Entrepreneurship and Management of Small & Medium Enterprise

TYBMS

Paper Pattern
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Section I
Concepts (3*5- 15 marks) Case study (15 marks)

Section II
Any three 10 marks each (with or without internal options)

*Reference book: Entrepreneurship and Management of Small & Medium Enterprise by Sunny Fernandes

What is Entrepreneurship?
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Capacity to take risks Ability to own and organize Desire and capability to INNOVATE and diversify

Who is an Entrepreneur?
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A person who organizes and manages a business undertaking, assuming the risk for the sake of profit. Any person who starts and operates a business is an entrepreneur.

Definitions of Entrepreneur
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J.B. Say
An Entrepreneur is one who brings together the factors of production and combines them into a product.

E.E. Hagen
An entrepreneur is an economic man who tries to maximize his profits by innovations. Innovations involve problem-solving and gets satisfaction from using his capabilities in attacking problems.

Concept of Entrepreneurship
ENTREPRENEUR
ENTREPRENEURSHIP

ENTERPRISE

PERSON

PROCESS OF ACTION Collection of Activities

OBJECT

An Individual

Result of the efforts of an Entrepreneur. Creates an enterprise

Definitions of Entrepreneurship
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Joseph Schumpter:
Entrepreneurship as defined essentially consists in doing things that are not generally done in the ordinary course of business routine.

Peter Drucker:
Entrepreneurship occurs when resources are redirected to progressive opportunities not used to ensure administrative efficiency. He further states that entrepreneurship is not natural; it is not creative. It is work. Entrepreneurship requires entrepreneurial management.

Characteristics of a successful Entrepreneur

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Creativity Innovation Interpersonal skills Leadership Team Building Achievement, Motivation Problem Solving Goal Orientation Risk taking and decision making ability Positive Self Concept

Continued
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Commitment Locus of control Self confidence Ability to mobilize resources Mental ability Business Planning Business secrecy Human Relations Ability Technical Knowledge

CLASSIFICATION AND TYPES OF ENTREPRENEURS

Classification
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Based on Functional Characteristics Based on Type of Business Based on Use of Technology Based on Motivation Based on Growth Based on Stages of Development Based on Area Based on Gender Based on Role of Operation

Functional Characteristics
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Innovative Entrepreneur Imitative Entrepreneur Fabian Entrepreneur Drone Entrepreneur

Type of Business
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Business Entrepreneurs: Printing house, Garments, etc Trading Entrepreneurs: Export- Import Industrial Entrepreneurs : Electronics , Machine tools, etc Corporate Entrepreneurs: Eg: Ambani Agricultural Entrepreneurs: Dairy, Plantation, etc

Use of Technology
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Technical Entrepreneurs Non- Technical Entrepreneurs Professional Entrepreneurs

Motivation
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Pure Entrepreneurs: Psychological and economic rewards Induced Entrepreneurs: Incentives, Concessions Motivated Entrepreneurs: Profit and innovation Spontaneous Entrepreneurs: Confidence

Growth
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Growth Entrepreneurs: high growth industry Super- Growth Entrepreneurs: growth performance is shown by liquidity of funds and profitability

Stages of Development
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First Generation Entrepreneurs Modern Entrepreneurs Classical Entrepreneurs

Others
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Based on Area
Urban Entrepreneurs Rural Entrepreneurs

Based on Gender and Age

Men Entrepreneurs Women Entrepreneurs

Based on Role of Operation

Small Scale Entrepreneurs Large Scale Entrepreneurs

Intrapreneurship
Making Big Companies More Entrepreneurial

Introduction
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The term Intrapreneur was coined in USA in late seventies. It is a creation of a system which will provide selected executives a status within the organization similar to that of an entrepreneur in the society. Intrapreneur is defined as any of the dreamers who do. Intrapreneurship involves the development of independent units designed to create a market, and expand innovative services, technologies or methods within the organization. Some companies who promote intrapreneurial activities are General Motors, IBM, Dupont ,etc.

Characteristics of Intrapreneur
Creates New Ventures
Self Confident Innovates Products/ Services

Self Motivated

Innovates Processes

Intrapreneur

Competi tively aggressiv e Renews Organiza tion

Proactive

Risk Taking

Elements of Intrapreneurial Environment

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Organization operates on frontiers of technology Trial and Error Encouraged No opportunity parameters Resources available and accessible Multi discipline team work approach Long time horizon Volunteer Program Appropriate Reward System Sponsors available Support of top Management

Difference between Entrepreneur and Intrapreneur

Entrepreneur
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Intrapreneur
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Owner and operator of the business. High Risk . Primary motive is independence, opportunity to create, and make money. Serves oneself and customers.

Only operator of the business not owner. Moderate Risk. Primary motive is independence, and ability to advance in the organization, and rewards. Serves oneself, organization and customers. Financial support from organization May get increment, or reward but does not own the rewards Big enterprise or a new unit of a big company

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Personal Capital Investment Owns the rewards

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Generally a small enterprise set up

WOMEN ENTREPRENEURSHIP

Introduction
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They are a woman or group of women who initiate, organize & operate a business enterprise. According to Marshal, any woman or group of woman who innovates, initiates, or adopts an economic activity may be called a woman entrepreneur. According to Government of India, it is an enterprise owned & controlled by woman or a woman having a minimum financial interest of 51% of the capital in the enterprise and giving at least 51% of the employment generated in the enterprise to women.

Factors influencing Women Entrepreneurs

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Greater freedom and mobility Establishing their own creativity Establishing their own identity Achievement of Excellence Building confidence Developing risk taking ability Motivation Equal status in society Government Support Education

Features of Women Entrepreneurs

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Imagination Attribute to work hard Persistence Ability and desire to take risk Value of Self fulfillment over money Sense of responsibility High level of optimism Tolerance for ambiguity Flexibility Organizing capacity

Reasons for women starting an Enterprise

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Motivational Factors
Economic necessity Self Actualization Independence Government policies and programmes Educational Qualification Self identity and social status Family occupation Success stories Self satisfaction

Facilitating Factors
Adequate financial facilities Innovative thinking Network of contacts Cooperation of family Support of family

Continued
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Push Factors
Desire to do something new in life Need for independence Availability of finance Concessions and subsidies

Pull Factors
Death of husband or father Financial problems Family responsibilities

Types of Women Entrepreneurs

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Chance Natural Created Forced

Trends
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Seventh Five year plan suggested the following :

Treat women as specific target groups in all development Increase womens participation in decision making Provide marketing assistance at the state level Properly diversify vocational training facilities for women to suit their needs and skills Encourage appropriate technologies, equipments and practice for reducing their drudgery and increase their efficiency and productivity.

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New industrial policy recommends product and process oriented courses for women Nationalized banks advance loans to women on preferential basis SIDC provides loans, subsidies and grants to small scale women entrepreneur National Alliance of Young Entrepreneurs (NAYE) assist women Rural Employment Generation Programme by the Government.

Problems faced
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Lack of Independence Family Responsibilities Social Attitude Low Mobility High cost of Production Lack of Education Low need for Achievement Shortage of finance Inefficient Arrangement for Marketing and Data Shortage of Raw Material Stiff Competition Lack of managerial and marketing skills Lack of Technical Know how Low risk bearing capability

Strategies for the Development of Women Entrepreneurs

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Education and Awareness Better time management Set up Home based Business Efficient use of IT Organize Workshops and Seminars Group Entrepreneurship Simplified Procedures Dispense Collateral Security Finance Cells Training

Special Schemes
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Seed Capital Scheme National Equity Fund Finance Corporation Scheme Prime Ministers Employment Guarantee Scheme, Central Governments Scheme for Educated Unemployed Women Industries Fund Scheme Single Window Scheme Joint Loan Scheme District Industries Centre Scheme Training and Extension Services Scheme for Refinance Assistance to Women Entrepreneurs

Financial Institutions supporting Women Entrepreneurs

Development of Women Entrepreneurship through SHG

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There are 2,60,000 SHGs in India. A Self help group is a small, economically homogenous and significant group of rural/urban poor, voluntarily formed to save and mutually agreed to contribute to a common fund to be lent to its members. It is a collection of 20 members who form a group facilitated by a NGO, MFO or a bank. It helps women save on daily basis. These groups may set up micro enterprises.

Famous Women Entrepreneurs in India

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Neeta Ambani- Dhirubhai Ambani International School Kiran Mazumdar Shaw- Biocon Shahnaz Hussain- Shahnaz Herbals Inc Ekta Kapoor- Balaji Telefilms Neelam Dhawan- HP India Simone Tata - Lakme Indu Jain- The Times Group Priya Paul- Apeejay Park Hotels Vidya Manohar Chhabria- Jumbo Group Sulajja Firodia Motwani Kinetic Vimalben Pawale- Sri Mahilla Udyog Lijjat Papad

Theories of Entrepreneurship
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Economic Theory Sociological Theory Psychological Theory

Economic Theory
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Entrepreneurship and economic growth take place when the economic conditions are favorable Economic incentives are the main motivators for entrepreneurial activities Economic incentives include taxation policy, industrial policy, sources of finance and raw material, infrastructure availability, investment and marketing opportunities, access to information about market conditions, technology etc

Sociological Theory
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Entrepreneurship is likely to get a boost in a particular social culture. Societys values, religious beliefs, customs, taboos influence the behaviour of individuals in a society The entrepreneur is a role performer according to the role expectations by the society

Psychological Theory
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Entrepreneurship gets a boost when society has sufficient supply of individuals with necessary psychological characteristics. The psychological characteristics include need for high achievement, a vision or foresight, ability to face opposition. These characteristics are formed during the individuals upbringing which stress on standards of excellence, self reliance and low father dominance.

McClellands Views on Entrepreneurship/ Theory of Achievement Motivation

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Two Characteristics of Entrepreneurship:

Doing things in a new and better way; and Decision making under uncertainty

Such people are not influenced by money or external incentives y They consider profit to be a measure of success and competency y According to McClelland, a person has three types of needs at any given time, which are: Need for achievement (get success with ones own efforts) Need for power (to dominate, influence others) Need for affiliation (maintain friendly relations with others) y The need for achievement is the highest for entrepreneurs
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Schumpters views on Entrepreneurship/ Entrepreneurship Innvovation Theory

Theory by Joseph Schumpeter who believes that entrepreneur helps the process of development in an economy y He says that an entrepreneur is the one who is innovative, creative and has a foresight y According to him, innovation occurs when the entrepreneur Introduces a new product Introduces a new production method Opens up a new market Finds out a new source of raw material supply Introduces new organisation in any industry
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Continued..
The theory emphasizes on innovation, ignoring the risk taking and organizing abilities of an entrepreneur y Schumpeters entrepreneur is a large scale businessman, who is rarely found in developing countries, where entrepreneurs are small scale businessmen who need to imitate rather than innovate
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Hagens views on Entrepreneurship

Creative Innovation or change y Withdrawal of Status Respect y Four different Personalities arise:
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Retreatist : Indifferent Ritualist: Defensive Reformist: Rebel Innovator: Creative

Factors affecting Entrepreneurial Growth

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Economic Factors Social Factors Psychological Factors Cultural Factors Personality Factors Government

Economic Factors
Capital y Labour y Raw Materials y Market
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Social Factors
Social norms and values y Role Models y Social Pressure y Respect and Status y Security
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Psychological Factors
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Need for Achievement Withdrawal of Status Respect

Retreatist : Indifferent Ritualist: Defensive Reformist: Rebel Innovator: Creative