Assignment 1

On
FACTOR
AFFECTING THE
MICRO –
ENTREPRENEUR
AND PROBLEM
FACED BY
MICRO –
ENTREPRENEUR
Submitted to: Submitted by:
Mr. Mohammad Ehsanul Haq ASHWANI KUMAR
Instructor of EBP (MGT611) Reg.No:-10905626,
Roll No.:RR1906 A06
 INTRODUCTION: -

Entrepreneurs are the key drivers and inhibitors of economic growth, innovation, regional
development and job creation. A strong highly motivated SME’s sector provides a strong
foundation to increase standards of living and to reduce poverty. Despite being recognized
internationally the importance of SME’s, they still face major challenges in many especially
in developing countries like India today. The challenges of business start ups, its survival and
growth are often substantial. The availability of financial resources and lack of capacity to
handle complex business management issues as well as a complicated and bureaucratic
environment present major obstacles. As a result, there is an urgent and continuous need to
improve the different factors that make up a good entrepreneurial climate.

In order to establish strategic plans for small and medium enterprise development, it has been
necessary to establish some business development sectors to bridge the gap between private
and public sectors, since private sector development relies on a partnership between the
private and public sectors. Since, Business and Technology go hand in hand and hence they
can be separated. Technology, Business and knowledge are becoming the buzzwords of the
new millennium. As the technology is leapfrogging for beyond the expected, enormous
activities are in progress in research and development for new and newer technologies day by
day, resulting into the emergence of new areas of technology. At the same time, the process
of globalization, establishment of World Trade Organization, high quality standards and
environmental considerations, imposition of trade barriers by developed countries,
information technology revolution continues to adversely affect the conventional/traditional
competitive advantage of the small and medium enterprises in the developing countries and a
threat for survival in the marketplace.

LETERATURE REVIEW:-

1. Donald Trump Eat your Heart Out

Posted: Sep 19, 2007

The entrepreneurs to be people who are driven and focused, with a huge capacity for work.
They also demonstrated high levels of integrity and consistency when dealing with
individuals and a particularly generous approach to sharing the rewards of success. They had
an eye for developing a business that would stand the test of time and that would contribute
to their local community. What stands out amongst these individuals is the passion they have
for what they are doing. That passion feeds their success and drives them forward.

2. The role of the entrepreneur in identifying international expansion as a strategic

opportunity
Posted: - Dec 2010, Valle Santos-Álvarez, Teresa García-Merino.

The business internationalization is a process of recognizing and exploiting business

opportunities in an international context. And differentiate internationalization into two
stages:
• Opportunity identification
• Subsequent opportunity exploitation.
And focus on the initial identification stage to determine the impact of entrepreneurs'
cognitive variables when gathering relevant information for internationalization of the firm,
highlighting. The role of entrepreneurs' alertness the centre of interest, causal logic, and prior
experience and also examine the importance of the entrepreneur's environment, social
networks, and institutional setting. The decisions related to internationalization are restricted
by uncertainty and a poor understanding of the appeal, barriers, and available support
services.

3. Bilateral US-Arab Chamber of Commerce; US-Arab Chamber Focuses on

Potential for U.S. Entrepreneurs in the United Arab Emirates
Posted: - Nov 5, 2010

The Middle East has been conducting trade mission in U.S companies with key decision
makers. The Chamber garnered interest for a trade mission to the UAE in 2011 and has
already begun developing plans. An Entrepreneurs Organization’s (EO) Global Policy was
summated in Washington in which fifty CEO’s are invited from UAE by Chamber of
Commerce to know the business (bilateral trade) opportunities/relationship between UAE and
USA.

4. Gender, Financial Inclusion and the Third Sector: Framework for Promoting
Home-Based Women's Micro Entrepreneurship Through Awqaf in Kano,
Nigeria
Posted: - Sep 2010,

Nigeria should employ the institution of Awqaf in the provision of socio-economic welfare in
general and promoting women's micro entrepreneurship in particular. This move is necessary
given the dearth of microfinance institutions in the state and the gender-based barriers
excluding women from formal finance services. And highlight women’s experiences in home
based micro enterprises and access financial services through non bank institution. There is
ample evidence to suggest that if awqaf are harnessed, in the direction of the framework, the
benefits to be derived will not be limited to just promoting women's participation in
economic activities, but are likely to extend to improving their social wellbeing, that of their
households, other deprived women and the Muslim ummah in general.

5. 6th Citi, PPAF Micro entrepreneurship Awards held

Posted: - Jul 7, 2010

It is to raise awareness about microfinance, particularly among micro entrepreneurs who

could benefit from it, to recognize and celebrate the contributions that micro entrepreneurs
bring to the world economy and to highlight the best practices in micro entrepreneurship. At
the ceremony, as many as 50 rising micro entrepreneurs were awarded in the categories of
'Best National Micro-entrepreneur Male', 'Best National Micro-entrepreneur Female' and six
'Best Regional Micro-entrepreneurs' from Punjab Federal and Azad Kashmir with one runner-
up for each category. These awards have given by Citi-PPAF (Pakistan Poverty Alleviation
Fund (PPAF) and Citi Foundation). This ceremony held all about to awareness among micro
entrepreneurship.
 6. Making the Transition from an Entrepreneurship to a Professionally Run
Business
Posted: Apr 22, 2010

Starting a new business is an exciting venture, full of challenge, opportunity, and excitement.
Especially, if you’re entrepreneurial concept gains traction and generates growth. When it
does, the next step is transitioning from an entrepreneurship to a professionally run business.
Smart people can lose. And many entrepreneurs do every day. The key is to understand the
business lifecycle and how to move from one stage of the lifecycle to the next. Transition is a
natural part of the process. A rapidly expanding company can quickly outgrow its
infrastructure. Suddenly the informal management style that worked so well in the beginning
no longer gets the job done. The organization's existing infrastructure cannot support the next
stage of growth, and the fallout is upheaval.

7. Is Self-employment and Micro-entrepreneurship a Desired Outcome?

Posted: - Dec 2009

The employment dynamic to the business cycle and examines the self-employed sector. And
evaluate whether micro entrepreneurship resembles the industrialized countries view, where
it is characterized as being creative and dynamic view, where it is seen as stagnant and
unproductive. The transition patterns from salaried positions and unemployment, and the
evolution of the sector in the period of analysis. It is a clear segmentation. Own-account
workers show characteristics similar to what is predicted by the dynamic view; while self-
employed with employees resembles the industrialized countries view.

8. The nature of micro-entrepreneurship: evidence from Argentina

Posted: - Sep 2009

If focused on the micro entrepreneurship resembles and its counterpart in industrialized

countries, characterized by the risk-taking nature of the entrepreneurial activity, or is the
result of labor market distortions and disguised unemployment, as in the dual economy
hypothesis. The results suggest a segmentation of the micro-entrepreneur sector. Both young
uneducated and middle aged highly educated salaried workers have the highest likelihood of
becoming entrepreneurs. However, the first segment has a high probability of becoming own-
account workers, while the probability of becoming micro-entrepreneurs with employees is
strictly increasing in both age and education. Moreover, the probability of entrepreneur
failure has an inverted U shape, implying that both high and low skill individuals are more
likely to remain entrepreneurs.

9. Encouraging entrepreneurship
Posted: - March 17, 2009

Enterprises in every pocket fortunately, an entrepreneurial mindset is re-emerging in India.

Young Indians are no longer obsessed with India's poverty but with its future. This gives
India a chance to chart its own course.

Poverty alleviation equally important is the need to have the right kind of infrastructure to
facilitate the marketing of their products, ensuring right prices without the involvement of
middlemen. It is important to get at inequalities first, without derailing growth. In fact,
generating job opportunities for the poorer segments would probably be the best way
forward. Policy documents in India recognize the directions needed: To spur actions and
achieve results. In this respect, microfinance institutions have been successful, as they have
rightly focused on strategies to reduce poverty.

10. The Massachusetts Office of Small Business Development and Entrepreneurship

Hires 451 Marketing
Posted: Mar 24, 2009

451's team of Inbound Marketing Specialists will offer the OSBE (Office of Small Business
Development and Entrepreneurship) a combination of cutting edge marketing techniques and
creative inspiration in order to effectively establish a strategic marketing campaign, enhance
their brand, create a quarterly newsletter, redesign their existing web page and reinvent their
marketing material. These efforts will develop awareness for the OSBE within their respected
communities, which will increase resources available to businesses in Massachusetts.

RESEARCH METHODOLOGY:

All the data using in my assignment are secondary data from World Wide Web No primary
data take place in my assignment.

FACTOR AFFECTING THE MICRO – ENTREPRENEUR

Entrepreneurship involves managerial functions that direct all activities related to the
production of goods and services in response to people's needs. As managers, entrepreneurs
determine their objectives, plan for business programs and activities, provide needed
resources and engage in sales and marketing to ensure the success of the enterprise.
The Four Basic Managerial Tasks of an Entrepreneur
1. Planning - The entrepreneur lays out short and long range plans which require
decisions for future action. Planning includes goal setting and related decisions about
what, who, when, and how.
A well thought plans have the following qualities:

a. Adaptability - flexible enough to allow changes due to unexpected developments.

b. Objectives are specific, measurable, attainable, results-based, and time bound (SMART).
c. Problem solving and decision-making should be participatory and therefore should involve
the personnel.
2. Organizing - this is the assignment of tasks and functions to individuals, units or
departments. Duties, functions, and accountability of each individual or group are
well-defined.
 3. Directing - the entrepreneur implements the business plan. He/she monitors the
production of goods or services and guides the work activities of personnel and other
workers. He/she sees to it that standards in the production of goods or services are
followed.
4. Controlling - this is the evaluation aspect of entrepreneurship. The entrepreneur
assisted by personnel, checks on the quality of goods and services produced. Packing
of materials and saleability of products are assessed after the materials and products
are sold.
Factors that Affect Business Ownership
Anyone who starts or buys a business is always faced with the question of whether to
organize the firm as a proprietorship, a partnership or a corporation. Enterprise which was
started as single proprietorship may find it better to become partnerships or corporations later
as the venture develops into big business.
The decision as to what business form to follow in the establishment of the business
enterprise depends upon the following factors:
1. Nature of the Business - if the business is small, a single proprietorship may be considered.
2. Capital - one major factor is the investment. If the investment is small, it has to be
reinforced from the outside.
3. Number of people interested to join the business - the availability of people with capital
who are interested to join a business is a factor that affects business ownership.
4. Prevailing business climate - whatever is the existing business atmosphere determines the
type of business ownership to choose.
5. Management know-how - the knowledge on how to run a business also affects the type of
ownership to choose because a person who ahs capital but who asks the knowledge to run a
business well look for people who can manage a business to join him/her.
6. Prevailing government business policies - favourable business policies will also affect the
choice of business ownership because entrepreneurs will consider incentives given by
government which are favourable to a certain type of ownership.

PROBLEM FACED BY MICRO- ENTREPRENEUR: -

A broad range of controllable and uncontrollable non-institutional components such as

political, social, cultural, technological, natural, and personal factors shape up the overall
development process of micro-entrepreneurship and it sustainability in long run.
Local economic factors such as - size of the local market and its demand generated by local
purchasing power influence the entrepreneurs’ business decisions. Businesses also depend on
the geographical characteristics that lead towards specific business types historically. A
crucial factor of production – labor and its availability and price (wage rate) are also
considered as crucial factors in developing any entrepreneurship practice and type of business
concentrations. High rate of wages influences micro-entrepreneurs inclined to selling labor
and at the same time hiring labor for micro-enterprises becomes more costly – both the
scenarios work as barriers for the micro businesses. Local standard of living alters the
characteristics of the micro entrepreneurships, in cases of superior living standards; people
are most likely to prefer SME over micro-enterprise to receive relevant services.
The geographical position also defines micro-entrepreneurship businesses, such as, micro-
enterprises mostly run in the remote villages. Moreover, the quality of land plays an immense
role for the success of agricultural businesses. The sustainability of micro-enterprises also
depends heavily on availability of supplies, raw materials, price volatility of relevant goods,
and price inflation of the product, substitute goods, demand elasticity of the goods and so on.
Local governance sets environment which impacts the growth of entrepreneurial
movements. Different community based laws, such as tribal laws, affect the development of
micro-enterprises. Different communities of people as broadly categorized through
demographic position, regional cohesiveness or cultural orientation mutually agree upon
doing small business practices based on community acceptance and formal laws and informal
regulations.
Religious beliefs, interpretation and implementation often dictate the progress. The culture of
a society can also be influenced by high level of corruption, low level of education and
awareness of the citizens of the society, as these factors shape up an individual’s perception
of moral and social responsibilities.
Locality based cultural and demographic factors, such as; ethnic rules, social structure,
literacy rate, income level, gender, age group etc define the local demand and profitability.
For example, the product that is being produced in a tribe, now only meets the tribal demand.
This very demand can be boosted through introducing and promoting the product in other
parts of the country.

New technologies bring a robust shift in business approaches. Whenever a new technology
arrives, the challenges for micro-entrepreneurs amplify. It increases the vulnerability of local
businesses as it reduces cost of competitors as well as increase capital investment
requirements for the local micro entrepreneurs. The activities of micro-entrepreneurs are
indigenous with traditional production methods and equipments, where new technologies and
automated machines are important to adopt to face the challenges of competitors and to
improve the quality and stretch the production. The utilization of computer, internet,
telephone or mobile services provide a superior edge to the micro-entrepreneurs. Market
information equips small scale businesspeople to get a comprehensive understanding on
current market prices, demand-supply scenario and other relevant insights. As there is no
thorough and updated market information system, micro–entrepreneurs fail to explore new
opportunities, effective technologies, attractive markets, and relevant scopes for their
businesses.
 CONCLUSION

Individual capacity development is a key priority area for the sustainable growth of these
small scale entrepreneurs. Capacity development programs such as
• Trainings on business start-up plans
• Regular operations, and
• Enterprise developments.
Disseminating marketing knowledge to equip entrepreneurs with necessary skills to promote
their ventures and other professional education such as management, sales, accounting, and
strategies will be quite useful to enhance the capacity as a whole. Effective training on
various managerial as well as social aspects will contribute largely in enhancing economic
independence, self confidence, awareness, and decision making process, sense of
achievement, social interaction, and leadership quality, personal and social capabilities.
Fortunately, most of the micro-entrepreneurs engaged in informal activities do not require
extensive training or skills. A few fundamental concepts and approaches will be enough to
facilitate them to conduct their businesses smoothly. In order to reduce the poverty level
through accelerating the growth of micro entrepreneurship, the government, policy makers,
donors, NGOs, MFIs and other relevant organizations need to consider and address non-
institutional barriers properly. The integrated approaches are important to overcome the non-
institutional barriers through awareness creation, motivational program, sound business plans
and a combined external support. Through the right support from the institutional as well as
non-institutional associations, micro-entrepreneurs can strengthen their own capacities
besides contributing in both family and national earnings. Since micro-entrepreneurial
movements and capacity building are imperative for economic and social development, an
integrated approach is necessary to be deployed within shortest possible time.
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