Académique Documents
Professionnel Documents
Culture Documents
Module 5
Entrepreneurs in India: Family businesses, new generation entrepreneurs, women
entrepreneurs.
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WOMAN ENTREPRENEURS:
When women move forward, the family moves, the village moves and the nation moves."
enterprise owned and controlled by a women having a minimum financial interest of 51 per cent
of the capital and giving at least 51 per cent of the employment generated in the enterprise to
women."
However, this definition is subject to criticism mainly on the condition of employing
more than 50 per cent women workers in the enterprises owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business enterprise,
initiate it, organize and combine the factors of production, operate the enterprise and
undertake risks and handle economic uncertainty involved in running a business
enterprise.
3. What are the functions of women entrepreneur? (10m)
As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in
establishing an enterprise. These include idea generation and screening, determination of objectives,
project preparation, product analysis, and determination of forms of business organization, completion of
promotional formalities, raising funds, procuring men, machine and materials, and operation of business.
Frederick Harbison (1956) has enumerated the following five functions of a woman entrepreneur:
1. Exploration of the prospects of starting a new business enterprise.
2.
3.
4.
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Supervision and leadership.
The fact remains that, functions performed by an entrepreneur whether man or women are the same .
All these entrepreneurial functions can be classified broadly into three categories:
Risk-bearing
Organisation
Innovations
5.
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NABARD
DWCRA
SIDBI
SEWA
AWAKE
COWE
8. Name few women entrepreneurs in India(6m)
(For detailed explanation refer attachment no 3)
Vidya Chabbria= Jumbo group
Anu Aga- Thermax group
Ranjana Kumar- Bank of India
Sullaja Firodia Motwani- Kinetic Engineering
Amrita Patel- NDDB
Priya Paul Park Hotels
Swati Piramal- Nicholas Piramal
Ekta Kapoor
9. Name few Womens organisation supporting women entrepreneurship(6m)
(For detailed explanation refer attachment no 4)
Sri Mahila Griha Udyog Lijjat Papad(Recognised by Khadi & Village Industries)
Sabala-an organisation for women empowerment
Co-operative women entrepreneurship- The Mahila Bunkar Sahakari Samithi
10. Give an account of the growth of women entrepreneurship in India(10m)
Women in India constitute around half of the country's population. Hence, they are
regarded as the "better half of the society". In the official proclamation, they are at par
with men. But, in real life, the truth prevails otherwise. Our society is still m aledominated and women are not treated as equal partners both inside and outside four
walls of the house. In fact, they are treated as abla, i.e., weak and dependent on men. As
such, the Indian women enjoy a disadvantageous status in the society. Let us g ive some
facts about it. The low literacy rate (40%), low work participation rate 28%) and low
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urban population share (10%) of women as compared to 60%, 52% and 18%
respectively of their male counterparts well confirm their disadvantageous position in
the Indian society.
Our age old socio cultural traditions and taboos arresting the women within four walls
of their houses also make their condtions more disadvantageous. These factors serve
as non conducive conditions
for the emergence and development o f women
entrepreneurship in the country
In India, women entry into business is a new phenomenon. Women entrepreneurship is
traced as an extension of their kitchen activities mainly 3PS - PICKES, POWDER,
PAPPAD. Women in India plugged into business for both push and pull factors.
Pull factors imply the factors which encourage women to start an
occupation or venture with an urge to do something independently.
Push factor refers to those factors which compel women to take up their
own business to tide over their economic difficulties and responsibilities.
With growing awareness and spread of education women shifted from 3P TO 3 modern
Es
Electronics, Engineering & Energy under IRDP. Women entrepreneurs
manufacturing solar cookers in Gujarat, small foundries in Maharashtra & TV
capacitors in Odisha have proved that they are better than their male counterparts in
business.
Sumati Morarji (Shipping Corporation), Yamutai Kirloskar ( Mahila Udyog Limited),
Neena Malhotra(Exports), Kiran Majumdar Shaw(Bi o technology) etc are some
exemplary names of successful and accomplished women entrepreneurs in our country.
In India Kerala is the state with highest literacy rate reflecting a congenial atmosphere
for the development of women entrepreneurship in India. The proper education of
women in Kerala coupled with the financial, marketing and trining assistance given by
the state governments also helped motivate women to assume entrepreneurial career.
Like Kerala, an increasing number of women are entering busin ess in Maharashtra also.
11. What are the problems of women entrepreneurs?(10m)
i.
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Problem of finance & working capital: Finance is regarded as the life blood of any
enterprise. Women entrepreneurs face shortage of funds due to two reasons. Firstly, women do
not generally have property on their names to use as collateral security for obtaining funds from
external sources . Secondly, banks also consider women as less credit worthy and discourage
women borrowers on the belief that they can leave the business at any time
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ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
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Lack of Confidence: Women generally lack confidence in their own capabilities. Having
accepted a subordinate status for long, even at home, members of their family do not appear to
have total confidence in their abilities and on their decision-making. Society in general also lacks
confidence in a women strength, traits, and competence. This is quite apparent in the familys
reluctance to finance a womens venture, bankers are reluctant to take risks on projects set up
by women, and individuals are unwilling to stand guarantee for loans to a women.
Scarcity of Raw Material: Most of the women enterprises are plagued by scarcity of raw
materials and necessary inputs. The failure of many women cooperatives in 1971 engaged in
basket making is an example for how scarcity of raw materials causes winding up of businesses
by women entrepreneurs
Stiff competition: Women entrepreneurs do not have the organizational set up to pump in a
lot of money for canvassing and advertisement. Thus they have to face stiff competition for
marketing their products with both organized sector and male counterparts
Limited mobility: Unlike men, women mobility in India is highly limited due to various
reasons. A single woman asking for room is still looked upon with suspicion in India
Family Ties'. In India, it is mainly a women's duty to look after the children and other
members of the family. Man plays a secondary role only. In case of married women, she has to
strike a fine balance between her business and family. Her total involvement in family leaves
little or no energy and time to devote for business. Support and approval of husbands seem
necessary condition for women's entry into business. Accordingly, the educational level and
family background of husbands positively influence women's entry into business activities.
Lack of Education: In India, around three-fifths (60%) of women are still illiterate. Illiteracy is
the root cause of socio-economic problems. Due to the lack of education and that too
qualitative education, women are not aware of business, technology and market knowledge.
Also, lack of education causes low achievement motivation among women. Thus, lack of
education creates one type or other problems for women in the setting up and running of
business enterprises.
Male-Dominated Society: Male chauvinism is still the order of the day in India. The
Constitution of India speaks of equality between sexes. But, in practice, women are looked
upon as abla, i.e. weak in all respects. Women suffer from male reservations about a women's
role, ability and capacity and are treated accordingly. In nutshell, in the male-dominated Indian
society, women are not treated equal to men. This, in turn, serves as a barrier to women entry
into business.
Socio cultural barriers: A woman has to perform her family duties irrespective of her career
as a working woman or an entrepreneur. In our society, more importance is given to educating
the male child as compared to the female child. This results in lack of schooling and vocational
training of women, their lack of attaining technical skills and thereby lack of awareness of
opportunities available.
Production Problems: Production in a manufacturing enterprise involves coordination of a
number of activities. While some of these activities are in the control of the entrepreneur, there
are others over which she has little control. The inability of women entrepreneurs to keep pace
with the latest advances in technology and lack of technical know-how results in high cost of
technology acquisition and machinery utilisation. These problems result in increasing the cost
of production and adversely affecting the profitability of the unit.
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xi.
xii.
Inefficient Marketing Arrangements: Heavy competition in the market, and their lack of
mobility makes the women entrepreneurs dependent on middlemen. For marketing their
products, women entrepreneurs are at the mercy of middleman who pocket a major chunk of
profit. Further, women entrepreneurs also find it difficult to capture the market and make their
products popular. They lack information on the changing market. In addition, women
entrepreneurs, face difficulty in collection of payments.
Low Risk-Bearing Ability: Women in India lead a protected life. They are less educated and
economically not self-dependent. All these reduce their ability to bear risk involved in running
an enterprise. Risk-bearing is an essential requisite of a successful entrepreneur.
In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost
of production, social attitude, low need for achievement and socioeconomic constraints also
hold the women back from entering into business.
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information about the variety, range, and quality of say competing products, and publicity and
marketing of products and services.
Workshop and seminars should be organised frequently for the officials of financial and support
agencies and for women entrepreneurs to make their relations more cordial.
Procedures for financial assistance by banks and government organisations must be simplified.
Women inspectors, if available, should be asked to inspect women enterprises.
It has been observed, that there is a tendency to project a higher value of sales, production, and
profits in project reports to impress the bankers. Such a project profile is not appropriate from a
financial management point of view. So, women entrepreneurs need to undertake training in
various aspects of financial management to understand its implications
Since complicated and lengthy procedures make it difficult to acquire loans from government
financial agencies and banks, it is suggested that women entrepreneurs search for non-formal
sources of finance like private financiers, relatives, friends, and others
Banks and financial institutions must maintain a minimum target of loan to be disbursed to
women entrepreneurs. Collateral security should be dispensed with in the case of women
entrepreneurs because many women hardly have any property or other assets in their name to
keep as guarantee.
Margin money for projects to be undertaken by women entrepreneurs should not exceed 10 per
cent. Subsidies should also be given to women entrepreneurs at the initial stage itself.
Women entrepreneurs should acquire relevant training in technology and in details of their plant
and machinery. They should be knowledgeable about the functioning of machines and processes.
They should be more assertive with their employees. They should employ more women workers
in their enterprises. They must undergo training in management skills to handle human resources
as well as training in effective communication skills and practices and the legal aspects of running
a business.
Group entrepreneurship is a viable option for the weaker sections of the society and it helps
woman to overcome their poverty. It empowers women and provides the necessary confidence
for entrepreneurship. Women's organizations, womens cooperatives, and NGQs should be
promoted to assist self- employment for poor women.
In the present scenario, due to modernization, urbanization, globalization and development of
education, with increasing awareness, women are now seeking gainful employment in several
fields.
.
13. Discuss the role of SHGs in promoting grass-root woman entrepreneurship(10M)
SHG is a small economically homogeneous and affinity group of rural/urban poor, voluntarily
formed to save and mutually agree to contribute to a common fund to be lent to its members as
per group decisions
A typical rural womens SHG is a good example of capacity building for prospective entrepreneurs. Its
aims include enabling members with no educational or industrial or entrepreneurial background to
become self-dependent and self-reliant, developing and enhancing the decision-making capacity of
members, instilling in members the strength and confidence to solve their problems, and providing poor
people a forum where they can learn about collectively mobilising and managing money and matters.
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In a SHG the women are organised into small groups. The group formation helps to generate peer group
support and solidarity. The group meets regularly, initially for awareness generation. After selecting a
specific project, some of the members of the group leave for training. Regular and timely attendance at
meetings becomes very important at this stage and the quantum of weekly saving is decided upon. Each
member is expected to contribute and participate. The initial contribution is made either by an NGO, or a
funding agency or the government. Owing to the credit programme, the women have access to money.
They decide on their own which issues are of concern. Some women may start a home-based business
from the loan availed.
SHGs are directly helping women increase their income by providing loans for productive enterprises.
There are other indirect ways in which SHGs can help increase income. The interest rate of moneylenders
is avoided and women are equipped to face possible loss of assets like cattle and goats through insurance.
However, self-help groups cannot be considered as a credit or savings group alone. Mobilisation and
organisation of women into groups is equally important because these groups form the basis for
solidarity, strength, and collective action. Organising such groups needs to go further in addressing not
only economic but also other social and political issues. Such groups were first organised in many places
as a savings group to overcome the lack of access to credit for women for entrepreneurial activities.
14.How do SHGs work?(10m)
1.The group addresses a felt need and a common interest: When people share a common
problem that can be addressed by group action, they are more likely to mobilise themselves and
work with support agencies to change the situation than if the problem applies to only a few
members. Social cohesion tends to break down as groups grow or spread over large areas and
monitoring and behaviour of individuals becomes more difficult. For this reason, as groups
expand, they either create subgroups or formalise regulations and delegate decision making to
smaller working groups.
2. The benefits of working together outweigh the costs: The benefits may be economic
(cash savings, increased production, income and time savings), social capital formation
(increased ability to collectively solve problems), increased individual capacity (knowledge and
skills), psychological (sense of belonging and confidence), or political (greater access to
authority, greater authority, and reduced conflict).
3.The group is embedded in the local social organisation: Community organisations are
most successful when based on existing relationships and groupings or when members share a
common identity such as kinship, gender, age, caste, or livelihood.
4.The group has the capability, leadership, knowledge and skills to manage the tasks:
As noted above, special attention needs to be given to ensuring groups have the necessary
capacities for the tasks at hand. Those in leadership positions need to be respected and honest
in their dealings. In some cases, safeguards may need to be put in place to ensure that these
leaders are accountable to the group members. 5.Thegroup owns and enforces its rules and
regulations: Internalize rules and regulations that are known to its members characterize all
successful groups and associations. Group members should be able to participate in
determining the rules and the enforcement mechanisms
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15. Explain the SHG System(10M)
Self-help Group is a collection of 20 members who form a group, facilitated by a nongovernmental organisation (NGO) for its formation or by the Micro Finance Organisation
(MFO) or a bank, or it may evolve from a traditional Rotating Savings and Credit Group
(ROSCG) or other locally initiated grouping. The process of formal linkage to an MFO or a
bank usually goes through the following stages, which takes a few months to years.
The SHG members decide to make regular savings contribution. These may be kept by
their elected head, in cash or in kind or they may be banked.
The members start to borrow individually from the SHG, for various purposes on
terms and interests rates decided by the group itself.
The SHG members open a savings account in the groups name with the MFO or bank
for funds that are not needed by members or in order to qualify for a loan from the
bank.
The MFO or bank gives a loan to the SHG in the name of the group, that is then used
by the group to supplement its own funds for lending to its members.
Married women between the ages of 25 and 50, to ensure a permanent address and
thereby the security of the loans.
Recruitment of members from among themselves so that they are mutually accountable
and understand the cooperative nature of the savings/loan plans. These voluntary
SHGs are formed of women of different faiths and communities.
Readiness to be initiated into a 12- month small mutual savings plan, which works like
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an orientation for a bigger MFI/ICICI Bank micro-credit programme to follow. By this
time members of SHG have demonstrated a proven ability to save funds and pay
interest.
Organisation
AWAKE is an ISO 9001 -2000 accredited, not for profit registered Society. It is
exempt from Income Tax under Sections 12A and 80 G of the Income Tax Act,
India.
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All women from urban, rural, national and international areas aspiring to be socially
and economically self reliant, irrespective of their academic, social and economic
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background.
AWAKEs clientele comprises of 90% women, 60% rural, of which 50% belong to
low income.
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FAMILY BUSINESSES:
1. Define family business(6M)
Family business or enterprise is meant to refer to the business which is owned and
managed by the members of the family or by their successors. In other words, the
enterprise which is developed on the basis of a persons creative power or
professional efficiency and is m anaged by the member or members as successors
after his death is known as family venture or business.
It may be organized as a sole proprietorship, partnership, corporation, or limited
liability company.
2.
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1.
Formation: The method of formation of such venture is very easy and simple. In
4.
Capital: The owner, Karta or the senior-most member of the family provides
necessary capital for the business. If needed, the Karta at his own risk and
responsibility or by procuring .family loan can increase the amount of capital.
5.
Ownership: For the first type of business, either a single individual or sometimes
more than one enjoys the ownership right. But in case of second type of business,
i.e. in case of joint family business, all the members of the family enjoy the
ownership right by birth.
6.
7.
Stability: The first type of business lacks long stability. The stability of the business
will last so long the entrepreneur remains alive. But after his death, if the suitable
successor is available, the business i s not closed down; but if the suitable
successor is not available, the business will come to an end. On the other hand,
for the second type of business, the stability is comparatively long; because, on the
death of the Karta or of any member, the business is not abolished. But if the
coparceners intend to share the ownership or if the Karta desires, the business will
come to an end.
8.
9.
Extent of liability: The Karta or the entrepreneur has unlimited liability. But the
liability of other members is limited up t o the share of ownership. In other words,
it can be said that the Karta or the senior -most member of the family will remain
personally responsible to the third parties for debts and liabilities and the family
as a whole will be jointly responsible.
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5. What are the features of
law)?(10M)
Family business refers to such a business which is owned by the members of the family
or managed by inheritance. In our country, the form of family venture means Hindu
Family Business as per Mitakshara Law.
Joint Family Business: Joint Family Business refers to such a business whose coparceners
are the members of a family and which has not been apportioned. Only the Hindu law
is applicable to such businesses, because coparcener y will be available on inheritance,
not by means of contract.
According to Mitakshara Law, the features of a Joint Family Business are stated below:
1.
2.
3.
Management and contract: Though the coparceners become the owners of this
business, the task of its management and contro l is generally vested with the
senior-most member, who is known as Karta. He performs all functions relating to
transaction of the business. But if the Karta becomes incapable of managing the
business, a disorder arises in its management, and other coparce ners collectively
claim for partition of the business.
4.
Legal status: In the eye of law, this business has no separate entity. The entity of
the family and its business are inseparable.
5.
Risk: The Karta of the family bears unlimited liability in this type of business. The
liability of other coparceners is limited up to the share of their individual
ownership rights.
6.
Sharing of profits: In the joint family business, the coparceners enjoy the share of
profit on the basis of ratio of ownership. But in case of birth of a new member,
other members, share reduced. Similarly, in case of death of a member, others will
get increased share. As such, there is no definiteness regarding getting the share of
profit or dividend.
7.
8.
Stability: In case of death of Karta, or of any coparcener, the business does not face
any difficulty as regards its stability. In c omparison to sole -proprietorship
business, it is more stable
9.
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Position of a minor: In this type of business, with the birth of a member, he gets the
10.
11.
Dissolution: In case of death of one or a few coparceners, this business does not
12.
dissolve. No coparcener can serve any notice for the dissolution of the business.
When all the coparceners claim for partition, it gets dissolved.
Position of woman: Only the male members can become the coparcener in this
13.
business. No woman can claim for its ownership right. But with the enactment 1
of Hindu Inheritance Act, 1956, women have been given the right of ownership in
the property.
6. What are the advantages of family business?( 10 M)
1.
Easy formation:.
2. Common Values: Entrepreneur and his / her family are likely to share the same
ethos and beliefs on how things should be done. This will give entrepreneur an
extra sense of purpose and pride - and a competitive edge for his/her business.
3. Strong Commitment: Building a lasting family enterprise means entrepreneur is more
likely to put in the extra hours and effort needed to make the business a success.
At the same time, his/her family is more likely to understand that he / she need s
to take a more flexible approach to his/ her working hours.
4. Loyalty: Strong personal bonds, called loyalty, means entrepreneur and family
members are likely to stick together in hard times and show the determination
needed for business success. Loyalty l eads to commitment which gets translated
into hard work and perseverance which are the prerequisites of success in any
endeavour including business.
5.
6.
7.
8.
Stability:
Decreased Costs: Unlike non -family businesses, members of family business may be
more willing to make financial sacrifices for the sake of the business. For example,
accepting lower pay than they would get elsewhere to help the business in the long
term, or deferring wages during a cash flow crisis. The family business can also
hold down the costs o f governance, in terms of special accounting systems,
security systems, policy manuals, legal documents and other mechanisms to reduce
theft and monitor employees' work habits. This is possible because employees and
managers of business are well related an d have trust and confidence on each other.
Selfless activities: In such business, all the coparceners can perform their works in
association with each other. In view of having such an outlook, each one works
for others.
Source of income: Whatever is done by the coparceners, each one gets some amount
of income or otherwise from the business. This leads to make them free from
anxiety as to their maintenance.
9.
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Business experience: This may be called the primary centre for business experience.
Though the Karta manages the business, but other coparceners can participate in it
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and thus they can gain business experience. With such business experience, they
can promote separate business in future.
10.
Division of labour: All the members of the family can undertake the re sponsibility
for various activities on the basis of their own capacity and experience. Thus, the
business is benefited for the division of labour.
11.
12.
13.
Limited liability: The liability of the members of this business is limited. The
members have no liability in excess of his share of ownership. Here, the
members cannot individually sue or be sued.
14.
Increase in confidence of joint family system: The scheme of financing for s uch
business becomes easy and smooth. The foundation of joint family system
becomes sound and strong.
Example:
Following is an example of Bajaj family business confirming how family business
proves cost-effective:
We may run businesses of different sizes but we have the same standard of living,'
says Neeraj Bajaj. 'Rahul runs the 2500 crore Bajaj Auto and Shekhar runs the 200
crore Bajaj Electricals, but they get equal salaries and equal pocket money. Splits
take place when there is visible inequality. We take pains to observe absolute
equality, and our 15 rules keep us honest. We travel in the same types of cars; we
are allowed the same class of air travel; we usually vacation together; thus, we
minimise differences and comparisons.
'Every year at Diwali the family members get together and we review the 15 rules by
which we run our joint family. These rules relate to what each family member gets
as pocket money, vacation allowance, what women spend on jewellery, and so on.
Each year the family members update their allowances under the leadership of
Rahul, who is presently the head of the household after my father Ramakrishna's
death. And we meticulously stick to our pocket money. No exceptions! And I
should know because I am currently the treasurer of the family, responsible for
managing the family wealth, disbursing funds, filing tax returns and looking after
the family affairs
Indulgence in idleness: This business exhibits that without doing any work, the
coparceners enjoy share of profit. As a result, they have no eagerness to work. They
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2.
become very often indolent. Sometimes, they are also involved in anti -social activities.
Dictatorship management: In this business, the management and controlling power have
been rested with the Karta. If he is a well -efficient and wise man, then there is
.
nothing to be anxious. But if he is eccentric or incompetent or corrupted, then the
business will face bad days. Moreover, if he exercises dictatorship in management of
the business, other coparceners will lose the inspiration.
3. Absence of definite share: A coparcener may not have a definite share all along in
the business. If a new member is born, each ones share wi ll reduce. Then there
is no certainty about the definite share of each coparcener.
4.
Family chaos: Without doing any work, each coparcener enjoys a fixed income.
This puts them in beneficial condition as regards their security. But it cannot be
denied that money is the root of all evils. A conflict and dispute may arise
among the coparceners in relation to profit or loss or authority in management
of the business. This may disrupt the family peace.
5.
Want of encouragement: Here, there is no scope of reward for the works done by
enterprising persons. As such, the members may have want of encouragement
about the activities of the business.
6.
Heavy burden on Karta: The whole responsibility is cast on the senior -most person
or Karta. On account of such heavy responsib ility, he has no end of anxiety.
Again, it may not be possible for one person to keep watch equally on
everything; some aspects may be neglected or overlooked.
Want of coparcenery right to woman: The women of the family have no right to
7.
enjoyment. They are deprived of ownership right of the business. So, this system
is not justified from the viewpoint of the society.
8.
Difficulties in government control: This type of business does not require t o comply
with government rules and regulations. Hence, government has little contact
with them; it cannot interfere the family secrecy. Therefore, various types of
unsocial practices, viz., tax-evasion, black marketing, etc. will evolve out.
9.
Inability for Shareholders to Cash Out of the Family Business : Mostly family
businesses lack the financial ability to fund the redemption of stock from one
major shareholder. Funds are typically not available, and most owners will
refuse to go to the bank for a loan as it might put the company in a poor
financial position. Thus, the minority shareholder wanting to cash out eithe r
cannot do it or must follow certain company policy, which normally discusses
the conditions and timing of a stock redemption
10.
Family businesses go through various stages of growth and development over time.
Many of these challenges will be found once the second and subsequent generations
enter the business.
A famous saying about family owned business in Mexico is Father, founder of the
company, son rich, and grandson poor . The founder works and builds a business,
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the son takes it over and is poorly prepared to manage and make it grow but enjoys
the wealth, and the grandson inherits a dead business and empty bank account.
Few challenges of family businesses are as follows:
1.
Emotions: Family problems will affect the business. Divorce, separations, health
or financial problems also create difficult political sit uations for the family
members.
2.
Informality: Absence of clear policies and business norms for family members
tunnel vision. Lack of outside opinions and diversity on how to operate the
business. Lack of written strategy. No documented plan or long -term planning.
3.
Compensation:
4.
Lack of talent: Hiring family members who are not qualified or lack the skills and
Dividends, salaries, benefits and compensation for non participating family members are not clearly defined and justified. Role
confusion. Roles and responsibilities must be clearly defined.
abilities for the organization. Inability to fire them when it is clear they are not
working efficiently.
5.
High turnover of non-family members-. When employees feel that the family mafia
will always advance over outsiders and when employees realize that management
is incompetent, they prefer to leave the organisation.
6.
Succession planning. Most family organizations do not have a plan for handing the
power to the next generation, leading to great political conflicts and divisions.
7.
Retirement and estate planning: Long-term planning to cover the necessities and
realities of older members when they leave the company.
8.
Training: 1 here should be a specific training program when you integrate famil y
members into the company. This should provide specific information that
related to the goals, expectations and obligations of the position.
9.
10.
Overly Conservative: Older family members try to preserve the status quo and
resist change. Especially resistance to ideas and change proposed by the younger
generation.
11.
12.
13.
14.
Exit strategy: No clear plan on how to sell, close or walk away from the business.
Business valuation: No knowledge is of the worth of the business, and the factors
that make it valuable or decrease its value.
15.
Growth: Problems due to lack of capital and new investment or resistance to re investment in the business.
16.
Vision: Each family member has a differen t vision of the business and different
goals.
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17.
11.
Consequences
Social capital
Family
Business
Financial
capital
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Lower costs
of
governance
Survivability
capital
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1.
Human capital: The first resource is the familys human capital, or inner
circle. When the skill sets of different family members are coordinated as a
complementary cache of knowledge, with a clear division of labor, the
likelihood of success improves significantly.
2.
Social capital: The family members bring valuable social capital to the business
in the form of networking and other external relationships that complement
the insiders skill sets.
3.
Patient financial capital: The family firm typically has patient financial capital in
the form of both equity and debt financing from family members. The family
relationship between the investors and the managers reduces the threat of
liquidation.
4.
5.
Lower Costs of Governance: The family business must manage its ability to
hold down the costs of governance. In non -family firms, these include costs
for things such as special accounting systems, security systems, policy
manuals, legal documents and other mechanisms to reduce theft and monitor
employees' work habits. But, a family^ business can minimize or eliminate
these costs significantly because employees an d managers of business are well
related and have trust and confidence on each other.
If these family resources are clearly delineated and judiciously leveraged into a
well-coordinated management strategy, the chances for success of family
business greatly improve
14.
15.
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Business succession planning seeks to address and manage these vital
issues involved in family busines s by setting up a smooth transition
between their owner and the successor.
Succession planning means planning for succession or making preparations
on who will succeed the owner - leader of the business.
Succession planning is a process for identifying and developing family
members with the potential to succeed the key role o f owner- leader in the
business Leader and the future one of the family business.
In nutshell, business succession planning needs to be done with serious thinking.
Following are some of the important steps involved in making a successful
succession planning for a family business
While planning for management succession, entrepreneur should keep six factors
into consideration: (z) the role of the owner during the transition; (ii) family
dynamics; (iii) income for family members employed in the business and
shareholders; (iv) business conditions during transition; (u) treatment of long term and loyal employees; and (vi) tax consequences
1.
Make a Solid Case for Succession Planning: Remember people do not resist changing,
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mentors and advisors, and delegating some authority to the successor much before the
actual passing on of the baton takes place. Of course, grooming more than one
member to become the successor of business is not a bad i dea, but at times it may
create confusions and complexities leading to strenuous succession battles. Business
history is replete with evidences, like the recent one of Ambani brothers, that extreme
succession battle may cause a split in the family business . Yes, some may not consider
the split as a bad thing considering the fact that the split between Ambani brothers led
to a dramatic increase in the value of their individual holdings in the erstwhile family
business.
How can you make family business more effective?(10m)
Focusing on Business, not Family Needs: Although a family business entrepreneur
may feel obligations to take care of family problems of one type or other. He/She
should not use business as employment agency for family members. Neither
he/she should use business funds for family purposes .Ultimate focus of running
family business should be family as business, not business as family.
Ploughing Back of Profits in the Business: Profits earned by family business should
not be used for meeting fam ily requirement, but should be reinvested in the
business to further strengthen and sustain it in the market place.
Using Caution with Family: Be cautious about the implications of hiring family
members in the business to avoid likely conflicts and confron tations among the
family members.
Delegating Authority or Decision Taking: A family business entrepreneur should
delegate decision taking to those who are competent and capable of making right
decisions. This gives more time to entrepreneur to concentrate on business issues
involving more serious thinking and visioning. The family entrepreneur who
makes all decisions by himself and does not delegate to others is viewed as
control freak. Such entrepreneur does not get wholehearted and willing
cooperation and support from others.
Viewing Big and Broader Picture : Family business entrepreneur should view big
and broad, that is, he/she should consider others' interests as well while running
the business. In other words, the entrepreneur while running business sho uld
strike a fine balance among three broad perspectives of family business: family,
ownership, and management, also lumped together as the '3 -Circle Model' of
family business.
Planning for Management Succession: Because family business runs for a long
period of time, hence there is always a need to have a good management
succession plan in place to carry on the business effectively.
Prepare the Family Constitution: The family constitution also called 'family ru les/ in
simple sense, refers to do's and don't do's in the business. It elaborates about the good
governance practices to be practiced in the family business.
.
17.
What are the pitfalls in family business?(6m)
16.
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An inability to separate the familys business from the interest of the consumer
Short term approach to business
Leading to an absence of investment in employees and in product development
Insensitivity to the customer
Causes of pitfalls
Lack of focus & strategy
Nepotism in family(favouritism o one of the family members)
Lack of professionalism
Inability to separate the familys interest from the interest of the business
Sibling rivalry
18.
Open communicataions
Clarity of roles
A sense of humour
the
concept
of
new
generation
10 Syed Balkhi, 21
Syed Balkhi used to get online at three oclock in the morning to trade stones for a game called
Neopets.When he was 12, his cousin pointed out that he could do the same thing with domain names all
while making handsome profit. Soon he was developing websites, designing them, and running a paid
domain name directory.
Along with a handful of college friends (Amanda Roberts, David Pegg, and Mohammed Karim), Syed has
started a successful web service company called Uzzz Productions. His blog for WordPress beginners,
WPBeginner, has been up since July 2009 and already attracts an incredible 145,000 unique visitors each
month.
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Flipkart(Sachin Bansal and Binny Bansal)
Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka. It was founded by
Sachin Bansal and Binny Bansal in 2007. In its initial years, Flipkart focused on online sales of books,
but later it expanded to electronic goods and a variety of other products. As of today, Flipkart is amongst
the popular sites for online marketing business. Flipkart offers multiple payment methods like credit card,
debit card, net banking, e-gift voucher, Cash on Delivery and Card Swipe on Delivery
Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked
for Amazon.com before quitting and founding their own company. The first book the company sold was
John Woods' Leaving Microsoft to Change the World. Today, Flipkart is amongst the top 20 Indian Web
sites and has been credited with being India's largest online bookseller with over 11 million titles on offer.
Further in 2012, Flipkart added A.C, air coolers, stationery supplies & life style products to its product
portfolio. As of today, Flipkart employs more than 4,500 people.
Initially funded by the Bansals themselves with 400,000, Flipkart has raised funding from venture capital
funds Accel India (US$1 million in 2009) and Tiger Global (US$10 million in 2010 and US$20 million in
June 2011).
Flipkart.com, on 24 August 2012, announced the completion of its 4th round of $150 million funding
from MIH (part of Naspers Group) and ICONIQ Capital. The company announced, on 10 July 2013, that
it has raised an additional $200 million from existing investors including Tiger Global, Naspers, Accel
Partners and Iconiq Capital.
Acquisition by Flipkart
Flipkart's reported sales were 40 million in FY 20082009, 200 million in FY 20092010 and 750
million for FY 20102011. In FY 20112012, Flipkart is set to cross the 5 billion (US$100 million) mark
as Internet usage in the country increases and people get accustomed to making purchases online. Flipkart
projects its sales to reach 10 billion by year 2014. On average, Flipkart sells nearly 20 products per
minute and is aiming at generating a revenue of 50 billion (US$1 billion) by 2015.
Farrhad Acidwalla, 18
His first step at entrepreneurship started with his borrowing $10 from his parents to buy his first domain
name. He began building a web community devoted to aviation and aero-modeling. The website was a
success; he sold it for a lot more money than his initial investment, and moved on with other similar
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ventures. Each took his achievement to another level and the appreciations left him humble. This
motivated him to offer his work under the name of his company.
Farrhad has launched Rockstah Media, a cutting-edge company devoted to web development,
marketing, advertisement, and branding. It is just over a year old but it has clients and a full fledged team
of developers, designers and market strategists spread across the globe.As the CEO and founder, Farrhad
is behind the wheels of the company taking care of the clients and guiding the creative team to success.
2. Who is known as internet entrepreneur?(10M)
Mark Elliot Zuckerberg (born May 14, 1984) is an American computer programmer and internet
entrepreneur. He is best known as one of five co-founders of the social networking website Facebook. As
of April 2013, Zuckerberg is t fhe chairman and chief executive of Facebook, Inc. and in 2013 his
personal wealth was estimated to be US$16.8 billion.
Together with his college roommates and fellow Harvard University students Eduardo Saverin, Andrew
McCollum, Dustin Moskovitz and Chris Hughes, Zuckerberg launched Facebook from Harvard's
dormitory
rooms.
The
group
then
introduced
Facebook
onto
other
campuses nationwide and moved to Palo Alto, California, United States (U.S.) shortly afterwards. In 2007,
at the age of 23, Zuckerberg became a billionaire as a result of Facebook and the number of Facebook
users worldwide reached a total of one billion in 2012. Zuckerberg was involved in various legal disputes
that were initiated by others in the group, who claimed a share of the company based upon their involvent
during the development phase of Facebook.
In 2010, Zuckerberg has been named among the 100 wealthiest and most influential people in the world
by Time magazine as a part of its Person of the Year distinction In 2011, Zuckerberg ranked first on the
list of the "Most Influential Jews in the World" by The Jerusalem Post and has since consistently topped
the list every year as of 2013.He was played by actor Jesse Eisenberg in the 2010 Hollywood film The
Social Network in which the rise of Facebook is portrayed.
3. Give examples for some new generation women entrepreneurs (10M)
1. JESSIE PAUL (CEO- Paul Writer)
Jessie Paul was not yet 35 when she became Chief Marketing Officer (CMO) of IT major Wipro
Technologies. Five years on Paul, quit her high flying corporate career to start her own business. She set
up a marketing advisory firm, Paul Writer and thereby joined a growing band of women entrepreneurs
creating high growth business ventures.
2. RADHA RANGARAJAN
Co-founder and CEO, Vitas Pharma
After stints in Harvard School of Public Health and Dr Reddy's Laboratories, Rangarajan set up Vitas
Pharma, which is engaged in developing new anti-infective therapies, in 2010
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3. RESHMA ANAND, Founder and CEO, Earthy Goods
The firm, set up in 2007, procures packages and markets natural handcrafted products. Anand, an IIMBangalore alumnus, sources the products from rural NGOs and producer units.
4. SURUCHI WAGH, Co-founder and COO, YourNextLeap
The virtual career counselor, started in 2010, uses psychometric evaluations and math models on past
admission patterns to help students make an informed higher education choice.
5. VINITA ANANTH, Founder and CEO, Vangal
The start-up, launched in 2010, uses social media analysis technology to provide insights to brands on
customer segmentation, impact of advertising campaigns and brand image in social media users' mind.
ALL THE BEST!!!
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