Shivaji University, KolhapurFaculty of Commerce

Workshop on Revised Syllabus of B. Com. Part- IISemester III &IV

( New Syllabus introduced from June, 2014)

Subject :- Fundamentals of EntrepreneurshipPresentation by

Dr. S. D. Goral

RBM Mahavidyalaya Chandgad,Dist: Kolhapur

August-12, 2014

Unit III : Entrepreneurship Development Concept - Objectives – Process- Problems and Measures of EDP in India – Institutional Support for Entrepreneurship Development -EDI, NIESBUD, NISIET, SIDO, SIDBI, TCO (Technical consultancy organization )DIC.(15 Periods)

Introduction:-Entrepreneurship is a process undertaken by to augment his business interests. It is an exercise consisting of innovation and creativity, that will go for establishing the business enterprise. The entrepreneur possess many qualities and performs entrepreneurial functions. Entrepreneurship involves taking of risk and making decisions under uncertain conditions . It also consists of planning, decision making and innovation, so as to increase the production of economy.

Entrepreneurship is a composite skill , it is a the result of mix of many qualities which includes- imagination, idea generation, planning, readiness to bear the risk, organize factors of production and put them into use , ability t mobilize scientific and technological advancement.

In the process of entrepreneurship a practical approach is necessary to implement an idea generated by an entrepreneur . Personal motives and aspirations put an individual in the entrepreneurship. Entrepreneurship lies in the ability to minimized the use of resources and maximize the output. Without the awareness of quality and desire for excellence, entrepreneurship cannot stand for long period. Today in entrepreneurship is product of team work.

The Concept of Entrepreneurship DevelopmentEntrepreneurship is an important element in the process of economic development of any country. Entrepreneurial competence makes all difference to rate of economic growth and also for the development of various sectors ( agriculture, industry and service) in economy. Existence of entrepreneurship in an economy identifies and promotes the business enterprises. Entrepreneurship is a propensity of mind to take a calculated risk with confidence to achieve the predetermined objectives of business enterprise. Entrepreneurship is associated with an individual, with a group of individuals, with a family or may be with a particular community which engage themselves in commercial and industrial activities.

Entrepreneurship itself is a complex phenomenon , some thinks it as a job of innovation, some as managers of enterprise , some as bearers of risks and others as mobilizes and allocators of capital. In India context entrepreneurship may be considered as creators of economic wealth for self and society at large through commercial and productive activities.

Therefore, Entrepreneurship Development means all those activities aiming at development of individuals in such a way that an urge is ignited for becoming an entrepreneur.

Phases of Entrepreneurship Development

Phase-I. Initial- Creation of awareness about the entrepreneurial opportunities.Phase-II. Developmental- Implementation of training program to develop motivation and management skills.Phase-III. Support- Infractural support of counseling, assisting to establish new enterprise and to develop existing units.

Meaning of EDP:- Entrepreneurship development program is a program designed to help an individual in strengthening his entrepreneurial motive and acquiring skill and capabilities necessary for planning his entrepreneurial role. ( Vasant Desai).The process of entrepreneurship development program includes equipping a person with the information used for enterprise building and sharing his entrepreneurial skills. The objective is to motivate a person for entrepreneurial career and to make him capable of perceiving and exploiting successfully opportunities for their enterprise .

EDP means, a program designed and organized to inculcating entrepreneurial traits into a person, imparting the required knowledge, developing the technical, financial marketing, managerial skill and building entrepreneurial attitude.Objectives of EDP

Objectives of Entrepreneurship Development :1. To develop and strengthen entrepreneurial quality and motivate entrepreneurial instinct among the perspective entrepreneurs2. To provide information to the perspective entrepreneurs regarding opportunities to initiate business enterprises3. To prepare the mind set of perspective entrepreneurs to bear the risk and search for innovation 4. To help in analyzing various to select the most appropriate product suiting to the entrepreneur and the market5.To understand process and procedure to set up a business enterprise 6. To Formulating the detailed project report. 7. To Develop various business related skill.8. Preparing for team building , technology up gradation and growth9. To acquire managerial skills10. To know about the various Government schemes available to help and support the business enterprises .( Rapid economic development, employment generation, rural industrial development, develop various epr.& mgr skill, innovation11. To acquaint and appreciate the needed social responsibility and entrepreneurial discipline

Process of Entrepreneurship DevelopmentIt is necessary to promote the understanding of motives and motivational pattern and impact on behavioral and entrepreneurial values among the individuals. EDP is recognized as an effective human development program which makes and individual to organized and process the resources , produce goods and services . Entrepreneurship development helps in generation of employment , promotion and development of ssi. It helps to develop backward regions. Entrepreneurship Development Process consists of entrepreneurial training which has three phases. These are as follows:

I. Pre-Training Phase : Pre training phase involves main structure for launching the entrepreneurship development program.

1.making availability of infracture for training,2.preparation of course material, 3.arrangement of facilities,4.designing tools and techniques for selection of perspective entrepreneur 5.selection of training program 6.identification of and selection of potential entrepreneurs 7. providing essential motivation for such entrepreneurs.

II. Training Phase : This phase involves actual implementation of Entrepreneurship Development Program . In this phase a proper guidance for setting up of enterprise is given training program

1. Focus on behavioral input2. Business opportunity guidance3. Information about project planning4. Managerial inputs5. In plant and off the plant training6. Change of attitude7. Goal setting8. Self assessment9. Introduction of E’pr and E’prship10. Motivational aspects11. Psychological gains12. Managerial training13. Project feasibility study14. Plant visit

III. Post Training Phase

1 .Assessment of objectives of ED That have been achieved2.Strength and weaknesses of EDP identified3.Efforts to eliminate the weakness 4.Incorporation of suggestions if any at the the time of designing the next program5.Maitain ;the records and files of trainees6.Keeping the rapport with the trainees by the institution7.Frequent with the trainee by the institution8.Follow up with trainee regarding their business for further advice if necessary

Problems of EDP

1. Lack of coordination among various institutions2. Problem of priority (Capital, raw material, guidance, trg, concessions)3. Lack of expert trainers-inefficiency technical, marketing4. More number of Institutions- DIC, MCED5. Lack of long term planning6. Lack of resources7. Institutions work mechanically8. Sick units9. Inefficient trainers- Not up to the mark in motivating the trainees10. Identification of wrong projects11. Trained trainees expect employment/Selection of wrong trainees12. Lack of entrepreneurial environment and culture( non conductive env.)13. No support from the other(bank) institutions to the training institutions14. inefficient attitude of supporting agencies like banks

Measures to solve the problems of EDP in India

1. To establish coordination among the various institutions imparting training

2. One window scheme

3. To set the priority

4. Appointment of expert trainers

5. Nurturing of new enterprises

6. Revival of sick units ( BIFR)

7. Long term policy formulation

8. Efficient support from other institutions

Institutional Support for Entrepreneurship DevelopmentVarious state and national organizations are organizing EDP to support the ED in India. EDI, NIESBUD, NISIET, SIDO, SIDBI, TCO (Technical consultancy organization )DIC.

1.Entrepreneurship Development Institute of India (EDII)1983-HO-Ahmedabad- (IDBI, ICICI, IFCI and SBI formed in the beginning as a apex inst. for ED at national level)Objectives1.To augment the supply of Inds. Eprs. through education and training2.To produce opportunities for self employment3.Improve managerial capabilities of SSI4.To contribute to the dispersal of business ownership an to expand the social base of industry5. To create new knowledge in entrepreneurial theory and practice through research6. Training program for trainers7. Professional assistance to various institutions tor their entrepreneurial activities8.To collaborate with similar org. in India and abroad.

Target Group- Technical employees, other employees, young engineers, artisans, craftsman, traders.

Functions-1. Organization of EDP2. Generation and dissemination of new knowledge3. Trainers training programs4. Conducting ;seminars ;and ;workshops5. Extension motivation programs for officers of various agencies6. performance improvement programs for existing entrepreneurs7. EDP appreciation and awareness program.8. Orientation programs of NABARD officers

2. National Institute for Entrepreneurship and Small Business Development (NIESBUD)1983-New Delhi, Ministry of Industry Govt. of India- Apex body for coordination the activities of the various institutions and agencies.Objectives1. To accelerate the process of ED.2. To help Inst ;and agencies in carrying out activities3. To Evolve std. process of selection and training , support , and sustenace

of potential Eprs to set and run Enterprises successfully4. To provide information for all to trainers ;and researchers5. To provide functional forums for integration and exchange of experiences

helpful for policy formulation and modification of various levelsFunctions1.Effectilve trg, strategy and ;methodology2. Std. model syllabi for various target group3. Formulate scientific selection procedure4. Developing trg. Aids manuals and tools5. Facilitating and supporting various agencies in execution of EDP6. Publishing literature fro furtherance of Eship.7. Org. activities which help to develop Epr culture

3. Technical Consultancy Organization (TCOs)A network of technical consultancy organizations (TCOs) was estd by all financial institutions (IDBI, IBCI, ICICI in collaboration with state level financial institutions)was set up in 1970. There are 17 TCOs in the country. Some of them are covering ;more than one state. TCOs have been set up to provide a package total consultancy services to state government, financial institutions and banks.

Functions

1. To prepare project profiles and feasibility profiles2.To undertake industrial potential survey3. To identify potential entrepreneurs and provide them technical and managerial assistance4. To undertake market ;research and surveys for specific products5. To supervise the project where necessary, render tech. and admn. Assistance6.To undertake export consultancy for export oriented project7. To conduct EDP8. To offer merchant banking services9. Undertaking technological upgradation program

The TCOs are:

1. Andhra P. Industrial and TCO Ltd.2. Bihar Industrial and TCO Ltd. 3. Gujarat Industrial and TCO Ltd. 4. Haryana- Delhi Industrial Consultants Ltd. 5. Karnataka Industrial and TCO Ltd. 6. Maharashtra Industrial and TCO Ltd. 7. North-Eastern Industrial and TCO Ltd. 8. J& K Industrial and TCO Ltd. 9. North India TCO Ltd.10. Orissa Industrial and TCO Ltd. 11. Himachal Pradesh Consultancy Org. Ltd.12. West Bengal Consultancy Org. Ltd.13. Rajasthan Consultancy Org. Ltd.14. Madhya Pradesh Consultancy Org. Ltd.15. North Eastern Industrial consultants Ltd.16. U.P. Industrial consultants Ltd.17. Industrial and TCO of Tamilnadu Ltd.(Technical Consultancy Organization)

4. National Institute for Small Industries and Extension Training ( NISIET)

1956-HO_ Hyderabad Estd by Central Gove. To develop the required manpower for running ssi in the country. The institute is registered as an autonomous institute under the Societies Registration Act.

Objectives1. To train the Govt. officers who are related to the development of industries 2. Area development- study available resources, structures program3. Management Dev. Program for the officers of the state and central Govt.4. Research in small scale sector- to have balanced regional development

Functions1. To impart training toe the persons engagd in ssi2. To undertake research in ssi3. To provide consultancy 4. To undertake EDP and MDP

5. Small Industries Development Organization (SIDO)

SIDO is known as the office of Development Commissioner(SSI), under the Dept. of SS & Agro and Rural Industries, Ministry of Industry, Govt. of India, New Delhi. Having its 28 offices and 31 branch institutes(SISI).

Objective1. To act as the nodal agency for the development of this sector. Coordinating

and monitoring the policies and programs for promotion of SSI.

2. To undertake various programs of training , consultancy , evaluation for needs of SSI and development of industrial estates.

Functions/ ActivitiesI.SISI-28 and Branch Institutes-30- Provides:Economic/information/EDP consultancyTrade market informationProject profilePotential surveyModernization in plant studiesWorkshop facilitiesTraining in various trade activities

II. Regional Testing Centres(4) and Field Testing CentresTesting facility, program, and consultancy services

III. Tool Rooms/ Tool Design Institutes (10)Assistance in tool design, manufacture of tools, training facilities to tool makers, common service facility and consultancy.

IV. Process cum Product Development Centres ( 6)Product design and innovation, product and process improvement, development of improved packaging techniques, common facility centre and manpower development.

6.Small Industries Development Bank of India (SIDBI)

Head Office at Lucknow, with a network of 5 regional offices and 33 branch offices in all states. Set up in 1989 as wholly owned subsidiary of the IDBI by an Act of Parliament.

ObjectivePromoting, financing and development of industries in the small scale sector and for coordinating the functions of other institutions engaged in similar activities. Functions1. Provide term finance to SSI2. Provide finance to artisans, village and cottage unites, road transport operators3. Refinance through Primary Lending Institutions(SFCs, SIDCs and banks)4. Bill discounting of SSI5. Direct finance to specialized marketing institutions 6. Assistance to well run Cos on selection basis for acquiring assets7.All SSI eligible for assistance – debt equity ratio is 3:1(laon up to Rs. 10 lac)

7. District Industries Centers (DIC)The DICs program was started on 8th May, 1978with an objective to provide integrated administrative framework at the district level for the promotion of SSI in rural areas .1. A single window interacting agency at district level .2. Service and support to small entrepreneurs under single roof 3. Registration of small industries 4. To implement the schemes such as SEPUP and PMRY

Functions1. To conduct industrial survey- availability of resources, techno eco. Survey2. To provide investment advice3. To prepare action plan to implement the scheme4. To guide entrepreneurs- assets, exports 5. To appraise worthiness of proposals6. To assist in marketing – in exports too7. To undertake product development8. To conduct artisan training program

Unit IV : Micro, Small and medium Enterprises (MSME)Definition - importance – MSME-Policy in India after 1991.- problems & remedies of MSME. - Franchising –

concept, characteristics & importance.(15 Periods)

MSME- IntroductionMSME plays a vital role in the process of industrialization of a country. It provides immediate and large scale employment to the country. It have a higher labor capital ratio. This means in anticipation to the capital investment, these enterprises generate more employment as compare to large scale industries. The LDCs and DCS have a problem of capital, therefore these countries can’t prefer industrialization through LSI. In addition this these countries require to generate employment opportunities to face the problem of increasing population. MSME offers a method of equitable distribution of national income and mobilizes the available resources in an economy . MSME Stimulate the growth of industrial entrepreneurs . These entrepreneurs manufactures a wide variety of goods and services in different product lines . The country, like India, it is the virtue for the development of industrialization the existence of MSME is essential. There is diversity in geographical env. Agri. Env. And socio-cultural env. In India. The different natural resources are available in different parts of the country . Considering ;the availability of resources, diverse environment, different skill at different regions it is essential to industrialization through MSME. This will help to use local resources local skills, allow to use moderate technology and help to generate employment.

Definition of MSMEMSME Act 2006,MSED Act-2006- Integration of micro, small and mediumMicro Enterprises- Capital investment Max. Rs 25 lac in P&M- Mfg. and in case of service industry max Rs.10 lacSmall Enterprises- Investment Rs. 25 lac to max Rs. 5 crore-mfg. , and in case of service industry Rs. 10 lac to max Rs. 2 croreMedium enterprises- Rs. 5 crore to max Rs. 10 crore, service industry Rs. 2 crore to max Rs. 5 crore.MSME contributes- 8% of GDP, 40% of Mfg. output, 45% of exports, 60 Million employment(28% Mfg,72% service), 26 million units, 35% total direct export and 40% value added .Importance of MSME 1. Employment generation2. Use of available natural resources3. Balanced regional development4. To speed up industrial development 5. Requires small amount of capital6. Supports LSI 7. Requires moderate technology8. Equitable distribution of national wealth9. Economic and social stability10. Use of available local skill11. Acts supplementary to agricultural sector

MSME Policy in India after 1991The MSME policyIndia was faced with a sever balance of payment crisis in June 1991 due to various reasons gulf war,inflation-17%, decline in foreign exchange, fiscal deficit . This resulted in economic reforms and Govt . announced new economic policy on 23 July,1991.for the promotion and strengthening small ,tiny and village industries . The Highlights of the policy are as under:1.De-reservation of the industries2.De-licencing of the industries3Abolition of MRTP limit4. Promotion to foreign investment5.Replacement of FERA by FEMA6.Compulsion of phased production abolished7.Compulsion of loan conversion into shares abolished8.Researved 812 items for SSIMSME policy statement announced 6th Aug. 1991Dynamic and Vibrant sector of economy generates more employment. Contribution to growth, employment and exports All rules and regulations are modified to support small and village industries

A. Small and Tiny Enterprises-1. Investment-

An increase in the investment limits in plant and machinery of small scale industries, ancillary units and export – oriented units to Rs 6 million, Rs 7.5 million, and Rs 200 thousand respectively. Such limits in respect of "TINY" ENTERPRISES would now be increased from the present Rs 200 thousand to Rs. 500 thousand, irrespective of location of the unit. Limit in plant and machinery for determining the status of MSME/Ancillary units as on date is Rs 10 million. For tiny it is Rs 2.5 million and for SSSBE Rs 500 thousand.

*Promotion package and additional support*Benefits of National Equity Fund Scheme, One window scheme (MSSIDC)

2. Financial support-Subsidized and cheap credit made available, for modernization and technological up gradation 24% equity participation, regulatory provision liberalized, simplification of payments through SIDBI in place of delayed payments. 3. Infrastructure Facilities –Link between agriculture and industry through Integrated Infrastructure Development, Technology Development Cell (TDC) with the help of SIDO, equitable distribution of imported raw material, proper and adequate arrangement of delivery of package.

4.Marketing and Export-Market promotion through cooperative and public sector institutions, NSIC would concentrate on marketing, encouragement to Industry Association to purchase to products, SIDO recognized as supporting agency.5. Modernization, Technological and quality upgradation-Awareness, programs with industry association, counseling , facilities, IIT& Engg. Colleges6. Simplification of rules and proceduresB. Village Industries1. Handloom sector-

project package, welfare package, developmental package, National Handloom Development Corporation- NHDC

2. Handicraft sector-extension service to craftsman

3. Other Village Industries-rural and cottage industries, KVIC will discharge the responsibility, linkage with

DRDA and TRYSEM, agro processing and food processing, R&D in linkage with CSIR and KVI, training facilities.

Comprehensive Policy Package for SSI and Tiny Sector 2000Policy support-(1cr. To 5cr.) Fiscal support-( Excise duty exemptionrs 50 lac toRs. 1 cr.),Credit suppport- (loan uoto Rs. 25 lac from NEFS),Infrastructure support-(Researvation for rural area, cluster development),Techniological support-(subsidy 12% for technology, one time capital grant 50% of testing lab expenses), Marketing support- (Vendor Dev. Program, B-S Meet, exhibilltions. Capacity Building, Facilitatin Prompt Payment, Rehabilitation of sick unilts, Handloom sectro and KVIC.MSME Act-2006

Definitions of Micro, Small & Medium EnterprisesIn accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

(a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.

(b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

Manufacturing Sector EnterprisesInvestment in plant & machinery

Micro Enterprises Does not exceed twenty 5 lakh rupeesSmall Enterprises More than twenty 5 lakh rupees but does not exceed five crore

rupees Medium Enterprises

More than five crore rupees but does not exceed ten crore rupeesService Sector EnterprisesInvestment in equipments

Micro Enterprises Does not exceed 10 lakh rupees:Small Enterprises

More than 10 lakh rupees but does not exceed two crore rupeesMedium Enterprises

More than two crore rupees but does not exceed 5 core rupees

Problems of MSME1.Financing Problems2.Extreme competition3.Poor Technology Base4.Lack of infrastructure5.Lack of Skilled workers6.Marketing and Distribution Problems7.Delayed payments8.Mindset Problems9.Outflow of wealth10.More prone to global fluctuations11.Social welfare areas neglectedRemedies

1.Progressive de-reservation of products in the MSMEs2.Technological upgradation, 3.Promotion of exports 4.Economies of scale, with a view to encourage modernization and enhance competitiveness 5.Initiatives for development and promotion of MSMEs.6.Supporting incentives for development and promotion of MSME

FranchisingConcept, characteristics and importance

The Concept

Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement. Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs the parent company much less when new stores are owned and operated by a third party. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store.

70 different industries use the franchising business model, and according to the International Franchising Association the sector earns more than $1.5 trillion in revenues each year. The franchising business model is used across many industries, but it is most popular in the fast food restaurants, hotels, and casual and upscale restaurants industries.

The legal definition of a franchise agreement is contained in the Franchising Cody of Conduct, which now regulates franchising in Australia. In essence a franchise agreement in defined as an agreement where one party (the franchisor) provides to another (the franchisee) the right to carry on business under a system or marketing plan and using a trade mark or symbol owned by the franchisor in return for a fee paid by the franchisee.Characteristics or features of a franchise –

1. Well established businessA franchise is a readymade and well established business that needs expansion. It is a ready form of business seeking expansion in new market areas with the help of a local representative.

2.2. Needs limited investmentAs franchise business is already set up by the franchisor, the initial investment quired by the franchisee to enter and establish is relatively low.In franchise selling the franchisor allows the franchisee to use his brand name, trademark, service mark and management skills for developing and expanding franchise business.

3. Easy entry in new markets

As the goodwill and reputation is already set up in other countries, franchisor does not require more efforts to enter in new markets. He is easily accepted in the new markets.

4. Business has large establishments

Franchise has large establishments around the world and operates through a network of local representatives in different market areas.

5. Helps in diverting business risks

By establishing outlets in different parts of the world franchise helps the owner of the firm to diversify his business risks.

6. Results in a large turnover

Franchise results in large volume of sales. Society is benefited by the management of franchisor and service skills of franchisee. Brand name and bumper publicity results in a large turnover.

7. Separates labor and specialization

Franchise results in division of labour and specialization. The franchisor concentrates on production, whereas franchisee looks after distribution and service at a unit level. The advantages of division of labor and specialization benefits both.

8. Allows use of brand name and trademark

In franchise selling the franchisor allows the franchisee to use his brand name, trademark, service mark and management skills for developing and expanding franchise business.

9. Business is based on mutual agreement

Franchise business is based on mutual agreement or contract setting out terms and conditions for franchising. Agreement is based on the understanding between franchisor and franchisee. To avoid disputes, agreement should be drafted in a detailed manner.

10. Success needs a long-term relationship

For the successful functioning of a franchise business, both franchisor and franchisee have to remain committed in their long-term relationship, only then business will be mutually rewarding. Strong franchisee relationship enables the franchisor to sell a franchise more effectively, introduce needed changes into the system very easily and motivate franchisee and their managers to provide a consistent level of products and services to their customers.

Importance of Franchising

Franchises offer important pre-opening support:

1.Site selection2.Design and construction3.Financing (in some cases)4.Training5.Grand-opening program

Franchises offer ongoing support1.Training2.National and regional advertising3.Operating procedures and operational assistance4.Supervision and management support5.increased spending power, access to bulk purchasing and economies of scale

Thank You !