Entrepreneurship and Management of Small & Medium Enterprise

TYBMS

Paper PatternSection 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?Capacity to take risks

Ability to own and organize

Desire and capability to INNOVATE and diversify

Who is an Entrepreneur?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 EntrepreneurJ.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

OBJECTPROCESS OF

ACTIONPERSON

ENTREPRENEURSHIP ENTERPRISE

An Individual Collection of Activities

Result of the efforts of an

Entrepreneur. Creates an enterprise

Definitions of Entrepreneurship 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

CreativityInnovationInterpersonal skillsLeadershipTeam BuildingAchievement, MotivationProblem SolvingGoal OrientationRisk taking and decision making abilityPositive Self Concept

Continued…CommitmentLocus of controlSelf confidenceAbility to mobilize resourcesMental abilityBusiness PlanningBusiness secrecyHuman Relations AbilityTechnical Knowledge

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

Classification 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 CharacteristicsInnovative Entrepreneur

Imitative Entrepreneur

Fabian Entrepreneur

Drone Entrepreneur

Type of Business

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

Technical Entrepreneurs

Non- Technical Entrepreneurs

Professional Entrepreneurs

Motivation

Pure Entrepreneurs: Psychological and economic rewards

Induced Entrepreneurs: Incentives, Concessions

Motivated Entrepreneurs: Profit and innovation

Spontaneous Entrepreneurs: Confidence

Growth

Growth Entrepreneurs: high growth industry

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

Stages of Development

First Generation Entrepreneurs

Modern Entrepreneurs

Classical Entrepreneurs

Others 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 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

Intrapreneur

Creates New

VenturesInnovates Products/ Services

Innovates Processes

Proactive

Risk Taking

Renews Organizati

on

Competitively

aggressive

Self Motivated

Self Confident

Elements of Intrapreneurial Environment 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 Owner and operator of the

business. High Risk .

Primary motive is independence, opportunity to create, and make money.

Serves oneself and customers.

Personal Capital Investment

Owns the rewards

Generally a small enterprise set up

Intrapreneur 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

WOMEN ENTREPRENEURSHIP

Introduction

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

Greater freedom and mobility Establishing their own creativityEstablishing their own identityAchievement of ExcellenceBuilding confidenceDeveloping risk taking abilityMotivationEqual status in society Government SupportEducation

Features of Women Entrepreneurs ImaginationAttribute to work hardPersistenceAbility and desire to take riskValue of Self fulfillment over moneySense of responsibilityHigh level of optimismTolerance for ambiguityFlexibilityOrganizing capacity

Reasons for women starting an Enterprise 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…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 EntrepreneursChance

Natural

Created

Forced

Trends Seventh Five year plan suggested the following :

◦ Treat women as specific target groups in all development◦ Increase women’s 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.

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 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 EntrepreneursEducation and AwarenessBetter time managementSet up Home based BusinessEfficient use of ITOrganize Workshops and SeminarsGroup EntrepreneurshipSimplified ProceduresDispense Collateral SecurityFinance Cells Training

Special SchemesSeed Capital SchemeNational Equity FundFinance Corporation SchemePrime Minister’s Employment Guarantee

Scheme, Central Government’s Scheme for Educated Unemployed

Women Industries Fund SchemeSingle Window Scheme Joint Loan SchemeDistrict Industries Centre SchemeTraining and Extension ServicesScheme for Refinance Assistance to Women

Entrepreneurs

Financial Institutions supporting Women Entrepreneurs

Development of Women Entrepreneurship through SHG

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 IndiaNeeta Ambani- Dhirubhai Ambani International

SchoolKiran Mazumdar Shaw- BioconShahnaz Hussain- Shahnaz Herbals IncEkta Kapoor- Balaji TelefilmsNeelam Dhawan- HP IndiaSimone Tata - Lakme Indu Jain- The Times Group Priya Paul- Apeejay Park HotelsVidya Manohar Chhabria- Jumbo GroupSulajja Firodia Motwani – KineticVimalben Pawale- Sri Mahilla Udyog Lijjat Papad

Theories of Entrepreneurship

Economic Theory

Sociological Theory

Psychological Theory

Economic TheoryEntrepreneurship 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 TheoryEntrepreneurship is likely to get a boost in a

particular social culture.

Society’s 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 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 individual’s upbringing which stress on standards of excellence, self reliance and low father dominance.

McClelland’s Views on Entrepreneurship/ Theory of Achievement Motivation 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

They consider profit to be a measure of success and competency

According to McClelland, a person has three types of needs at any given time, which are: –Need for achievement (get success with one’s own efforts)–Need for power (to dominate, influence others)–Need for affiliation (maintain friendly relations with others)

The need for achievement is the highest for entrepreneurs

Schumpter’s views on Entrepreneurship/ Entrepreneurship Innvovation TheoryTheory by Joseph Schumpeter who believes that

entrepreneur helps the process of development in an economy

He says that an entrepreneur is the one who is innovative, creative and has a foresight

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

Continued..The theory emphasizes on innovation,

ignoring the risk taking and organizing abilities of an entrepreneur

Schumpeter’s 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

Hagen’s views on EntrepreneurshipCreative Innovation or changeWithdrawal of Status RespectFour different Personalities arise:

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

Factors affecting Entrepreneurial GrowthEconomic Factors

Social Factors

Psychological Factors

Cultural Factors

Personality Factors

Government

Economic FactorsCapitalLabourRaw MaterialsMarket

Social FactorsSocial norms and valuesRole ModelsSocial PressureRespect and StatusSecurity

Psychological FactorsNeed for AchievementWithdrawal of Status Respect

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