs have
selected the projects which suit their calibre and background and provide suitable assistance to those
who failed to identify the right type of project or are facing certain other problems. This main aim of
this follow-up exercise is to make EDPs all the more useful and effective for promoting entrepreneurial
talents. Generally, follow-up action meetings are conducted after every three years of training
completion and the tools used for the follow-up are:
➢ Postal questionnaires.
➢ Telephonic follow-up.
➢ Individual contact by the trainer.
➢ Team meetings.

Role of EDPs:
All Entrepreneurship Development Programmes primarily play four roles to help an individual to become an
entrepreneur. They are:
1) Stimulatory Role - It aims at influencing people in large number to be entrepreneurs. This includes:
➢ Developing managerial, technical, financial, and marketing skills.
➢ Inculcating personality and social traits.
➢ Promotes and reforms entrepreneurial behaviour and values.
➢ Identifying a potential entrepreneur applying scientific methods.
➢ Motivational training and building a proper attitude towards business and life.
➢ Strengthening the motive of a person and giving recognition.
➢ The valuable know-how of the local products and the processes help in the selection of products,
preparation of project reports.
2) Supportive Role - It helps in the following ways:
➢ Registration of the business.
➢ Procurement of fund.
➢ Incubation support.
➢ Team building and team development support.
➢ Mentorship and guidance from industry experts.
➢ Arrangement of water, land, power, shed, etc.
➢ Support in the purchase of appropriate and adequate machinery and equipment.
➢ Supply of raw materials and other necessary common facilities.
➢ Providing tax relief, subsidy and other financial assistance and aids.
➢ Guidance in product marketing.
➢ Support for management consultancy.
3) Sustaining Role - It aims at providing an effective safeguard to businesses to sustain against the cut-
throat market competition. This includes:
➢ Help in modernization, expansion, and diversification.
➢ Additional financing for further development.
➢ Global Networking Opportunities.
➢ Creating new marketing processes.
➢ Helping to access to improved services and facility centres.
➢ Deferring interest payment.
4) Socio-economic Role - It aims at upgrading the socio-economic status of the public and includes:
➢ Identifying and applying entrepreneurial qualities in practicality.
➢ Creating employment opportunities in micro, small, and medium industries on an immediate basis.
➢ Arresting concentration of industries by supporting regional development in a balanced manner.
➢ Focusing on the equal distribution of income and wealth of the nation by channelizing the latent
resources for building an enterprise.

Achievements of EDPs:
The speed at which industrialization has taken place in recent years is due to the major role played by EDPs.
Following are the major achievements of EDPs:
1) EDPs played an important role in establishment, development and expansion of the practice-oriented
development programme In India almost all the training programmes conducted are organized and
developed under EDPs. 686 organizations are engaged in organizing entrepreneurship development.
2) EDPs have also developed and established various support systems necessary for the entrepreneurs.
They strengthen and coordinate these support systems.
3) EDPs have not only created a background for industrialization but have also given momentum to it.
4) These programmes have also contributed a lot to solve the problem of unemployment. EDPs have helped
to a great extent in this direction by starting self-employment programmes and giving momentum to the
speed of industrialization.
5) Another achievement of these programmes is establishment and development of new enterprise which
is a very difficult task in this competitive era. EDPs have provided various inputs to establish new
enterprises and also provided various entrepreneurial skills and qualities. Around 30% entrepreneurship
development trained entrepreneurs put up their enterprise.
6) Entrepreneurial education and training has spread because of entrepreneurial development programmes.
This has resulted in increase in the knowledge, imaginative power, farsightedness, risk taking ability of
the entrepreneurs etc.
7) EDPs have also contributed in project formulation. Choosing a right type of project is a difficult task as
resources are limited. EDPs have proved very useful in such situations.
8) EDPs have helped in balanced regional development by encouraging people to establish small industries
in villages and backward areas.
9) Another important achievement of EDPs is availability of cheap and quality product to the consumer.
Due to EDPs new ventures have been established which have new technology and expertise which
results in increase in competition.
10) Many entrepreneurship development institutions have been established because of the EDPs in India.
The major among them are Management Development Institute, National Institute of Entrepreneur and
Small Business Development (NIESBUD), Entrepreneurial Development Institute of India (EDII),
Technical Consultancy Organization (TCOs), etc.

Role of Government in organizing EDPs:

The role of government in organizing EDPs is considered significant in a country like India. It requires the
conversion of surplus labour force into real entrepreneurs to tackle the problems of unemployment and poverty
by means of the EDP mechanism. For organizing EDPs on sustained manner, the Union and State governments
have undertaken the following activities:

1) Establishment of Specialised Institutions at National Level - The following specialized EDP

organizations have been set up by the Government of India to promote entrepreneurship in the country:
➢ National Institute for Entrepreneurship and small Business Development (NIESBUD) - It is an
Apex organization for organizing and conducting EDP under the Ministry of Industry, Government of
India. It is located at Noida.
➢ Small Industries Service Institutes (SISIs) - It is set up by Government of India. It is having its
network of branches in many states in India.
➢ National Institute for Small Industry Extension and Training (NISIET) - NISIET is established in
1960, under Ministry of Small-Scale Industries, Government of India. It is located at Yousufguda,
Hyderabad. The Institute strives to achieve its objectives through a gamut of operations ranging from
training, consultancy, research and education, to extension and information services.
➢ Entrepreneurship Development Institute of India (EDII) - The Entrepreneurship Development
Institute of India (EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored
by apex financial institutions, namely the Industrial Development Bank of India (IDBI), the Industrial
Finance Corporation of India (IFCI), the Industrial Credit and Investment Corporation of India (ICICI)
and State Bank of India (SBI).
➢ National Science and Technology Entrepreneurship Development Board (NSTEDB) - In order to
focus on special target groups like science and technology personnels, the Union Government has
established the NSTEDB, operating under the Department of Science and Technology, Government of
India.
➢ Institutes of Entrepreneurship Development (IEDs) and Centres for Entrepreneurship
Development (CEDs) in different states of India - Various IEDs and CEDs have been set up in
different parts of India. The objective of these specialized institutions is to equip the ordinary person
with basics of entrepreneurial and managerial skills in order to enable him to be an effective
entrepreneur.
➢ The Indian Institute of Entrepreneurship (IIE) - The Indian Institute of Entrepreneurship (IIE) was
established in 1993 by the Ministry of Industry, Government of India with its headquarters at Guwahati
to undertake training, research and consultancy activities in the field of small industry and
entrepreneurship.
2) Institutional Support System for entrepreneurial development - Small scale enterprises are
important for generation of employment, utilization of available resources, creation of infrastructure
facilities and acceleration of economic development. Some of the prominent organization providing
institutional support system for entrepreneurial development in our country are:
➢ Small Industries Development Organisation (SIDO).
➢ National Small Industries Corporation Ltd. (NSIC).
➢ State Small Scale Industries Development Corporations (SSIDCs).
➢ Small Scale Industries Board (SSIB).
➢ India Investment Centre (IIC).
➢ Small Industries Service Institutes(SISIs).
➢ District Industries Centres (DICs).
➢ Industrial Estates.

3) Specialised Support Institutions for EDP promotion:

➢ National Institute for Entrepreneurship and Small Business Development (NIESBUD), Noida.
➢ Central Institute of Tool Design (CITD), Hyderabad.
➢ Central Tool Room and training Centres (CTTC).
➢ Central Institute of Hand Tools (CIHT).
➢ Institute for Design of Electrical Measuring Instruments (IDEM), Mumbai.
➢ National Institute of Small Industries and Extension Training (NIDIET), Hyderabad.
➢ Technical Consultancy Organisations (TCOs).
➢ Institutes of Entrepreneurship Development (IEDs) and Centres for Entrepreneurship Development
(CEDs).
➢ Central Silk Board.
➢ The Coir Board.
➢ Entrepreneurship Development Institute of India (EDI), Ahmedabad.
➢ Rural Development and Self –Employment Training Institute (RUDSET).
➢ Integrated Training Centre, Nilokheri.

4) Financial Institutions for sponsoring EDPs:

➢ Industrial Development Bank of India (IDBI).
➢ Industrial Finance Corporation of India Ltd. (IFCI).
➢ Industrial Credit and Investment Corporation of India Ltd. (ICICI).
➢ Life Insurance Corporation of India (LIC).
➢ Unit Trust of India (UTI).
➢ Small Industries Development Bank of India (SIDBI).
➢ Industrial Reconstruction Bank of India (IRBI).
➢ State Financial Corporations (SFCs).
➢ National Bank for Agriculture and Rural Development (NABARD).
➢ Export-Import Bank of India (EXIM Bank).
➢ Regional Rural Banks (RRBs).
➢ National Industrial Development Corporation Ltd. (NIDC).
➢ Commercial Banks.
➢ Khadi and Village Industries Commission (KVIC).
Evaluation of EDPs:
➢ So far, some 20 evaluation studies have been conducted by various organizations and individual
researchers (SIET 1974, Sharma and Akhouri 1978, Awasthi and Sebastian 1996).One of the earliest
attempts in this direction was made by a team of researchers and experts appointed by the Gujarat
Industrial and Financial Corporation to evaluate the effectiveness of the EDPs.
➢ It is found that the effectiveness of the EDPs is around 26 per cent. In other words, one out of every four
trainees actually started his / her enterprise after undergoing entrepreneurial training. However, the
expected start-up rate is slightly higher around 32 per cent.
➢ About 10 per cent trainees are found blocked due to various reasons at various stages in the process of
setting up their enterprises. It also suggests that if not helped effectively, they may join the category of
those 29 per cent trainees who have already given up the idea of launching their ventures.
➢ Out of 430 trainees who could not be contacted personally during the field survey, according to the
secondary sources, viz., family, friends, and neighbours, 17 per cent of them have already given up the
idea of venture launching as they are engaged in some other activities.
➢ In nutshell, the effectiveness of EDPs cannot be considered as impressive because about 7 out of every
10 trainees did not start enterprises after undergoing the EDP training.
➢ It means there are some problems or lapses here and there in conducting the EDPs. Therefore, there lies
the need for looking at the problems and constraints of EDPs.

Criticisms on EDPs:
1) No Policy at the National Level - Though Government of India is fully aware about the importance of
entrepreneurial development, yet we do not have a national policy on entrepreneurship. It is expected
that the government will formulate and enforce policies regarding the entrepreneurship.
2) Problems at the Pre-training Phase - Various problems faced in this phase are identification of
business opportunities, finding & locating target group, selection of trainee & trainers etc.
3) Over Estimation of Trainees - Under EDPs it is assumed that the trainees have aptitude for self-
employment and training will motivate and enable the trainees in the successful setting up and managing
of their enterprises. These agencies thus overestimate the aptitude and capabilities of the educated youth.
Therefore, the EDPs do not impart sufficient training and on the other financial institutions are not
prepared to finance these risky enterprises set up by the not so competent entrepreneurs.
4) Duration of EDPs - The duration of most of the EDPs varies between 4 to 6 weeks, which is too short
period to instil basic managerial skills in the entrepreneurs. Thus the very objective to develop and
strengthen entrepreneurial qualities and motivation is defeated.
5) Non-availability of Infrastructural Facilities - No prior planning is done for the conduct of EDPs.
EDPs conducted in rural and backward areas which lack infrastructural facilities like proper class room
suitable guest speakers, etc.
6) Improper Methodology - The course contents are not standardised and most of the agencies engaged
in EDPs are themselves not fully clear about what they are supposed to do for the attainment of pre-
determined goals.
7) Mode of Selection - There is no uniform procedure adopted by various agencies for the identification
of prospective entrepreneurs. Organisations conducting EDPs prefer those persons who have some
project ideas of their own and thus this opportunity is not provided to all the interested candidates.
8) Non-availability of Competent Faculty - Firstly there is problem of non-availability of competent
teachers and even when they are available, they are not prepared to take classes in small towns and
backward areas. This naturally created problems for the agencies conducting EDP.
9) Poor Response of Financial Institutions - Entrepreneurs are not able to offer collateral security for the
grant of loans. Therefore, those entrepreneurs who fail to comply with the conditions are not able to get
loan because the bank cannot pay with the public money and hence the dreams of the entrepreneurs is
shattered.
10) Non-Availability of Inputs - Non-availability of various inputs i.e., raw materials, power etc., with
poor follow up by the primary monetary institutions resulted failing in the entrepreneurship development
programmes.
UNIT V
 ENTREPRENEURIAL GROWTH AND ECONOMIC DEVELOPMENT

Entrepreneurial Growth in India:

Phase I - Medieval Age:
To discuss the growth or development of entrepreneurship in India, you must understand that India has one of
the oldest and most civilized business histories. During the Harappan civilizations around 2700 BC, there was
an internal and external trade culture. Also, due to this, most foreign countries recognize Indian entrepreneurial
skills.
Moreover, the increase in trade occurred during the era of Mughal rule. The popularity of Indian products,
arts, crafts, Vedic tools, foods, and much more attracted attention from different parts of the world. The Arab
mainland, western colonial counties and African countries were the major parties involved in the trade.
At the same time, different countries like UK, France and Portugal expanded their colonies in different parts
of the world. However, a significant entrepreneurial change occurred when the East India Company started its
business from the Bay of Bengal and later occupied parts of Bengal. It indirectly linked the entire Indian state
into one business ecosystem.
There were some major downsides to the colonial mindset of England. However, it also played some good
aspects in developing entrepreneurship in India.
Phase II - Pre-independence:
This was the era of industrialization in India, where some of India’s best entrepreneurs rise. The major events
changed the face of entrepreneurship in India.
The first cotton textile mill was revolutionized in 1854 by an Indian entrepreneur, Kawasji Dover. It was one
of India’s boldest steps in the modern development of entrepreneurship development.
Jamshedji Tata founded the company Tata Group in the year 1868. With the foundation of the Tata Group, he
has created a bar for entrepreneurship development in India.
1874 Cotton Mill by JRD Tata, TISCO by Dorabjee Tata, 1932 Tata Airlines, Tata Steel Plant, and more were
high-rate businesses in India. At the same time, it has also played a major role in various independence
initiatives.
Phase III - Post-independence:
Entrepreneurship in India, along with the national economy, was ground-breaking after independence. There
was not much left in the Indian economy at that time. However, the government took major steps to support
India’s development which is as follows.
Prime Minister Nehru adopted the economic structure line of the Soviet Union. It gave a major push to the
New Industrial Policy of 1956. Similarly, this policy liberalized the bar and standards set by the British
government, which were the ultimate impediment to industrial development.
Economic reforms were carried out in the initial phase of governance. Also, prominent economists adopted
the Mahalanobis model, which primarily aims to support entrepreneurs.
As all these influential policies were in operation, few major industries were established as opposed to the
traditional textile and natural resource industries. Since independence, there was a huge growth in
entrepreneurship in India.
However, it may seem that most of the top entrepreneurs were already in business. But the reality was
different. Economic policies were not giving much support to the entrepreneurs, due to which there was rough
growth. However, the transformation of entrepreneurship began in 1990.
Phase IV - After Economic Reforms:
The New Economic Policy of 1991 was a huge turning point. This policy has included three major aspects -
Liberalization, Privatization and Globalization. These were the most important of all the major aspects
involved in the new economic policy. However, all of them played an important role in developing
entrepreneurship in India. Some of the benefits that this policy replaced are as follows.
It gives a green signal to private banks and non-Indian banks to operate without any disruption. It was the only
reason for the huge circulation of money in the economy. And finally, it increased loans and supported new
entrepreneurs.
Due to the policy, foreign companies can find the best option to invest their money. This boosted huge FDI
and FPI in India and helped in understanding new and advanced technology.
Rise of India as a tech hub in the startup world where Indian tech people were the best choice for US, UK,
France and other country projects. At the same time, it also revolutionized the world of technology.
Before the policy, India’s entrepreneurship was based on the model of traditional industries and agro-
industries. However, after the implementation of the policy, major changes were seen in the technology. The
rise of Infosys, TCS, Wipro, HCL, and more. Also, in automobiles, Maruti, Tata, Mahindra, Bajaj, and more
were emerging. But there is a limitation to this policy as it favours a lot of big companies and does not give a
chance to a small and new startup to take off.
Phase V - Growth of Startups:
In 2016, startups started to grow. There are some key aspects of this startup initiative whose main objective is
to provide and lend support for entrepreneurship development in India. By the year 2015, startups were
rampant in India. Moreover, India is also known as the ‘poster child of an emerging market’. Some of the key
aspects of the 2016 Startup Initiative are as follows:
➢ The MSME ministry swung into action by supporting small and micro startups and firms.
➢ The Make in India initiative allows entrepreneurship to live in India and work on its growth.
➢ The NITI Aayog scheme was also launched. Its objective is to develop skills and provide training to
become a skilled resource.
New innovators and potential entrepreneurs are helping their businesses in the Indian market daily. If you
consider the growth of entrepreneurship since 1990, you will see a sharp growth every year.
The current Indian entrepreneurship world is becoming a highly favorable market for any company to invest
in. Also, most Indian companies have marked their potential in international trade and shown the growth of
entrepreneurship in India. However, among all other top start-ups and companies, the IT sector of India is on
the boom. It alone handles a large part of the development of the entrepreneur representing India.

Role of Entrepreneurs in Economic Development:

In capitalist and developed countries, private entrepreneurs play an important role in economic development.
In socialist countries, the state (Government) is the entrepreneur. In under-developed countries, private
entrepreneurship is not encouraged because of the degree of risk involved. The government has to play a vital
role in economic development. But in a developing country like India which follows a mixed economy, the
role of both the government and the private entrepreneurs is equally important. The role of the private
entrepreneurs has further increased because of the liberal economic policies followed by the Indian
government since 1991.
The role of entrepreneurs in economic development can be summarized as follows:
1) Agent of Progress in the Society - Economic growth depends on the rate of innovation in the economic
field, which in turn, depends on the number and quality of entrepreneurs in the society. Thus,
entrepreneur is an agent of progress in the society.
2) Life-line of a Nation - No country can progress without the development of entrepreneurship. Every
country is trying to promote its trade so that it is able to share the benefits of development. It also induces
backward and forward linkages which stimulate the process of economic development in the country.
Therefore, entrepreneurship is the yardstick to measure the level of development of a country.
3) Provides Innovation - Entrepreneurship and innovation are closely intertwined with each other. It is no
exaggeration to say that innovation cannot happen in any country without entrepreneurship.
Entrepreneurs have contributed in no small measure to economic development of any country by
innovation. They bring about innovation by building a brand-new product or by constantly upgrading
existing product or by tapping new market for existing product in a new territory or by inventing a new
technology to produce a product or service and so on. All these innovative exercises ensures rise in
income and output in the economy.
4) Contribution to Gross Domestic Product (GDP) - Promotion of entrepreneurship all across the
country would undoubtedly add to Gross Domestic Product and National Income of a country. It is stated
that the countries like America, Japan, Germany and so on have recorded a phenomenal increase in the
GDP, per capital income and national income, due to stupendous growth of entrepreneurship.
5) Employment opportunities - Entrepreneurship and its activities provide the maximum employment
potential. Large numbers of persons are employed in entrepreneurial activities in the country. The
growths in these activities bring more and more employment opportunities.
6) Balanced Regional Development - Encouragement of entrepreneurship in under developed and
undeveloped regions of a country through various incentives and concessions is more likely to promote
balanced regional development across the country. Besides, essentially it checks the migration of rural
population to urban centres in pursuit of employment.
7) Export Promotion - Entrepreneurship helps a country not only earn precious foreign exchange but also
preserve it. If entrepreneurship is encouraged to produce export-oriented goods, it can significantly add
to foreign exchange reserve of a country. Similarly, if entrepreneurship is encouraged to produce
products which are usually imported from foreign countries i.e., import substitute goods, it can help the
country save precious foreign exchange. The comfortable foreign exchange reserve position is more
likely to address the adverse balance of payment position if any.
8) Full utilisation of Latent Resources - Promotion of entrepreneurship across the country leads to better
utilisation of economic, human, material and natural resources which would remain otherwise unutilised
in a country. In other words, establishment of small, medium and micro enterprises all over the country
paves way for harnessing all latent resources in the country.
9) Capital Formation - Entrepreneurship promotes capital formation by mobilising the idle savings of the
public.
10) Reduction of Concentration of Economic Power in few hands - Promotion of entrepreneurship by
encouraging small, medium and micro enterprises prevents the concentration of economic power in the
hands of few large entrepreneurs. It promotes faster industrialisation and brings about equitable
distribution of wealth in the society.
11) Better Standard of Living - Entrepreneurs provide a lot of well-being measures to their employees
besides paying salaries and wages. This unmistakably helps employees upgrade their standard of living.
 Some of entrepreneurs who have genuine concern for the welfare of the general public, supply goods of
good quality at fair price. This in turn helps consuming public save more money and spends liberally on
comfort and convenience goods which are supposed to enhance the standard of living of the general
public. Higher standard of living brought about by entrepreneurship narrows down the gap between
haves and have nots.

Small Scale Entrepreneur - Meaning:

A small-scale entrepreneur is one who does a business that employs a small number of workers and does not
have a high volume of sales. Such entrepreneurs are generally private ones and sole proprietors, corporations
or partners. They lack resources to initiate large-scale production.

Small Scale Entrepreneur - Definition:

According to the Development Commissioner (SSI), SSI is defined as "an industrial undertaking in which the
investment in fixed assets in plant and machinery whether held on ownership terms on lease or on hire
purchase does not exceed Rs 10 million."

Ancillary Unit:
An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of
parts, components, sub-assemblies, tooling or intermediates, or the rendering of services and the undertaking
supplies or renders or proposes to supply or render not less than 50 per cent of its production or services, as
the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant
and machinery whether held on ownership terms or on lease or on hire-purchase, does not exceed Rs 10
million.

Tiny Sector:
A sector comprising of units whose investment limit in plant and machinery is Rs 2.5 million irrespective of
location of the unit.

Characteristics of Small-Scale Industries (SSIs):

1) Ownership - Ownership of small-scale unit is with one individual in sole proprietorship or it can be
with a few individuals in partnership.
2) Management and control - A small-scale unit is normally a one man show and even in case of
partnership the activities are mainly carried out by the active partner and the rest are generally sleeping
partners. These units are managed in a personalised fashion. The owner is activity involved in all the
decisions concerning business.
3) Area of operation - The area of operation of small units is generally localised catering to the local or
regional demand. The overall resources at the disposal of small-scale units are limited and as a result of
this, it is forced to confine its activities to the local level.
4) Technology - Small industries are fairly labour intensive with comparatively smaller capital investment
than the larger units. Therefore, these units are more suited for economics where capital is scarce and
there is abundant supply of labour.
5) Gestation period - Gestation period is that period after which teething problems are over and return on
investment starts. Gestation period of small-scale unit is less as compared to large scale unit.
6) Flexibility - Small scale units as compared to large scale units are more change susceptible and highly
reactive and responsive to socio-economic conditions. They are more flexible to adopt changes like
new method of production, introduction of new products etc.
7) Resources (portability) - Small scale units use local or indigenous resources and as such can be located
anywhere subject to the availability of these resources like labour and raw materials.
8) Dispersal of units - Small scale units use local resources and can be dispersed over a wide territory.
The development of small-scale units in rural and backward areas promotes more balanced regional
development and can prevent the influx of job seekers from rural areas to cities.
9) Labour intensive - Small scale units are fairly labour intensive. Hence, they are able to create job
opportunities to the local people at a relatively low cost of capital investment.
10) Smaller capital - Since small scale businesses are labour intensive industries, these require a lesser
amount of capital when compared to large scale units.

Objectives of SSIs:
1) To create more employment opportunities.
2) To help develop the rural and less developed regions of the economy.
3) To reduce regional imbalances.
4) To ensure optimum utilisation unexploited resources of the country.
5) To improve the standard of living of people.
6) To eradicate unemployment problem from the country.
7) To ensure more equitable distribution of national income.

Types of Small-Scale Industries:

1) Manufacturing/Assembly/Processing Industries - These types of industries are into manufacturing
finished goods for consumption or used further in processing. Some examples of such small-scale
industries are power looms, food processing units, engineering units.
2) Ancillary Industries - Ancillary industries are industries that manufacture components for other
manufacturers. These manufacturers then assemble or incorporate the final product. Ancillary industries
supply at least 50% of their products to other large or medium-sized businesses or the parent unit. A
good example is of a small unit that manufactures nuts and bolts of various sizes.
3) Service Industries - Service-based industries are not involved in any kind of manufacturing. They are
mostly to do with repair, maintenance and upkeep of the products after-sales.
4) Export Units - A small-scale industry is considered as an export unit if it is exporting more than 50%
of its production. In this case, the business can enjoy grants and other export bonuses offered by the
government.
5) Cottage Units - These small units do not involve a dedicated facility and are carried out within houses
or living spaces of the owners or contributors. These cover artisans skilled craftsman and technicians
who can work in their own houses and no pollution is caused. Handicrafts, toys, dolls, small plastic and
paper products electronic and electrical gadgets are some examples of these industries.
6) Village Industries - Many industries in rural areas that are not part of the organised sector can be
considered under village industries. Typically, these industries depend solely on human labour for
production. These industries produce goods and services without the consumption of electricity.
7) Feeder Industries - Feeder industries are those which are specialising in certain types of products and
services, e.g., casting, electro-plating, welding, etc.
8) Small Scale Industries Run by Women - The small-scale industries owned by women with at least a
share capital of 51% are eligible to opt for several grants from the Government like low-interest loans
and other perks.

Reasons for the Significance of SSIs in Economic Development:

1) SSIs Increase Production:
➢ India is one of the world’s fastest growing economies in the world. Consequently, its production output
is massive. It is pertinent to note that SSIs contribute almost 40% of India’s gross industrial value.
➢ These industries produce goods and services worth over Rs. 40 lakhs for every investment of Rs. 10
lakhs. Furthermore, the value addition in this output increases by over 10%.
➢ Small industries in India account for 95 per cent of the industrial units in the country. As a result of this,
the total industrial production output rose tremendously in the last few years. SSIs are, therefore,
strongly responsible for the growth of India’s economy.

2) SSIs Provide Employment:

➢ SSI uses labour intensive techniques. Hence, it provides employment opportunities to a large number of
people. Thus, it reduces the unemployment problem to a great extent.
➢ It is important to note that Small Scale Industries employs more people than all industries after
agriculture.
➢ SSI accounts for employment of people in unorganized sector.
➢ Furthermore, SSIs employ people in urban as well as rural areas. Consequently, this distributes
employment patterns in all parts of the country.
➢ It provides employment to both skilled and unskilled people in India.
➢ Further, the encouragement of small-scale industry would serve to counteract the seasonal
unemployment in agriculture and thus to utilise labour which might otherwise go to waste.

3) SSIs Facilitate Women Growth:

➢ It provides employment opportunities to women in India.
➢ It promotes entrepreneurial skills among women as special incentives are given to women entrepreneurs.

4) SSIs Bring Balanced Regional Development:

➢ SSI promotes decentralized development of industries as most of the small-scale industries are set up in
backward and rural areas.
➢ It removes regional disparities by industrializing rural and backward areas and brings balanced regional
development.
➢ It promotes urban and rural growth in India.
➢ It helps to reduce the problems of congestion, slums, sanitation and pollution in cities by providing
employment and income to people living in rural areas. It plays an important role by initiating the
government to build the infrastructural facilities in rural areas.
➢ It helps in improving the standard of living of people residing in suburban and rural areas in India.
➢ The entrepreneurial talent is tapped in different regions and the income is also distributed instead of
being concentrated in the hands of a few individuals or business families.
5) SSIs Help in Mobilization of Local Resources:
➢ It helps to mobilize and utilize local resources like small savings, entrepreneurial talent, etc., of the
entrepreneurs, which might otherwise remain idle and unutilized. Thus, it helps in effective utilization
of resources.
➢ It paves way for promoting traditional family skills and handicrafts. There is a great demand for
handicraft goods in foreign countries.
➢ It helps to improve the growth of local entrepreneurs and self-employed professionals in small towns
and villages in India.

6) SSIs Pave for Optimisation of Capital:

➢ SSI requires less capital per unit of output. It provides quick return on investment due to shorter gestation
period. The payback period is quite short in small scale industries.
➢ SSI functions as a stabilizing force by providing high output capital ratio as well as high employment
capital ratio.
➢ It encourages the people living in rural areas and small towns to mobilize savings and channelize them
into industrial activities.
➢ Thus, one of the great advantages of small-scale industries is that they make possible economies in the
use of capital.

7) SSIs Promote Exports:

➢ SSI does not require sophisticated machinery. Hence, it is not necessary to import the machines from
abroad.
➢ On the other hand, there is a great demand for goods produced by small scale sector. The number of
small-scale undertakings involved in export is more than 5,000. Thus, it reduces the pressure on the
country’s balance of payments.
➢ SSI earns valuable foreign exchange through exports from India.
➢ Almost half of India’s total exports these days come from small-scale businesses. 35% of the total
exports account for direct exports by SSIs, while indirect exports amount to 15%.
➢ The major items of export by SSEs are low-skilled labour-intensive goods, such as readymade garments,
leather products, gems and jewellery items, sports and plastic goods, chemicals, and processed food.

8) SSIs Complement Large Scale Industries:

➢ SSI plays a complementary role to large scale sector and supports the large-scale industries.
➢ SSI provides parts, components, accessories to large scale industries and meets the requirements of
large-scale industries through setting up units near the large-scale units.
➢ It serves as ancillaries to large scale units.
➢ In addition, SSIs also help in distributing the goods produced by large-scale industries. In this way, SSIs
are complementary to large-scale industries.

9) SSIs Meet Consumer Demands:

➢ SSI produces wide range of products required by consumers in India which include mass consumption
goods, readymade garments, hosiery goods, stationery items, soaps and detergents, domestic utensils,
leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints,
varnishes, safety matches, etc. Among the sophisticated items manufactured are electric and electronic
goods like televisions, calculators, electro-medical equipment, electronic teaching aids like overhead
projectors, air conditioning equipment, drugs and pharmaceuticals, agricultural tools and equipment and
several other engineering products. A special mention should be made of handlooms, handicrafts and
other products from traditional village industries in view of their export value.
➢ SSI meets the demand of the consumers without creating a shortage for goods. Hence, it serves as an
anti-inflationary force by providing goods of daily use.

10) SSIs Ensure Social Advantage:

➢ SSI helps in the development of the society by reducing concentration of income and wealth in few
hands as they are adept in distributing national income in more efficient and equitable manner among
the various participants of the society.
➢ SSI provides employment to people and pave for independent living.
➢ SSI helps the people living in rural and backward sector to participate in the process of development.
➢ It encourages democracy and self-governance.

11) SSIs Develop Entrepreneurship:

➢ SSIs provide ample opportunity for entrepreneurship. The latent skills and talents of people can be
channelled into business ideas which can be converted into reality with little capital investment and
almost nil formalities to start a small business.
➢ Small Scale industries provide a ground to train ground to train local entrepreneurs. The skills and
knowledge acquired can be transferred to other industries and thus become medium sized industries.
➢ It helps to develop a class of entrepreneurs in the society. It helps the job seekers to turn out as job
givers.
➢ About 60 to 70 percent of the total innovations in India comes from the SSIs. Many of the big businesses
today were all started small and then nurtured into big businesses.
➢ It promotes self-employment and spirit of self-reliance in the society.
➢ Development of small-scale industries helps to increase the per capita income of India in various ways.

12) SSIs Open New Investment Opportunities:

➢ Small-scale industries offer several advantages and opportunities for investments. For example, they
receive many tax benefits and rebates from the government.
➢ The opportunity to earn profits from SSIs are big due to many reasons. Firstly, SSIs are less capital
intensive. They even receive financial support and funding easily. Secondly, procuring manpower and
raw materials is also relatively easier for them. Even the government’s export policies favour them
heavily.

13) SSIs Advance Welfare:

➢ Apart from providing profitable opportunities, Small Scale Industries play a large role in advancing
welfare measures in the Indian economy as well.
➢ SSIs contribute in mitigating poverty by providing employment opportunities to people in urban and
rural areas. A large number of poor and marginalized sections of the population depend on them for
their sustenance.
➢ These industries not only reduce poverty and income inequality but they also raise standards of living
of poor people as bring higher national income and higher purchasing power to people in rural and semi-
urban areas. Furthermore, they enable people to make a living with dignity.

14) SSIs Reduce the Dependence on Agriculture:

Most of the rural population will be dependent on agriculture and this creates a burden on the agricultural
sector. Small scale industries by providing employment opportunities to the rural population provides
more avenues for growth and also paves way for a more arranged distribution of occupation.
15) SSIs Have Low Cost of Production:
➢ Locally available resources are less expensive. Establishment and running costs of small industries are
on the lower side because of low overhead expenses.
➢ In fact, the low cost of production which small industries enjoy is their competitive strength.

16) SSIs Make Business Simple:

Due to the small size of the organisations, quick and timely decisions can be taken without consulting
many people as it happens in large sized organisations. New business opportunities can be captured at
the right time.

Incentives offered by Government to SSIs:

1) Reservation - To protect the small-scale industries from the competition posed by large-scale industries,
the Government has reserved the production of certain items exclusively for the small-scale sector. The
number of items exclusively re-served for the small-scale sector has been considerably increased during
the Five-Year Plan Periods and now stands at 822. However, prior to the 1997 – 98 Budget the number
of items reserved for the small-scale sector stood at 836. The Finance Minister de-reserved 14 items in
the 1997 – 98 Budget.
2) Preference in Government Purchases - The Govern-ment as well as Government organisations shows
preference in procuring their requirements from the small-scale sector. For instance, the Director
General of Supplies and Disposals purchases 400 items exclusively from the small-scale sector. The
National Small-Scale Industries Corporation assists the SSI units in obtaining a greater share of
Government and de-fence purchases.
3) Price Preference - The SSI units are given price preference up to a maximum of 15 per cent in respect
of certain items purchased both from small-scale and large-scale units.
4) Supply of Raw Materials - In order to ensure regular supply of raw materials, imported components
and equipment’s, the Government gives priority allocation to the small-scale sector as compared to the
large-scale sector. Further, the Government has liberalised the import policy and streamlined the
distribution of scarce raw materials.
5) RBI’s Credit Guarantee Scheme - In 1960, the RBI introduced a Credit Guarantee Scheme for small-
scale industries. As per the Scheme, the RBI takes upon itself the role of a guarantee organisation for
the advances which are left unpaid, including interest overdue and recoverable charges. This scheme
covers not only working capital but also advances provided for the creation of fixed capital.
6) Financial Assistance - Small-scale industries are brought under the priority sector. As a result, financial
assistance is provided to SSI units at concessional terms by commercial banks and other financial
institutions. With a view to providing more financial assistance to the small-scale sector, several
schemes have been introduced in the recent past the Small Industries Development Fund (SIDF) in 1986,
National Equity Fund (NEF) in 1987 and the Single Window Scheme (SWS) in 1988. SIDF provides
refinance assistance to small-scale and cottage and village industries and the tiny sector in rural areas.
NEF provides equity type support to small entrepreneurs for setting up new projects in the tiny/small-
scale sector. In 1996, the small-scale sector received 42.3 per cent of the total priority sector advances
from public sector banks.
7) Technical Consultancy Services - The Small Industries Development Organisation, through its
network of service and branch institutes, provides technical consultancy services to SSI units. In order
to provide the necessary technical input to rural industries, a Council for Advancement of Rural
Technology was set up in October, 1982. The Technical Consultancy Organisation renders consultancy
services to SSI units at a subsidised rate. Many financial institutions are also providing subsidies to SSI
units for availing of consultancy serv-ices. For instance, small entrepreneurs proposing to set up rural,
 cottage, tiny or small-scale units, can get consultancy services at a low cost from the Technical
Consultancy Organisations approved by the All-India and State-level financial institutions. They have
to pay only 20% of the fees charged by a technical consultancy organisation. The entire balance of 80%
or Rs. 5,000 whichever is lower is subsidised by the Industrial Finance Corporation of India.
8) Machinery on Hire Purchase Basis - The National Small Industries Corporation (NSIC) arranges
supply of machinery on hire purchase basis to SSI units, including ancillaries located in backward areas
which qualify for investment subsidy. The rate of interest charged in respect of technically qualified
persons and entrepreneurs coming from backward areas are less than the amount charged to others. The
earnest money payable by technically qualified persons and entrepreneurs from backward areas is 10%
as against 15% in other cases.
9) Transport Subsidy - The Transport Subsidy Scheme, 1971 envisages grant of a transport subsidy to
small-scale units in selected areas to the extent of 75 % of the transport cost of raw materials which are
brought into and finished goods which are taken out of the selected areas.
10) Training Facilities - The Entrepreneurship Development Institute of India, financial institutions,
commercial banks, technical consultancy organisations, and NSIC provide training to existing and
potential entrepreneurs.
11) Marketing Assistance - The National Small Industries Corporation (NSIC), the Small Industries
Development Organisation (SIDO) and the various Export Promotion Councils help SSI units in
marketing their products in the domestic as well as foreign markets. The SIDO conducts training
programmes on export marketing and organises meetings and seminars on export promotion.
12) District Industries Centres (DICs) - The 1977 Industrial Policy Statement introduced the concept of
DICs. Accordingly, a DIC is set up in each district. The DIC provides and arranges a package of
assistance and facilities for credit guidance, supply of raw materials, marketing, etc.
13) GST Composition Scheme - In GST regime, tax is payable by every taxable person and in this regard,
provisions have been prescribed in the law. However, for providing relief to small businesses,
manufacturers, service providers, suppliers of food articles, traders, etc., making intra-state supplies, a
simpler method of paying taxes is prescribed, known as composition levy.

Problems of SSIs in India:

1) Problem of Finance - Finance is the most important aspect for any industrial development. The scarcity
of finance and credit is the main obstacle in the growth of SSIs. These enterprises are generally organized
in sole-proprietary and partnership concerns and so have no access to the capital market. There exists
insufficient equity type institutional support. Delays in institutional finance, unhelpful attitude of banks
are the common problems of SSIs. The delay in sanctions of loans occur due to lengthy procedural
formalities, insistence upon certificate from local authorities such as village office, block development
officers, etc., and over-emphasis on collateral security. Banks generally avoid financing smaller SSIs
due to low overall recovery performance and high cost of servicing SSIs loans. In this scenario SSIs
have to depend upon high interest non-institutional finance. These units frequently suffer from lack of
adequate working capital, either due to delayed payment of dues to them or locking up of their capital
in unsold stocks.
2) Shortage of Raw Material - Raw material scarcity caused disruption in the production process. SSIs
fail to make bulk purchases as they have no facilities to store them and thus have to pay higher price for
inputs. The suppliers of scarce raw material give preference to large buyers. SSIs have to depend upon
low quality localized high price raw material. Further, SSIs fail to make alternative arrangements for
critical inputs such as power due to financial constraints. These factors adversely affect product quality
and cost of production.
3) Marketing Related Problems - The problem of marketing products of SSIs generally arise due to small
scale production causing high product cost, lack of standardization of product, competition from big
industrial units and insufficient research and holding capacity. Another related problem is the weak
bargaining power of tiny and village industries against large buyers which is causing long overdue from
these buyers. Also, these organisations depend excessively on middlemen, who at times exploit them by
paying low price and delayed payments. SSIs thus fail to obtain fair and timely price for their products.
Further, direct marketing may not be feasible for small business firms as they lack the necessary
infrastructure. Lack of proper marketing is thus an important factor causing sickness in SSIs. The
inadequate organized marketing support for cottage and village industries also causes low promotion of
their products.
4) Slow Technological Progress - Paucity of funds is the major area for the slow adoption of innovative
practices in the business. The unsatisfactory technology delivery mechanism such as arrangement for
demonstration of cost and use of new technology also cause low technical progress in SSIs. SSIs
especially the cottage and village industries have to depend upon outdated and obsolete production
technique. This adversely affects the quality of output and increases manufacturing cost.
5) Poor Planning - Small scale entrepreneurs often fail due to proper planning, and due to inexperience,
entrepreneurs fail to prepare realistic feasibility reports. As a consequence, SSIs face large sickness at
early stage of their operation. Also, some business development plans ultimately negatively affect small
entrepreneurs’ performance.
6) Lack of Infrastructure Facility - Inadequate infrastructure, i.e., insufficient quality and quantity of
transportation, communication and other essential services, particularly in backward areas. Inadequate
infrastructure adversely affects the quality and quantity of production.
7) Sickness - There exists large level of sickness amongst SSIs. The incipient sickness (i.e., sickness at an
early stage of existence) is largely due to lack of planning, professional management and financial
problems. The sickness causes wastage of large amount of finances that remain locked into these units.
Further, sickness also leads to various socio-economic problems such as lower production, employment
and exports.
8) Managerial Problem - These businesses are generally promoted and operated by a single person, who
may not possess all the managerial skills required to run the business. Many of the small business
entrepreneurs possess sound technical knowledge but are less successful in marketing the output.
Moreover, they may not find enough time to take care of all functional activities. At the same they are
not in a position to afford professional managers.
9) Quality - Many MSMEs do not adhere to desired standards of quality. Instead, they concentrate on
cutting the cost and keeping the prices low. They do not have adequate resources to invest in quality
research and maintain the standards of the industry, nor do they have the expertise to upgrade
technology. In fact, maintaining quality is their weakest point, when competing in global markets.
10) Under Utilisation of Capacity - Due to lack of marketing skills or lack of demand, many firms have to
operate below full capacity due to which their operating costs tend to increase. Gradually this leads to
sickness and closure of the business.
11) Global Competition - Apart from the problems stated above MSME are not without fears, especially
in the present context of globalisation. These enterprises face competition is not only from medium and
large industries, but also from multinational companies which are giants in terms of their size and
business volumes.
Women Entrepreneurs - Definition:
Government of India based on women participation in equity and employment of a business enterprise has
defined women entrepreneurs as “An enterprise owned and controlled by a woman having a minimum
financial interest of 51% of the capital and giving at least 51% of the employment generated in the enterprise
to women”.

Women Entrepreneurs - Meaning:

Women entrepreneurs are those women who think of a business enterprise, initiate it, organize and combine
the factors of production, operate the enterprise and undertake risks and handle economic uncertainty involved
in running a business enterprise.

Problems faced by Women Entrepreneurs:

1) Problem of Finance - The access of women to external sources of funds is limited as they do not
generally own properties in their own name. Financial institutions too do not consider women in general
creditworthy as they are sceptical of their entrepreneurial capabilities of women. They impose stringent
condition which discourages women to avail themselves of loan assistance from banks. In this context,
they are pushed to rely on their own savings and small loans from friends and relatives. Because of the
limited funds, women entrepreneurs are not able to effectively and efficiently run and expand their
business.
2) Limited Mobility - Indian women cannot afford to shed their household responsibilities towards their
family even after they plunge into the venture started by them. This restricts the mobility of women
entrepreneur significantly. The domestic responsibilities do not allow women entrepreneurs to freely
move out of business enterprises in connection with business activities.
3) Lack of Education - Illiterate and semi-literate women entrepreneurs encounter a lot of challenges in
their entrepreneurial journey with respect to maintaining accounts, understanding money matters, day-
to-day operations of the company, marketing the products, applying technology etc., This reduces the
efficiency of operating the business successfully.
4) Lack of Network Support - The successful operation of any venture irrespective of the size depends
upon the network of support extended by various constituencies like family members, friends, relatives,
acquaintances, neighbours, institutions and so on. Women entrepreneurs need much needed
psychological support and wiser counselling especially during the time they actually encounter
challenges. But it is reported that women entrepreneurs get very limited support in times of crisis from
most of these constituencies.
5) Stiff Competition - Women entrepreneurs have to face acute competition for their goods from organised
sector and from their male counterparts. Since they are not able to spend liberally due to financial
constraints, they are not able to compete effectively and efficiently in the market.
6) Sensitivity - Women are more prone to a variety of emotions. Being mother, women are vulnerable to
many emotions. They tend to have sympathy and empathy for others. This trait does not allow women
entrepreneurs to take objective decisions in many contexts during the course of running the
entrepreneurial venture. Besides, the weak emotions do not allow them to tolerate failures and
disappointments arising during the normal course of their entrepreneurial journey. This inherently tone
downs the effectiveness of their functioning.
7) Lack of Information - Women entrepreneurs are reported not to be generally aware of subsidies and
incentives available for them due to their poor literacy levels or due to their pre occupation with
household responsibilities. This lack of knowledge or limited knowledge about subsidies prevents them
 from availing themselves of special concessions, benefits and incentives awarded by Government and
other agencies.
8) Dependent culture - In India, women however educated and talented are groomed to be dependent on
their parents, life partners and children during the various phases of their life cycle. They could not take
decisions on their own in many contexts due to this dependency factor. They have to take permission
from their support groups to engage in any purposeful and gainful activity. They are not treated as equals
unlike women in western countries. This cultural barrier does not allow them to start and manage their
ventures according to their free will and pleasure.
9) 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.
10) 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.

Governmental and Institutional Schemes for Women Entrepreneurs:

I. Institutional Support:
1) All Banks in India provide financial support to the women entrepreneurs, in the form of micro small
loans to buy Raw Materials and Equipment.
2) There are various associations like Self Help Groups (SHGs), Federation of Indian Women
Entrepreneurs (FIWE), Women’s India Trust (WIT), Small Industries Development organisation
(SIDO), National Bank for Agriculture and Rural Development (NABARD), Self Employed Women’s
Association (SEWA), Association of Women Entrepreneurs of Karnataka (AWAKE), The International
Centre for Entrepreneurship and Career Development, TiE Stree Shakti (TSS), Tamilnadu Corporation
for Development of Women Ltd. (TNCDW), Marketing Organisation of Women Enterprises
(MOOWES), Women Entrepreneurs Promotion Association (WEPA), Women Entrepreneurs
Association of Tamil Nadu (WEAT)and WeOW (Women entrepreneurs On Web) by Google are
aggressively promoting women entrepreneurship in India.
3) Consortium of Women Entrepreneurs of India (CWEI):
➢ Consortium of Women Entrepreneurs of India (CWEI) was registered as a civil society in the year
1996 which is a non-profit organisation in New Delhi. It is accredited by Government of India. It
is a member of National Board, Ministry of MSME and is working closely with Ministry of Rural
Development in the Public Private Partnership to support below poverty line families in India.
They are rendering the following functions:
• They are acting as a springboard for enterprises started by the women.
• It is helping women achieve high economic empowerment.
• It is acting as a catalyst to improve the access of womenfolk to natural resources.
• It is providing technological support in the sphere of product design and development in the
case of women owned enterprises.
• It is providing quality control, marketing and technological supports to women owned
enterprises.
• It is spreading knowledge to women entrepreneurs about various government schemes.
➢ In sum, it can be stated that women consortium is an agency providing a comprehensive service
of various types to women owned enterprises.
II. Governmental Support:
1) Government of India has put in a number of schemes exclusively for promotion of women
entrepreneurship namely:
➢ Stand-Up India Scheme for Women Entrepreneurs.
➢ Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women.
➢ Mahila Coir Yojana.
➢ Mahila E-haat.
➢ Prime Minister’s Rozgar Yojana (PMRY).
➢ Development of Women and Children in Rural India (DWCRA).
➢ Mudra Yojana Scheme for Women.
➢ Udyogini Scheme.
➢ TRYSEM (Training of Rural Youth for Self-EMployment).
2) Government of India has also introduced National Skill Development Policy and National Skill
Development Mission in 2009 in order to provide skill training, vocational education and
entrepreneurship development to the emerging work force. This has been catalysing the emergence of
women entrepreneurs in India. The following training schemes are being implemented for promoting
self-employment of women by Government of India:
➢ Support for Training and Employment Programme of Women (STEP).
➢ Development of Women and Children in Rural Areas (DWCRA).
➢ Small Industry Service Institutes (SISIs).
➢ State Financial Corporations (SFCs).
➢ National Small Industries Corporation (NSIC).
➢ District Industrial Centres (DICs).
3) Similarly, Micro and Small Enterprises (MSE) cluster development programme bear a substantial
portion of the project cost in respect of ventures owned and managed by women entrepreneurs. The
percentage of guarantee given by Credit Guarantee Fund Scheme for Micro and Small Enterprises
extend upto 80% for MSEs owned and operated by women.
QUESTIONS
 SECTION - A

UNIT I

1. Who is an entrepreneur?
Generally, entrepreneur is a person “who starts an enterprise, business or firm”. The term “Entrepreneur” is
derived from the French word known as “Entrepredre”, which means to “undertake”. According to Richard
Cantillon, the term entrepreneur denotes “A person who buys factors of production at certain prices with a
view to selling his product at uncertain prices in future”.

2. Define Entrepreneurship.
A.H. Cole has defined entrepreneurship as “The purposeful activity of an individual or group of associated
individuals, undertaken to initiate, maintain, or earn profit by production and distribution of economic goods
and services”.
According to Heggins, “Entrepreneurship is meant the function of seeking investment and production
opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labour,
arranging the supply of raw materials and selecting top managers of day-to-day operations”.

3. Who is an innovator?
An innovator is a person who carries out new combinations to initiate the process of economic development
through introduction of new products, new markets, conquests of new source of raw materials and
establishment of a new organization of industry. An inventor is one who discovers new methods and new
materials. And, an innovator utilizes such inventions and discoveries in order to make new combinations.

4. What are the characteristics of entrepreneur?

➢ Capacity to take risk.
➢ Capacity to work hard.
➢ Ability to foresee future.
➢ Ability to mobilize resources
➢ Ability to build up organization and administer.
➢ Desire for high achievement.
➢ Capacity to solve problem.

5. Who is an Intrapreneur?
Intrapreneurs are the new breed of managers emerging in big organization. They emerge from within the
confines of an enterprise. Generally, they are given freedom to operate on their own. They are encouraged to
think themselves as entrepreneur within the enterprise. They are also given Employee Stock Options. Thus,
they become partial owners.

6. Who is a Fabian entrepreneur?

Fabian entrepreneurs are characterised by great caution and scepticism in experimenting any change in their
enterprises. They imitate only when it becomes perfectly clear that failure to effect any change would only
result in loss of relative position of the enterprise. Such entrepreneurs have neither the will to introduce
changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs.
7. Who is a drone entrepreneur?
Drone entrepreneurs are characterized by their refusal to utilize opportunities to make changes in production.
Such entrepreneurs may even suffer loss, but they do not make changes in production methods. They are
laggards because they continue their business in the traditional way and their products lose the marketability.
Ultimately, their operations become uneconomical and they are pushed out of the market.

8. Who are pure entrepreneurs?

A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes
an entrepreneurial activity for his personal satisfaction in work, ego or status.

9. Who are corporate entrepreneurs?

Corporate entrepreneur is a person who demonstrates his innovative skill in organizing and managing
corporate undertakings. A corporate undertaking is a form of business organization which is registered under
a suitable Statute or Act which gives it a separate legal entity. A trust registered under the Trust Act, and
companies registered under the Companies Act are examples of corporate undertakings.

10. Define the term entrepreneur.

According to E.E. Hagen, “the entrepreneur is an economic man, who tries to maximise his profits by
innovations and problem solving”.
The New Encyclopaedia Britannica says that, “an entrepreneur is an individual who bears the risk of operating
a business in the face of uncertainty about the future conditions”.

11. What is entrepreneurship?

Entrepreneurship means the function of creating something new, organizing and coordinating and undertaking
risk and handling economic uncertainty. Entrepreneurship is the investing and risking of time, money and
effort to start a business and make it successful.

12. Who is the ‘Father of Entrepreneurship’?

Joseph Schumpeter is called as the ‘Father of Entrepreneurship’. Joseph Schumpeter recognized a person who
introduced innovations, as an entrepreneur.
 UNIT II

13. What is DIC?

The District Industries Centre (DIC) Programme was started in 1978 as a centrally sponsored scheme with an
object of providing all the services and support to MSME units under a single roof for the effective
development of small-scale industry in the widely dispersed rural areas and small towns of the country. The
main thrust of the DIC Programme is on the development of such industrial units, which can create large
employment opportunities in rural and semi-urban areas. At present, 422 DICs are functioning and providing
assistance to small-scale industries dispersed in 431 districts of the country.

14. What is MSME?

According to the Micro, Small and Medium Enterprises (MSME) Development Act of 2006, the definition of
micro, small and medium enterprises is as under:
I. In case of Manufacturing Enterprise:
➢ A micro enterprise is one in which the investment in plant and machinery does not exceed Rs.25 Lakhs.
➢ A small enterprise one in which the investment in plant and machinery is more than Rs.25 Lakhs but
does not exceed Rs. 5 crores.
➢ A medium enterprise is one in which the investment in plant and machinery is more than Rs. 5 crores
but does not exceed Rs. 10 crores.
II. In Case of Service Enterprise:
➢ A micro enterprise is one in which the investment in plant and machinery does not exceed Rs. 10 lakhs.
➢ A small enterprise one in which the investment in plant and machinery is more than Rs. 10 lakhs but
does not exceed Rs. 2 crores.
➢ A medium enterprise is which the investment in plant and machinery is more than Rs. 2 crores but does
not exceed Rs. 5 crores.

15. What is IFCI?

The Industrial Finance Corporation was established in 1948 under the Industrial Finance Corporation Act,
1948 as a statutory corporation. The principal objective of the Corporation is to provide long and medium-
term funds to the industrial units in our country. In 1960, the IFC Act was amended to widen the scope of its
activities and thereby public sector units, private limited companies and partnership concerns were also made
eligible for its assistance. The Act was further amended in the years 1970 and 1973 and its scope was further
expanded. Today, the IFCI’s role extends to the entire industrial spectrum of the country.

16. Expand:
➢ IDBI – Industrial Development Bank of India.
➢ ICICI – Industrial Credit and Investment Corporation of India Ltd.
➢ IFCI – Industrial Finance Corporation of India Ltd.
➢ DIC – District Industries Centre.
➢ SIDO – Small Industries Development Organisation.
➢ NSIC – National Small Industries Corporation Ltd.
➢ SIDBI – Small Industries Development Bank of India.
➢ SISI – Small Industries Service Institute.
➢ SSI – Small Scale Industry.
➢ NABARD – National Bank for Agriculture and Rural Development.
➢ IIBI – Industrial Investment Bank of India.
 UNIT III

17. What are the sources of business idea?

A business idea can emerge from technical source, (within the company) or from the market source (outside
the company).
➢ Technical sources (Company, Internal R&D).
➢ Market Sources (Consumers, Suppliers, distributors).

18. What is market appraisal?

Market appraisal is the review carried out by financial institutions to ascertain that the products manufactured
by the entrepreneur can be sold and its value realized. It is done by conducting marketing studies. Various
marketing considerations that are to be considered include – detailed product description, identifying the target
market place where products distributed (location, size, channels etc.), price determination (competition, price,
list, etc.), promotion plans (role of personal selling, advertising, sales promotions etc.) etc.

19. What is feasibility study?

Feasibility study refers to a structured and systematic analysis of the various aspects of a proposed
entrepreneurial venture designed to determine its workability. A well-prepared feasibility study can be an
effective evaluation tool to determine whether an entrepreneurial idea is a potentially successful one. It is the
first stage in the project formulation process. It is the appraisal of a project within the limitations of internal
and external constraints.

20. What do you mean by project?

Project is a scientifically evolved work plan, devised to achieve a specific objective within a specified period
of time. A project may be defined as “A complex, non-routine, one time effort limited by time, budget,
resources and performance specifications designed to meet customer needs”. Its major goal is to fulfil
customers’ needs.

21. What is project report?

Project report is a written document that summarises a business opportunity and defines how the identified
opportunity is to be seized and exploited. It is a scheme, design, a proposal of something intended or devised.
It helps in identifying and clarifying many of the issues that need to be addressed as an entrepreneurial venture
organized, launched and managed. It acts a blue print and road map for operating the ongoing business.

22. What do you mean by financial institutions?

A financial institution (FI) is a company engaged in the business of dealing with financial and monetary
transactions such as deposits, loans, investments, and currency exchange. At present, there is a well-integrated
network of financial institutions in the country comprising 12 institutions at the national level and 46 at the
state level. The All-India Financial Institutions comprise six All-India Development Banks (AIDBs), three
Specialized Financial Institutions (SFIs) and three investment institutions. At the state level, there are 18 State
Financial Corporations (SFCs) and 28 State Industrial Development Corporations (SIDCs).

23. What is project appraisal?

Project appraisal refers to the assessment of a project by the lending institutions. It involves the conduct of a
costs and benefits analysis of different aspects of proposed project with an objective to adjudge its viability.
It helps in selecting the best project among available alternative projects. Financial institutions appraise
projects before lending finance to them so as to assess their credit worthiness.
24. What is brainstorming?
Brainstorming is an idea generating process for developing creative solutions that encourages as many
alternatives as possible while withholding criticism. In a brainstorming session, a group of people gets together
in a room, in a relaxed environment, where everyone would be free to stretch their minds and think beyond
the ordinary. A group leader narrates the issue or problem to be addressed. The purpose of brainstorming is to
be an idea-generating process that opens up as many alternatives as possible as other people’s remarks act to
stimulate others in a sort of chain reaction of ideas.

25. What are the tools for assessing the financial viability of a project?
➢ Payback period.
➢ Return on investment.
➢ Discounted cash flow.
➢ Internal rate of return.
➢ Net present value.
➢ Profitability index.

26. What is Break-even analysis?

It helps to identify the minimum volume required to ensure that there is no loss. Break-even point is the level
or point of operation where there is no profit or no loss. The total costs are equal to the total revenue (TC =
TR). It is absolutely essential that the entrepreneur knows exactly the minimum no of units to be sold or how
much sales volume must be achieved for a break.

27. What is product life cycle?

It is an analytical tool which can be used by an entrepreneur to take various strategic decisions about the
product and market. Each product, like a human being has a certain length of life, during which they pass
through different stages. For some products, the life cycle may be very short, while for some other products
their life may be sufficiently long. Consequently, consumers may not buy such products and go out of the
market.

28. What are the stages in product life cycle?

➢ Introduction stage.
➢ Growth stage.
➢ Maturity stage.
➢ Saturation stage.
➢ Decline.
➢ Abandonment.

29. What is working capital?

In accounting, working capital means excess of current assets over current liabilities. Current assets refer to
those assets which can be converted into cash within a short period. Current liabilities refer to those obligations
which are payable within a short period. In short, working capital is the amount of funds which needed in day-
to-day business operations.
Gross Working Capital = Total Current Assets
Net Working Capital = Current Assets – Current Liabilities
30. What are the stages in the new product development?
➢ Idea generation.
➢ Screening of ideas.
➢ Concept development and evaluation.
➢ Business analysis.
➢ Product development and evaluation.
➢ Development and evaluation of marketing mix.
➢ Test marketing.
➢ Commercialisation of the product.

31. What is marketing feasibility?

Marketing feasibility involves testing of business idea as to its marketing viability. It is done by conducting
marketing studies. Various marketing considerations that are to be considered include – detailed product
description, identifying the target market place where products distributed (location, size, channels etc.), price
determination (competition, price, list, etc.), promotion plans (role of personal selling, advertising, sales
promotions etc.) etc.

32. What is financial feasibility?

Once the business idea is tested as to its marketing feasibility, the next step is financial feasibility. The
entrepreneur after ascertaining the feasibility of a commercial proposition should chalk out a plan estimating
the long and short-term requirements of capital. Financial feasibility considers start-up costs, working capital
requirements, equity requirements, loans, break-even analysis, collateral, credit references, equipment and
building financing. Its aim is to test the financial soundness of the idea selected for analysis.

33. What are the various sources of finance?

According to the length of the period for which funds are required, the sources of raising finance may be
classified into three types:
I. Long-term finance:
➢ Issue of Shares.
➢ Issue of Debentures.
➢ Finance from Financial Institutions.
➢ Retained earnings.
II. Medium-term finance:
➢ Issue of Redeemable debentures.
➢ Financial Institutions.
➢ Public deposits.
III. Short-term Finance:
➢ Trade credit.
➢ Consumer credit.
➢ Instalment credit.
➢ Account receivable financing.
➢ Bank credit.

34. What is Over-Capitalisation?

Over-Capitalization means that the actual earnings are lower than the expected ones. For e.g.: if a firm earns
profit of Rs.1 lakh and the expected rate of earnings is 10%, the minimum limit of capitalization is Rs.10 lakhs
(i.e., 1lakh/10%). In case the firm raises Rs.20 lakhs, the average earnings shall be 5% i.e., below the expected
rate.
35. What is Under-Capitalisation?
Under-Capitalisation implies a situation where the profits earned are exceptionally high but the capital
employed is relatively small. The value of long-term assets is higher than the capital raised.

36. What is Capitalisation?

Capitalisation means the total amount of capital employed in an enterprise. It means the determination of the
amount of finance and also the mode of finance. As per the historical cost theory, the amount of Capitalisation
of new enterprise is the total cost of fixed assets, working capital and the cost incurred in setting up the
enterprise.

37. What is Capital Structure?

Capital Structure refers to the mix of source from where the long-term funds required in a firm may be raised.
i.e., what should be the proportions of equity share capital, preference share capital internal sources,
debentures and other sources of funds in the total amount of capital which a firm may rise for establishing its
business.

38. What is venture capital?

It is capital provided for a venture which means new business. Venture capital loan is provided to new projects
with new ideas. The application of new technology is also encouraged. Venture capital is a form of financing,
especially designed for funding high technology, high risk and perceived high reward projects.

39. What is cost of capital?

Cost of capital means the minimum rate of return that a company must earn on its assets to satisfy investors.
The cost of capital varies from source to source.

40. What is technical feasibility?

It is also known as techno-economic feasibility. In technical feasibility study, one can ascertain whether a
business idea is feasible, whether it can be transformed into a product and also whether a business opportunity
really exists. This study evaluates the choice of technology, production process and the location of business.

41. What is legal feasibility?

An entrepreneur has to ascertain the legality of his business idea. Hence, he should be aware of the various
laws which are applicable to his business idea. Such laws vary from industry to industry. E.g., If the product
is chemical, then the clearance from the Pollution Control Board, Environment Clearance under Environment
Protection Act etc have to be obtained.

42. What is managerial feasibility?

The various forms of ownership structure have to be evaluated and the selection made after due care and
thought. These are long term critical decisions as they determine the risk, responsibility and control of the
entrepreneur as well as the division of profits. As per Indian law, there are four main ownership forms of
organization:
➢ Sole proprietorship.
➢ Partnership.
➢ Joint stock company.
➢ Co-operative societies.
43. What is pay-back period method?
This method, sometimes called the pay-out or pay off or replacement period method, determines the length of
time required to recover the initial outlay of a project. In other words, it is the period within which the total
cash inflows from the project equals the cost of investment in the project.
Payback period = Original Cost of investment / Annual net cash inflows

44. What is Net Present Value?

In this method, the discount rate should be equal to the company’s weighted average cost of capital. In this
method, future cash inflows are discounted to the present value. This is the Gross Present value of the cash
flows. From this, the present value of the cost of the project (i.e., cash outflow) is subtracted. The resulting
surplus is the net present value of the investment.
NPV = Present value of cash inflows - Present value of cash outflows

45. What is Internal Rate of Return (IRR)?

IRR is the rate of return at which the sum of discounted cash inflows equals the sum of discounted cash
outflows. It is the rate at which the NPV of the investment is zero. It is called internal rate because it depends
mainly on the outlay and proceeds associated with the project and not on any rate determined outside the
investment. This method is generally employed when cost of investment and annual cash inflows are known,
while the unknown rate of return (i.e., rate of cost of capital) is to be ascertained.

46. What is Accounting Rate of Return (ARR)?

ARR is the annualized net income earned on the average funds invested in a project. It is a measure based on
the accounting profit (profit after depreciation and tax) rather than the cash flows and is very similar to the
measure of rate of return on capital employed, which is generally used to measure the overall profitability of
the firm.

47. What is Profitability Index (PI)?

This method is a variant of the NPV method. It is also known as benefit cost ratio or present value index. It is
also based on the basic concept of discounting the future cash flows and is ascertained by comparing the
present value of cash inflows with the present value of cash outflows.
PI = Present value of cash inflows / Present value of cash outflows

48. Write any two differences between business idea and business opportunity.
I. Business Idea:
➢ All business ideas are generally may not be business opportunities.
➢ Finding a good idea is nothing more than a tool in the hands of an entrepreneur.
➢ It is the first step in the task of converting an entrepreneur’s creativity into an opportunity.
II. Business opportunity:
➢ Good ideas are not necessarily good opportunities.
➢ Opportunities are created or built, using ideas and entrepreneurial creativity.
➢ They are situational.

49. What is meant by Focus group?

In this method, a group of consumers is interviewed. A moderator leads a group of persons through an open,
in-depth discussion rather than simply asking questions to solicit participants’ response. The moderator
focuses the discussion of the group on the new product area in either a directive or non-directive manner.
50. What is a business idea?
A business idea could be an invention, a new product or service, or a solution to an existing problem. It is a
business seed, which expands into a business tree. A business idea can emerge either from within the
organization or from outside the organization.

51. What is business opportunity?

Business opportunity can be referred as a business concept, that, if turned into a tangible product or service
offered by a business enterprise will result in profit.

52. What is idea generation?

Idea generation is the creative process that a company uses in order to find out solutions to the problems faced
by it. The process includes constructing through the idea, innovating the concept, developing the idea and
bringing the concept into reality.

53. What is environmental scanning?

Environmental scanning is an analysis and evaluation process, which is used by the businesses to understand
their current environment. The process includes systematic surveys and interprets relevant data to identify
external opportunities and threats.

54. What is a commercial bank?

A commercial bank is a type of financial institution which performs the functions of accepting deposits from
the general public and giving loans for investment with the aim of earning profits. They do banking business
to earn profit.

55. What is short term finance?

Short term finance refers to financing needs for a small period normally less than a year. In businesses, it is
also known as working capital financing. This type of financing is normally needed because of uneven flow
of cash into the business, the seasonal pattern of business, etc. In most cases, it is used to finance all types of
inventories, accounts receivables etc. At times, only specific one-time orders of business are financed.

56. What is long term finance?

Funding obtained for a time frame exceeding one year in duration. When a business borrows from a bank
using long-term finance methods, it expects to pay back the loan over more than a one-year period. For
example, this might include making payments on a 20-year mortgage. Another long-term finance example
would be issuing stock.

57. What are the types of working capital?

Working Capital is classified as follows:
I. On the basis of Value:
➢ Gross Working Capital.
➢ Net Working Capital.
II. On the basis of Time:
➢ Temporary Working Capital.
➢ Permanent Working Capital.
58. What is test marketing?
The test marketing is a tool used by the companies to check the viability of their new product or a marketing
campaign before it is being launched in the market on a large scale.
The market test is generally carried out to ascertain the probable market success in terms of new product’s
performance, the level of acceptance of the product, customer satisfaction, and the efficiency of the marketing
campaign.

59. What are consumer goods?

Consumer goods are products bought for consumption by the average consumer. Alternatively called final
goods, consumer goods are the end result of production and manufacturing and are what a consumer will see
on the store shelf. Clothing, food, T.V sets, jewellery, etc.., are all examples of consumer goods. Basic or raw
materials, such as copper, etc.., are not considered consumer goods because they must be transformed into
usable products.

60. What are industrial goods?

Industrial goods are materials and or supplies that are purchased and utilized by other businesses or industries.
Generally industrial goods are raw materials for use in the production of parts and component parts such as
plastics and steel for the automotive business for instance. However, equipment, machinery, and specialized
tools and instruments used in the making of parts can also be classified as industrial goods.

61. What is financial planning?

Financial planning means to prepare the financial plan. A financial plan is also called capital plan. A financial
plan is an estimate of the total capital requirements of the company. It selects the most economical sources of
finance. It also tells us how to use this finance profitably. Financial plan gives a total picture of the future
financial activities of the company.
Financial Resources (FR) + Financial Techniques (FT) = Financial Planning.

62. What is locational feasibility?

The selection of a suitable location is very important for the proper and profitable functioning of an enterprise.
Proper decision as to the location of the plant enables the firm to operate with maximum efficiency at minimum
cost.
Shifting of plant from one place to another place involves huge expenditure. Hence, the entrepreneur must be
very careful while selecting the suitable area and place where the business unit is to be established.

63. Define location.

“Location” refers to a large general area say a country, a state or a district where the production and distribution
activities are carried out. Location should be an ideal one which means a location, which ensures the optimum
results in relation to costs.

64. What are the factors influencing location?

I. Primary Factors:
➢ Raw material.
➢ Market.
➢ Labour.
➢ Fuel and power.
➢ Transport.
II. Secondary Factors:
➢ Financial services.
➢ Climate factors.
➢ Personal factors.
➢ Political stability.
➢ Special concessions and benefits.

65. What is a site?

“Site” refers to a smaller area, which is situated within the general area selected for the purpose of carrying
out the production activities only. The site may be a city site, a country site or a sub-urban site.

66. How will you select a site?

➢ Availability of raw materials.
➢ Availability of Land.
➢ Availability of basic infrastructure.
➢ Availability of Labour.
➢ Transport facilities.
➢ Economic policy.
➢ Demographics.
➢ Free trade zones.
➢ Distributive channel.

67. What is plant layout?

Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture etc. within
the factory building in such a manner so as to have quickest flow of material at the lowest cost and with the
least amount of handling in processing the product from the receipt of material.

68. What are the factors influencing plant layout?

➢ Nature of the Industry.
➢ Managerial policies.
➢ Location of the Industry.
➢ Size of the Site.
➢ Nature of the product.

69. What is product layout?

Product or line layout refers to the arrangement of productive machines and equipment in the order of
manufacturing operations. All machines that are needed to produce a product are arranged sequentially in a
continuous line and the raw materials are fed into the first machine and the final product comes out of the last
machine. Line layout is used in a number of continuous type of industries such as sugar, paper, cement etc.

70. What are types of layouts?

➢ Product or Line Lay-out.
➢ Process or Functional Lay-out.
➢ Combined Lay-out.

71. How will you choose technology?

Selection of a technology involves many steps:
➢ Identification of possible alternative technologies.
➢ Access to the technology.
➢ Assessing technology.
72. What is trade credit?
Trade credit is an important external source of working capital financing. It is a short-term credit extended by
suppliers of goods and services in the normal course of business, to a buyer in order to enhance sales. Trade
credit arises when a supplier of goods or services allows customers to pay for goods and services at a later
date. Cash is not immediately paid and deferral of payment represents a source of finance.

73. What is PERT?

Program Evaluation and Review Technique (PERT) is a technique adopted by organizations to analyse and
represent the activity in a project, and to illustrate the flow of events in a project. PERT is a method to evaluate
and estimate the time required to complete a task within deadlines.
PERT serves as a management tool to analyse, define and integrate events.
The main goal of PERT is to reduce the cost and time needed to complete a project.

74. Define a product.

Philip Kotler: “A product is anything that can be offered to a market for attention, acquisition, use or
consumption. It includes physical objects, services, personalities, place, organizations and ideas.”
Schwartz: “A product is something a firm market that will satisfy a personal want or fill a business or
commercial need and includes all the peripheral factors that may contribute to consumer’s satisfaction.”

75. What is a subsidy?

A subsidy is a benefit given to an individual, business or institution, usually by the government. It is usually
in the form of cash payment or a tax reduction. The subsidy is typically given to remove some type of burden.

76. What are incentives?

Inducement or supplement reward that serves as a motivational device for a desired action or behaviour. An
incentive aims at improving the overall performance of an organization.

77. What is return on investment?

Return On Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or
compare the efficiency of a number of different investments. ROI tries to directly measure the amount of
return on a particular investment, relative to the investment’s cost.

78. What is CPM?

Critical Path Method (CPM) is generally used for the projects whose time duration is known with certainty
and also the number of resources required for the completion of the project is assumed to be known. A critical
path is determined by identifying the longest stretch of dependent activities and measuring the time required
to complete them from start to finish.

79. What is Network analysis?

The network analysis is a method used to analyse, control and monitoring of business processes and
workflows.

80. What is franchise?

Franchise is a patent or trade license enabling the holder to market particular goods/services under a trademark
as per the agreed terms and conditions. It is a system for distribution of goods/services through the outlets
owned by the dealer/ retailer.
81. What are the features of an attractive niche?
➢ The customers in the niche have a distinct set of needs.
➢ They are ready to pay a premium to the firm that best satisfies their needs.
➢ The niche is not likely to attract other competitors.
➢ The niche gains economies through specialization.
➢ The niche has size, profit and growth potential.

82. What is network marketing?

Network marketing also known as direct selling or multilevel selling, is well-known one-to-one selling.
Instead of spending crores of rupees for advertising, it is paid to independent distributors who help them to
advertise through word of mouth. It is an opportunity to flourish as a self-made entrepreneur. The success of
multi – level – marketing lies in the ability of a distributor / member to convince consumers about the product,
and thereby gaining the customers' in joining the network. Example: Amway, Tupperware, etc.,

83. What is geographic concentration?

Geographic concentration means concentration of industries in a certain geographic region. The concept has
emerged in planning where we see concentration of human beings in certain pockets of a region.

84. What is Niche Market?

A niche market is a subset of a larger market with its own particular needs or preferences, which may be
different from the larger market.
For example, within the market for women’s shoes are many different niches, or segments. Shoes for vegan
women would be a niche market, as would shoes for plus-sized women, shoes for nurses, or even shoes for
transvestites. These would all be niche markets within the larger women’s shoe market.

85. Distinguish between mass marketing and niche marketing.

Basis Mass Marketing Niche Marketing
Definition Intends to appeal to the entire market Intends to appeal to a targeted market
Objective Increase the market share Develop a value proposition
Competition Relatively high Relatively low
Product Focuses on products that everyone likes a Focuses on products that somebody likes a
Liking little lot
 UNIT IV

86. What is EDP?

Entrepreneurial Development Programme (EDP) refers to a programme, which is designed to help a person
in strengthening his entrepreneurial motive and in acquiring skills and capabilities required for performing his
role effectively. Thus, it aims at developing entrepreneurial motives and skills and thereby it helps in playing
entrepreneurial role effectively.

87. What are the phases of EDP?

An EDP possesses the following three phases:
➢ Pre-training phase.
➢ Training phase.
➢ Post-training phase.

88. List the methods used in Entrepreneurial Training.

➢ Individual Training.
➢ Group Training.
➢ Lecture Training.
➢ Written Instruction.
➢ Demonstration.
➢ Conference.
➢ Meetings.

89. What are the four primary roles of EDPs that help an individual to become an entrepreneur?
➢ Stimulatory Role.
➢ Supportive Role.
➢ Sustaining Role.
➢ Socio-economic Role.

90. State any four objectives of EDPs.

➢ To give knowledge about government plans and programs relating to ED.
➢ To provide training to operate a business.
➢ To encourage self-employment tendencies.
➢ To promote small and medium industries.
 UNIT V

91. What are ancillary units?

Ancillary units provide inputs to other industries. These are engaged in the manufacture of parts, components,
light engineering products like cycles, sewing machines diesels engines, machine tools, electrical application.
The investment in plant and machinery should not exceed Rs. 5 crores.

92. Define Women Entrepreneur.

Government of India based on women participation in equity and employment of a business enterprise has
defined women entrepreneurs as “An enterprise owned and controlled by a woman having a minimum
financial interest of 51% of the capital and giving at least 51% of the employment generated in the enterprise
to women”.

93. Define Rural Entrepreneurship.

According to KVIC, village industry or rural industry is “any industry located in a rural area, the population
of which does not exceed 10,000, which produces any goods or renders any services with or without the use
of power and in the fixed capital investment per head of an artisan or a worker does not exceed a thousand
rupees”.

94. Who is a small-scale entrepreneur?

A small-scale entrepreneur is a one who does a business that employs a small number of workers and does not
have a high volume of sales. Such entrepreneurs are generally private ones and sole proprietors, corporations
or partners.

95. When will an SSI unit be considered as an Export Unit?

A small-scale industry is considered as an export unit if it is exporting more than 50% of its production. In
this case, the business can enjoy grants and other export bonuses offered by the government.

96. What are feeder industries?

Feeder industries are those which are specialising in certain types of products and services, e.g., casting,
electro-plating, welding, etc.

97. What are cottage units?

These small units do not involve a dedicated facility and are carried out within houses or living spaces of the
owners or contributors. These cover artisans skilled craftsman and technicians who can work in their own
houses and no pollution is caused. Handicrafts, toys, dolls, small plastic and paper products electronic and
electrical gadgets are some examples of these industries.

98. What are Village Industries?

Many industries in rural areas that are not part of the organised sector can be considered under village
industries. Typically, these industries depend solely on human labour for production. These industries produce
goods and services without the consumption of electricity.

99. What is Tiny Sector?

A sector comprising of units whose investment limit in plant and machinery is Rs 2.5 million irrespective of
location of the unit.
100. State few characteristics of SSIs.
➢ SSIs are labour intensive.
➢ They use local or indigenous resources.
➢ Gestation period of SSIs are comparatively less then large-scale units.
➢ SSIs can be dispersed over a wide territory.

101. State any four problems of SSIs.

➢ Underutilisation of capacity.
➢ Global competition.
➢ Poor planning.
➢ Lack of infrastructure facility.
 SECTION - B

102. What are the various strategies for the development of Niche Market?
➢ Identify the target audience - You have decided to target a specific audience and it is not the mass
market. From then on, the challenge is to identify the age group, geographical region, the needs the
product will cater to, their social status and related parameters.
➢ Choose the focus area - Once the target audience has been identified, we now need to develop the focus
area and description should not be too general. Many people do the mistake of identifying the most
profitable or the high growth industries. Many people rush into domains not familiar to them and only
reason for them to try it out is that it is showing high growth in revenues and return on investment.
Trends could change fast and by the time the new company establishes itself the positive trend in the
niche industry may have changed.
➢ Identify the needs of the consumer - There are various ways to identify the needs of consumers–
market surveys, informal talk with potential customers, and secondary data. There are research houses
that publish market surveys on niche market strategy areas and it could be a good starting point to
identify your target audience. Sometimes the best method would be to talk directly to customers
➢ Look for ignored consumers - Mass marketers and they can be the focus area for niche marketing. For
example, if no vendor or grocer is delivering fruits and vegetables or cooked food in a particular region,
there is a good opportunity to provide such services if there is a genuine need felt by the people living
there. If it is composed of elderly people living in high rise residential flats, the requirement for home
delivery of daily use food and groceries may be higher. Similarly, most health and fitness centres cater
to the young, if a particular locality has more elderly people looking for exercise and fitness, a wellness
centre focused on the elderly would gain business.
➢ Synthesize the product - Once the entrepreneur identifies the target audience, the attributes and the
need it fulfils for the customer, they still need to synthesize the qualities of the new product or business.
The product needs to be conformed in a long-term vision set by the entrepreneur.
➢ Evaluation - Once the blueprint for the product is ready and the target audience is identified, the next
step is to evaluate the synthesizing criteria listed above. Does it conform to the qualities listed and if it
fails in a few of them, it is better to scrap the product and try something new? The evaluation should
enable the businesses to make the right decisions and not be driven by the marketing condition.
➢ Test Marketing - Many large companies introduce a new product in select markets, gauge audience
response and feedback from sellers before going ahead with the full production of the product or launch
of a service. In test marketing, a select group of customers is getting an opportunity to buy and use the
product.
➢ Implementation - The final stage in the niche market strategy entry process is the actual introduction
of the product in the market. This is the most crucial phase of the niche marketing. If sufficient
homework has been done, the launching of the product is only a calculated risk.

103. What are the merits and demerits of Niche Marketing?

The merits of Niche Marketing are:
➢ Less competition - Unlike in generalized marketing where market competition is still, niche marketing
has quite less competition for the viable customers purchasing the products.
➢ Brand loyalty - Niche marketing makes it possible for businesses to build their brand loyalty. This
marketing approach lets you provide customers with products and services they need and desire. You
 end up having a leg up on the competition because items in a niche market are difficult to find in general
products.
➢ Best for giving marketing insight - Niche marketing is all about selling to a segmented market. It is
about taking your products to people who have an interest in receiving them. This can help you redefine
your business, leading it in a new product directions and services.
➢ Less risks - There may be lesser risks, as the marketing is done to a very small segment of the market.
➢ Goodwill - A niche marketer can earn name and reputation in the market. For example, companies such
as Rolex Watches and Rolls Royce command a lot of goodwill.
The demerits of Niche Marketing are:
➢ The niche marketing strategy may not be suitable for long-term marketing, as niches may not give
adequate business.
➢ The niche markets may be invaded by large companies, and small marketers may find it difficult to
compete.
➢ A firm’s survival chances may decrease if it depends solely on niche.
Examples of niche products:
➢ Coconut oil-based products.
➢ Green Tea.
➢ Titanium Rings.
➢ Herbal products (Himalaya).
➢ Baby products (Johnson & Johnson baby soap).
➢ Low calories products for diabetic patients (sweets, biscuits).

104. What are the problems faced by the women entrepreneurs?

➢ Finance - The majority of women business owners have had to rely to a significant extent on self-
generated finance during the start-up period of their business. Bank loans and grants have only been
used in a minority of cases and have usually been accompanied by some form of self-generated finance.
➢ Limited mobility - Due to primary household responsibilities towards, her family, her time gets divided
between the two worlds. She has restricted timings for work due to which, she is not in a position to
travel frequently and be away for longer periods.
➢ Marketing - A lack of sales and marketing skills was the most commonly reported problem faced by
female entrepreneurs, after finance. The fact that this is a characteristic shared with many other micro
enterprises and small firms does not make it any less important to female entrepreneurs.
➢ Technology - Access to technology and problems with intellectual property protection were regarded
as problems for women entrepreneurs. The lack of computer knowledge of employees is a major
problem as computer skills are a key part of the business
➢ Lack of confidence - As women are accepting a subordinate status, as a result they lack confidence of
their own capabilities, even at home, family members do not have much faith in women possessing the
abilities of decision-making.
➢ Male dominated society - A woman is dominated by men in her family as well as business. Often, she
has to obtain permission from men for almost everything. They are not treated as equals.
➢ Low risk bearing ability - This is so because right from the childhood, her parents take decisions for
her and after marriage her husband takes over. She is protected throughout and thus the risk bearing
ability gets reduced.
105. Difference between PERT and CPM.
Basis PERT CPM
PERT is a project management CPM is a statistical technique of project
Meaning technique, used to manage uncertain management that manages well defined
activities of a project activities of a project
Orientation Event-oriented Activity-oriented
Evolved as Research & Development
Evolution Evolved as Construction project
project
Model Probabilistic Model Deterministic Model
Focuses on Time Time-cost trade-off
Three time estimates i.e., optimistic
Estimates estimate, most likely estimate and One time estimate
pessimistic estimate.
Appropriate for High precision time estimate Reasonable time estimate
Management of Unpredictable activities Predictable activities
Nature of jobs Non-repetitive nature Repetitive nature
Critical and Non-
No differentiation Differentiated
critical activities
Non-research projects like civil
Suitable for Research and Development Project
construction, ship building etc.
Crashing concept Not Applicable Applicable

106. Difference between Entrepreneur and Intrapreneur.

Basis Entrepreneur Intrapreneur
Entrepreneur refers to a person who Intrapreneur refers to an employee of the
Meaning set up his own business with a new organization who is in charge of undertaking
idea or concept innovations in product, service, process, etc.,
Approach Intuitive Restorative
Resources Uses own resources Use resources provided by the company
Capital Raised by him Financed by the company
Enterprise Newly established An existing one
Dependency Independent Dependent
Risk Borne by the entrepreneur himself Taken by the company
Creating a leading position in the Change and renew the existing organizational
Works for
market system and culture

107. What do you mean by a project? Explain its classification in brief.

A project can be defined as “a set of interrelated tasks to be executed over a fixed period and within certain
cost and other limitations”.
Classifications of projects:
1) Quantifiable projects - Quantifiable projects are those projects on which quantitative assessment of
benefits can be made. E.g.: Power generation projects.
2) Non-Quantifiable projects - Where quantifiable assessment is not possible in a project then it is known
as non-quantifiable project. E.g.: Defence projects.
3) Sectorial projects - In India, Planning Commission of India has accepted the sectorial basis as the
criterion for classification of project. E.g.: Development of agricultural and allied sector projects.
4) Financial Institution’s classification - Financial Institutions classify projects into:
• New projects.
• Expansion projects.
• Modernisation projects.
• Diversification projects.
These projects are invariably profit oriented.
5) Service projects - The ultimate aim of these is not to make profit but to serve the society. E.g.:
Educational projects.

108. What do you mean by project appraisal? State its objectives.

Project appraisal is the structured process of assessing the viability of a project or proposal. It involves
calculating the feasibility of the project before committing resources to it. It is a tool that company’s use for
choosing the best project among various alternatives.
Objectives of project appraisal:
➢ To make a systematic and comprehensive review of various aspects of a project and determine if it will
meet the objectives of the company.
➢ To extract relevant information for determining the success or failure of a project.
➢ To apply standard yardsticks for determining the rate of success or failure of the project.
➢ To determine the expected costs & benefits of the project.
➢ To arrive at specific conclusions regarding the project.

109. Explain in brief the stages in project life cycle.

1) Defining Stage - This is the first phase in project life cycle. At this stage, project specifications are
defined, objectives are established, terms are formed and tasks and responsibilities are assigned.
2) Planning Stage - At this stage plans are developed so as to determine what to do, when to do it, who
will to do it, what is the level of quality to be maintained etc., It involves preparation of schedules,
budgets, deciding resources and forecasting risks.
3) Executing Stage - Under executing stage, project so planned is implemented. At this stage, the
following are analysed:
➢ Is the project on schedule, on budget and meeting specifications?
➢ What revisions / changes are necessary?
4) Delivering Stage - It involves two activities namely:
➢ Delivering the project product to customer. It involves customer training and transferring
documents.
➢ Re-deploying project resources. After delivery of the product, the resources are redirected to other
projects and new assignments.

110. Explain in brief about EDP and state its objectives.

Entrepreneur Development Programme (EDP) is a programme which helps in developing the entrepreneurial
abilities. The skills that are required to run a business successfully, is developed among the people through
this programme. 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.
The EDPs are offered by both the Government Organization as well as Non-Government Organizations.
Initially, the Small Industries Extension and Training Institute (SIET), Hyderabad selected 52 young persons
in 1971 from business and industrial community and offered a three-month training programme and motivated
the participants to be entrepreneurs. Now at present, there are about 686 all-India and state level financial
institutions and public sector banks conducting EDPs. Even private companies have started to conduct
entrepreneurial development programmes.
Objectives of EDP:
The main purpose of entrepreneurship development programme is to widen the base of entrepreneurship by
development, achievement, motivation and entrepreneurial skills among the less privileged sections of the
society. The major objectives of the Entrepreneurship Development Programmes are:
➢ Develop and strengthen the entrepreneurial quality, i.e., motivation or need for achievement.
➢ Analyse environmental set up relating to small industry and small business.
➢ Understand the process and procedure involved in setting up a small enterprise.
➢ Know the sources of help and support available for starting a small-scale industry.
➢ Know the pros and cons in becoming an entrepreneur.
➢ Besides, some of the other important objectives of the EDPs are to:
• Let the entrepreneur himself/herself set or reset for his/her enterprise and strive for their
realization.
• Appreciate the needed entrepreneurial discipline.
• Develop passion and interest in entrepreneurship.
• Conduct research and study on the effectiveness of the various programmes, schemes, market
potential of various business opportunities, etc.

111. Explain the criticisms on EDPs.

1) No Policy at the National Level - Though Government of India is fully aware about the importance of
entrepreneurial development, yet we do have a national policy on entrepreneurship. It is expected that
the government will formulate and enforce policies regarding the entrepreneurship.
2) Problems at the Pre-training Phase - Various problems faced in this phase are identification of
business opportunities, finding & locating target group, selection of trainee & trainers etc.
3) Over Estimation of Trainees - Under EDPs it is assumed that the trainees have aptitude for self-
employment and training will motivate and enable the trainees in the successful setting up and managing
of their enterprises. These agencies thus overestimate the aptitude and capabilities of the educated youth.
Therefore, the EDPs do not impart sufficient training and on the other financial institutions are not
prepared to finance these risky enterprises set up by the not so competent entrepreneurs.
4) Duration of EDPs - The duration of most of the EDPs varies between 4 to 6 weeks, which is too short
period to instil basic managerial skills in the entrepreneurs. Thus, the very objective to develop and
strengthen entrepreneurial qualities and motivation is defeated.
5) Non-availability of Infrastructural Facilities - No prior planning is done for the conduct of EDPs.
EDPs conducted in rural and backward areas which lack infrastructural facilities like proper class room
suitable guest speakers, etc.
6) Improper Methodology - The course contents are not standardised and most of the agencies engaged
in EDPs are themselves not fully clear about what they are supposed to do for the attainment of pre-
determined goals.
7) Mode of Selection - There is no uniform procedure adopted by various agencies for the identification
of prospective entrepreneurs. Organisations conducting EDPs prefer those persons who have some
project ideas of their own and thus this opportunity is not provided to all the interested candidates.
8) Non-availability of Competent Faculty - Firstly there is problem of non-availability of competent
teachers and even when they are available, they are not prepared to take classes in small towns and
backward areas. This naturally created problems for the agencies conducting EDP.
9) Poor Response of Financial Institutions - Entrepreneurs are not able to offer collateral security for the
grant of loans. Therefore, those entrepreneurs who fail to comply with the conditions are not able to get
loan because the bank cannot pay with the public money and hence the dreams of the entrepreneurs is
shattered.

112. Explain in brief about District Industries Centres (DICs).

Administration:
All the MSMEs are offered various services and support under the single roof of the District Industries Centre.
The General Manager is the head of the District Industries Centre functioning in 31 districts and Chennai
district is headed by Regional Joint Director. The post of General Manager is of Joint / Deputy Director Level.
The General Manager is assisted by the Project Manager, Manager (Credit), Manager (Economic
Investigation)/ Manager (Village Administration) and an office Superintendent.
Monitoring of DICs:
The functioning of DICs and their performance is monitored by the Principal Secretary/ Industries
Commissioner & Director of Industries & Commerce. The review of the General Managers is organized
periodically to evaluate the performance and also help in resolving difficulties in implementation of various
schemes.
Incentive schemes:
The following incentives are being extended to Micro, Small and Medium Enterprises in the State through
DICs:
➢ Subsidy schemes for micro manufacturing enterprises.
➢ Subsidy schemes for small and medium manufacturing enterprises establishing in 251 Industrially
Backward Blocks.
➢ Subsidy schemes for Agro based small and medium manufacturing enterprises established in all the 385
blocks of the State.
➢ Special Capital Subsidy for Thrust Sector Enterprises.
➢ Generator Subsidy.
➢ Back-ended Interest Subsidy.
Implementation of Self Employment schemes:
The following Schemes are being implemented in the State through DICs:
➢ Prime Minister's Employment Generation Programme (PMEGP).
➢ Unemployed Youth Employment Generation Programme (UYEGP).
➢ New Entrepreneur-Cum-Enterprise Development Scheme (NEEDS).
113. Explain in brief about SIDO and its functions.
Small Industries Development Organization (SIDO) is a subordinate office of the Department of SSI &
Auxiliary and Rural Industry (ARI). It is an apex body and nodal agency for formulating, coordinating and
monitoring the policies and programmes for promotion and development of small-scale industries.
Development Commissioner is the head of the SIDO. He is assisted by various directors and advisers in
evolving and implementing various programmes of training and management, consultancy, industrial
investigation, possibilities for development of different types of small-scale industries, industrial estates, etc.
The main functions of the SIDO are classified into:
(i) Co-ordination.
(ii) Industrial Development.
(iii) Extension.
These functions are performed through a national network of institutions and associated agencies created for
specific functions. At present, the SIDO functions through 27 offices, 31 Small Industries Service Institutes
(SISI), 37 Extension Centres, 3 Product-cum-Process Development Centres, and 4 Production Centres.
The main functions performed by the SIDO in each of its three categories of functions are:
(i) Functions Relating to Co-ordination:
➢ To evolve a national policy for the development of small-scale industries.
➢ To co-ordinate the policies and programmes of various State Governments.
➢ To maintain a proper liaison with the related Central Ministries, Planning Commission, State
Governments, Financial Institutions etc.
➢ To co-ordinate the programmes for the development of industrial estates.
(ii) Functions Relating to Industrial Development:
➢ To reserve items for production by small-scale industries.
➢ To collect data on consumer items imported and then, encourage the setting of industrial units to produce
these items by giving coordinated assistance.
➢ To render required support for the development of ancillary units.
➢ To encourage small-scale industries to actively participate in Government Stores Purchase Program by
giving them necessary guidance, market advice, and assistance.
(iii) Function Relating to Extension:
➢ To make provision to technical services for improving technical process, production planning, selecting
appropriate machinery, and preparing factory lay-out and design.
➢ To provide consultancy and training services to strengthen the competitive ability of small-scale
industries.
➢ To render marketing assistance to small-scale industries to effectively sell their products.
➢ To provide assistance in economic investigation and information to small-scale industries.

114. Explain in brief about IFCI.

IFCI Ltd. was set up in 1948 as Industrial Finance Corporation of India, a Statutory Corporation, through `The
Industrial Finance Corporation of India Act, 1948’ of Parliament to provide medium- and long-term finance
to industry. After repeal of this Act in 1993, IFCI became a Public Limited Company registered under the
Companies Act, 1956. IFCI became a government-controlled company subsequent to enhancement of equity
shareholding to 55.53% by Government of India on December 21, 2012. In April, 2015, Government of India
has acquired six crore Preference Shares of IFCI Ltd. of Rs.10/- each from six public sector banks. With this,
the shareholding of the Government of India in paid-up share capital of IFCI has been increased to 51.04%
and IFCI has become a Government Company under Section 2(45) of the Companies Act, 2013. IFCI is also
a Systemically Important Non-Deposit taking Non-Banking Finance Company (NBFC-ND-SI), registered
with the Reserve Bank of India.
The primary business of IFCI is to provide medium to long term financial assistance to the manufacturing,
services and infrastructure sectors. Through its subsidiaries and associate organizations, IFCI has diversified
into a range of other businesses including broking, venture capital, financial advisory, depository services,
factoring etc. As part of its development mandate, IFCI was one of the promoters of National Stock Exchange
(NSE), Stock Holding Corporation of India Ltd (SHCIL), Technical Consultancy Organizations (TCOs) and
social sector institutions like Rashtriya Gramin Vikas Nidhi (RGVN), Management Development Institute
(MDI) and Institute of Leadership Development (ILD).
The Government of India, as per the Budget for FY 2014-15 has mandated IFCI for setting up of a Venture
Capital Fund under Social Sector initiatives with an aim to promote entrepreneurship among the Scheduled
Castes (SC) and to provide concessional finance to them. The fund has been put in place after getting approval
of SEBI under AIF regulation, 2012 with contribution of Rs.200 crore from Government of India. IFCI has
committed Rs.50 crore as lead investor and sponsor of the Fund. IFCI’s subsidiary IFCI Venture Capital Funds
Ltd., is the Investment Manager of the Fund. Government of India has also provided Rs.200 Crore to IFCI
Ltd. in March 2015 under the Scheme of Credit Enhancement Guarantee for Scheduled Caste (SC)
Entrepreneurs for providing guarantee to banks against loans to young and start-up entrepreneurs belonging
to Scheduled Castes with an objective to encourage entrepreneurship in lower strata of the society.

115. Explain in brief about NSIC.

History:
It was established in 1955 to promote and develop micro and small-scale industries and enterprises in the
country. It was founded as a Government of India agency later made into a fully owned government
corporation.
Operation:
National Small Industries Corporation Ltd. (NSIC), is an ISO 9001-2015 certified Government of India
Enterprise under Ministry of Micro, Small and Medium Enterprises (MSME).
NSIC operates through countrywide network of offices and Technical Centres in the Country. To manage
operations in African countries, NSIC operates from its office in Johannesburg, South Africa. However, From
January 2018, Johannesburg office is now closed and is now closely looking after domestic MSME Units. In
addition, NSIC has set up Training cum Incubation Centre & with a large professional manpower, NSIC
provides a package of services as per the needs of MSME sector.
NSIC has recently partnered with Rubique.com, to facilitate lending for MSME segment. Rubique & NSIC
will work together to create an interface which will ease credit facilitation for MSMEs by allowing quicker
decision making and evaluation and to widen the product offerings will bring their respective bank/FI tie-ups
under one umbrella for MSME.
Objectives:
Government of India to promote small and budding entrepreneurs of post independent India, decided to
establish a government agency which can mediate and provide help to small scale industries (SSI). As such
they established National Small Industries Corporation with objectives to provide machinery on hire purchase
basis and assisting and marketing in exports. Further, SSIs registered with NSIC were exempted from paying
Earnest money and provided facility of free participation in government tendered purchases. Also, for training
persons the training facilities centres and for providing assistance in modernising the small industries several
branches of NSIC were opened up by government over the years in several big and small towns, where small
industries were growing.
NSIC also helps in organising supply of raw materials like coal, iron, steel and other materials and even
machines needed by small scale private industries by mediating with other government companies like Coal
India Limited, Steel Authority of India Limited, Hindustan Copper Limited and many others, who produce
these materials to provide same at concessional rates to SSIs. Further, it also provides assistance to small scale
industries by taking orders from Government of India owned enterprises and procures these machineries from
SSI units registered with them, thus providing a complete assistance right from financing, training, providing
raw materials for manufacturing and marketing of finished products of small-scale industries, which would
otherwise not be able to survive in face of competition from large and big business conglomerates. It also
helps SSI by mediating with government owned banks to provide cheap finance and loans to budding small
private industries of India.
 SECTION - C

116. What are the sources of Business Idea?

Business ideas are thoughts that when implemented can lead to income generalization. Entrepreneurs must
first come up with ideas from different sources that should lead them to starting a well-planned business.
Here are some of the sources of business ideas:
1) Surveys - Business ideas can be generated from market surveys indicating or showing which sector is
viable or possibly void of products. People can check the market to come out with appropriate
conclusions on which sectors are not flooded or occupied.
2) Training - Business ideas can be acquired through training individuals where they are equipped with
necessary skills and knowledge from schools and such other institutions of training.
3) Experience - An idea can also be generated from experience. Experience in itself comes from constant
touch on a particular aspect. For instance, an individual might have an experience in accounting through
his or her occasional involvement with accounting issues.
4) Hobbies - Hobbies are what one is fond of doing most of his or her time. At least each and every one
finds something interesting and comfortable doing every time. Well, that might be a source of a business
idea.
5) Talents - A business idea can also come from individual talents. You are best in what you are talented
in and this might form a good base for starting a business if you spot an idea in that area. For instance,
if you are talented to play football, you might spot an idea in supplying football kits to customers in the
market.
6) Strengths of an individual - An individual's strength can also serve as a source of idea which is tuned
to an idea for carrying out business. For instance, if you have a particular strength in helping out clients
through consultations, that could form a base to start a business.
7) Market gaps - Spotting a gap in the market can also form an idea. A market gap in this case is used to
mean some important area that is not occupied. Sometimes, a particular area in the market may be empty
with nobody really providing some goods or services needed by customers. This is what can be formed
to an idea.
8) Events - A business can also be generated through attending events in which new ideas are exchanged.
For instance, an event that is scheduled in some other place can be very good opportunity to find out
what is missing in that particular place and by providing such products, you satisfy customers’ needs
which is one of the reasons of doing business.
9) Media - An idea can also come from the media. Reading magazines, newspapers and such published
materials that contain business related issues can help one generate an idea. An idea can still come from
the other media sources like television stations and radios. Discussions related to business topics can be
very useful in generation of an idea.
10) Shows and exhibition - An idea can also be extracted from shows and exhibitions. By seeing what other
people presents in the shows and exhibitions, an individual can come up with an idea of providing
something like what he or she has seen others do.
11) Recognizing needs - An idea can also be generated from recognition of what customers need in the
market. If for instance customers are frequently demanding maize flour instead of maize itself, one can
come in to provide the maize flour demanded by customers.
12) Merging existing businesses - Business people can also come up together to merge their business as a
new development towards achieving or getting more customers or for provision of better services to
customers.
13) Listening to what people say - A business idea can also be generated through listening from other
people's thoughts. This is more so important when you socialize with great minds or such people who
have tried out businesses or those who actually are in businesses.

117. Discuss the various project idea generation techniques.

Idea generation is the process of creating, developing, and communicating ideas which are abstract, concrete,
or visual. The process includes the process of constructing through the idea, innovating the concept,
developing the process, and bringing the concept to reality.
Ideas are things that come and go and fairly frequently too. However, the really great ideas usually spring
unexpectedly in moments of inspiration. It becomes easier to come up with great ideas when we free ourselves
from the mundane, every day, conventional thoughts that take up the thought space in our brain.
The following are the various project idea generation techniques:
1) Scamper - Scamper is an idea generation technique that utilizes action verbs as stimuli. It is a well-
known kind of checklist developed by Bob Eberie that assists the person in coming up with ideas either
for modifications that can be made on an existing product or for making a new product. SCAMPER is
an acronym with each letter standing for an action verb which in turn stands for a prompt for creative
ideas.
➢ S – Substitute
➢ C – Combine
➢ A – Adapt
➢ M – Modify
➢ P – Put to another use
➢ E – Eliminate
➢ R – Reverse
2) Brainstorming - This process involves engendering a huge number of solutions for a specific problem
(idea) with emphasis being on the number of ideas. In the course of brainstorming, there is no assessment
of ideas. So, people can speak out their ideas freely without fear of criticism. Even bizarre/strange ideas
are accepted with open hands. In fact, the crazier the idea, the better. Taming down is easier than thinking
up.
3) Mind mapping - Mind mapping is a graphical technique for imagining connections between various
pieces of information or ideas. Each fact or idea is written down and then connected by curves or lines
to its minor or major (previous or following) fact or idea, thus building a web of relationships. It was
Tony Buzan, a UK researcher, who developed the technique “mind mapping” discussed in his book ‘Use
your Head’ (1972). Mind mapping is utilized in brainstorming, project planning, problem solving and
note taking. As is the case with other mapping methods, the intention behind brain mapping too is to
capture attention and to gain and frame information to enable sharing of concepts and ideas.
4) Role playing - In the role-playing technique, each participant can take on a personality or role different
from his own. As the technique is fun, it can help people reduce their inhibitions and come out with
unexpected ideas.
5) Brain writing - Brain writing is easy. Instead of asking the participants to shout out ideas, they are told
to pen down their ideas pertaining to a specific problem or question on sheets of paper, for a small
number of minutes. After that, each participant can pass their ideas over to someone else. This someone
else reads the ideas on the paper and adds some new ones. Following another few minutes, the individual
participants are again made to pass their papers to someone else and so the process continues. After
 about 15 minutes, you or someone else can collect the sheets from them and post them for instant
discussion.
6) Collaboration - As the term indicates, collaboration is about two or more people joining hands in
working for a common goal. Designers frequently work in groups and engage in collaborative creation
in the course of the whole creative process.
7) Reverse thinking - As the term ‘reverse thinking’ itself suggests, instead of adopting the logical, normal
manner of looking at a challenge, you reverse it and think about opposite ideas. For example: ‘how can
I double my fan base?’ can change into ‘how do I make sure I have no fans at all? You may notice that
the majority of participants would find it easier to produce ideas for the ‘negative challenge’ simply
because it is much more fun. However, don’t spend too much time on the reverse idea-generation –
about 10 to 15 wrong ideas is fine. After one session is over, you can either continue in the reverse idea
atmosphere with a new challenge or else do the reversal once more to make it stronger. An example for
the latter is “I am never going to update any of my social networks” changing into “I am going to always
update all of my social networks.”
8) Visualization and visual prompts - Visualization is about thinking of challenges visually so as to better
comprehend the issue. It is a process of incubation and illumination where the participant takes a break
from the problem at hand and concentrates on something wholly different while his mind subconsciously
continues to work on the idea. This grows into a phase of illumination where the participant suddenly
gets a diversity of solutions and he rapidly writes them down, thereby creating fresh parallel lines of
thought.
9) Storyboarding - Storyboarding has to do with developing a visual story to explain or explore.
Storyboards can help creative people represent information they gained during research. Pictures, quotes
from the user, and other pertinent information are fixed on cork board, or any comparable surface, to
stand for a scenario and to assist with comprehending the relationships between various ideas.
10) Accidental genius - Accidental genius is a relatively new technique that utilizes writing to trigger the
best ideas, content and insight.
11) Socializing - If employees only hang around with colleagues and friends, they could find themselves in
a thinking rut. Let them utilize all those LinkedIn connections to begin some fantastic conversations.
Refreshing perspectives will assist with bringing out new thinking and probably, one or two lightning
bolts. Socializing in the context of ideation can also be about talking to others on topics that have nothing
whatsoever to do with the present problem.

118. What is project report? Explain the contents of a project report.

A project report is a document which provides details on the overall picture of the proposed business. The
project report gives an account of the project appraisal to ascertain the prospects of the proposed plan / activity.
Contents of project report:
1) General Information - A project report must provide information about the details of the industry to
which the project belongs to. It must give information about the past experience, present status, problems
and future prospects of the industry. It must give information about the product to be manufactured and
the reasons for selecting the product if the proposed business is a manufacturing unit. It must spell out
the demand for the product in the local, national and the global market. It should clearly identify the
alternatives of business and should clarify the reasons for starting the business.
2) Executive Summary - A project report must state the objectives of the business and the methods
through which the business can attain success. The overall picture of the business with regard to capital,
operations, methods of functioning and execution of the business must be stated in the project report. It
must mention the assumptions and the risks generally involved in the business.
3) Organization Summary - The project report should indicate the organization structure and pattern
proposed for the unit. It must state whether the ownership is based on sole proprietorship, partnership
or joint stock company. It must provide information about the bio data of the promoters including
financial soundness.
4) Project Description - A brief description of the project must be stated and must give details about the
following:
➢ Location of the site.
➢ Raw material requirements.
➢ Target of production.
➢ Area required for the work shed.
➢ Power requirements.
➢ Fuel requirements.
➢ Water requirements.
➢ Employment requirements of skilled and unskilled labour.
➢ Technology selected for the project.
➢ Production process.
➢ Projected production volumes, unit prices.
➢ Pollution treatment plants required.
5) Marketing Plan - The project report must clearly state the total expected demand for the product. It
must state the price at which the product can be sold in the market. It must also mention the strategies
to be employed to capture the market. If any, after sale service is provided that must also be stated in
the project. It must describe the mode of distribution of the product from the production unit to the
market.
6) Capital Structure and Operating Cost - The project report must describe the total capital requirements
of the project. It must state the source of finance, it must also indicate the extent of owners funds and
borrowed funds. Working capital requirements must be stated and the source of supply should also be
indicated in the project. Estimate of total project cost, must be broken down into land, construction of
buildings and civil works, plant and machinery, miscellaneous fixed assets, preliminary and preoperative
expenses and working capital.
7) Technical Aspects - Project report provides information about the technology and technical aspects of
a project. It covers information on Technology selected for the project, Production process, capacity of
machinery, pollution control plants etc.
8) Project Implementation - Every proposed business unit must draw a time table for the project. It must
indicate the time within the activities involved in establishing the enterprise can be completed.
Implementation schemes show the timetable envisaged for project preparation and completion.
9) Social Responsibility - The proposed unit draws inputs from the society. Hence its contribution to the
society in the form of employment, income, exports and infrastructure. The output of the business must
be indicated in the project report.

119. Explain the methods of project appraisal in detail.

1) Payback Period - One of the most commonly used techniques for evaluating investment proposals is
the cash pay back or payback period. It attempts to calculate the period known as payback period known
as payback period required to recover the initial investment out of cash flow after tax. This method
overlooks time value of money.
Payback Period = Original investment / CFAT p.a.
CFAT - Cash Flow After Tax
2) Return on Investment (ROI) - Return on investment (ROI) is defined as the ratio of profit (net of
depreciation and taxes) to initial capital outlay. The figure is compared to the cost of capital. If the
project yields the desired ROI, it will be accepted and vice versa.
ROI = (Annual average net earnings / Average investment) X 100
Average investment = (Initial investment – Scrap value)/2
3) Discounted Payback Period - The discounted payback period is a capital budgeting procedure used to
determine the profitability of a project. A discounted payback period gives the number of years it takes
to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing
the time value of money. The metric is used to evaluate the feasibility and profitability of a given project.
Discounted payback period = Initial investment / Discounted CFAT p.a.
4) Net Present Value (NPV) - Net present value method (also known as discounted cash flow method) is
a popular capital budgeting technique that takes into account the time value of money. It uses net present
value of the investment project as the base to accept or reject a proposed investment in projects like
purchase of new equipment, purchase of inventory, expansion or addition of existing plant assets and
the installation of new plants etc., Net present value is the difference between the present value of cash
inflows and the present value of cash outflows that occur as a result of undertaking an investment project.
It may be positive, zero or negative. These three possibilities of net present value are briefly explained
below:
➢ Positive NPV - If present value of cash inflows is greater than the present value of the cash
outflows, the net present value is said to be positive and the investment proposal is considered to
be acceptable.
➢ Zero NPV - If present value of cash inflow is equal to present value of cash outflow, the net
present value is said to be zero and the investment proposal is considered to be acceptable.
➢ Negative NPV - If present value of cash inflow is less than present value of cash outflow, the net
present value is said to be negative and the investment proposal is rejected.
5) Profitability Index (PI) - This method is also known as benefit cost ratio. It is ascertained by comparing
the present value of cash inflows with present value of cash outflows.
PI = Present value of cash inflows / Present value of cash outflows
Accept or Reject Criterion:
➢ Accept the project if the PI is more than 1.
➢ Reject the project if the PI is less than 1.
6) Internal Rate of Return (IRR) - IRR is the rate of return at which the sum of discounted cash inflows
equals to the sum of discounted cash outflows. In other words, it is the rate at which the NPV of the
investment is zero. It is called as Internal Rate of Return because it mainly depends on outlay and
proceeds associated with the project and not on any rate determined outside the investment. This method
is also known as marginal rate of return method.
IRR = Lower rate + [(Positive NPV / Difference in calculated present values) X Difference in rate]

120. Explain the Phases of Entrepreneurship Development Programmes.

An Entrepreneurship Development Programme involves 3 phases. They are:
(i) Pre-training Phase.
(ii) Training Phase.
(iii) Post-training or Follow-up Phase.

(i) Pre-training Phase - The success of EDP depends on the training and promotional ground work carried
out by the training organisation. Various activities undertaken by an organisation are:
(a) Designing of Course Curriculum - At the time of designing innovative course curriculum, utmost care
is taken to ensure that it must meet the requirements of the programme. The main thrust is on the
following subjects:
➢ Introduction to entrepreneurship - An attempt is made to generate knowledge about
entrepreneurship knowledge is imported about various factors affecting small scale business, the
role of entrepreneurs in economic development, entrepreneurial behaviour and the facilities
available for setting up enterprises.
➢ Motivation training - It is an attempt made to increase the need of achievement and confidence
amongst the participants which helps the individual to build right attitude and behaviour towards
the business. An earnest attempt is made for prompting and preparing entrepreneurs for starting
their own enterprises.
➢ Management and technical skills - The basic aim of this module is to impart management and
technical-know-how required by the participants to operate their business efficiently and
effectively. The knowledge would be regarding functional areas like production, marketing,
finance, etc.
➢ Support System and Procedure - Entrepreneurs about be informed about the support available
from various agencies and institutions for setting up and running of enterprises. They are to be
made aware about the procedure of applying and obtaining assistance from the institutes.
➢ Fundamentals of project feasibility study - The participants are provided guidelines on the
effective analysis of viability or feasibility of the project in view of marketing organisation,
technical financial and social aspects. Knowledge is provided for preparing project and feasibility
report.
➢ Plant visit - To know about the real-life situations in business, plant visits are arranged. Such trips
provide participants with opportunities to learn about entrepreneur’s behaviour, personality,
thoughts and aspirations.
(b) Selection of faculty or resource persons - The success of EDP depends upon the calibre of the faculty
or resource persons. The identification and finalisation of terms and conditions with the faculty thus
becomes very important for the conduct of EDP. Expert faculty can be invited from various colleges,
universities, consultancy firms, banks, financial institutions and firms engaged in R&D.
(c) Insertion of Advertisement - Information regarding forthcoming EDPs along with relevant details is
flashed through various Medias of advertisement. Normally advertisement is given in the local
newspaper to attract the local talents. It can also be through Medias like press releases, handbills,
meetings with trade unions, etc. An earnest effort is made to attract maximum number of prospective
entrepreneurs for EDPs.
(d) Selection of Potential Entrepreneurs - Utmost care should be exercised in selecting entrepreneurs for
EDPs. It should be designed in such a manner that it restricts admission to EDP to those who are
supposed to possess the requisite traits or qualities of potential entrepreneurs. Failure to make proper
identification and selection of potential entrepreneur will result in wastage in time, effort and money on
the organising and conduct of EDP.

(ii) Training Phase - The main aim of training programme is to develop motivation and requisite skills
amongst the potential entrepreneurs. Both theoretical and practical knowledge is imported to the
trainees. The basic purpose of training is to develop, ‘Need for achievement’ amongst the trainees.
Entrepreneurial training can be imparted by the following methods:
(a) Individual Training - A single individual is selected for training under this method. This method of
training is most suited where a complicated skill is to be taught to an individual.
(b) Group Training - This method is more suitable for a group of individuals with a similar type of work
and where similar general instructions are to be given to all.
(c) Lecture Training - Here the instructor communicates in theory the practice to be followed by the
trainees. Whatever are the queries, clarifications or doubts of the trainees, these are cleared on the spot.
(d) Written Instruction - This method aims at providing written material for future reference by the
learners. This method is generally adopted where a standardised production system is followed.
(e) Demonstration - This method aims at providing practical exposure to the trainees by the trainer for
better understanding. Trainer while giving demonstration explains at length minute details of the
performance of the work.
(f) Conference - Here experts in different fields share their ideas aimed at providing knowledge to trainees
for improving their effectiveness.
(g) Meetings - This method aims at providing opportunity to the trainees to discuss various problems
confronting them. It also enables them to exchange ideas and views on various issues and finally arrive
at firm conclusions based on discussion.

(iii) Post Training or Follow up Phase - EDPs aims at developing the right type of calibre and motivation
amongst the potential entrepreneurs so as to enable them to set up their own enterprises. The success or
failure of EDPs depends upon to the extent to which the objectives of EDPs are perfect and how far it
has been achieved. Through follow up we can know about our past performance, weakness, if any, and
draw up plans for removing these bottlenecks in future. Appraisal can also help us in knowing as to what
extent entrepreneurs have selected the projects which suit their calibre and background and provide
suitable assistance to those who failed to identify the right type of project or are facing certain other
problems. This main aim of this follow-up exercise is to make EDPs all the more useful and effective
for promoting entrepreneurial talents.
MODERN TERMS IN
ENTREPRENEURIAL
DEVELOPMENT
ACCELERATOR: An accelerator is a program to help newer startup businesses improve their growth.
Accelerators are different from incubators in that they usually only work with startups which already have a
business plan and basic strategy in place.
ACQUIRERS: Those who take over a business started by somebody else and use their own ideas to make it
successful. This often happens when there is a financial problem in the current operation. Fresh management
ideas may save the business.
ADVENTURE CAPITAL: Adventure capital is capital needed in the earliest stages of the venture’s creation
before the product or service is available to be provided.
AGRIPRENEURSHIP: Agripreneurship is essentially entrepreneurship in the agricultural sector.
Agripreneurship = agriculture + entrepreneurship.
ANGEL: An angel is a type of investor, often a wealthy individual, who provides capital and financial support
to a fledgling startup in return for an ownership percentage.
BOOT CAMP: Boot Camp is a training camp for learning various type of skills and is designed to get you
ahead in your start-up journey.
BUSINESS MODEL: A business model is a description of how an existing business or business idea plans
to achieve success, make a profit, and create value.
BUY-SELL AGREEMENT: A buy-sell agreement is an agreement designed to address situations in which
one or more of the entrepreneurs wants to sell their interest in the venture.
BUY-SELL ARTIST: Those who buy a company for the purpose of improving it so that they can sell it again
for a profit.
CENTRAL DRIVING FORCES MODEL: The central driving forces model is an entrepreneurial-based
model that considers the positives and negatives of three areas of the venture; founder(s), opportunities, and
resources. The model then evaluates these areas regarding the “fits and gaps” that indicate correlating strengths
or weaknesses for the venture. The CDF model also considers industry and market information in the overall
analysis.
CORRIDOR PRINCIPLE: The corridor principle is the principle where an entrepreneurial venture may find
that it has significantly changed its focus from the initial concept of the venture as it has continually responded
and adapted to its market and the desire to optimize profitability potential.
CROWDFUNDING: When a large number of individuals will each invest small amounts of money in a
business or project using the internet to collect the money.
CYBERPRENEUR: 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.
DELIVERABLE: A product or service developed by a business.
ECONOMY OF SCALE EXPLOITER: These types of entrepreneurs are those who benefit from a large
volume of sales by offering discount prices and operating with very low overhead.
ECOPRENEURSHIP: Ecopreneurship is entrepreneurship where a major, or perhaps the main, focus of the
business is to operate sustainably or to help the environment, such as through recycling or fighting climate
change. Ecopreneurship is also known as environmental entrepreneurship and green entrepreneurship.
EDTECH: Refers to the software designed to enhance teacher and/or student educational outcomes.
ENTREPRENEUR IN HEAT (EIH): The term “entrepreneur in heat” describes an entrepreneur that
continues to develop new products and services beyond what the venture can support and inadvertently may
diminish the focus and effectiveness of the activities supporting the venture’s primary revenue streams.
FATAL 2% RULE: The concept of the fatal 2% rule is that if a venture can just get “2%” of total market
share it will be successful. This percentage can be unattainable based on the approach, limited resources,
and/or structure of the industry.
FINTECH: Businesses that use modern technology to advance banking and financial services.
FIRST MOVER: The first mover is a company that attempts to gain an unchallengeable, privileged market
position by being the first to establish itself in a given market.
FRANCHISEE: A franchisee is an individual who starts a business for which a widely known product image
has already been established. The franchisee owns the business and assumes its operating responsibilities
subject to specifications set out by the franchisor.
HACKATHON: A hackathon is an event where individuals come together to creatively solve problems.
HUSTLER ENTREPRENEUR: 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.
INCUBATOR: An incubator is a program to assist the newest startup businesses take ideas and create viable
business models, strategies, and profit plans for them. Incubators differ from accelerators in that many people
often seek incubators simply with little more than just a powerful idea.
INTRAPRENEURSHIP: Intrapreneurship is where someone displays the traits and characteristics of
entrepreneurship while within and being part of a larger company.
NECESSITY ENTREPRENEUR: This type of entrepreneur is an unemployed person who needs to establish
his/her own business in order to survive, e.g., a cobbler, micro-trading.
PATIENT CAPITAL: Patient capital is money a small or medium-sized private business raises. Its name
refers to its lenient repayment terms. Because it is often raised through family or friends it is sometimes called
“love money.” Patient capital can be either debt or equity and often there is no contract spelling out payments
of interest, principal or dividends, the lender does not get any ownership of the company, no collateral is used
as security and the debt could be forgiven.
PATTERN MULTIPLIER: These are entrepreneurs who spot an effective business pattern originated by
someone else, and multiplies it to realize profit.
PEST ANALYSIS: PEST is a popular framework for situation analysis, looking at Political, Economic, and
Social Trends. Analysing these factors can help generate marketing ideas, product ideas, and so on.
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.
SEED CAPITAL: Seed capital is the initial amount of money an entrepreneur uses to start a business. Often,
this money comes from family, friends, early shareholders or angel investors. Seed capital is typically used to
support the planning of a business up to the point when the company starts selling a product or service. It
normally covers expenses until the business can make money and thereby attract more investors.
SKILL SET: A range of skills a person has that enables them to perform a particular job.
SLOGAN/STRAPLINE: A catchy phrase that sums up a business' message.
SMART OBJECTIVES: SMART is an acronym that defines important criteria for setting ideal goals and
objectives to manage your staff or a company. SMART objectives must be Specific, Measurable, Achievable,
Realistic and Time-bound. SMART objectives help you determine what direction you’re going in and help
you communicate that properly to people on your team so that everyone’s heading in the same direction and
it’s possible to track progress properly.
SOCIAL ENTREPRENEUR: A social entrepreneur is a businessperson whose goal is to create long-term
social or environmental value such as creating jobs for marginalized people, providing essential services to
people who otherwise would not have access to them, or selling products or services that protect the
environment. Businesses run by social entrepreneurs are not charities; they manufacture or sell products and
services that generate revenue and profits. However, profit is not their sole motivation, and their structure is
either that of a commercial co-op or a social-purpose company.
STEPPED PAYMENT LOAN: With a stepped-payment loan, a borrower’s monthly payments start low and
increase gradually over time. This arrangement can be beneficial for start-up companies with limited financial
resources in the beginning. Stepped-payment loans are riskier than other loan types because it takes longer for
lenders to get back their principal (the original amount of the loan). For this reason, lenders tend to only offer
stepped payments to well-managed companies and on loans that are secured with high-quality assets–those
easy to convert to cash.
SWOT: SWOT is an acronym that refers to a form of analysis that examines your Strengths, Weaknesses,
Opportunities and Threats.
SYSTEMATIC INNOVATION: Systematic innovation is innovation resulting from an intentional and
organized process to evaluate opportunities to introduce change, based on a definition provided by Peter
Drucker. The sources of innovation may be internal or external to the enterprise.
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.
UNICORN: A unicorn is a startup company, usually privately-held, which reaches a valuation of over $1
billion.
VENTURE CAPITAL: Venture capital is financing that investors provide to start-ups and small businesses
that are believed to have long-term growth.
WANTPRENEUR: A wantrepreneur is someone aspiring to become an entrepreneur, perhaps with ideas or
a general goal but without having started yet. A portmanteau of “want” and “entrepreneur,” some might
negatively use it to mean a “wannabe entrepreneur.”
WORKSHOP: A meeting of a group of people with the goal of engaging in discussion and activity in a
particular subject.
ACRONYMS USED IN
ENTREPRENEURIAL
DEVELOPMENT
ED Entrepreneurial Development
EDP Entrepreneurial Development Programme
AIDBs All India Development Banks
AIFIs All India Financial Institutions
FI Financial Institution
SFCs State Financial Corporations
SFIs Specialized Financial Institutions
ARR Accounting Rate of Return
CFAT Cash Flow After Tax
IRR Internal Rate of Return
NPV Net Present Value
PI Profitability Index
ROI Return on Investment
ARI Auxiliary and Rural Industry
CPM Critical Path Method
PERT Program Evaluation and Review Technique
DIC District Industries Centre
ICICI Industrial Credit and Investment Corporation of India
IDBI Industrial Development Bank of India
IFCI Industrial Finance Corporation of India
IIBI Industrial Investment Bank of India
KVIC Khadi and Village Industries Commission
MSMEs Micro, Small and Medium Enterprises
NABARD National Bank for Agriculture and Rural Development
NI-MSME National Institute for Micro, Small and Medium Enterprises
NSIC National Small Industries Corporation
SIDBI Small Industries Development Bank of India
SIDCO Small Industries Development Corporation
SIDCs State Industrial Development Corporations
SIDO Small Industries Development Organisation
SISI Small Industries Service Institute
SSI Small Scale Industry
TCOs Technical Consultancy Organisations
MSMED Act The Micro, Small and Medium Enterprises Development Act, 2006
NEEDS New Entrepreneur-Cum-Enterprise Development Scheme
PMEGP Prime Minister's Employment Generation Programme
PMRY Prime Minister’s Rozgar Yojana
SPRS Single Point Registration Scheme
UYEGP Unemployed Youth Employment Generation Programme
R&D Research and Development
SCAMPER Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, Reverse