Unit 1

CONCEPT OF ENTREPRENEURSHIP

Section - A

1. Who is an entrepreneur?

Ans.: The term "Entrepreneur" is derived from the French word known as

"Entrepreneur which means to "undertake". The term was first used for the economic

activities only in 18th century by Richard Canton who is original ly an Irish man but

l iving in France. According to him; the term entrepreneur denotes, "A person who buys

factors of production at certain prices with &view to selling his product at uncertain prices in

future".

2. Define Entrepreneurship.

Ans.: Entrepreneurship is one of the four mainstream economic factors and

entrepreneurship. Defining entrepreneurship might seem simple, but it is not so in practice.

A, H.Cole has defined entrepreneurship as "the purposeful activity of an individual 01 group of

associated individuals, undertaken to initiate, maintain. or earn profit by

Production and distribution of economic goods and services,"

3. Write the importance of Entrepreneurship.

Ans.: Entrepreneurship is the spirit of a person. It is a quality which may be inherent or

developed for the economic development of a country, entrepreneurial skills need to be

developed those skills lead to the development of business and ultimately, the result is seen

in the economic growth of the country.

Entrepreneurship plays a very important role in terms of -

1. Generation of employment opportunities.

2. Its size and nature, it is more dynamic, flexible and capable of making quick decisions.

3. Ensuring balanced economic development.

4. State any four functions of entrepreneurs.

Ans.: An entrepreneur performs all the functions right from the conceiving of an idea up to the

establishment of an enterprise. He is an opportunity seeker. Heorganizes and coordinates

the factors of production. His main functions are -

� Generating business idea.

� Determining business objectives.

� Product analysis.

� Deciding the form of enterprise etc.

5. Who are habitual entrepreneurs?

Ans.: A habitual entrepreneurs are an individual who has prior business ownership

experience. Nascent entrepreneurs can either be a novice entrepreneur or habitual

entrepreneurs.

6. What is an Enterpri se?

Ans.: Enterprise consists of people working together primarily for the purpose of making,

selling and distributing a product or service. Enterprise consumes valuable resources

like raw materials, power, labour to produce the output. Enterprise is a continuing

entity. It is not an effort to produce a single product or output, but rather a recurring

and continuing, effort to produce a stream of products. Thus, enterprise is an

undertaking, which involves various activities and the willingness to take risks.

7. What are the two ways to generate the business Idea?

Ans.: Generation of idea is the first and foremost function of an entrepreneur. Essentially

There are two ways in which business idea can be created namely,

(i) Generating Own idea or

(ii) Developing someone else's idea.

The second is far more commonbecause virtually every successful business is a development

of an earlier businessconcept.

8. Who are Drone entrepreneurs?

Ans.: Drone entrepreneurs are characterized by a refusal to adopt and use opportunities to

make change in production. They are conservative. They always feel comfortable

with their old fashioned technology of production. They never like to come out of their

old business even though they suffer losses. They continue to operate in their traditional

way and resist changes. So they are called laggards i.e. slowcoach.

9. What is risk - bearing?

Ans.: Risk - bearing is one of the important characteristics of entrepreneurship. Entrepreneur

involves in starting a new enterprise, which involves risk. Further, he tries for doing

something new and different which is also risky. In addition, the enterprise may earn

profits or incur losses due to various factors such as increasing competition, changes

in customer preferences etc. Therefore, an entrepreneur should be bold enough to

take risk.

Section - B

1. Enumerate the characteristics of entrepreneurs.

(or)

Explain the important role of entrepreneurs.

Ans,:An entrepreneur is an enterprising person who combines venous factors of production.

Processes and converts the raw material into finished product and creates utility the product

and sells the product in the market to earn profit. Important role playedby entrepreneurs or

characteristics can be judged on the following basis.

1. Generation of Employment:Entrepreneurs offers sol ution of the unemployment

problem confronting the economy Entrepreneurs firstly/generate self-employment and

secondly be employing others in their enterprise6. Unemployment problem of

others. Entrepreneurs thus ensure an honorable life style. Entrepreneur utilization of

manpower resources

2. Increasing per capita Income: Budding entrepreneur are always on the lookout.

Opportunities and are keen to exploit them. This entrepreneur mobilizesthe

resources of the economy and makes optimum use of them. Goods and services generate

more employment and help in the Improvement of Percapitaincome.

3. Helping in capital formation: Entrepreneurs employ their own Lai resources on one hand and

on the other mobilize idle savings of the general public through issue of various type of securities.

4. Balanced regional development: Entrepreneurs by setting up their units in remote and

backward areas facilitate in making last possible use of local resources. More industrial units

result in more employment more income and overall development or prosperity of these

regions.

4. Promoting self-reliance: Entrepreneurs by producing close substitute of imported

products help in reducing overdependence on other countries. They also help in

generating surplus output by producing in excess of our present requirement.

2. State the qualities of an entrepreneur

Ans.: A close analysis of the concept of entrepreneur made in the preceding paragraphs

reveals the following as the qualities/traits of a successful entrepreneur:

1. Capacity to take risk.

2. Capacity to work hard.

3. Energetic .

4. D ri ve .

5. Self-Confidence.

6. Intell igence and knowledge.

7. Ability to foresee future.

8. Willingness to change.

9. Ability to mobilize resources.

10. Ability to build up organization and administer.

11. Abil i ty to take decis ions .

12. Willingness to take responsibility.

13. I n n o v a t i v e n e s s .

14. Desire for high achievement.

15. Capacity to sol ve probl em.

16. U s i n g fe e d b ac k .

17. Taking initiative.

18. Handling fai lures .

19. Locus of control.

20. Tolerance of uncertainty.

21. Fl e xi bi l i ty .

22. Gua rding bus ine ss s ec ret s .

23. Quali ty conscious.

24. T a c t f u l .

25. H a ve v i s i o n .

26. Information seeking.

27. Monitorin g.

28. W el fare orientation

29. Systematic pl anning

30. Persuasion

5. Briefly explain Peter Drukeris view on entrepreneur.

Ans.; Peter F.Drucker supports J.A.Schumpeter's view and says "An entrepreneur' is One who

always searches for change, responds to it and exploits it as opportunity, Innovation is the

basic tool of entrepreneurs, the means by which they exploit change as. an opportunity for a

different business or service." Entrepreneur need to search purposefully for the sources of

innovation, the changes and their symptoms that indicate opportunities for successful innovation.

Further he says that:-

(i) An entrepreneur should not try to be clever in design or execution otherwise he is

bound to fail.

(ii) He should innovate for the present and not for the future.

(iii) Innovation should be simple otherwise it would not work.

(ivi Innovation requires knowledge ingenuity, diligence persistence and commitment. kv)

An entrepreneur must be an innovator as well as a leader.

kAn entrepreneur must be capable of analysing the opportunities and exploit them

successfully.

According to him, there are certain strategies to be adopted by the entrepreneur. they

are:

Being first test with the rnust test.

2. Hitting them where they are not.

3. Finding and occupying a specialized ecological niche.

4. Changing values and characteristics.

6. What are the characteristics of entrepreneurship?

Ans.: The following are the important characteristics of entrepreneurship:

1. Risk-bearing: One of the important characteristics of entrepreneurship is risk

bearing. Entrepreneur involves in starting a new enterprise, which involves risk,

Funkier, he tries for doing something new which is also risky. addition, the enterprise

may earn profits or incur los

2. Innovation: J .A.Schumpeter identified innovation. as a characteristic of

entrepreneur for the first time in 1934. According to him. Entrepreneurship1S 3creative

activity. He says entrepreneur introduces something new to the economy' It may be a

new product, a new method of production, a new raw material, a nevimarket not yet

exploited, a new organization etc.

3. Decision – making: Decision making is another characteristics of

entrepreneur. Decision is a course of action, which is consciously chosen

from among a multiple of alternatives to achieve the desired result.

Entrepreneurship involves both risk and uncertainty. so decision-making

is crucial on the part of entrepreneurs to set up and run the enterprise

successfully.

4. Achievement orientation: An entrepreneur must be achievement oriented.

McClelland stressed two things for an entrepreneur such as -

(0 "Doing things in a better way" and

(ii) "Decision-making under uncertainty.

These things cannot be all aimed unless he does not have motivation to

achieve them.

5. Organization building: EHarbison says entrepreneurship implies the skill to

build

an organization. Such skill enables oneself to multiply by delegation of authority

to othe rs. H e opi ned tha t orga niza tion bui ldi ng is most c ruci a l ski l l

needed f or entrepreneurship because it provides for the economic use of

other innovations.

6. Accepting challenges: The challenges of being an entrepreneur include

being comfortable with change and uncertainty , making a bewildering

number of decisions, facing tough economic choices, being comfortable

with taking risks, needing many different-skills and talents, and being

comfortable with the potential of failure.

7. Gap filling: H.Liebenstein states that filling the gap in knowledge as to

production function is the main feature of entrepreneurship. These gaps arise

due to tne non-availability of certain inputs in production function. Inputs

such as motivation, innovativeness and leadership cannot be purchased

from the market.

8. Creative personality: E.E.Hagen is one of the view that "Creative Innovation

or change is the basic feature of the economic growth. He describes an

entrepreneur as a creative problem solver, he tolerates disorder without

discomfort.

9. M o b i l i z i n g re s o u rc e s : A n ot h e r f u n d a m e n t al c h a ra c t e r i s t i c f ea t u re of

entrepreneurship is resource mobilization. Resources refer to the help that is

required to carry out activities resulting in attaining objective. They are

scattered in the environment and so they are to be identified and mobilized by

entrepreneurs to attain the goal.

7. Discuss the common myths on entrepreneurs.

Ans.: Some of the common myths about the term entrepreneur a. -

1. Entrepreneurs are driven by money.

2. Entrepreneurs are high risk-takers.

3. All entrepreneurs are wealthy and successful.

4. Entrepreneurs are born, not made.

5. Anyone can start a business.

6. Entrepreneurs are gamblers.

7. Entrepreneurs want the whole show to themselves.

8. Entrepreneurs are their own bosses and completely independent .

9. Entrepreneurs work longer and harder than managers m big companies

10. Entrepreneurs experience a great deal of stress and pay

11. Starting a business is risky and often ends up in future

12. Money is the most important start up ingredient.

13. Entrepreneurs should be young and energetic.

14. Entrepreneurs seek power and control over others.

15. Any entrepreneur with a good idea can raise venture capital

16. If an entrepreneur has enough startup capital.

Section - C

1. Describe the functions of an entrepreneur

Ans.: An entrepreneur performs all the function right from the conceiving at an idea the

establishment of an enterprise. He is an opportunity seeker. He Co-ordinates the

factors of production. His main functions are discussedbelow

1. Generating Business Idea: Generation of idea is the 'first and foremost ac toan

entrepreneur. Essentially there are onlytwo ways in which business Ideas be created

namely Generating own idea.

The second is far more common because virtually every successof an earlier

business concept. These include areas suchmanagement buy-outs or buy-ins,

corporate spin off. Franchising and braying a existing business, In terms of

generating business ideas, there are three sources of opportunisticsuch as

adverts, agents and opportunity spotting, or watching out for businessthat one

find match his objectives.

2. Determining business objectives:The next function of entrepreneur is determining business

objectives. He should lay down his objectives clearly. He should clearly state the nature

of business and the type of business. In other words, he has to specify clearly whether

the business, which he decides to start, belongs to manufacturing activities or trading

or service oriented organization. It will enable him to carry on the activities without any

hesitation.

3. Product analysis:The next important furtheraction of an entrepreneur is product and market research. He should conduct market research in order that regarding the product, which he likes to manufacture, can be systematically collected. It should be carried on persistently because it gives him the information regarding the demand for the product, supply of the product, price of the product, size of the customer's etc.

4. Deciding the form of enterprise:Another important function of an entrepreneur is deciding

the form of an enterprise. It should be decided by taking into account the factors. such as

nature of the product, volume of investment, nature of activities, types of products, quality

of product, quality of human resources etc. The various forms of organisations that are

prevalent are sole trading concerns, partnership firms, co-operative society and joint

stock companies. Before establishing an organisation, the form of ownership only, the

other legal formalities can be carried on to establish the organisation.

5. Promoting the enterprise:Once the form of ownership is decided, the next step is

undergoing the necessary legal formalities as required under the relevant statue if any to

establish an organisation. In case of sole trading concerns and partnership firms, there are

not many legal formalities when compared to joint stock companies and co-operative

societies. He has to read the relevant statute and fulfill the necessary legal formalities

in establishing the enterprise.

6. Raising Necessary funds: Finance is the life-blood of any business because all the activities

of a business depend upon it. Hence raising of finance is considered as the most

important function of an entrepreneur. He needs funds for purchasing assets, carrying

out day-to-day activities, meeting establishing expenses etc. lit: raises funds internally

as well as externally.

7. Procurement of Machine and Material:The next function is procuring machines and

rawmaterials. Machines and equipment’s are purchased and installed in the initial stage

itself. While purchasing them he should consider the aspects like details as to the

technology adopted, installed capacity of the machines, details of manufactures and

suppliers, country in which the machines are manufactured i .e., whether they made

domestically or in a foreign country, availability sales service facilities and warranty

period given etc. This will enable entrepreneurs to buy quality machines at cheaper rates.

8. Recruiting Men: Recruiting of suitable personnel for the various activities *I the

enterprise is another important function of an entrepreneur. First of all. entrepreneur

has to estimate the manpower need of the enterprise. Then he has to by down the

selection procedure, He should devise suitable method of compensation.

Arrangements should be made for giving to personnel to the tabs which they have

been recruited.

9. Undertaking the activities: This is the stage of implementing the protect. It

should be done in a time-bound manner. He should perform it as per schedule. This

will enable him to avoid cost and time over run and also competition_

All the above functions can be broadly categorized into three namely.

1, Risk-bearing

2, Organisation

3. Innovation

2. Explain briefly the various classifications of entrepreneurs.

Ans.: Entrepreneurs are of many types. They may be classified based on many factors. They

are found engaged in various types of activities such as industrial. agriculturaland

commercial. We shall now discuss the various types of entrepreneurs under the

following classification.

I. Classification of M.Wright based on the behaviorof entrepreneurs .

1. Nascent entrepreneurs

2. Novice entrepreneurs

3, Habitual entrepreneurs

4. Serial entrepreneurs

5. Portfolio entrepreneurs

IL Clearance Dan.hof's classification based on American Agriculture

���� Innovating entrepreneurs

���� Initiative

entrepreneurs

���� Fabian entrepreneurs

���� Drone entrepreneurs

III. Classification based on types of business carried on by them:

1. Business entrepreneurs

2. Trading entrepreneurs

3. Industrial entrepreneurs

4. Corporate entrepreneurs

5. Agricultural entrepreneurs

IV. Classification based on Technology Adopted

1. Technical entrepreneurs

2 Non-technical entrepreneurs

3. Professional entrepreneurs

V. Classification based on motivation:

���� Pure entrepreneurs

���� Induced entrepreneurs

���� Motivated entrepreneurs

� Spontaneous entrepreneurs

VI. Classification based on development stage

1. First generation entrepreneurs

2. Modem entrepreneurs

3. Classical entrepreneurs L Based on the behavior of entrepreneurs : This is

classified into fine types namely,

1. Nascent-entrepreneur: A nascent-entrepreneur is an individual who is in the process

of starting a new business. The concept of nascent entrepreneur appears to reflect most

closely the complex entrepreneurial process. They use entirely different styles of

problem solving, decision-making, and discovery when compared to non-nascent

entrepreneurs.

2. Novice entrepreneur: A novice entrepreneur is an individual who has no prior business

ownership experience as a business founder, inheritor of a business, or a purchaser of

a business.

3. Habitual entrepreneur: A habitual entrepreneur is an individual who has prior business

ownership experience. A nascent entrepreneur can either be a novice entrepreneur or a

habitual entrepreneur.

4. Serial entrepreneur: A serial entrepreneur is an individual, who has sold or

closed an original business, established another new business, sold or closed That business,

and continues this cycle of entrepreneurial behavior. In other words, he goes on commencing

a business and selling it continuously.

5. Portfolio entrepreneur: A portfolio entrepreneur is an individual who retains an

original business and builds a portfolio of additional businesses through inheriting,

establishing, or purchasing them. He is one who grows by leaps and bounds.

UNIT 2

ENTREPRENEURIAL DEVELOPMENT AGENCY

Section - A

1. What are development banks?

Ans.As commercial banks are providing short-term funds, the long-term fund requirements are

main object is to promote industrial development in the Country. And other important

objects are providing, fixed capital to industries, promoting modernizationamong

industries, development of backward areas by starting major industries,providing

export finance etc.

2. State the various development banks functioning in India.

Ans. In India we have development banks such as:

IDBI - Industrial Development Bank of India.

ICICI - Industrial Credit and Investment Corporation of India.

SEC - State Finance Corporation.

NIDC - National Industrial Development Corporation.

IRC - Industrial Reconstruction Corporation.

3. What is lead bank scheme?

Ans.Lead bank scheme introduced by the RBI. One district has been allotted to each

scheduled commercial bank for providing banking facilities there. Under the scheme, the

lead bank acts as leaders to bring about a co-ordination of co-operative banks.

Commercial banks and other financial institutions in their respective districts to bring

about rapid economic development.

As on March 2002, the lead bank scheme covered 580 districts of the country. The main

objective of the scheme has been to co-ordinate the activities of the banks and other

developmental agencies to facilitate the flow of credit to the priority sector.

4. State the objectives of NSIC.

Ans.The main objectives of the national small industries corporation limited (NSIC) as

envisaged in its memorandum of associations are -

1. To secure a reasonable share of government order for small units,

2. To provide loans and technical assistance, which have secured firm orders from the

government to execute the orders in time.

3. To secure co-ordination between large scale and small scale industries so as to

enable the latter to manufacture ancillaries, components and other articles required

by the former.

5. What is meant b y Financi al Assistance?

Ans.:The phrase, "whosoever has the gold makes the rule, brings out the significance of

the need of adequate finances for a small industry or enterprise. Finance, being the

basic requirement, of any enterprise is needed at every stage. Rather, an

entreprerieux must know very clearly about his financial need before actually

setting up his unit.

6. Give the three types of roles are played by government and non-

governmental agencies.

Ans.: In India, three types of roles are played by government and non-governmental

agencies. They are

� Promotional.

� S u p p o r t i v e .

� R e g ul at o r y .

7. What is RCS (Risk Capital Scheme)?

Ans.: The Risk Capital Foundation (RCF) was sponsored by the IFCI in 1975, with a view to

provide special assistance to new entrepreneurs particularly technologists and

professionals to promote medium sized industries. The assistance is provided in

the form of interest free personal loans on soft terms to enable them to meet a part of

their own contribution.

8. What are the various primary functions of the ICICI?

Ans.: The main functions of ICICI can be classified into primary and secondary

functions various primary functions are —

• D i r e c t l o a n s .

• Loans i n fo reign currency.

• G u a r a n t e ei n g f o r th e l oa n .

• Underwriting for securities.

• Contributing to the share capital and debentures.

9. Write short note on ICVIC.

Ans.: The Khadi Village Industries Commission (KVIC) is a statutory body created by an

Act of parliament No.61 of 1956 and as amended by Act No.12 of 1987. Established

in April 1957, it took over the work of the former All India Khadi and Village

Industries

Board. The broad objectives that the KVIC are providing employment,

producing saleable articles and creating self-reliance amongst the poor and

building up a strong rural community spirit. The KVIC is charged with the planning,

promotion, organisationand implementation of programs for the development of

khadi and village industries in the rural areas in coordination with other

agencies engaged in rural development wherever necessary.

10. What is RCS (Risk Capital Scheme)?

Ans.: The Risk Capital Foundation (RCF) was sponsored by the IFCI in 1975, with a view to

provide special assistance to new entrepreneurs particularly technologists

and professionals to promote medium sized industries. The assistance is provided

in the form of interest free personal loans on soft terms to enable them to meet a

part of their own contribution.

Section - B (Five Marks Questions)

1. State the functions of NSIC.

Ans.: The functions of National s ma l l industries corporation Ltd are listed below.

I. Financial assistance: NSIC provides f inancial assistance for the product an

Marketing activities under one root I t gives working entrepreneurs as

well as export oriented units IFOUSI. It also post shipment finance. Besides, it

assists in the preparation of proposal completion of formalities.

2. Provides for equipment leasing: Its equipment leasing scheme analyses

equipment for modernization. Expansion and of new as -well as enterprises.It

enables the completion of import formalities single window'„'; scheme. Under the

scheme.it procures license and opens letter of credit 'Mix rebate.on lease rental is

allowed for full five years.

3. Hire purchase financing: All &SI units registered with DIC having investin

fixed assets up to a maximum of Rs.300 lakhs are to get hire purchase financing

facility of machines. The units may he of old ones or newly established enterprises.

Security in the form of 25% investment in NSIC or collateral security to be given.

The rate of interest is normally charged at 14.5%.

4. Enables single point registration: NSIC enables small scale units to register

them under a single point. Registered units can get tender sets free of cost and

also intimation of tenders issued by DGS and D in advance. Such mils are

exempted from earnest money deposit . It need not give security deposit.

5. Facilitates Training: NSIC has set up five training centers at Okhle, Howrah

Chennai, Rajkot and Hyderabad so as to provide training. These centers also

organise special training programs. Develop prototypes of machines and tools and

import substitutes.

6. Enables smell scale enterprises to obtain required technologies: It has set

up technology transfer center to enable small Scale enterprises to get the required

technology. It also publishes journals, catalogues, conference papers etc. in the

field of science and technology. It also organises seminars and conferences.

7. Assists in Marketing: It participates in global tenders on behalf of small scale

enterprises. It helps them in the production of quality products. It organises trade fair

and exhibitions.

8. Export assistance: As NSIC is a recognized export house, smart - scale units can

export their products through it and avail export benefits NSIC itself spends

marketing and export promotion expenses. It provides lot of facilities to small-scale

units to produce quality goods at cheaper rates. It arranges buyers alAdsellers

meet also.

9. Undertakes the construction of Industrial Estates Abroad: NSIC has a l s o

establ ished indust ria l estates in various countries such as Africa, Nepal and

Vietnam.

2. Discuss the role played by government and non-governmontn1

r a f i n i l c s o t i in Promoting entrepreneurship in India.

Ans.In India three types of roles are played by government and non-government. They are:

1. Promotional Role: In this role, both government and non-government

try to promote entrepreneurship by awareness building, enforcement, motivation,

guidance, etc. The entrepreneurial spirit is encouraged by publicity and promotional

effect. The various Entrepreneurial development Programs IEDPs1 fall in thin

category. The efforts for promoting entrepreneurship are of three types -

awarenesscreation on creation of new entrepreneurs, programme lot current

entrepreneurs.

2. Supportive role: Various agencies lend support in establishing and managing

enterprises. There is obviously an overlap between promotional, supportive and

developmental roles. The supportive role helps in promotion, maintenance and

development of entrepreneurship. Institutions providing promotional and supportive

role are established at different levels. They have 3 or 4 tier machinery to serve

entrepreneurs. They are at district, village, and state and at national levels.

3. Regulatory role: After the promotional and supportive roles, the need for regulation

and control emerges. Through various laws, a government tries to regulate and

control entrepreneurs. They regulatory institutions give clearance for construction

of factories, supply of power, tax reliefs, concessions, etc.

Proper and simple rules and regulations will act as a positive factor in the promotion

of entrepreneurship.

3. Explain the role of commercial banks in assisting SSI sector.

Ans.: The commercial banks, particularly, after nationalization, have been playing a key

role in the economic and social transformation and in the development of our country.

Role of commercial banks in Assisting SSI sector:

1. Credit to small scale Industries: Small scale industries can avail term loan facilities

for acquisition of machinery up to a maximum amount of 50% of the cost, for a

period of 5 to-7 years. Besides, they provide working capital loans. The working

capital loan is disbursed in the form of overdraft, cash credit etc

2. Financing the establishment of small-scale units by technical

entrepreneurs:Under this scheme, banks provide a term loan of Rs. 5 lakhs to the

technician entrepreneurs for establishing an industrial unit.

3. Financing and Development of Khadi and village industries: Under this scheme.a

bank grants a working capital loan up to a maximum amount of Rs.1,500 to a

borrower covered under KVIC interest subsidy scheme at an interest rate equal

to4% will be covered from the borrower whose family income from all sources

does

Not exceed Rs.3.000 per annum and who should not own in excess of one acre

ofirrigated land.

4. Finance to Tiny sector of SSI: Banks provide term loans as well as working capital

borrowers in backward areas and 11% for those in other areas.

4. State the functions and objectives of any one of the Tamilnadu small scale Industrial

development corporations.

Ans.: State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT)

SIPCOT was set up in 1971 as a public limited company, wholly owned by the

government of Tamilnadu for the medium and major industries. The office is located in

Egmore, Chennai. It works in liaison with 771C and extends term loans under IDBI refinance

scheme.

Objectives:

1. To establish, develop, maintain and manage industrial complex, parks and growth centres

at various places across the state of Tamilnadu.

2. To channelise incentives for industries set up in the state.

3. To provide escort services to medium and. large scale industries.

4. To provide entrepreneurial development programmes for the weaker sections to

generate employment opportunities.

5. To help in project assistance and clearance.

6. To provide single window statutory clearance

7. To provide marketing assistance.

Instead of just accelerating the pace of industrial growth in already developed and

densely populated areas, SIPCOT has created industrial complexes, parks, growth centres in

17 strategic places. They are located in BarguriCheyyar, Cuddalore, Gangaigondan,

Gummidipoondi, Housur, Irungattukottai, Manamadurai, Nernili, Nilakkotteri, Oragadarn,

Perundurai, Puddukkoti, Ranipet, Siruseri, Sriperambedur andTuticorin.

Functions of SIPCOT: It provides financial assistance for medium and major

industries in the form of -

1. Term loan under IDBI refinance scheme.

2. IDBI's seed capital scheme.

3. Underwriting the capital issues.

4. Guarantee to loan from commercial banks. It

provides other assistance for industries like:

1. It helps entrepreneurs in assessing the merits of alternative locations for the

proposed projects.

2. it guides the entrepreneurs to decide on the economic size of the unit, foreign

collaboration, supply of machinery, technical know-how etc.

3. It also helps entrepreneurs to obtain supply of power etc.

Section - C

1. Discuss the role and functions of industrial finance corporation of India.

Ans.: 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.

Initially, the corporation was authorized to assist only pubic limited companies in the

private sector and the co-operative societies, which are not able to secure assistance

from the banking companies, or from the capital market. 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 IFCs role extends to the entire industrial spectrum of the country.

Pursuant to the IFC (Transfer of Undertaking and Repeal) Act, 1993 the undertaking of IFCI

under the erstwhile IFC Act, 1948, stood transferred to and vested in the new company

called Industrial Finance Corporation of India Ltd. with effect from July 1, 1993

Functions of IFCI:Direct financing is the main business of the corporation. It provides direct finance

for promotional activities like starting new ventures, expansion .of capacity for replacement,

renovation or modernization of the existing industrial units particularly large and medium units.

Originally, the IFCI was authorized to deal with requests for loan for Rs.10 lakhs and above. But now it

is entertaining only applications above Rs. 2 crores.

Under Sec. 23 of the IFC Act, the corporation has been authorized to render its financial assistance in

the following six ways:

1. Guaranteeing loans raised by industrial concerns from the capital market, scheduled banks or state

co-operative Banks which are repayable within a period of 20 years.

2. Granting loans either directly or by subscribing to the debentures of industrial concerns

repayable within 25 years.

3. Underwriting of the issue of shares, bonds on debentures.

4. Subscribing directly to the stocks, shares, debentures and bonds issued by industrial concerns.

5. Acting as an agent of the Central Government and the World Bank (IBRD) in respect of

loans sanctioned by them to the industrial concerns.

6. Guaranteeing -

(i) Deferred payments for machinery imported from abroad or purchased within the country.

(ii) Foreign currency loans raised by industrial concerns from foreign institutions, and

(iii) Rupee loans raised by industrial concerns from scheduled banks or state cooperative

banks or the public market.

Besides it offers financial services such as equipment leasing, equipment procurement, buyers and

suppliers credit, finance to leasing and hire purchase concerns etc. IFCI provides merchant

banking services and undertakes project counseling, issue management and debenture

trusteeship assignments. Further, IFCI undertakes promotional activities to provide a stimulus

to industrialization process.

The IF'CI is also undertaking various promotional activities financed out of its benevolent reserve fund.

The following activities are worth mentioning:

1. Entrepreneurial guidance.

2. Technical consultancy organization.

3. Risk capital scheme.

4. Technical assistance scheme.

There is no doubt that the IFCI has experienced impressive performance over the years.

2. Describe the functions of DIC.

Ans.: The District Industries Centre programme was started in 1978 as a centrally sponsorer

scheme with an object of providing all the services and support to village and small-

scale enterprises under a single roof for the effective development of small scalp

industry in the widely dispersed rural areas and small towns of the country.

The important functions of DICs summarized as below:

I . Identification of entrepreneurs: DICs main function is to identify new

entrepreneurs, for which they conduct motivated programs throughout the

district, especially in the headquarters of Panchayat Union.

2. Conducting Surveys: DICs conduct survey on the potential of industries to select

projects. They conduct survey of the existing traditional and new industries and

raw materials and human resources. They make market forecasts of various

products. They prepare techno-economic feasibility reports for identified products.

Based on these surveys and reports they offer technical advice to entrepreneurs so

that they select the projects that are suitable to them.

3. Registration under SSI: They register the SSI, which selects the projects

provisionally initially, and thereafter permanent registration is also made.

Registration enables SSI units to get assistance from financial institutions.

4. Recommending the loan: DICs recommend the application form of SSI units for

the purchase of land and buildings to various financing institutions functioning at

state and center levels.

5. Guiding in selection of Machinery and Equipment: DIC guide the entrepreneurs

in selecting suitable machinery, equipment, material etc. It issues necessary

certificate for importing and exporting machinery etc. The DIC indicates the

locations where from machinery and equipments can be acquired and also arrange for

supply of machinery on hire purchase basis.

6. Help in getting clearance from various departments: DICs help entrepreneurs

to

get clearance from various departments such as electricity department, pollution

control board.

7. Make arrangements for loans: DICs makes the necessary arrangement with

ead• Banks and other financial Institutions in order to provide financial assistance

to the entrepreneurs. They also appraise the application and monitor the flow of

industrial credit in the district.

8. Sanctioning of interest-free sales tax loans: DICs sanction for the interest free

sales tax loan up to the 8% of its total fixed assets, which is to be obtained from

SIDCO.

9. Assisting for availing subsidy: DICs assist SSI units to get subsidies under different

programs of various institutions. They sponsor applications for subsidy under IRDP

at 33 i% of capital cost of the project but subject to a maximum of Rs.3,000 per unit.

They disburse the interest subsidy to engineers who established their units in

rural areas.

10. Providing Training: Dies also conduct training courses for the entrepreneurs of

small and tiny units. They act as an intermediary between the entrepreneurs and

the small industries service institutes in order to introduce new and improved

product lines and quality developed by the latter to the former, They also assist

institutions which give training to rural small entrepreneurs.

11. Giving self-employment to unemployed youths: DICs give opportunity to

unemployed educated youths between the age of 18 years and 25 years from the

year 1983 to become self employed. Here the priority is given to those who are

techno crafts or who have passed S.S.L.C. Women are also given preference.

12. Providing Marketing Assistance: DICs assist entrepreneurs for marketing their

goods. DICs conduct market surveys and market development programmes. They

also organise marketing outlets, contact with Government procurement agencies

and make the entrepreneurs well informed of the market intelligence. They also

assess the possibilities for exporting their goods.

13. Assists in procuring raw materials: DICs obtain the details regarding the materials

required by various units and arrange for purchase of the same in bulk. Thereby

they enable the small units to get their raw materials at reasonable prices.

14. Giving special attention to Khadi and village Industries: DICs give special

attention to the development of Khadi and village industries and other cottage

industries. They also keep close contact with the state khadi board and

organizetraining programs for rural artisans.

Besides, they provide sheds also to SSI units set up in rural areas. They prepare

action plan for the implementation of DRDA, IRD and TRYSEIVI schemes.

3. Give a brief account of ICICI and its role in capital market.

Ans.: The creation of Industrial credit and Investment Corporation of India is another milestone in

the growth of the Indian Capital Market. It was incorporated in the year 1955, as a company

registered under the Companies Act. It was sponsored by a mission from the world bank

for the purpose of developing small and medium industries in the private sector.

To encourage industrial development in the private sector, a considerable provision of

underwriting facility was considered necessary to accelerate the phase of the

industrialisation to fill these gaps, the ICICI was established.

Objectives of the ICICI: The major objective of the ICICI was to meet the needs of the industry for

permanent and long-term funds in the private sector. In general, the major objectives of the

corporation are:

•••• To assist in the creation, expansion and modernisation of industrial enterprises in

the private sector.

•••• encourage and promote the participation of private capital, both internal and external,

in such enterprises.

•••• To encourage and promote private ownership of industrial investment and

expansion of markets.

•••• To provide equipment finance

•••• To provide finance for rehabilitation of industrial units.

Functions of the ICICI : The corporation performs the following functions-

1. Providing finance in the form of long-term or medium term loans or equity participation.

2. Sponsoring and underwriting new issues of shares and other securities.

3. Guaranteeing loans from other private investment sources.

4. Making funds available for re investment by revolving investment as rapidly as possil;t1e.

5. Providing project advisory services i.e..offering advice - (1) to private sector companies in

the pre-investment stages on government policies and procedures, feasibility studies and joint

venture search, and (2) to central and state governments on specific policy related issues.

Role of the ICICI :The corporation started a Merchant Banking Division in 1973 for advising its

clients on a selective basis, on raising finances in suitable forms and on restructuring of

finances in the existing companies. It also advises clients on amalgamation proposals.

Assistance is provided in preparing proposals for submission to financial institutions and

banks and for negotiations with them for loans, underwriting etc. This division acts as

Managers to the issue of capital. Assistance is also provided for completion of formalities

connected the public issue and a legal formality for raising loans. Since its inception, this

division has assisted 117 companies in raising a total amount of Rs.742 crores.

In 1982, the ICICI gave a new dimension to its merchant banking division by offering to provide

counseling for industrial investment, in India to non-resident Indians and Persons of Indian origin

living abroad. This is likely to prove not only the least expensive route for technological up gradation

but also a source of foreign currency funds by way of risk capital. It has set up ICICI Brokerage

services limited in March 1995. It is a 100% subsidiary of I-SEC. It commenced its securities

brokerage activities in 1996. It is registered with the National Stock Exchange of India Limited

and the Mumbai stock exchange.

ICICI setup ICICI credit corporation in 1997, which later renamed as ICICI personal Financial

Services Limited in 1999. It is offering a comprehensive range of goods and services to retail

customers.ICICI capital services ltd. was originally set up as SCICI securities ltd. as a wholly

owned subsidiary of erstwhile SCICI Ltd in 1994. Its object is providing stock broking

.

UNIT 3:

PROJECT MANAEGMENT

Section - A

1. What are the Sources of finance?

Ans.; There are two main sources of finance.

(i) Internal sources and

(ii) External sources

The internal sources of financing could be owner's capital known as equity, deposits

and loans given by the owner, partners, the directors, as the case may be to

theenterprise.

The external sources of financing could be funds known as long term fund and short turn

fund. eg: Sources of long term funds - Shares, debentures, financial institutesetc. So, access

if short term funds - Commercial banks, public deposits, trade credits etc.

2. What is break-even point?

Ans.: Break - even point analysis is yet another aspect to be considered as to financial and

economic feasibilities of a project. It is a simple technique useful in profit planning. Cost

control and determining appropriate volume of operations. It is the analysis of cost

volume profit relationships. Break even point is the point at which total cost equals

total revenue. It is a point of no profit, no loss. This is the point where total costs are

recovered If sales go up beyond the break-even point, enterprise makes profit. If they

come down, it makes loss.

3. What is product innovation?

Ans.: All growth industries have an important role for innovation in their marketing plans.

Innovation alone assures growth and survival while customer-orientation assures

survival. The evolution of new products is a practical business function and it is

described as a process of product management. The new product programme must

tie organised and controlled if it is to be effectively managed. The process of product

planning and development is always adopted for product innovation. Product

development is a general term covering the search for new products and new innovation

as well as improvement of existing products.

4. What do you mean by project?

Ans.: A project may be defined as "A complex, non-routine, one-time effort limited by time,

budget, resources and performance significations designed to meet customer needs".

Its major goal is to fulfill customer’s needs.

5. Expand: PERT, CPM.

Missile System Division of Lock Lead Aircraft Corporation to plan and control the huge

developed the Programme Evaluation and Review Technique [PERT] in 1950s. PERT is

now popular in the field of project planning and control. It describes basic network

technique, which includes planning, monitoring and control of projects.

Critical path Method (CPM) was developed at E.Dupont de Nemours Company in 1956

to aid in the scheduling of routine plant overhaul, maintenance and construction work.

6. State the meaning of feasibility study.

Ans.: 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 can also serve as a basis for

the all-important business plan.

8. What is meant by project report?

Ans. Project report is a written document that summarizes a business opportunity anddefines

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,

9. Mention the stages in the project appraisal process.

Ans.: There are four stages in the process of a project namely,

� Defining stage.

� Planning stage.

� Executing stage.

� Delivering stage.

Section - B

1. What do you mean by Feasibility Report?

Ans.: The feasibility report is prepares the project formation stage has been passed by the

project report that all the factors that for the feasibility (possibility) of the project, is knowing

as feasibility report.

I. Introduction: A general descriptive explanation about the nature and extent of the

Industry is given in this part. This description analyses the public policy with respect

to the industry, along with capital investment., nature of production- typeof

technology and the form of organisation of the industry.

2. Selection of project - An over view: The feasibility report should contain a

description regarding the process and know-how chosen for the project. Among other

things, detail-5 regarding the area chosen for the project, the facilities available in that

area and the environment benefits should be presented.

3. Project analysis: Project analyses means identification of problem and select the

problem suitable for the situation. It involves examining the problem and find cut the

other analysis like finance, Marketing etc. A detailed statement regarding the resources

required for consumption and production and various cost of operation should also be

given.

4. Market Research: Marketing analysis involves Examining the supply and demand

factors of the product, as well as the requirements of the product and the method of

distribution. A brief history about the pricing of the product, considering the

competitors prices and the price trends for the past years.

5.Financial analysis: The objective of financial analysis is to describe the project from

the financial angle and its characteristics. Financial analysis concerns with the estimation of

various costs, including project operating costs and project funds requirements. This analysis also

covers the appraisal of the financial characteristics of the project as compared to other

investment opportunities.

6.Social-cost benefit analysis: The overall benefit of the project on the society should be stated

in the feasibility report. While financial analysis describes the project from the profitability

point of view, social-cost benefit analysis evaluates the project from the point of view of

national viability minas or sole trader, business secrets can be maintained to the maximum

extent.

2. Explain the importance of Project Report?

Ans.: Project Report is a vital document for an upcoming project. Project plays a very important

role in the decision of the entrepreneur with regards to proceedings on with the proposed

project and at the same time financial institutes and state agencies involved in the project

base their decisions on it regarding the ways and the extent up to which the assistance is

to be provided to the unit.

Significance or importance of Project Report Aproject report is very important from an

entrepreneur’s point of view. It highlights the practicability of a project in terms of different

factors like economy, finance, technology and social desirability. It is required by the

entrepreneur for starting a new enterprise or for carrying out expansion in the existing

unit. An entrepreneur while preparing project report can depend on the expertise of

scientists and engineers, financial institutes or bankers, consultancy service providers etc.

Firstly project report, like a road map, highlights the direction the enterprise is

going in what its goal s are and how i t intends to real ise these goal s . It

enabl es the entrepreneur to know that he is proceeding in the right direction. Some

hold the view that without wel l spel led goal s and o perational

methods/tactics , most business founder on the rocks of hard times.

Secondly on the basis of project report tenders and investors can know about

the soundness of a project. The preparation of project report helps entrepreneurs in getting

requisite financial assistance from financial institution and banks. Various other

organizations providing assistance like land and work shed, raw material, seed/margin

money etc. are equally interested in knowing the economic viability of the

proposedventure.

3. Describe the guidelines for project feasibility study.

Ans.: Guidelines for feasibility report for Industrial Projects

I. General Information: The feasibility report should include an analysis of the

industry to which the project belongs. It should deal with the past performance

of the industry. The description of the type of industry should also be given i.e.,

the priority of the industry, increase in production, role of public sector, allocation

or investment of funds, choice of technique etc. This should also contain

information about the enterprise submitting the feasibility report.

2. Preliminary Analysis of Alternatives: This should contain present data on the

gap between demand and supply for the outputs which are to be produced,

data on the capacity that would be available from the projects that 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 proposed projects.

3. Project Description: The feasibility report should provide a brief description of the

technology/process chosen for the project. Information relevant to determining

optionality of the location chosen should also be included. To assist in the

assessment of the environmental effects of a project.

4. Marketing plan: It should contain the following items:

Data on the marketing plan demand and prospective supply in each of the areas to be

served.

The methods and data used for making estimates of domestic supply and selection of the

market areas should be presented. Estimates of the degree of price sensitivity should be

presented. It should contain an analysis of past trends in prices.

5. Capital requirements and costs: The estimates should be reasonably

completeand properly classified. Information on all items of costs should be carefully

collected and presented.

6. Operating requirements and costs: Operating costs are essentially those which are

incurred after the commencement of commercial production. Information about all items of

operating cost should be collected. Operating costs relate to the cost of raw materials and

intermediates, fuel, utilities, labour, repair and maintenance. setting expenses and other

expenses.

7. Financial Analysis: The purpose of this analysis is to present some measures to assess

the viability of the project. A perform balance sheet for the project data should be

public enterprises. Foreign exchange requirements should be cleared by the department of

economic affairs.

8. Economic Analysis: Social profitability analysis needs some adjustment in the data

relating to the costs and returns to the enterprise. One important type of investment

involves a correction in inputs and costs, to reflect the true value of foreign exchange,

labour and capital.

9. Miscellaneous Aspects: The preceding areas are deemed appropriate to almost every

new small enterprise. Notwithstanding depending upon the size of the operation and

peculiarities of a particular project, other items may be considered important to be spelled

out in the project report.

5. Describe briefly the application

of PERT and CPM.

PERT Net Work

Ans..:The application of PERT and CPM for

project manage- ment Involves the

following steps.

Identifying all key activities and

events for completion of the

project an activity here is defined as an operation or job to be performed, which

consumes time and resources. An event is defined as a beginning or completion of

an activity.

2 Determining sequence of activities and events in a project and arranging them Ina

network. Each and every event is assigned a serial number. The network shows a

number of paths of activities and events from beginning to completion.

3. Determining and assigning time for beginning and completion of each activity in

the network. This will help to find out the total time require to complete the project.

For completion of each activity, three estimates of time span are calculated namely,

optimistic tune is shortest time, pessimistic tune i.e. longest tame and normal

time i.e. most likely time. Then all the time estimates are coined intoa single

workable time value i.e. expected time.

4. Identifying- the sequence of those activities the competition for which is critical for the

timely completion of entire project. Any delay in completion of activities which is

one of the critical paths, will delay the completion of entire project,

Section-C

1. Briefly explain the various sources of short term finance?

Ans.:The short term financial needs of the companies are generally met from the following

sources.

1. Trade Credit: Just as a firm grants to credit to its customers it can also get credit

from the manufacturers or wholesalers or suppliers. It is known as trade or

mercantile credit. According to Howard and Upton trade credit may be defined as

"The credit extended by the sellers to the buyers at all levels of production and

distribution processes down to the retailer".

2. Consumer credit or consumer advance: Many times the manufacturers or the

suppliers insist on, advance by the customers particularly is case of special

orders or big others. The customer advance forms part of the price of the products

ordered by him. Sometimes, the customer also tenders the full price. This is an

interest free source of finance.

3. Installment credit: This is also called consumer credit, retailers for selling consumer

durables like television; washing machine, etc. generally use it. Here,

however, we use the term "Installment credit" to denote the facility provided by the

equipment suppliers on easy installments as this serves to provide capital to a

firm in kind. Installments include interest on unpaid sums and are suitably spread

as to enable the purchasing company to meet them out of current cash flows.

4. Account Receivable Financing: Under this method, a financing company purchases

the account receivables from the customers or money is advanced on the

security of the accounts receivable. In short, it is a method of getting credit by

pledging book debts. In financial accounting, it is denoted as sundry debtors or trade

debtors, and this item appears on the asset side of the balance sheet. Since credit sales

are unavoidable in trading transactions, every trader has always a larger amount

locked up in the form of account receivables. This account receivable is a right to

property and a right to collect the amount from the client. This method of financing is

very popular in the United States of America.

2. Explain the factors to be considered when selecting a project.

Ans.: Project selection is concerned with the collection, compilation and analysis of economic data

for the eventual purpose of locating possible opportunities for investment and with the

development of the characteristics of such opportunities. According to Peter F. Drucker,

opportunities are of three kinds: Additive, Complementary and break -through. Additive

opportunities are those opportunities which enable the decision -maker to better utilise

the existing resources without in any way involving a change in the character of

business.

Complementary opportunity involves introduction of new ideas and as such do lead

certain amount of change in the existing structure.

Break - through opportunities, on the other hand, involve fundamental changes in both the

structure and character of business.

Project. Each project has three basic dimensions - inputs, outputsand benefits. In

addition to this every project has an internal andexternal impact on

The society,

Internal Factors: Internal factors arise on account of the limitations of the management

system which will eventually be responsible for the implementation of a project. In

India, the internal constraints for the entrepreneurs while venturing the projects

comprise inputs resources and outputs. These are narrated below:

1. Entrepreneurs, while implementing the projects, rely more on outside consultants for

preparation of feasibility reports in the formulation of their projects, the limitation on the

part of entrepreneurs to provide inbuilt project services in the form ofprepari ng

feasibil i ty reports is an important internal factor in the earl y implementation

of the project.

2. For early implementation of projects within the budgeted cost and time

schedule, and the entrepreneurs cannot develop independent project

management systems, organisation structure, network analysis and other

elements. In such a situation, well equipped project the entrepreneurs

inherent constraints are developing management strategies and tools while

implementing them.

3. Protect goals and objectives lay down the main purpose for which an organisation

exists. Practically, project management team is not much involved with the

determination of project objectives. Certainly, this will be another internal

constraint for the project team to achieve the unrealistic objective which is decided

by the top management personnel of the business.

External factors: The external factors are also another important factor for the entrepreneurs who venture into project implementation. The important external factors are the project environments comprising things, people and situations outside a project and also the size, nature, location and extent of the project constitute the environment of the project. The other tangible environment factors are namely, social taboos, Government policies and the state of capital market. These are described as under

1. The external environment factors like nature, size, location and the extent of project

are the important limiting factors for the entrepreneurs when the project does not

conform to the socio-economic objectives of the country.

2. Governme nt pol ici es and reg ul ati ons are a nothe r maj or hards hi p for the

entrepreneurs while implementing the projects. They are mainly in the form of

delay in giving approval to the entrepreneurs in the matter of industrial licensing,

foreign collaboration approval CCI clearance, environmental clearance, foreign

exchange permit, capital goods approved and import goods clearance.

3. Financial institutions and banks are the important external financial sources

for the entrepreneurs while financing their project. The financial institutions

and commercia l banks cum bersome procedures and documentat ion system

are important external factors for the entrepreneurs which causes delay in

financing the projects.

3. State the elements of project formation.

Or

Explain in detail the sequential stages of project formulation.

Ans.:Mr. Vinod Gupta in his study an 'Formation of a Project Report' divides the process of

project development into eight distinct and sequential stages. These stages are:

1. General Information:

(1) Bio data of promoter i.e., name, address, qualification, experience and other

capabilities of the entrepreneur/entrepreneurs.

(ii) Industry profile i.e., the industry to which theproject belongs, past performance,

present status, its problem etc.

Constitution and Organization covering of national structure.

(ii i) Product Details - Product - ut i l i ty , range , design and relati ve

•••• Project Description: Covering details w.r.t the site i.e., location of

enterprise, physical infrasture i .e ., availability of raw material, skilled labour,

power fuel , water, Pollution control, communication network, transport facilities,

production process, machinery equipment, capacity of the plant, selected

technology, research and development etc.

•••• Market Potential: Covering details like demand and supply position, expected

price marketing strategy, after sale service , transportation etc.

•••• Capital Costs and Sources of Finance; Estimate containing various components of

capital like land and building, plant and machinery installations cost preliminary

expenses, margin for marking capital etc. The various sources of finance should be

stated mentioning clearly owners contribution and funds raised from financial

institutions.

•••• Assessment of Working Capital: The requirement for working, capital and its

sources of s uppl y , l ength of w orki ng capital cycle s houl d be es timated a nd

mentioned.

•••• Other-Financial Aspects: Etc judging profitability of the project a projected Profit

and Loss Account indicating sales revenue. Cost of production, al l ied cost and

profit should be prepared. A projected balance sheet, cash - flow statement should

be prepared. Break-even Analysis should also be shown in the project report.

•••• Economic and Social Valuables: Various socio economic benefits expected from

the project shoul d be included in the project report , various benef its can be

development of area etc. Arrangement made for treating the effluents and emissions

should

Project Implementation: The time table for implementations of the project should be

stated and project delay resulting in cost overrun should be avoided. Delay in the

project can effect financial availability of the project. It is in the interest of the

entrepreneur to check out an implementation schedule.

UNIT – IV

ENTREPRENEURIAL DEVELOPMENTPROGRAMMES [EDP]

SECTION – A

1. Give the meaning of Entrepreneurial development programmes.

Ans. Entrepreneurial development programme refers 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 roleeffectively.

2. Write short notes on EDP institute Ahmedabad.

Ans. The Entrepreneurship Development Institute of India [EDI!, Ahmedabad 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). The institute is registered.

3. Write short note on "Industrial Estate".

Ans.Apart from EDPs, all governments offer various other schemes to promote the

entrepreneurship. All state governments promote industrial estates to attract people to

start their own enterprises. An industrial estate is a place where factory

accommodation and other related facilities are provided by the Government to

entrepreneurs to establish their own industries. For example - Ambattur Industrial Estate,

Guindy Industrial Estates in Chennai etc.

4. Name the agencies involved in EDP.

Ans.: There are various agencies and institutions engaged in entrepreneurial development activity,

they are -

•••• National Institute for Entrepreneurship and small Business Development I NIESBUD

•••• Entrepreneurship Development Institute of India [EMI]

•••• Technical Consultancy Organisation ITCOI

•••• Indian Investment Centre IIIC1 etc.

5. Who provides EDP Training?

Ans.: EDP training provides by the qualified trainers through EDP Success of EDPs depends on

the trainers. They should be committed, competent and qualified. Trainers must be fully

acquainted with whatever is latest in their respective fields.Different types of

entrepreneurial training programmes are organised in different countries to suit the

local condition.

7. What is seed capital?

Ans.If a new entrepreneur wishes to promote medium scale project and does not have sufficient capital, IDBI offers financial assistance in the form of seed capital.The seed capital scheme is operated through SFCs and SIDCOs agents of DBL It is limited to a maximum amount of Rs.1.5 lakhs and provided in the form of interest free soft loans to proprietary or partnership firms. In the case of private and public liglited companies, it forms 1% of the cumulative redeemable preference shares (CRPS).

9. State any two benefits of Industries situated in Backward areas.

Ans. Small entrepreneurs should be encouraged to set up in rural areas or backward areas.

Income tax and other levies, such as excise duty, sales tax, corporate tax, customs duty, can

be exempted. In return for tax holiday and de-regulation are the two benefits of industries

situated in rural areas or back ward areas.

10. State the phases of EDP

Ans. An EDP possesses the following three phases:

• Pre-training phase

• Training phase

• Post-training phase i.e. follow up phase.

11. Wri te note about Hierarchy Theory.

Ans: Dr. Abraham Maslow a psychologist formulated a widely accepted theory of hurn,

an needs. He classified human needs into 5 different categories in order of priority

morn lower to higher needs. He called them the hierarchy of needs.

Physiological need, safety and security needs, social needs. Esteem, needs,

self-actualisation needs are different stages in hierarchy needs.

SECTION – B

1. Explain the objectives of Entrepreneurial development programme.

Ans.An entrepreneur is a pivot around which the entire Industry rotates. He is the one who is

going to perceive, initiate, organise and manage an enterprise. de is to bear all the risks

and uncertainties associated with the setting up, running and the ultimate outcome of the

enterprise. Success in any venture depends upon foresight, knowledge, optimism, hard

work, persistence and efficient management. Entrepreneurial development has

gained great deal of importance in all the developing and developed economics of the

world.

The important objectives of EDP can be stated as follows;

• Developing and strengthening entrepreneurial quality in them.

• Analyzing environmental set up as to small business and industry.

• Selecting project

• Formulating the project.

• Understanding the process and procedure of setting up small enterprise.

• Knowing the sources of assistance available for setting up aenterpnse.

• Acquiring the necessary managerial skills for managing an enterprise.

• Knowing the pros and cons of being an entrepreneur.

• Acquainting the required entrepreneurial discipline.

• Identifying and training potential entrepreneurs.

• Providing post-tra ining assistance .

• A c cele rat ing indus tr i al de vel opm ent .

• Solving unemployment problem.

2. Explain the role of EDP.

Ans. EDP is considered as the most important instrument to solve the poverty and unemployment.

It ensures it through the establishment of SSI units all over the nation. EDP performs the

following roles:

1. Stimulatory Role: Stimulatory role refers to all such efforts, which stimulate the

emergence of entrepreneurship in a society. It involves the following:

• Educating entrepreneurs.

• Publishing entrepreneurial opportunities in a planned manner. (hi)

Locating potential entrepreneurs through scientific methods.

• Imparting motivational training to new entrepreneurs.

• Guiding entrepreneurs in product selection as well as preparation of project report.

• Providing data regarding technical, economical, legal and financial aspects of a project.

• Developing new products and processes suitable to local conditions.

• Providing entrepreneurial counselling and promotion.

• Creating a forum for entrepreneurs.

• Recognising entrepreneurs.

2. Supportive role: Supportive role aims at assisting entrepreneurs to establish and

operate enterprises. This is done by group support activities. These acts includesthe

following:

• Registration of enterprises.

• Arranging for finance.

• Providing of land, shed, power, water, etc.

• Guiding for the selection of machinery.

• S uppl yi ng s c arc e mate r ia l s .

• Providing of common infrastructural facilities.

• Granting tax relief and providing subsidies.

• Providing management consultancy services.

• Assisting in the marketing of products.

• Supplying necessary data.

3. Sustaining role: Sustaining role enables the entrepreneurs to run their enterprises on a

sustained basis. It includes the following activities:

•••• Assisting in modernization, expansion and diversification of the organization.

•••• Helping in the production of substitute products.

•••• Providing the necessary finance for the maximum capacity utilization.

•••• Enabling repayable of principal/payment of interest.

•••• Reservation of products.

•••• Creation of new scope for marketing

•••• Quality testing/Improving services.

4. Socio-economic role: Socio-economic role of EDP facilities promotion of industries

as well as status of the people in the society. It performs the following functions:

• Augmenting latent qualities of the persons to become entrepreneurs.

• Utilising the latent and unutilised resources for the establishment of the enterprise.

• Helping dispersion of industries to promote balanced regional development.

• Creative immediate employment opportunities in small scale enterprises and business

sector.

• Ensuring more equitable distribution of national income and wealth.

3. What are the objectives of Entrepreneurial training?

Ans.Entrepreneurial training is provided through Entrepreneurial Development

Programmes. The main aim and objectives of EDPs are:

• To attract people to entrepreneurial development programmes through effective promotion.

• To make them aware of the various available business opportunities.

• To motivate and strengthen entrepreneurial quality.

• To develop the course content and the curriculum of the programme, keeping in view the

characteristics and the factors influencing entrepreneurial growth.

• To develop management related skills like problem solving, decision making,

communication, opportunity identification, interpersonal, team building, etc.

• To make participants aware of the various laws, procedures etc., relating to the

entrepreneurship.

• To develop passion and interest in entrepreneurship.

• To conduct research and study on the effectiveness of the various programmes, schemes,

market potential of various business opportunities, etc.

SECTION – C

1. Discuss the achievements of Entrepreneurial Development Programmes

Ans. Entrepreneurship plays a very important role in the economic development.

Entrepreneurs act as catalytic agents in the process of industrialisation and economic

growth. Technological progress alone cannot lead to economic development unless

technological breakthrough is put to economic use by entrepreneurs. EDP enables

entrepreneurs in initiating and sustaining the process of economic development in

the following ways.

• Creation of Employment Opportunities: Unemployment is one of the most

important problems confronting developing and underdevelopment countries, EDPs

enable prospective entrepreneurs in the selling 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

honorable life and at the same time they enable others in getting gainful employment.

• Capital formation: It is not possible to set up an enterprise without adequate

funds. Entrepreneur as an organiser of factors of production employs his own as well

as borrowed resources for the setting up of his enterprise. Entrepreneur mobilises

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.

• 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 industrialisation 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.

• Use of Local Resources: In the absence of any initiative local resources are likely to

remain unutilised. Proper use 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.

• Improvement in per Capita Income: Entrepreneurs are always on the lookout for

opportunities.

• Improvement in the standard of living: Entrepreneurs by adopting latest

Innovations them the production of wide variety of goods and services. By making Efficient u

of the resources, the start producing more or better quality and that too at lower costs. This

enable those to ensure easy availability of better quality products lower prices to the

consumers which result in the improvement in the standard of living of the people.

• Economic Independence: Entrepreneurs enable a country to produce wide variety of better

quality goods and services and that too at competitive prices. They develop substitute of the goods

being imported and thus prevent over-dependence on foreign countries and at the same tune

help in the savings of precious foreign exchange. Export promotion and import

substitution thus help in promoting economic independence of the economy.

• Preventing Industrial Status: 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 help in reducing pollution and overtaking of civic

amenities.

• 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 canalising 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.

• Facilitating overall development: An en entrepreneur acts as a catalytic agent tar change

which results in chain reaction. With theprocess of industrialisation in set in motion.

2. Explain the various of phases of EDP’s.

Ans: An EDP possesses the following three phases:

• Pre-training phase.

• Training phase.

• Post-training phase i.e., follow up phase.

1. Pre-training phase: Pre-training refers to the activities and preparatory work made

before the actual conduct of training. In this phase, actually preparations are made for

launching the programme. It involves the following activities.

• Selection of area.

• Selection of course coordinator.

• Arrangement of infrastructure.

• Conduct of industrial survey to identify good business opportunity.

• Formulating the programme -

� Publishing the programme.

� Establishing contacts.

� Printing the entry forms.

� Distribution of entry forms.

� Appointing selection committee to select trainees.

� Getting sanction from the concerned department of the government.

� Final ising the syl labus .

� A r r a n g i n g g u e s t f a c u l t i e s .

6. Getting support from various agencies such as DICs, SFCs, SISI etc.

2. Training Phase: It involves three phases in it, which are as follows:

a) Raising Motivational Level i.e. confidence building:

The entrepreneurial training programmes are normally designed so as to rare their

motivation to a higher level. Each session in the training programme should aim at

strengthening their confidence and expanding their vision. Motivational level must be

raised to a greater extent because only motivated participants will take effort to start al

venture.

b) Improvement of Managerial talents:

Management of a project is a difficult task. However, it can be done easily, if the

entrepreneur is well versed with the techniques of management. They must be made to

understand the basic principles of management, they must be made to realise the benefits

and significance of the management functions like planning, organising, staffing, directing,

controlling and coordinating. The various techniques involved in the management process

must be explained. To sum up their skills in managing an enterprise must be improved.

c) Developing the technical competence:

During the course of the training programme a candidate may select one or more products

for manufacture. The technical competence suitable to the product selected should be

developed in the participants. For this purpose, many details are required to be given to

participants. They are as hereunder.

• Details of technology.

• Plant and machinery - its cost, the name of suppliers, its life-span, special features of the

machinery etc.

• Raw-materials its availability, special characteristics and the like.

• M anufacturing process - i ts detail s .

• Requirement of labour - quality and qualification and the availability of such labour.

3. Post-training phase: Post-training phase refers to follow-up stage. In this phase, assessment as

to how far the objectives of the programme have been achieved has been made. It indicates past

performance, drawbacks if any in the past work and suggests guidelines for formulating future

policies.

During this phase, participants are given support to start their ventures. This is an important

phase because it is at this stage that an entrepreneur is in need of counselling, advice and

moral backing. The activities that crop up during this phase are as below:

1. Registration of the enterprise .

2. Arranging finance for starting the unit.

3. Guidance with respect to purchase of plant and machinery.

4. Providing land, shed, power connection etc. for establishing the project.

5. Obtaining of licences for scarce raw materials.

6. Granting incentives such as capital investment subsidy, interest subsidy, tax relief etc.

7. Assistance by way of management consultancy.

8. Marketing faci l ities .

9. Up-to-the date information of the industry.

In short, we may say that for the healthy development of entrepreneurs and enterprises,

all the three phases are necessary.

UNIT – V

ECONOMIC DEVELOPMENT ENTREPRENEURIAL GROWTH

SECTION – A

1. Define Franchising?

Ans.David D.Settz in his book "How to get started in your own franchised business" has

defined the term franchising as "A form of business ownership created by contract

whereby a company grants a buyer the rights to engage in selling and distributing its

products or services under a prescribed business format in exchange for royalties

or share of profits."

2. What is Network?

Ans.: Project design refers to the process of defining the individual activities which

go into the corpus of the project and their interrelationship with each other. It

enables to identify the flow of events which must take place for the successful

completion of the project network analysis involves the consideration of time and

resources profile of the project activities so as to identify the optimal course of action

involving the time. keeping in mind the available resources constraints, It provides the

project formulation team a clear picture of the work elements of the project

and their sequential relationship.

3. Write short notes on development of women entrepreneurship. [Nov 2010. emu'

Ans. Women entrepreneurs may be defined as the woman or group of women who takes

initiating to set up a business enterprise and to turn it smoothly. According to the data compiled by

the small administration office of women's business ownership there are but 9.1 million women

owned business employed 27.5 million people and contribute $3.6 trillion to the economy.

According to the information available. Women constitute only 5.2% of the total self-employed

persons in India (1981 census) But in 1988-89, it has improved. It is 9.01% of the self-employed

persons. It is a healthy sign that woman participation in entrepreneurship is increasing.

4. List out the various types of SSIs.

Ans.The small scale Industrial sector may be classified into five types viz.,

� Small Scale Industry.

� Ancillary Units.

� Tiny Sector.

� Small Scale Service Establishments.

� Household Industries.

5. What is merger?

Ans.Merger is a type of external growth strategy. It refers to combination of two or more existing

enterprises into one. It may take place in two ways namely Absorption Amalgamation. If one enterprise

is acquired by another it is called absorption. On the other hand, if two or more. Enterprises join into one

to form of new concern it is what LS called amalgamation. Thus in the case of absorption, no new firm is

formed whereas in the case of amalgamation, and firm is formed.

6. What is sub-contracting?

Ans.Sub-contracting refers to a mutually beneficial commercial relationship between

twocompanies, it is also called ancillarisation. In sub-contracting, contractor places

orderwith sub-contractor for the production of parts, components, assemblies or sub-

Assemblies to be incorporated into a product sold by the contractor. Sub-contractor

produces accordingly and supplies the same. In large-scale industries, sub-contracting is

common because they do not produce all goods on their own.

7. What are the different types of franchising?

Ans. Franchising is of three types such as -

1. Product franchising.

2. Manufacturing franchising.

3. Business-format franchising.

8. Define women entrepreneurs.

Ans.: Women entrepreneurs may be defined as the woman or group of women who take

initiative to set up a business enterprise and to run it smoothly. According to

Schumpeter’s concept, "Women who innovate, imitate or adopt a business activity are known

as women entrepreneurs".

9. State the functions of women entrepreneurs?

Ans.: Being an entrepreneur, women also should perform in establishing an

enterpriseFrederick Harbison in his article has emigrated the following as the functions women

entrepreneur:

1. Exploring the prospects of starting new enterprises.

2. Undertaking of risks and the handling of uncertainties:

3. Introduction of new innovations.

4. Imitation of successful onesin existence.

5. Co-ordination, administration and control of business activities.

6. Supervising and leading in all aspects of the business.

10. What are the schemes of financial assistance available to women entrepreneurs?

AnsGovernment, banks and financial institution have introduced different-schemes forthe

development of women entrepreneurs in India of them important schemes are 1. Development of

women and children in rural areas (DWCRA).

•••• Schemes of IDBI.

•••• Scheme of Karnataka SFC

•••• Scheme of IFCI.

•••• Rajasthan Financial

11. What is meant by DWCRA?

Ans.: DWCRA is a scheme introduced by Government of India for the encouragement of women

entrepreneurship. Generally a woman is unable to start a venture (independently)

due to various reasons. The concept of teamwork has been introduced to make them conrageons

enough to start their own enterprises. This idea has been incorporated into a scheme and the

Government implemented the scheme known as The Development of Women and Children in

Rural Areas. (DWCRA).

12. What is Niche Marketing?

Ans: Niche marketing become implementable once the businessman has completed the

process of identification of niche market. He has to focus the floodlights on niche market first

and identify it. Niche marketing means to plan out strategies to market product or service in

market. Niche marketing is the process of finding and serving small but potentially profitable

market segments and designing custom made products or services for them.

Section - B

1. Discuss the role of entrepreneur in economic growth as an innovator.

Arts.Entrepreneurs play their role in different capacities such as innovators, generators of

employment opportunities and developers of economy. Being innovator, entrepreneur

performs a variety of functions to provide for the acceleration of economic growth, which

are as follows:

I . Introduces new combinations in the means of production: As an innovator,

entrepreneur brings out new products, new techniques of production, opens up a new

market, finds out new sources of raw-materials, a novel use for existing products, a

new type of organisation etc. All these result in growth and development of a country's

economy through increased supply of products, savings in production cost etc

2. Enables progress in technology: Entrepreneurs make use of potential technical

knowledge, which enables continuous technological progress. It removes

diminishing returns because technological progress leads to innovation, and

consequently results in steady increase in total output and percapita output.

3. Aims at leadership: As Peter F.Drucker says, "a successful innovation aims at

leadership", because leadership is a most logical attribute of entrepreneur to bring about

economic development.

4. Implements Skills: Entrepreneur makes use of his conceptual skills to bring about

improvement in the quality of the product. It is a continuous function of an

entrepreneur. There is no end to it. In this world of competition, an

innovateentrepreneur alone can survive. Lack of innovative spirit may, in due course

will an enterprise.

2. Discuss the problems faced by the SSIs.

Ans.Small scale industries do face problems. Some of their important problems are as follows:

• Inadequate supply of raw materials: Small Industries purchase raw materials in small

quantities. They cannot compete with large industries that are buying in bulk and also

for ready cash. Their bargaining power is less and they are forced to pay high prices. Besides,

the small units in our country depend heavily on the open market for the supply of scarce raw

materials. The quality of the materials is very poor, their supply is very irregular and the

prices are also more than double those implied prices.

3. Explain the merits and demerits of joint venture.

Ans. Joint venture is one of types of external strategy followed by business concerns. It is a

temporary partnership between two or more firms to undertake jointly to complete a specific

venture. The parties entering the venture by means of an agreement are known as co-

ventures.

Advantages of Joint Venture:

Joint venture offers the following benefits:

1. It reduces risk involved in the business.

2. It helps to increase the competitive strength of business.

3. It enables the use of advanced technology and knowhow.

4. It enables the firms to avail the benefits of large scale economies.

Disadvantages of Joint Venture:

It also suffers from certain drawbacks, which are as follows:

•••• The functioning of the business may be badly affected due to misunderstanding between

the co-ventures.

•••• In case of foreign ventures, it may be in a position to face a lot of legal restrictions

•••• Lack of co-ordination among co-ventures is another drawback of joint ventures.

•••• Conflicts -among co-ventures due to unequal equity participation is a Common feature of

joint venture.

5. What are the functions of women entrepreneurs?

Ans . Being an entrepreneur, women also should perform all the functions, which

an entrepreneur is expected to perform in establishing an enterprise. Functions of

entrepreneurs generally involve idea generation and screening, determination of

objectives, preparation of project, analysing product, deciding the form of organisation,

promoting an enterprise, raising funds, recruiting men, arranging for

machines,materials etc. and running the business.

Besides, whether men or women, an entrepreneur is expected to perform the

ninctionsbrought under the following three categories, such as

1. Risk - bearing.

2. O r g a n i s a t i o n .

3. I n n o v a t i o n s .

Frederick Harbison in his article has enumerated the following, as the functions -2t

women entrepreneur:

1. Exploring the prospects of starting new enterprises.

2. Undertaking of risks and the handling of uncertainties.

3. Introduction of new innovations.

4. Limitation of successful ones in existence.

5. Co-ordination, administration and control of business activities.

6. Supervising and leading in all aspects of the business.

6. What are the features of network marketing?

Ans: Network marketing also known as direct selling or multi-level selling, is well-known

one to one selling. It is a form of franchisingbased on the concept of word of - month advertising.

Network marketing is one of the non-stores retailing which is multibillion dollar industry

although it is still catching up in India.Network marketing strategy is all about achieving

success in the network marketing business. One can communicate through Internet and develop

global network marketing business.

Features: Network marketing has the following features:

•••• Every member acts as an independent distributor and builds his own network.

•••• It involves minimum capital and risk and success in selling depends upon each

distributors own skill, competence and selling ability.

• Unlike conventional selling where top people make much more money as pe r hierarchy,

network marketing provides an opportunity to earn according to ones equitable contribution of efforts

in income generation.

• People who have better access level earn more irrespective of their level in hierarchy Thus, it

becomes the fairest and clean system available which compensate people according to their efforts and

contribution.

•••• Every member gets support from top management because success of t op

management depends on success of these in lower management.

•••• Network marketing makes people millionaire due to their abilities to duplicate ones

business rather than owing it.

•••• One distributor can participate in a number of affiliate businesses, each of which had the

potential to generate an additional stream of income very quickly.

Section - C

1. Define SR. Describe its role in the Indian economy.

Ans.As per the definition given by the small scale industries board in January 1955, a small

scale industrial unit is, "A unit employing less than 50 persons, if using power and less

than 100 persons without the use of power and with capital asset not exceeding Rs.5

lakhs''.

Small scale industries play a significant role in the Indian economy due to the following reasons:

• Minimum Capital: Small industries need smaller amount of capital when compared to

large industries. But the return is relatively quick. Hence, it is found suitable to a

country like ours where there is deficiency of capital.

• Employment opportunities: Small industries are labour intensive industries: So they

provide more employment opportunities. Further, they have greater scope for self-

employment. Therefore, these industries are more important in developing countries

like ours where labour is abundant and the unemployment problem Is more acute.

• Quick capital formation: As the return on capital is quick, generated

cash can be reinvested. This would lead to quick capital formation.

• Skin Light: Small industries can be carried out with their own family members who

have little training.

• Import Light: Small industries invest a relatively minimum portion of their capital in imported

equipment’s and raw materials when compared to large units i.e. it needs less import.

Hence, it does not require foreign exchange meet their Import requirements.

• Quick yielding: In case of small industries. the gestation period will be less.

Therefore, their yielding is quick.

• Balanced Development: Small industries can be spread throughout the country,

which in turn provide for the dispersal of industries. Thereby it can -

Reduce the regional imbalances,

Help to lap the rural resources, and

Stop the moving of people from the rural areas to the urban area.

• Even distribution of income and wealth: Since the small industries proves for regional

balanced development, even distribution of income and wealth is also possible.

• Flexibility: Small industries can quickly adjust with the changing conditions and habits of the

people without much dislocation. So there industries are more flexible when compared to larger

one.

• Better Labour-Management Relationship: In small industries, management has:.a

personal contact with its workers. So the chances for industrial dispute are less.

• Less pollution: Pollution will be comparatively less in the care small scale industries.

2. Discuss the problems of women entrepreneurs.

Ans.Being a successful entrepreneur is so difficult because it is not easy to research, Man,

organise, launch, and manage an entrepreneurial venture successfully. Besides due to

race/gender, entrepreneurs face some additional challenges. Especially, minority and women

entrepreneurs face all sorts of challenges. The problems faced by women entrepreneur are

detailed below:

• Problem of finance: The main challenge, which women entrepreneurs face, is getting the

funding they need to start and grow their businesses. Access to capital is a serious issue of

minority and women entrepreneurs, A study by the Federal Reserve System of Small

business Financing patterns found that minority. Small - business owners have an

extremely hard time in getting credit. Studies have shown that they have lower levels of

available credit than do their male counterparts. So, the capital problem is definitely real and

very serious.Access to capital to start and grow their entrepreneurial. A venture is a n

extremely difficult barrier for women entrepreneurs.

• C o n f l i c t b e t w e e n w o r k a n d f a m i l y : A n o t h e r c h a l l e n g e t h a t

w o m e n Entrepreneurs, particularly, face is the conflict between work and family,

Although this issue can, and does, arise for male entrepreneurs also, it is e s p e c i a l l y

a c u t e f o r w o m e n b e c a u s e m a n y c h i l d - r e a r i n g a n d f a m i l y responsibilities fall on

them. Being an entrepreneur can be a 24 x 7 (24 hours a day, 7 days a week) commitment.

Running a successful business often means finding a healthy balance between work and

family lives.

• Shortage of Raw material: Security of raw materials is yet another challenge that women

entrepreneurs face. They suffer from higher prices and lower Discount rates.

• Stiff competition: Women entrepreneurs face intense competition for their goods from organised

sector and male entrepreneurs. This is because they do not have enough funds to spend on

advertisement, canvasing and publicising their products.

• Limited Mobility: Incur country; mobility of women is highly limited on account of various

reasons. They cannot travel freely from one place to another for business reasons. In order to set up an

organisation, an entrepreneur has to get sanctions at varied levels from various government

departments all of which require free mobility. This is not possible in India.

• Low literacy rate among women: Rate of literacy among women is very low in

India. Education is important for a person to be aware of least technology, business

trends, market knowledge etc. This creates additional problem for women entrepreneur in

setting up and running business enterprises.

• Male-dominated society: Male-domination is still the order of the day in our country. Equality

between sexes is only on paper, speeches, constitution etc. In practice, still women are considered

weak in all respects. Men in the society dominate the business world and men in the families

do not permit female members to start their ventures. The reputation of the family, the sense of

prestige etc. come to the forefront. Discipline and integrity are demanded from the women; their

legitimate freedom and right to self-development and independent pursuit are denied. This acts as

another barrier to women entrepreneurship.

• Lack of motivation: Fear to failure is too much in women than men. This fear creates no

motivation in them. Hence, lack of motivation among womenentrepreneurs is considered as

another barrier, which stands in the developmentof women entrepreneurs.

• Low achievement need: Need for achievement is the most important pre-requisite for success in

entrepreneurship in India, urge to achieve in lacking. It acts as another barrier to succeed in their

venture.