b.j.hadvale september 8, 2015 sfimar.mms-iv.em.bjh 1...

B.J.HADVALE

April 19, 2023SFIMAR.MMS-IV.EM.BJH

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ENTREPRENEURSHIP MANAGEMENT

The early history of entrepreneurship in India


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Culture, customs and tradition of the Indian people. Vaishyas are considered to venture into business

As society grew and various occupational roles interchanged, people from different castes and status also entered into the entrepreneurial role.

Britishers for their own ulterior motive destabilized the then self sufficient Indian economy. England flourished & India paid for that.

After the Second World War, entrepreneurship received new meaning for attaining economic development within the shortest possible time. But in the process they were seriously handicapped by the rigid institutional setup, political instability, marketing imperfection and traditional value system.

ENTREPRENEURSHIP


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• A theory of evolution of economic activities. • A continuous process of economic development. • An ingredient to economic development. • Essentially a creative activity or an innovative function. • A risk taking factor which is responsible for an end result. • Usually understood with reference to individual business. • The name given to the factor of production, which

performs the functions of enterprise. • Creates awareness among people about economic activity. • Generates Self-employment and additional employment

Socio-psychological & Economic Perspective of Entrepreneurship


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Sociologists analyze the characteristic of entrepreneurs in terms of caste, family, social value and migration.

Psychologists differentiate entrepreneurs from general population on various personality trials such as need for achievement, creativity, propensity to take risk, independence, leadership etc.

Economists highlight situational characteristics such as occupational backgrounds, access to capital, business and technological experience and managerial skills with economic gains considered as characteristic of entrepreneur.

An entrepreneur by implication is one who ventures out, prefers change as a means of growth and is prepared to take a calculated risk being aware of the possibilities of success as well as the consequence of failure.

WHY ENTREPRENEURSHIP


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• To eradicate backwardness of the people. • Economic development of the region. • To analysis resource utilization. • Proper utilization of human potential. • Special attention to take up new activities. • To create self-employment and generation of

employment opportunity. • Eradication of regional imbalances. • Better economic gain.

AN ENTREPRENEURIAL CAREER


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Entrepreneurship plays an important role in the economic growth and development of nation.

Purposeful activity that includes initiation, promotion and distribution of wealth.

An entrepreneur is a critical factor in socio-economic transformation.

It involves risky and challenging tasks, needs utmost devotion, total commitment and greater sincerity with fullest involvement.

It is not a one day job nor is it is bed of roses. Prosperity and success never come easily. They

take time, hard work, systematic planning and business acumen.

WHO IS AN ENTREPRENUER


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• Develops and owns his own enterprise • A moderate risk taker who works under uncertainty for achieving

the goal. • innovative• Peruses the deviant pursuits • Reflects strong urge to be independent. • Persistently tries to do something better. • Dissatisfied with routine activities. • Prepared to withstand the hard life. • Determined but patient • Exhibits sense of leadership • Exhibits sense of competitiveness • Takes personal responsibility • Oriented towards the future. • Tends to persist in adversity • Converts/creates a situation into opportunity.

Characteristics of an Unique Entrepreneur


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- High need for achievement - High need for power - Independence - Propensity to take risk - Personal modernity - Takes and gives support - Business acumen & enterprise - Leadership

Self Check


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1. Are you prepared to put in hard work for achieving your goal ?

2. Do you possess a strong will power to face and overcome the difficulties and setbacks and make the enterprise successful ?

3. Is your family environment congenial to undertake a new venture ?

4. Are you prepared to wait for the results of your efforts ?

WHAT – Information Needed


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- Prospects and scope of a particular industry or business - Technical details - Information about different fields in the particular trade - Purpose of the business - Responsibilities towards stakeholders - Awareness of strength and weakness of product/service- Factors affecting market demand - Cost and model of distribution - Manufacturing process - Plant and machinery - Availability of new materials- Production costs- Manpower - Finance requirements - Assessment of profitability and repayment of term loan.

HOW - Implementation Plan


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- Final selection of product - Prepare project report - Registration : - Apply to Financial Institutions - Provisional Registration - Obtain Licenses - Apply for shed, Land and Power etc. - Arrange capital - Plant Layout - Construct shed - Obtain utilities - Order for NOC - Order for raw materials supply etc. - Recruitment and training of manpower - Arrangements of sales network - Trial run/sales promotion technique - Introduction of product - Commercials production return.

Basic Qualitative Instincts


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Basic qualitative instincts to survive in the world of uncertainty are –

(1) Will, (2) Zeal, (3) Skill, and(4) Action.

GENDER ISSUES IN ENTREPRENEURSHIP


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First born usually in middle class familyParent in BusinessCollege educatedMarriedEarly 30’sPrevious experienceDesires independenceDesires job satisfactionSmall & young business

GENDER ISSUES IN ENTREPRENEURSHIP…


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Self-confidentModerate risk takerHigh tolerance for ambiguityHigh energy level

PROBLEMS IN START UP


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Lack of business trainingAvailability of informationObtaining seed capitalMarketingPersonnel managementLack of experience in financial planningWeak collateralsCash flow managementTaxation

PSYCHOSOCIAL BARRIERS


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Poor self imageInadequate motivationDiscriminationFaulty socialisationRole conflictCultural valuesLack of courage & self-confidenceLack of encouragementLack of social acceptance

PSYCHOSOCIAL BARRIERS contd.


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Unjust socio-economic & cultural systemLack of freedom of expressionAfraid of failute and criticismSusceptible to negative attitudesNon-persistent attitudeLow dignity of labourLack of leadership qualities

PRODUCT SELECTION BY WOMEN


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General 29% Chemicals 20% Plastics 15% Textiles/hosiery 13% Engineering 12% Electronics 07% Leather 04%

SERVICES SELECTION BY WOMEN…


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DomesticFoodHouse-hold servicesEducationalBeauty & personal careHealth & nutritionChild care & old age care

ROLE OF ENTREPRENEURSHIP..


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IntroductionEntrepreneurship Current PerspectiveScope of entrepreneurship development in IndiaPromoting EntrepreneurshipEncouragement at attitudinal and social levelEncouragement at physical levelWhat will be the qualities needed to succeed in this new world?Indian Entrepreneurs

Indian Entrepreneurs


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Dhirubhai AmbaniA proud son of this glorious state of Gujarat, and a man with long ties with this wonderful city of Ahmedabad, was the greatest example of this spirit of entrepreneurship!

In a short span of less than 25 years, and without even the benefit of a formal education, Dhirubhai Ambani built Reliance, a first generation enterprise, into one of the world’s 200 most profitable companies!

Dhirubhai Ambani


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He started out in life, working as a mere petrol pump attendant in Aden, Yemen. He had no technical knowledge, of any of the businesses he wished to create in India.

He had just five hundred rupees in his pocket, a vision of what he wanted to achieve, an intrinsic faith in the latent demand potential of the Indian markets, a belief in the capabilities of Indian people, and a burning desire to succeed! The end result? He created Reliance, a Rs. 75,000 crore enterprise, in a single lifetime!



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Azim H. Premji

In a world where integrity purportedly counts for naught, Azim Hasham Premji symbolizes just that. The 55-year-old Wipro chairman made international waves in 2000 ever since his group became a Rs 3,500-crore empire with a market capitalization exceeding Rs 500,000 million! If any stargazer had been foolish enough to predict in 1966 that a 21-year-old Indian at Stanford University would one day achieve all this, he'd have been laughed out of business. At that juncture, Premji was forced to discontinue his engineering studies in the States due to the untimely death of his father. Returning to India to take charge of a cooking oil company, the youth infused new life into the family's traditional mindset and trade.

Azim H. Premji


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Despite all the success, the media-shy Premji maintained a low profile, letting his work do all the talking. Until early last year the media broke the story that Azim Premji had become the second-richest man in the world… In spite of his billions, however, he still travels economy class and stays in budget hotels.


N.R.Narayana MurthyAn Indian IT chief who's really made it big without dropping his ethical precepts by the wayside is Nagawara Ramarao Narayana Murthy, Chairman of Infosys. Born in 1946, Murthy's father was a schoolteacher in Kolar district, Karnataka, India. A bright student, Murthy went on to acquire a degree in Electrical Engineering from Mysore University and later studied Computer Science at the IIT, Kanpur, India.

The Infosys legend began in 1981 when Narayana Murthy dreamt of forming his own company, along with six friends. There was a minor hitch, though-he didn't have any seed money. Luckily, like many Indian women who save secretly without their husband's knowledge, his wife Sudha-then an engineer with Tatas-had saved Rs 10,000. This was Murthy's first big break.


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N.R.Narayana Murthy

The decade until 1991 was a tough period when the couple lived in a one-room house. The second break came in 1991 when Indian doors to liberalization were flung open… Murthy grabbed the opportunity with both hands and has never looked back ever since. Today, Infosys is the first Indian company to be listed on the US NASDAQ.

While working in France in the 1970s, Murthy was strongly influenced by socialism. The bubble was pricked, however, when he was arrested in Bulgaria on espionage charges. Today, he says: "I'm a capitalist in mind, a socialist at heart." It was this belief in the distribution of wealth that made Infosys one of the first Indian companies to offer employees stock-option plans. Infosys now has 400 employees who are dollar millionaires.


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N.R.Narayana MurthyHeading a company with the largest market capitalization hasn't changed Murthy's life-style much. The man still doesn't know how to drive a car! On Saturdays-his driver's weekly off-the Infosys chief is driven to the bus stop by his wife, from where he boards a company bus to work! Incidentally, Sudha Murthy is now chief of the Infosys Foundation, which channels Rs 50 million into charity every year.

Simplicity, humility and maintaining a low profile are the hallmarks of this super-rich Bangalorean. And the man is principled to a fault. Murthy's unprecedented wealth has catapulted him into the public glare. After the kidnapping of Dr Rajkumar by forest brigand Veerappan, the Home Ministry has sounded out the local government about providing Z-category security to Murthy and Premji. Both characteristically turned down the offer.In a letter to the police top brass last month, Murthy said he was a simple man who had no intentions of annoying his neighbors and disturbing traffic with an intrusive entourage of security vehicles and personnel.


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PERSONALITY OF AN ENTREPRENEUR…

The 9 Personality Types of Entrepreneurs

1. The Improver: using your company as a means to improve the world. Your overarching motto is: morally correct companies will be rewarded working on a noble cause. Improvers have high integrity and ethics.

Personality Alert: Be aware of your tendency to be a perfectionist and over-critical of employees and customers.

Entrepreneur example: Anita Roddick, Founder of The Body Shop.


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2. The Advisor: High level of assistance and advice to customers. The advisor's motto is: the customers are right and please them. Companies built by advisors become customer focused.

Personality Alert: Totally focused on the needs of their business and customers that they may ignore their own needs and ultimately burn out.

Entrepreneur example: John W. Nordstrom, Founder Nordstrom.


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3. The Superstar: Business is centred around the charisma and high energy of the Superstar CEO. This personality often will cause you to build your business around your own personal brand.

Personality Alert: Can be too competitive and workaholics.

Entrepreneur example: Donald Trump, CEO of Trump Hotels & Casino Resorts.


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4. The Artist: Reserved but highly creative type. Often found in businesses demanding creativity such as web design and ad agencies. As an artist type you’ll tend to build your business around the unique talents and creativities you have.

Personality Alert: You may be overly sensitive to your customer’s responses even if the feedback is constructive. Let go the negative self-image.

Entrepreneur example: Scott Adams, Creator of Dilbert.


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5. The Visionary: A business built by a Visionary will often be based on the future vision and thoughts of the founder. You will have a high degree of curiosity to understand the world around you and will set-up plans to avoid the landmines.

Personality Alert: Visionaries can be too focused on the dream with little focus on reality. Action must proceed vision.

Entrepreneurial example: Bill Gates, Founder of MicroSoft Inc.


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6. The Analyst: If you run a business as an Analyst, your company will focus on fixing problems in a systematic way. Often the basis for science, engineering or computer firms, Analyst companies excel at problem solving.

Personality Alert: Be aware of analysis paralysis. Work on trusting others.

Entrepreneurial example: Intel Founder, Gordon Moore.


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7. The Fireball: A business owned and operated by a Fireball is full of life, energy and optimism. Your company is life-energizing and makes customers feel the company has a get it done attitude in a fun playful manner.

Personality Alert: You may over commit your teams and act to impulsively. Balance your impulsiveness with business planning.

Entrepreneurial example: Malcolm Forbes, Publisher, Forbes Magazine.


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8. The Hero: You have an incredible will and ability to lead the world and your business through any challenge. You are the essence of entrepreneurship and can assemble great companies.

Personality Alert: Over promising and using force full tactics to get your way will not work long term. To be successful, trust your leadership skills to help others find their way.

Entrepreneurial example: Jack Welch, CEO GE.


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PERSONALITY OF AN ENTREPRENEUR

9. The Healer: If you are a Healer, you provide nurturing and harmony to your business. You have an uncanny ability to survive and persist with an inner calm.

Personality Alert: Because of your caring, healing attitude toward your business, you may avoid outside realities and use wishful thinking. Use scenario planning to prepare for turmoil.

Entrepreneurial example: Ben Cohen, Co-Founder Of Ben & Jerry’s Ice Cream.


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KEY BEHAVIOURS FOR AN ENTREPRENEUS…

Are you patient?

I started INeedMotivation.com in 2002. I can honestly tell you that the website barely made any money the first year. It took forever to get a great search engine ranking and of course for me to figure out all the necessary steps to make a business successful on the internet. If I wasn’t a patient person, I would have given up within that first year, thinking “oh this will never work”. Most people that ask me about becoming an entrepreneur do not have patience in the first place. Believe me, it takes time and thus tons of patience to create something of value that will stand the test of time.


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Are you meticulous?

When you have a business, there are so many aspects to it, and so many factors to consider, that you need to be thorough, otherwise you will not be successful. I have seen companies make huge mistakes in their advertising with spelling and the likes, that it’s just embarrassing. Every little detail needs to be checked and double-checked. I was always very methodical and meticulous in my work and in my studies, that when I entered the realm of entrepreneurship, I had what it took to make sure that every base was always carefully covered.


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Are you thick-skinned?

You need a thick skin to succeed in sales, and it’s not that much different as an entrepreneur. No matter what you do, you will always have certain clients that will completely demoralize you with their assessment of your product or service. The quicker you learn not to take it personally (and it’s hard when it’s your business and your creation), the more successful you will be. You will always come across people that will criticize you, no matter how great or valuable your product or service may be. You can bounce back very quickly, and that’s a needed skill in business.


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Are you creative?

As you manage a business, you will absolutely need to innovate. What makes a success story in business is not actually reinventing the wheel, but taking a current wheel and making it better. For that, you need to be creative. Some of my advertising ideas, some of my promotions, and some of my pricing points ended up being duplicated by my competitors. I take it as a compliment, and it just pushes me even more to make the wheel even better! I see so many people trying to do exactly what others are already doing…this is almost like shooting yourself in the foot. Dare to be different.


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Are you flexible?

In a business, you have a business plan (hopefully!). This plan is like your “script”. This is what you should follow if everything goes as planned. However, let me tell you that business never ever goes as you anticipated. This is why you need to be ready to go “off the script” and improvise. Being open-minded and flexible comes in handy in such situations. Especially in an internet business, things are always changing, so you need to be ready and willing to make changes at all times to keep up with the flow. You never know if a competitor will come up with something that may make your current product or service obsolete, so you have to be mentally prepared for such things to happen.


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Are you a visionary?

When you combine my two previous points, being creative and being flexible & open-minded, you have the potential to become a visionary. This is when you are able to assess the “big picture” in your industry and dictate the pace and/or direction it undertakes. Being able to envision what the business and the industry will be like in years to come is a skill that can guarantee that you will be around for the long haul. Right now, I have ideas and projects about things that I will be doing years from now. Being able to visualize your progression over time can become an extremely valuable tool to your enterprise.


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KEY BEHAVIOURS FOR AN ENTREPRENEUS

Are you adventurous?

I often compare the business world to a jungle. Perhaps it’s even more dangerous and ruthless than an actual jungle at times! To really enjoy the ride in the world of entrepreneurship, you need to be able to sustain yourself outside of your comfort zone and have a sense of adventure. I mentioned earlier how things never go as planned, so you need to be ready to face the unknown. That can be scary to some, but for the adventurous type, it’s something they can thrive on.


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SUCCESS STORIES…..

Mary Kay Ash.

The founder of Mary Kay Inc. started a cosmetics business. While she didn’t have a college education or any training, she successfully created a brand known throughout the world. To date, nearly half a million women have started Mary Kay businesses , selling cosmetics. Their appreciation for Mary Kay Ash is unwavering.


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Richard Branson.

Richard Branson is best known for his thrill seeking spirit and outrageous business tactics. He dropped out at the age of 16 and started his first successful business venture, Student Magazine. He is the owner of the Virgin brand and its 360 companies. His companies include Virgin Megastore and Virgin Atlantic Airway.


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Coco Chanel.

An orphan for many years, Gabrielle Coco Chanel trained as a seamstress. Determined to invent herself, she threw out the ideas that the fashion world deemed feminine, boldly using fabric and styles normally reserved for men. A perfume bearing her name, Chanel No. 5 kept her name famous.


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Simon Cowell.

Simon Cowell started in a mailroom for a music publishing company. He has since become an Artist and Repertoire (A&R) executive for Sony BMG in the UK, and a television producer and judge for major television talent contests including American Idol.


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Michael Dell.

With $1,000, dedication and desire, Michael Dell dropped out of college at age 19 to start PC’s Limited, later named Dell, Inc. Dell became the most profitable PC manufacturer in the world. In 1996, The Michael and Susan Dell Foundation offered a $50 million grant to The University of Texas at Austin to be used for children’s health and education in the city.


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Barry Diller.

Fox Broadcasting Company was started by a college dropout, Barry Diller. Diller is now chairman of Expedia, and CEO of IAC/InterActiveCorp which includes Home Shopping Network and Ticketmaster.


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Walt Disney.

Having dropped out of high school at 16, Walt Disney’s career and accomplishments are astounding. The most influential animator, Disney holds the record for the most awards and nominations. Disney’s imagination included cartoons and theme parks. The Walt Disney Company now has annual revenue of $30 billion.


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Debbi Fields.

As a young, 20 year old housewife with no business experience, Debbi Fields started Mrs. Fields Chocolate Chippery. With a recipe for chocolate chip cookies, this young woman became the most successful cookie company owner. She later renamed, franchised, then sold Mrs. Field’s Cookies.


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Henry Ford.

At 16, Henry Ford left home to apprentice as a machinist. He later started Ford Motor Company to manufacture automobiles. Ford’s first major success, the Model T, allowed Ford to open a large factory and later start the assembly line production, revolutionalizing the auto-making industry.


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Bill Gates.

Ranked as the world’s richest person from 1995-2006, Bill Gates was a college drop out. He started the largest computer software company, Microsoft Corporation. Gates and his wife are philanthropists, starting The Bill & Melinda Gates Foundation with a focus on global health and learning.


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Milton Hershey.

With only a fourth grade education, Milton Hershey started his own chocolate company. Hershey’s Milk Chocolate became the first nationally marketed chocolate. Hershey also focused on building a wonderful community for his workers, known as Hershey, Pennsylvania.


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Steve Jobs.

After attending one semester of college, Steve Jobs worked for Atari before co-founding Apple Computers. Now without the “Computers” in their name, Apple includes innovative products such as the iPod, iTunes, and most recently the iPhone. Steve Jobs was also the CEO and co-founder of Pixar before it merged with Walt Disney.


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Rachael Ray.

Despite having no formal training in culinary arts, Rachel Ray has made a name for herself in the food industry. With numerous shows on the Food Network, a talk show and cookbooks, high-energy Rachael doesn’t slow down. She has also appeared in magazines as well has having her own magazine debut in 2006. She knew she was a success when a website dedicated to bashing her was created.


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Ty Warner.

Sole owner, CEO, and Chairman of Ty, Inc., Ty Warner is a savvy, yet private business man. Ty, Inc., made $700 million in a single year with the Beanie Babies craze without spending money on advertising! He has since expanded to include Ty Girlz dolls, directly competing with Bratz dolls.


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SUCCESS STORIES

Frank Lloyd Wright.

Having never attended high school, Frank Lloyd Wright surpassed all odds when he became the most influential architect of the twentieth century. Wright designed more than 1,100 projects with about half actually being built. His designs have inspired numerous architects to look at the beauty around them and add to it.


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LESSONS…..

1. Think success. To attain the kind of success that you want, you need to dream big. Every success story starts with big dreams. You need to have big dreams for yourself - which you want to be somebody rich, famous or fulfilled. So if you want more money, say "I will have money" in every step of the stairs. This technique will reinforce your goal and keep it fresh in your consciousness.

2. Be passionate with what you do. You start a business to change any or all part of your life. To attain this change, you need to develop or uncover an intense, personal passion to change the way things are and to live life to the fullest. Success comes easily if you love what you do. Why? Because we are more relentless in our pursuit of goals about things that we love.


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LESSONS…..

3. Focus on your strengths. Let's face it; you cannot be everything to everybody. Each of us has our own strengths and weaknesses. To be effective, you need to identify your strengths and concentrate on it. You will become more successful if you are able to channel your efforts to areas that you do best.

4. Never consider the possibility of failure. Ayn Rand, in her novel The Fountainhead, wrote, "It is not in the nature of man - nor of any living entity, to start out by giving up." As an entrepreneur, you need to fully believe in your goals, and that you can do it. Think that what you are doing will contribute to the betterment of your environment and your personal self. You should have a strong faith in your idea, your capabilities and yourself.


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LESSONS…..

5. Plan accordingly. You have a vision, and you have enough faith in yourself to believe that you can achieve your vision. To achieve your vision, you need to have concrete goals that will provide the stepping-stone towards your ultimate vision. Put your goals in writing; not doing so just makes them as intangible fantasies. You need to plan each day in such a way that your every action contributes to the attainment of your vision.

6. Work hard! Every successful entrepreneur works hard, hard and hard. No one achieves success just by sitting and staring at the wall every single day. Brian Tracy puts it out this way, "You work eight hours per day for survival; everything over eight hours per day is for success." If you are in a start-up phase, you will have to breathe, eat and drink your business until it can stand on its own.


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LESSONS…..

7. Constantly Look for Ways to Network. In business, you are judged by the company you keep - from your management team, board of directors, and strategic partners. Businesses always need assistance, more so small businesses.

8. Willingness to Learn. You do not need to be a MBA degree holder or PhD graduate to succeed in your own business. In fact, there are a lot of entrepreneurs who did not even finish secondary education. Studies show that most self-made millionaires have average intelligence. Nonetheless, these people reached their full potentials achieved their financial and personal goals in business because they are willing to learn.


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LESSONS…..

9. Persevere and have faith. No one said that the road to success is easy. Despite your good intentions and hard work, sometimes you will fail. Some successful entrepreneurs suffered setbacks and resounding defeats, even bankruptcy, yet managed to quickly stand up to make it big in their fields. Your courage to persist in the face of adversity and ability to bounce back after a temporary disappointment will assure your success.

10. Discipline yourself. Thomas Huxley once said, "Do what you should do, when you should do it, whether you like it or not." Self-discipline is the key to success. The strength of will to force yourself to pay the price of success - doing what others don't like to do, going the extra mile, fighting and winning the lonely battle with yourself.


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KEY TAKE HOMES…..

1. Do what you enjoy. 2. Take what you do seriously. 3. Plan everything. 4. Manage money wisely. 5. Ask for the sale. 6. Remember it's all about the customer. 7. Become a shameless self-promoter (without becoming

obnoxious). 8. Project a positive business image. 9. Get to know your customers. 10. Level the playing field with technology. 11. Build a top-notch business team. 12. Become known as an expert.


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KEY TAKE HOMES

13. Create a competitive advantage. 14. Invest in yourself. 15. Be accessible. 16. Build a rock-solid reputation. 17. Sell benefits. 18. Get involved. 19. Grab attention. 20. Master the art of negotiations. 21. Design Your workspace for success. 22. Get and stay organized. 23. Take time off. 24. Limit the number of hats you wear. 25. Follow-up constantly.


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Innovation & Entrepreneurship

April 19, 2023

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SFIMAR.MMS.IV.EM.BJH

Presentation OutlineEntrepreneurship and marketingInnovation process Intellectual Property RightsUniversity research and Technology

TransferIntellectual Property Rights and

DevelopmentTechnology adoption and diffusionMarketing and adoption

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EntrepreneurshipENTREPRENEURS MAKE THINGS

HAPPEN.

They are individuals who take a concept and convert it into a reality. A product, policy or institution.

They become the champions of a new process, and they are engines of change.

Entrepreneurship occurs in all areas of life. In business, academy, government and NGOs.

Entrepreneurs are everywhere.Entrepreneurship can be used for good and

evil.

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Entrepreneurs Can Be Encouraged and Promoted

Openness to new ideas, freedom from investigation of operation, and promotion and pay based on merit encourage entrepreneurship.

Excessive regulation, rigid hierarchy, lack of freedom, and excess control discourage entrepreneurship.

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Requirements of Entrepreneurs

Entrepreneurs need a keen eye to understand economic, social, and scientific realities and the capacity to understand evolutionary processes in the future.

They need to understand how institutions work, and individuals react in order to introduce activities and products that serve peoples’ need and that are sustainable economically and politically.

Entrepreneurs also need dedication and commitment and the capacity to overcome failure.

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Entrepreneurship and society

To encourage entrepreneurship, society should tolerate failure and give people a second chance. .

Obviously, people need to pay for their mistakes, but if the payment is too high, people will not dare or take risk.

Effective legal system is essential for positive entrepreneurship

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Marketing & environmental leadership

A leader may have to sell ideas, promote concepts, raise funds, recruit followers-which requires marketing.

Environmental issues are abstract and removed from the daily reality for most people- marketing environmental issues is a challenge.

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What Are Innovations?

Innovations are new ways of doing tasks.

It is useful to distinguish between process innovations and product innovations.

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The Innovation ProcessAn innovation starts as a concept that is

refined and developed before application.Innovations may be inspired by reality. The

innovation process, which leads to useful technology, requires: Research Development (up-scaling, testing) Production Marketing Use

Experience with a product results in feedback and leads to improved innovations.

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The Innovation ProcessFigure 1. Typical steps in the life cycle of a new technology

Research

Patentingand

Approval

Adoption

Development

Production

Marketing

Discovery

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Technology Adaptation and Appropriateness

Rarely is the same technological solution optimal everywhere. The value of an innovation depends on socio-economic,climatic, and ecological specifics it calls for.

Important innovative activities adapt technological solutions to specific conditions. Export of technologies across regions without

adaptation may lead to negative environmental side effects and waste.

A technology may have several versions to meet needs and capabilities of various users in a region, e.g., large vs. small farmers’ versions of a machinery.

The establishment of an innovative capability starts with a buildup of capacity to support and adopt innovations and new technologies.

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Induced Innovations

Innovations respond to need and economic conditions. Inventors, investors, and researchers put effort into solving problems, and that leads to innovations. Labor shortages led to mechanized equipments. Drought conditions led to improved irrigation. Energy crises led to higher efficiency cars. Farmers’ cooperatives were established during periods

of excessive low farm prices.

Environmental regulations trigger cleaner technologies. A tax on carbon will lead to improved stoves and power

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Various Types of Innovators• In the past most innovations were introduced

by practitioners. • The scientific discoveries of the late 19th

century gave rise to science-based innovations (Edison, Bell, Marconi).

• Major companies (IBM, Sony, Bell, Kodak, GM) built their own research labs.

• Public sector labs made important agricultural and environmental discoveries.

• Universities and start-up companies are becoming major sources of new innovations.

• The ownership of a technology and leadership in its applications move between organizations over time.

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Incentives for Innovations• Patents: Awards monopoly rights for 17-20 years.– Patent protection allows publication of research findings

that leads to innovations.– Patent rights (for certain applications) can be transferred.– Patents are valid only where they are registered.

• Copyright protection: Pertains to books, brand names, and the media.

• Trade secrets: Protects against thefts.• Plant breeders’ right: Allows exclusive sales of

varieties and allows farmers to reuse seeds.• Prizes: Awarded to winners of a contest for finding

a technical solution to a problem. • Indigenous knowledge is poorly protected.

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IPRs and Development

• Investments in R&D and new products will be much lower without the expected monopoly gains.

• Local industry and foreign investors benefit from patent protection, as is already the case in India.

• IPR constraints may inhibit domestic companies’ ability to develop new products.

• Added IPR knowledge may lead to gains:– Production for local markets does not require obtaining

rights to patents that are not registered locally.– Developing countries can trade access to bio-diversity for

access to technology. They can reach special agreements with universities and companies.

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Investment in Research: A Key Element of Environmental Policies

• Research enables discovery of basic environmental problems.

• Research provides better monitoring and management equipment to help identify environmental problems and monitor response.

• Public research enables sustaining development of technologies that may not be economical under existing prices.

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Division of LaborBasic research: Gain more comprehensive

knowledge or understanding of the subject under study, without specific applications in mind. Conventionally conducted by universities.

Applied research: Apply knowledge. Often conducted by industries.

Educational-industrial complex: University research has led to the creation of new firms and even industries, brought old ones down, and, in general, profoundly impacted rates of innovation in the larger economy.

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Stakeholders in the Innovation Process

Universities, including research scientists, university administrators, and designated officers of technology transfer.

Entrepreneurs, including start-up companies and venture capitalists.

Incumbent corporations.Potential technology adopters and downstream

producers who will use the technologyGovernment regulators.Environmental and other special interest

organizations.Consumers.

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Why Universities Do Not Do What Companies Do and Why Companies Do Not

Do What Universities Do

1. Uncertainty: Uncertain outcome of basic research.

2. Inappropriability or ‘nonmarketability’: Some results from basic research are not appropriable, because they occur at such fundamental levels of scientific analysis.

3. Spillovers: Some results from basic research can easily spill over to competitors in the same line of business that the results may actually help the competitors more than they help the company that conducted the initial research.

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Institutional Arrangements: Incentives to University

ResearchersFormulas for the allocation of OTT revenues from license royalties:-Most common formula: Equal sharing among the university (33%), the department (33%), and the employee inventor (33%).

-Another common formula: 50%-50% sharing between the university and the inventor.-Average net revenue distributions: University (35%), department (25%), and faculty inventor (40%).

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Trends in Entrepreneurial Start-Ups Based on University Technologies: 1980 to 1999

Year(s) Number of institutions reporting Start-ups formed

1980-93 N=154 1,169

1994 N=156 241

1995 N=172 223

1996 N=168 248

1997 N=171 333

1998 N=176 364

1999 N=188 344

Total 2,922

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Adoption and Diffusion

The use of new technologies spreads gradually. There is a significant time lag between the time a

new innovation is introduced and when it becomes widely used by producers or consumers.

Diffusion is the aggregate process of product penetration. It is measured by the percentage of potential users who

actually adopt a technology. Diffusion curves measure aggregate adoption as a

function of time. They tend to be S-shaped.Adoption = Decision by a specific individual to

use a technology. Diffusion is aggregate adoption.

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The S-Shaped Diffusion Curve

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Stages of Diffusion

We distinguish among: Early adopters: More educated, innovative

individuals who gain from technology. Followers: The majority of adopters who see its

success and want to join in. Laggards: Less-advanced individuals who either

do not adopt or adopt very late

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Adoption as Imitation

Some explain the S-shaped behavior as the outcome of imitation.

Contact among individuals is the driving force of diffusion.

Profitability of the new technology, ease of use, and quality of technical support are factors that can enhance diffusion.

VCRs, wireless communication, Bt cotton were technologies with a fast rate of diffusion, while personal computers had slower adoption rates.

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Threshold ModelThe factors behind diffusion:

Heterogeneity of potential adopters. The individual decision process aimed at improving

well-being. Dynamic forces that make technology more

attractive.

Source of heterogeneity (size, location, and human capital).

Decision criteria (profitability, well-being, risk minimization).

Dynamic processes that drive adoption (learning by doing, learning by using, network benefits).

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Application of the Threshold ApproachMechanical innovations: Tractors and cars

are adopted by larger farms and richer families.

In the case of a tractor,L = size of farma = saving per acreP = cost of tractor

Adopt if P > aLL = P/a critical size.

Critical size declines because P declines. As a result of learning by doing, a increases as a result of learning by using.

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Other ExamplesWater-conserving technologies (sprinklers)

increase water-use efficiency if: With traditional technology, 50% of applied water is actually

consumed. 75% is consumed with sprinklers. It results in higher yield and water saving.

Technology adoption occurs: In sandy soils and hills where the traditional technology is

especially inefficient. Locations where the price of water is high. With high-value crops.

Green Revolution technologies are high-yield varieties that require complementary inputs (fertilizers and sometimes water). They are adopted when: They have high yield and cost effects. Farmers have access to credit.

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Adoption and Risk• Impacts of technologies are unknown. Risk

considerations slow adoption.• One approach in assessing a technology:– Maximize Expected benefits- risk

• where is a coefficient of risk aversion.• Risk may be measured by a variance of profit.

• Policies that reduce risk include– insurance (crop insurance enhances adoption)– Diversification.

• An alternative approach: Select the technology with the highest benefit given that it yields minimum required benefits at the worst case scenario. This approach aims to assure sufficient resource during drought.

• Good inventories, banking systems, and asset accumulation possibilities reduce the need for protection against risks.

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Adoption, Credit, Location, and Education

Lack of credit and high cost of credit are major impediments for adoption.

Poorer consumers and farmers may be more constrained by risk and credit constraints.

Adoption may be slower at far away locations because of less access to information and sources of technology, higher cost of inputs. In some cases, however, early adopters are at distance locations(if technology reduces transportation costs).

Adoption requires a high learning cost -more educated individuals tend to be early adopters. When the technology is simple, sometimes less sophisticated individuals adopt first.

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Adoption and Policy• The government may enhance adoption

through positive incentives such as:– Price support of products produced with technologies.– Extension and education.– Credit subsidies.– Insurance schemes.– Cost-sharing arrangements.

• Negative incentives– Regulation against existing technologies (pesticide

regulation enhances biotechnology).– Higher cost of inputs used intensively with existing

technologies (water price hikes).• Key elements of environmental policy are incentives to

– Induce innovation of greener products.– Induce adoption of cleaner products.

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Timing of AdoptionSometimes it is worthwhile to wait and

see and not adopt immediately when benefits of technology exceed costs.

Cost of technology may decline over time. You should wait if the reduction in technology cost> than the cost of waiting.

When a technology has uncertain irreversible outcomes- waiting to learn more is prudent.

Waiting prevent the opportunity of learning and improving a technology- the gains from waiting should be compared to the costs.

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Government & adoption• Governments and NGOs are promoting and

encouraging adoption of technologies

• Government is using incentives, initiate advertisement and promotional campaigns.

• Extension is an institution used for education and support of diffusion processes. – Extension should complement private sector marketing of new

technology -not replace it. – In some cases extension’s clientele are mostly technology

providers-not users– Extension role is to provide balanced assessments of new

technologies not advocate them.– Extension role is adaptation of technology– Extension may initiate and implement institutional innovations

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Small Scale and Ancillary IndustriesSmall scale industrial units are those

engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) does not exceed Rs.1 crore. The investment limit of Rs. 1 crore for classification as SSI has been enhanced to Rs.5 crore in respect of certain specified items under hosiery, hand tools, drugs & pharmaceuticals, stationery items and sports goods by the Government of India.


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1.2. Tiny EnterprisesThe status of ‘Tiny Enterprises’ may be given

to all small scale units whose investment in plant & machinery is up to Rs. 25 lac, irrespective of the location of the unit.


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Small Scale Service & Business Enterprises

Industry related service and business enterprises with investment up to Rs. 10 lac in fixed assets, excluding land and building will be given benefits of small scale sector.


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Indirect finance in the SSI sector will include credit to :

Agencies involved in assisting the decentralized sector in the supply of inputs and marketing of outputs of artisans, village and cottage industries.

Government sponsored Corporation/ organizations providing funds to the Weaker sections in the priority sector.

Advances to handloom co-operatives.


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Term finance/loans in the form of lines of credit made available to State Industrial Development Corporation/State Financial Corporations for financing SSIs.

Credit provided by banks to Khadi and Village Industries Commission (KVIC) under the scheme for provision of credit to KVIC by consortium of banks for lending to viable Khadi and Village Industrial Units.

Funds provided by commercial banks to SIDBI/SFCs will be eligible for inclusion under the priority sector as indirect finance to SSI.


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Loans for setting up industrial estates.All advances to KVI sector, irrespective of their size of

operations, location and investment in plant and machinery, will be covered under priority sector advances.

Manufacture of common salt through any process may be considered as an industrial activity and credit provided by banks to units engaged in the manufacture of common salt which satisfy the norms of SSI Unit may be classified under advances to SSI.

1.10 Water mills (Gharat) has been recognized as an industrial activity and shall be eligible for registration as small scale industry.


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Units engaged in ship breaking/dismantling are composite ones which also undertake the processing of scrap thus obtained and hence the entire activity can be covered under processing.

Bank loans to bought leaf factories manufacturing tea are to be reckoned as priority Sector lending to small scale industry, provided the investment in plant and machinery (original cost) does not exceed the prescribed limits.


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The following items within the food and agro-based processing sector would be eligible for classification as priority sector for lending by banks :

Fruit and vegetable processing industryFood grain milling industryDairy productsProcessing of poultry and eggs, meat productsFish processing


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Bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery (including cocoa processing and chocolate), malt extract, protein isolate, high protein food, weaning food and extruded/other ready to eat food products

Aerated water/soft drinks and other processed foodsSpecial packaging for food processing industriesTechnical assistance and advice to food processing

industriesThe food and agro-based processing units of small

and medium size with investment in plant and machinery the investment ceiling (up to Rs. 5 crore) has been altogether withdrawn.


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Software IndustryLoans to software industry with credit limit

upto Rs. 1 crore from the banking industry to be included under this item.


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2.2 Venture CapitalInvestment in Venture Capital will be eligible for

inclusion in priority sector, subject to the condition that the venture capital funds/companies are registered with SEBI.

However, fresh investments that may be made by Bank on or after July 1, 2005 shall not be eligible for classification under priority sector lending and the investments, which has already been made by Bank up to June 30, 2005, shall not be eligible for classification under priority sector lending with effect from April 1, 2006.


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Lines of Credit

Banks may consider on merit, proposals received from State Industrial Development Corporations (SIDCs) and State Financial Corporations (SFCs) for sanction of term Finance/loans in the form of lines of credit.

Such term finance/loans to the extent granted for/to the Small Scale Industrial (SSI) Units, will be treated as priority sector lending, subject to the observation of following Conditions:


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SFC/ SIDC should maintain separate and distinct accounts of fresh disbursements made to SSI units and outstanding amounts there against.

Periodical statements to be obtained from SFC/ SIDC to monitor the position.

Annually, a certificate issued by SFC/ SIDC statutory auditors certifying that the outstanding borrowings from banks were fully covered by the non-overdue loans outstanding in respect of fresh disbursements made to SSI units from out of term finance/ lines of credit granted by banks.


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The rate of interest to be charged by banks on such term finance/ loans/ lines of credit will be in conformity with the directives on interest rates issued by the Reserve Bank from time to time.

3.3 In order to ensure adequate credit to this sector, the credit requirements of village industries and other SSI units having aggregate fund-based working capital limits upto Rs. 5 crores from the banking system, will be computed on the basis of a minimum of 20 percent of their projected annual turnover for new as well as existing units.


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Bills Rediscounting

Funds provided by SIDBI to Commercial banks by way of rediscounting of bills of SSIs which are originally discounted by a commercial bank and rediscounted by SIDBI will be eligible for inclusion under the priority sector as indirect finance to SSI.

4.2 Funds provided by commercial banks to State Financial Corporations (SFCs) by way of rediscounting of bills of SSIs earlier discounted by the SFCs will be eligible for inclusion under the priority sector as indirect finance to SSI.


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Leasing and Hire Purchase

Para-banking activities such as leasing and hire purchase financing undertaken departmentally by bank will be classified as priority sector advances, provided the ultimate beneficiary satisfies the criteria laid down by RBI for treating such advances as advances to priority sector.


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COMMON GUIDELINES/INSTRUCTIONS for LENDING TO SSI sector

Based on the recommendations made by the Working Groups and High Powered Committees, appointed by the Government of India and the Reserve Bank of India, a set of comprehensive guidelines to be followed for advances to all categories of borrowers in the SSI sector were evolved.


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Processing of Applications

Bank should give acknowledgement for loan applications received from the borrowers.

All loan applications for SSI up to a credit limit of Rs.25,000/- be disposed of within 2 weeks and those up to Rs.5 lac within 4 weeks and those above Rs.5 lac. within 8 to 9 weeks provided the loan applications are complete in all respects and accompanied by a ‘check list’.


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Register of Rejected Applications

A register should be maintained at branch wherein the date of receipt, sanction/rejection/ disbursement with reasons therefore etc., should be recorded. The register should be made available to all inspecting agencies.

Rejection of applications for fresh limits/ enhan- cement of existing limits should not be done without the approval of the next higher authority.

Sanction of reduced limits should be reported to the next higher authority immediately with full details for review and confirmation.


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Assessment of working capitalGuiding formats for appraisal of SSI loan

proposal up to Rs. 25 lac and up to Rs. 2 crore have been shown in Appendix.

Margin15% to 25% as per H.O. guidelines and

prevailing schemes of the bank.


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Composite loanA composite loan limit of Rs.1 crore can be sanctioned

by banks to enable the SSI entrepreneurs to avail of their working capital and term loan requirement through Single Window.

2.8. Delayed paymentUnder the Amendment Act, 1998 of interest on

Delayed Payment to Small Scale and Ancillary Industrial Undertakings, penal provisions have been incorporated to take care of delayed payments to SSI units which inter-alia stipulates a) agreement between seller and buyer shall not exceed more than 120 days,


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b) payment of interest by the buyers at the rate of one and a half times the prime lending rate (PLR) of SBI for any delay beyond the agreed period not exceeding 120 days. Further, Bank has been advised to fix sub-limits within the overall working capital limits to the large borrowers specifically for meeting the payment obligation in respect of purchases from SSI.


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Revised guidelines on rehabilitation of sick SSI units (based on Kohli Working Group recommendation)

Following are broad parameters for grant of relief and concessions for revival of potentially viable sick SSI units.

Interest on Working Capital Interest 1.5% below the prevailing fixed/prime lending rate, wherever applicable

Funded Interest Term Loan Interest Free Working Capital Term Loan Interest to be charged 1.5% to

3% below the prevailing fixed/prime lending rate, wherever applicable.

Term Loan Concessions in the interest to be given not more than 2% (not more than 3% in the case of tiny/decentralized sector units) below the document rate.


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Term Loan Concessions in the interest to be given not more than 2% (not more than 3% in the case of tiny/decentralized sector units) below the document rate.

Contingency Loan Assistance The Concessional rate allowed for Working Capital Assistance.


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Mode of Disbursement of LoanAs far as possible, disbursement of loan

amounts sanctioned should be made directly to the suppliers of inputs such as raw materials implements, machinery, etc. However, Bank may continue the practice of obtaining receipts from borrowers.


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Repayment Schedule

Repayment programme should be fixed taking into account the sustenance requirements, surplus generating capacity, the break-even point, the life of the asset, etc., and not in an "ad hoc" manner. In respect of composite loan up to Rs.50,000/- to artisans, village and cottage industries, repayment schedule may be fixed for term loan component only (subject to SIDBI’s requirements being fulfilled).

In the case of other borrowers affected by natural calamities, banks may convert drawings in excess of the value of security into a term loan repayable over a reason- able period of time and provide further working capital and extend/re-phase the instalements due under term loans.


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Rate of Interest, Penal Interest

Interest shall be charged at a rate as prescribed by Head Office from time to time. Interest shall be charged on this outstanding debit balance on working capital and on reducing balance in case of term loan.

No penal interest should be charged by banks for loans under priority sector up to Rs.25,000/-. However, the issue of charging penal interests that should be levied for reasons such as default in repayment, non-submission of financial statements etc. have been incorporated in the Lending Policy of the Bank for loans above Rs.25,000/-


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Service Charges/ Inspection Charges

No service charges/inspection charges should be levied on priority sector loans up to Rs.25,000/-

For loans above Rs.25,000/- ---- as per H.O. Guidelines.


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. Insurance against Fire and Other Risks

Table showing insurance exemption for the Category, Risk and the assets is given below:

All categories of priority sector advances upto and inclusive of Rs.10,000/-Fire & Other risksEquipment and current assets(b) Advances to SSI sector upto and inclusive of Rs.25,000/- by way of –Composite loans to artisans, village and cottage industriesAll term loansWorking capital where these are against non-hazardous goods FireFire Fire Equipment and current assetsEquipmentCurrent Aeests


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9. Photographs of borrowers For the purpose of identification, branch

should make arrangements for the photographs and also bear the cost of photographs of borrowers falling in the category of Weaker Sections.

These guidelines are subject to any instructions that may be issued by the RBI from time to time.


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Annexures

A.General Guidelines on SSI Sector Landing—A - I and A - II

B.Check-list for SSI EntrepreneursC.Check-list for Branch Managers--- SSI

ProposalsD.The guiding formats for Appraisal of SSI

Loan Proposal up to Rs. 25 lac and also above Rs. 25 lac to Rs. 2 crore have been given in Appendix.


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