TABLE OF CONTENTS

Definition of an entrepreneurship - Bhupi.......................................................................................................................2

Social Entrepreneur - Sid................................................................................................................................................5

Women Entrepreneurs - Baba.........................................................................................................................................8

Woman Entrepreneur – Dohad........................................................................................................................................8

TECHNOPRENEUR - Bavishi.....................................................................................................................................12

Opportunity based Entrepreneurship – Bada mak & Tulsi............................................................................................14

Challenges to Indian Entrepreneurs - Bada Mak and Tulsi..........................................................................................14

Q:  Similarities & Differences between Entrepreneurs and Managers - Jhaveri............................................................17

Intrapreneurship: - Wasim.............................................................................................................................................19

Entrepreneurship and the Dynamics of Family Business in India - Satra......................................................................21

Cross Cultural Trends in Entrepreneurship – Ram........................................................................................................28

BUSINESS PLAN, MANTRAS OF BUSINESS PLAN, WHY DO SOME BUSINESS PLAN FAILS - Tejas..........29

Quick-start route to ‘Entrepreneurship - Shriram..........................................................................................................34

Venture Capital – Lacchi & Baba..................................................................................................................................35

Support Organisations - Harshil.....................................................................................................................................39

SMALL SCALE INDUSTRIES - ROLE/IMPORTANCE OF SMALL SCALE INDUSTRIES...........................................................43

Definition of an entrepreneurship - Bhupi

Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who

undertakes innovations, finance and business acumen in an effort to transform innovations into economic

goods".

This may result in new organizations or may be part of revitalizing mature organizations in response to a

perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses;

however, in recent years, the term has been extended to include social and political forms of entrepreneurial

activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as

intra-preneurship and may include corporate venturing, when large entities spin-off organizations.[1]

In more recent times, the term entrepreneurship has been extended to include elements not related

necessarily to business formation activity such as conceptualizations of entrepreneurship as a

specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form

of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.

An entrepreneur is a person who has possession of new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome. 

Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. 

Jean-Baptiste Say, a French economist is believed to have coined the word "entrepreneur" first in about 1800. He said an entrepreneur is "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour.

Entrepreneurs choose a [[level of personal, professional or financial risk to pursue opportunity.

Entrepreneurs tend to identify a market opportunity and exploit it by organizing their resources effectively to

accomplish an outcome that changes existing interactions within a given sector.

Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish

business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs," while social

entrepreneurs' principal objectives include the creation of a net social benefit.

Other entrepreneurs are necessity entrepreneurs. Entrepreneurship, particularly among women in developing

countries (Minitti, 2010) seems to offer an improvement in the standard of living as well as a path out of

poverty. Entrepreneurship is now growing at nearly three times the rate among women as it is among men.

Scholar Robert. B. Reich considers leadership, management ability, and team-building as essential qualities of an entrepreneur.

The para in bracket below is optional....

A more generally held theory is that entrepreneurs emerge from the population on demand, from the

combination of opportunities and people well-positioned to take advantage of them. An entrepreneur may

perceive that they are among the few to recognize or be able to solve a problem. In this view, one studies on

one side the distribution of information available to would-be entrepreneurs (see Austrian School

economics) and on the other, how environmental factors (access to capital, competition, etc.), change the

rate of a society's production of entrepreneurs

A prominent theorist of the Austrian School in this regard is Joseph Schumpeter, who saw the entrepreneur

as innovators and popularized the uses of the phrase creative destruction to describe his view of the role of

entrepreneurs in changing business norms. Creative destruction dealt with the changes entrepreneurial

activity makes every time a new process, product or company enters the market.

Qualities of entrepreneurs

1. Mission: Leaders know what their mission is. They know why the organization exists. A superior leader has a well thought out (often written) mission describing the purpose of the organization. That purpose need not be esoteric or abstract, but rather descriptive, clear and understandable. Every employee should be able to identify with the mission and strive to achieve it. 

2. Vision: Where do you want your organization to go? A vision needs to be abstract enough to encourage people to imagine it but concrete enough for followers to see it, understand it and be willing to climb onboard to fulfill it. 

3. Goal: How is the organization going to achieve its mission and vision and how will you measure your progress? Like a vision, goals need to be operational; that is specific and measurable. If your output and results can't be readily measured, then it will be difficult to know if you have achieved your purpose. You may have wasted important resources (time, money, people, and equipment) pursuing a strategy or plan without knowing if it truly succeeded.

4. Competency: You must be seen by your advisors, stakeholders, employees, and the public as being an expert in your field or an expert in leadership. Unless your constituents see you as highly credentialed--either by academic degree or with specialized experience--and capable of leading your company to success, it will be more difficult for you to be as respected, admired, or followed.

Practically speaking, not all executives immediately possess all of the characteristics that spell success. Many leaders learn along the way with hard work. As crises and challenges arise, those at the top of the hierarchy have key opportunities to demonstrate to others that they are in fact, qualified

to be leaders. In actuality, greater competency can be achieved as a leader gains more on-the-job experiences. 

5. A strong team: Realistically, few executives possess all of the skills and abilities necessary to demonstrate total mastery of every requisite area within the organization. To complement the areas of weakness, a wise leader assembles effective teams of experienced, credentialed, and capable individuals who can supplement any voids in the leader's skill set. This ability is what sets leaders apart from others. However, the leader needs to be willing to admit he lacks certain abilities and go about finding trusted colleagues to complement those deficiencies. After building the team, the entrepreneur needs to trust that team to understand issues, create solutions, and to act on them.

6. Communication skills: It does little good to have a strong mission, vision, and goals--and even a solid budget--if the executive cannot easily and effectively convey his ideas to the stakeholders inside and outside of the organization. He must regularly be in touch with key individuals, by email, v-mail, meetings, or other forms of correspondence. Of course, the best way to ensure other people receive and understand the message is with face-to-face interactions.

Getting out of the office or touring different sites is an irreplaceable method of building rapport and sending and receiving messages. "Management By Walking Around," or MBWA, meeting employees at their workstations or conference rooms, or joining them for lunch are just a few of the many effective approaches leaders can use to develop positive contacts with employees.

7. Interpersonal skills: Successful   entrepreneurs  are comfortable relating to other people; they easily create rapport and are at least more extroverted than they are introverted. These factors help leaders seem approachable, likeable, and comfortable in their position. Those qualities contribute to staff wanting to interact with their leader. They also help motivate employees to do a better job. When workers can relate to their boss, they believe that their boss is more concerned about them, with their performance, and with their output. Furthermore, they believe that they can go to their boss with problems they encounter on the job without fearing consequences for not knowing how to resolve issues.

Not all entrepreneurs are adept at interpersonal skills. Those that aren't, might find it helpful to take a course, choose a mentor or locate a therapist to help them build interpersonal skills. The intangible cost is too high to not improve these abilities. In addition, here's where a strong team comes into play. The less experienced leader who is still learning these skills can rely on the team to get out and to "press the flesh," interact with employees, and spread a positive attitude to help develop morale.

8. A "can do, get it done" attitude: Nothing builds a picture of success more than achievement, and achievement is the number one factor that motivates just about everyone across all cultures. When employees see that their boss can lead and direct, has a clear vision and attainable goals, and actually gains results in a timely manner, then that person's credibility increases throughout the organization. Entrepreneurs must modestly demonstrate their skills to give their constituents valid reasons to appreciate and value their efforts. 

9. Inspiration: Quite often, employees need someone to look up to for direction, guidance, and motivation. The entrepreneur needs to be that person. Hopefully, Human Resources has hired self-motivated individuals. Nevertheless, there are times, when many employees need the boss to inspire them by word or action. Employees need someone to look up to, admire, and follow. Even when the production or delivery of services looks like "it is all going well," the leader may at times need to step in personally to offer a suggestion or encouragement to ensure that employees perform their jobs in an optimal manner.

10. Ambition: Resting on your laurels is bad for employee morale and entrepreneurial credibility. Employees need to be constantly striving for improvement and success; and they need to see the same and more in their leaders. When the boss is seen as someone who works to attain increasingly higher goals, employees will be impressed and more willing to mirror that behavior. It's a win-win for everyone.

Social Entrepreneur - Sid

Definition:A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. Whereas a business entrepreneur typically measures performance in profit and return, a social entrepreneur focuses on creating social capital. Thus, the main aim of social entrepreneurship is to further social and environmental goals. However, whilst social entrepreneurs are most commonly associated with the voluntary and not-for-profit sectors, this need not necessarily be incompatible with making a profit.

The aim of the social Entrepreneur is to accomplish targets that are social and or environmental as well as financial – is often referred to as the triple bottom line. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose remains central to their operation. The profit from the business could be used to support a social aim, such as funding the programming of a non-profit organization. Moreover, a business could accomplish its social aim through its operation by employing individuals from disadvantaged backgrounds or lending to micro-businesses that have difficulty in securing investment from mainstream lenders.

Features and Goals:A social business is featured to be as follows:

To be designed and operated to pass on all the benefits to the consumers To be operated without incurring losses To be operated competing with Profit Maximizing Enterprises (PMEs

Profit making by an SBE shall be consistent and desirable because

To generate enough surplus to pay back the invested capital to the investors as early as possible To generate surplus for — (i) Expansion, (ii) Improvement of quality, (iii) Increasing efficiency

through introducing new technology, (iii) Innovative marketing to reach the deeper layers of low-income people and disadvantaged communities and (v) Undertake research and experimentation to improve and diversify products and services

Seven Principles of Social BusinessThese were developed by Prof. Muhammad Yunus at the World Economic Forum, Davos, January 09

Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization

Financial and economic sustainability Investors get back their investment amount only. No dividend is given beyond investment money When investment amount is paid back, company profit stays with the company for expansion and

improvement Environmentally conscious Workforce gets market wage with better working conditions Do it with joy

Points three and four may be at the discretion of the Social Entrepreneur but mostl y the business is driven by a social objective rather than a profit one.

Indian context:A social enterprise in India is primarily NGOs, who raise funds through some services (often fund raising events and community activities) and occasionally products. Despite this, in India the term, Social Enterprise is not widely used, instead terms like NGOs and NPOs (Non-profit organizations) are used, where these kind of organizations are legally allowed to raise fund for non-business activities. Child Rights and You and Youth United, are such examples of Social Enterprise, who raise funds through their services, fund raising activities (organizing events, donations, and grants) or sometimes products, to further their social and environmental goals.

Examples:Throughout history, such individuals have introduced solutions to seemingly intractable social problems, fundamentally improving the lives of countless individuals by changing the way critical systems operate. Florence Nightingale and Maria Montessori offer two prominent historical examples. Vinoba Bhave was the Founder and leader of the Land Gift Movement, he caused the redistribution of more than 7,000,000 acres of land to aid India's untouchables and landless. Muhammad Yunus, recipient of the 2006 Nobel Peace Prize, is a more recent example. He began offering microloans to impoverished people in Bangladesh in 1976, thereby empowering them to become economically self-sufficient and proving the microcredit model that has now been replicated around the world. While social entrepreneurship isn’t a new concept, it has gained renewed currency in a world characterized by a growing divide between the haves and the have-nots. With this heightened visibility, social entrepreneurs at the forefront of the movement are distinguishing themselves from other social venture players in terms of ultimate impact

Agar Aur Gas Bharna Hai To!!

Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps. Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field. They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else. Each social entrepreneur presents ideas that are user-friendly, understandable, ethical, and engage widespread support in order to maximize the number of local people that will stand up, seize their idea, and implement with it. In other words, every leading social entrepreneur is a mass recruiter of local changemakers—a role model proving that citizens who channel their passion into action can do almost anything

Distinct from a business entrepreneur who sees value in the creation of new markets, the social entrepreneur aims for value in the form of transformational change that will benefit disadvantaged communities and, ultimately, society at large. Social entrepreneurs pioneer innovative and systemic approaches for meeting the needs of the marginalized, the disadvantaged and the disenfranchised – populations that lack the financial means or political clout to achieve lasting benefit on their own.

These and other social entrepreneurs are solution-minded pragmatists who are not afraid to tackle some of the world’s biggest problems. They recognize the extraordinary potential in the billions of poor people who inhabit the planet, and they are absolutely committed to helping them use their talents and abilities to achieve their potential. Social entrepreneurs use inspiration, creativity, courage, fortitude and, most importantly, direct action, to create a new reality – a new equilibrium – that results in enduring social benefit and a better future for everyone.

Social entrepreneurs and social enterprises share a commitment to furthering a social mission andimproving society. Some of the basic definitional issues that remain include the choice of for-profit /nonprofit structure, the necessity of earned-income strategies among nonprofits, and the degree to which social entrepreneurs/enterprises can manage the toughest social and environmental issues

Rather than maximizing shareholder value, the main aim of social enterprises is to generate profit to further their social and or environmental goals. This can be accomplished through a variety of ways and depends on the structure of the social enterprise. The profit from a business could be used to support a social aim, such as funding the programming of a non-profit organization. Moreover, a business could accomplish its social aim through its operation by employing individuals from disadvantaged backgrounds or lending to micro-businesses that have difficulty in securing investment from mainstream lenders.

Note: Social entrepreneurs are individuals who pursue opportunities to create pattern-breaking change in inequitable systems, whether through social enterprises or other means. Many social entrepreneurs have launched their ideas within nonprofits, since that organizational form is already set up to advance social value. However, there are an increasing number of social entrepreneurs launching social purpose businesses by building a social or environmental mission into the DNA of their company. By contrast, social enterprise refers to an organizational movement that applies market-based strategies to achieve social change. The underlying motivation is a growing awareness that the scale of the problems we are facing today cannot be adequately solved by the traditional non-profit and philanthropic approach.

Examples:

The Social Enterprise Alliance(SEA), based in the USA with a membership that is mainly from the USA and Canada. SEA defines a “social enterprise” as “an organization or venture that advances its primary social or environmental mission using business methods.”

SEA advocates for the social enterprise field, acts as a hub of information and education for its members, and promotes the continued growth of this vibrant sector. Every year, the Social Enterprise Alliance puts together the largest gathering of leaders representing enterprising non-profits, fair trade, digital inclusion, micro-finance, for-benefit companies, and others pursuing a social or environmental mission using market-driven approaches. The event is known as the Social Enterprise Summit

In India, a social enterprise may be a non-profit Non-governmental organization(NGO), often registered as a Society under Indian Societies Registration Act, 1860, a Trust registered under various Indian State Trust Acts or a Section 25 Company registered under Indian Companies Act, 1956.[1] India has around 1-2 million NGOs, including number of religious organizations, religious trust, like Temples, Mosque and Gurudwara associations etc, who are not deemed as Social Enterprises.

A social enterprise in India is primarily NGOs, who raise funds through some services (often fund raising events and community activities) and occasionally products. Despite this, in India the term, Social Enterprise is not widely used, instead terms like NGOs and NPOs (Non-profit organizations) are used, where these kind of organizations are legally allowed to raise fund for non-business activities. Child Rights and You and Youth United, are such examples of Social Enterprise, who raise funds through their services, fund raising activities (organizing events, donations, and grants) or sometimes products, to further their social and environmental goals.

Women Entrepreneurs - Baba

The government of India has defined women entrepreneurs based on women’s participation in equity and employment of a business enterprise. Accordingly, a women entrepreneur a woman entrepreneur is defined as an enterprise owned and controlled by women having a minimum financial interest of 51% of the capital and having at least 51% of the employment generated in the enterprise to women.

Qualities/Characteristics of Women Entrepreneurs

1) Communication Skill2) Managerial Skill/Acumen – inborn abilities3) Responsibility – (due to things such as getting married at an earlier age, etc)4) Financial Skills – though men are the earners, it is the women who have the financial powers to

spend. The responsibility of running the household, she learns to make judicious usage of limited resources. These factors, make woman a good financial manager.

5) Endurance – women work harder than men in Asia and Africa. The United Nations report on Women in Asian Agricultural countries including India says that women work more than men and animals put together. This is because not only do women work on their farms, they also do all household work like fetching water (which may be a km away), fodder for cattle, fuel for cooking (wood), looking after and nursing the children, husband and animals in addition to the farmland.

Weaknesses/ Problems of Women Entrepreneurs

Women lack certain skills that limit their abilities as entrepreneurs. There are two sets of problems namely – general problems and problems specific to women entrepreneurs.

1) Emotional in business decisions – become emotional while taking decisions, cannot be ruthless enough which may be required while taking business decisions.

2) Lack of exposure – (early in life, shielded from decisions/unpleasantness, etc)3) Lack of assertiveness – women lack assertiveness and this hinders their ability to market and sell

new ideas. This leads to failures. The cultures prevailing in our country – the women from childhood are brought up to be submissive and hence they do not exhibit assertive characteristics.

4) Limited understanding on legal issues5) Male dominated society6) Women have limited mobility compared to men7) Problem with finance – (Eg when women approach a bank, they do not lend that freely, women are

not seen at par with men entrepreneurs by the banks)

Woman Entrepreneur – DohadWomen owned businesses are highly increasing in the economies of almost all countries. The hidden

entrepreneurial potentials of women have gradually been changing with the growing sensitivity to the role

and economic status in the society. Skill, knowledge and adaptability in business are the main reasons for

women to emerge into business ventures. ‘Women Entrepreneur’ is a person who accepts challenging role to

meet her personal needs and become economically independent. A strong desire to do something positive is

an inbuilt quality of entrepreneurial women, who is capable of contributing values in both family and social

life. With the advent of media, women are aware of their own traits, rights and also the work situations. The

glass ceilings are shattered and women are found indulged in every line of business from papad to power

cables. The challenges and opportunities provided to the women of digital era are growing rapidly that the

job seekers are turning into job creators. They are flourishing as designers, interior decorators, exporters,

publishers, garment manufacturers and still exploring new avenues of economic participation. In India,

although women constitute the majority of the total population, the entrepreneurial world is still a male

dominated one. Women in advanced nations are recognized and are more prominent in the business world.

But the Indian women entrepreneurs are facing some major constraints like –

a) Lack of confidence – In general, women lack confidence in their strength and competence. The family

members and the society are reluctant to stand beside their entrepreneurial growth. To a certain extent, this

situation is changing among Indian women and yet to face a tremendous change to increase the rate of

growth in entrepreneurship.

b) Socio-cultural barriers – Women’s family and personal obligations are sometimes a great barrier for

succeeding in business career. Only few women are able to manage both home and business efficiently,

devoting enough time to perform all their responsibilities in priority.

c) Market-oriented risks – Stiff competition in the market and lack of mobility of women make the

dependence of women entrepreneurs on middleman indispensable. Many business women find it difficult to

capture the market and make their products popular. They are not fully aware of the changing market

conditions and hence can effectively utilize the services of media and internet.

d) Motivational factors – Self motivation can be realized through a mind set for a successful business,

attitude to take up risk and behavior towards the business society by shouldering the social responsibilities.

Other factors are family support, Government policies, financial assistance from public and private

institutions and also the environment suitable for women to establish business units.

e) Knowledge in Business Administration – Women must be educated and trained constantly to acquire the

skills and knowledge in all the functional areas of business management. This can facilitate women to excel

in decision making process and develop a good business network.

f) Awareness about the financial assistance – Various institutions in the financial sector extend their

maximum support in the form of incentives, loans, schemes etc. Even then every woman entrepreneur may

not be aware of all the assistance provided by the institutions. So the sincere efforts taken towards women

entrepreneurs may not reach the entrepreneurs in rural and backward areas.

g) Exposed to the training programs - Training programs and workshops for every type of entrepreneur is

available through the social and welfare associations, based on duration, skill and the purpose of the training

program. Such programs are really useful to new, rural and young entrepreneurs who want to set up a small

and medium scale unit on their own.

h) Identifying the available resources – Women are hesitant to find out the access to cater their needs in the

financial and marketing areas. In spite of the mushrooming growth of associations, institutions, and the

schemes from the government side, women are not enterprising and dynamic to optimize the resources in the

form of reserves, assets mankind or business volunteers.

Highly educated, technically sound and professionally qualified women should be encouraged for managing

their own business, rather than dependent on wage employment outlets. The unexplored talents of young

women can be identified, trained and used for various types of industries to increase the productivity in the

industrial sector. A desirable environment is necessary for every woman to inculcate entrepreneurial values

and involve greatly in business dealings. The additional business opportunities that are recently approaching

for women entrepreneurs are:

•Eco-friendly technology

• Bio-technology

• IT enabled enterprises

• Event Management

• Tourism industry

• Telecommunication

• Plastic materials

•Vermiculture

• Mineral water

• Sericulture

• Floriculture

• Herbal & health care

• Food, fruits & vegetable processing

Empowering women entrepreneurs is essential for achieving the goals of sustainable development and the

bottlenecks hindering their growth must be eradicated to entitle full participation in the business. Apart from

training programs, Newsletters, mentoring, trade fairs and exhibitions also can be a source for

entrepreneurial development. As a result, the desired outcomes of the business are quickly achieved and

more of remunerative business opportunities are found. Henceforth, promoting entrepreneurship among

women is certainly a short-cut to rapid economic growth and development. Let us try to eliminate all forms

of gender discrimination and thus allow ‘women’ to be an entrepreneur at par with men.

TECHNOPRENEUR - Bavishi

What is Technopreneurship?

It is the process and formation of a new business that involves technology. Technopreneurs use technological innovations and translate such technology into successful produces or services.

Sources of New Technopreneurial Venture:

A good understanding of how business works is necessary to all types of industry. Where technology is concerned, Peter Drucker, renowned management guru, addresses this issue with clarity in his book, Innovation and Entrepreneurship.

He proposes seven sources for innovative opportunities for starting new technopreneurship ventures. These are the seven principles:

a. The Unexpected: An opportunity can arise from an unexpected event. The Internet has opened up a lot of opportunities for technopreneurs. For example, Dell Computer has grown into a billion-dollar company from selling direct personal computers to consumers through the Internet. A virtual bookshop, Amazon.com Inc, has successfully grown into a global company using website ordering techniques.

b. The Incongruity: A discrepancy between reality and what everyone assumes is real, or between what is and what ought to be, can create an innovative opportunity. For example, most people thought that the invention of the television would spell the demise of movie theatres. However, movie theatres have since evolved and are still attracting a lot of moviegoers.

c. Process needs Innovation: When a weak link is evident in a particular process, an opportunity is present to the person or company willing to supply the "missing link". For example, Iomega Inc., a US company, discovered the need for a portable hard disk storage system. Since there was none available in the market, they designed a portable disk drive known as the Zip Iomega drive. It has since been a very successful product providing the "missing link".  

d. Changes in the Market Structure or Industry. A business is ready for an innovative product, service or approach to the business when the underlying foundation of the industry or market shifts. For example, when the Singapore government deregulated the market for telecommunications products, there was a surge of very successful local companies in the telecommunications industry. Such companies include the WyWy group of companies and Telecom Equipment.

e. Demographics: Changes in the population's size, age structure, composition, employment, level of education and income can create innovative opportunities. For example with the high level of computer literacy in Singapore, especially with the government's thrusts in making Singapore an intelligent island, a lot of technopreneurial companies distributing and manufacturing personal computers have flourished. This is also evident in the increasing number of schools offering courses in computer software.

f. Changes in Perception, Mood and Meaning: Innovative opportunities can develop when a society's general assumptions, attitudes and beliefs change. For example, people's feelings about personal computers have shifted; initially regarded as simple word processing machines, they are now used for entertainment. Such a shift has given rise to companies such as Creative Technologies whose Sound Blaster products can

transform a personal computer into an entertainment device. The Sound Blaster has become an industry standard that can re-create real-world audio experiences in games, music and other audio applications.

g. New Knowledge: Advances in scientific and non-scientific knowledge can create new products and new markets. Advances in two different areas can sometimes be integrated to form the basis of a new product. For example, the advent of the flat-panel television, portable handphones, which can be used anywhere on earth using satellite technology, intelligent facsimile machines and portable personal computers, provide lots of opportunities in this area.

Characteristics of Technopreneurship:

The tasks that technopreneurs must face when starting up, developing and managing a new business are enormous. The technopreneur often finds it difficult to fulfil all the necessary management roles effectively. They may be skilled and effective in design, research and development, production and selling but may lack the experience in business administration, including financial matters.

Starting a Technopreneurial Venture:

Before you start a technological business, you need to assess your understanding of the business as well as your readiness and ability to manage the proposed venture.

It is important to possess the following:

a. Some previous work experience or skills appropriate to your business.

b. Knowledge of your products/service and the market for it.

c. Understanding of the relationship between product knowledge of technological goods and the disciplines of marketing, production, finance and administration.

Opportunity based Entrepreneurship – Bada mak & Tulsi

Basic Types of Entrepreneurship

Apparently, it can be said that the starting point of entrepreneurship would define its type. The two types of entrepreneurship may be classified as:

1. Opportunity-based entrepreneurship- an entrepreneur perceives a business opportunity and chooses to pursue this as an active career choice.

2. Necessity-based entrepreneurship- an entrepreneur is left with no other viable option to earn a living. It is not the choice but compulsion, which makes him/her, choose entrepreneurship as a career.

Opportunity-based entrepreneurship involves those who choose to start their own business bytaking advantage of an entrepreneurial opportunity. Necessity-based entrepreneurship involves people who start a business because other employment options are either absent or unsatisfactory.

The opportunity entrepreneurs are more prevalent in high-income countries (such as France, the United Kingdom and the United States), while necessity entrepreneurs are more common in the low-income countries (such as Hungary and Poland).Accordingly, it may be argued that in developed countries opportunity entrepreneurship is linked to economic growth, while in most developing countries necessity entrepreneurship exists because of low growth. It may be that because richer countries are characterized by a more developed labor market or access to stronger safety nets (social welfare), there is a lower need forstarting up a business and that therefore these countries exhibit lower necessity-based entrepreneurial activity rates

Opportunity entrepreneurs are influenced by pull factors to start a business, while necessity entrepreneurs are affected by push factors

Challenges to Indian Entrepreneurs - Bada Mak and TulsiWhat is Entrepreneurship?

The definition of entrepreneurship has been debated among scholars, educators, researchers, and policy makers since the concept was first established in the early 1700’s. The term “entrepreneurship” comes from the French verb “entreprendre” and the German word “unternehmen”, both means to “undertake”. Bygrave and Hofer in1891 defined the entrepreneurial process as ‘involving all the functions, activities, and actions associated with perceiving of opportunities and creation of organizations to pursue them’. Joseph Schumpeter introduced the modern definition of ‘entrepreneurship’ in 1934. According to Schumpeter, “the carrying out of new combinations we call ‘enterprise’,” and “ the individuals whose function it is to carry them out we call ‘entrepreneurs’.” Schumpeter tied entrepreneurship to the creation of five basic “new combinations” namely: introduction of a new product, introduction of a new method of production, opening of a new market, the conquest of a new source of supply and carrying out of a new organization of industry.

Peter Drucker proposed that ‘entrepreneurship’ is a practice. What this means is that entrepreneurship is not a state of being nor is it characterized by making planes that are not acted upon. Entrepreneurship begins with action, creation of new organization. This organization may or may not become self-sustaining and in fact, may never earn significant revenues. But, when individuals create a new organization, they have entered the entrepreneurship paradigm.

Today’s knowledge based economy is fertile ground for entrepreneurs, in India. It is rightly believed that India has an extraordinary talent pool with virtually limitless potential to become entrepreneurs. Therefore, it is important to get committed to creating the right environment to develop successful entrepreneurs. To achieve this, India must focus on four areas.

1. Create the Right Environment for Success: Entrepreneurs should find it easy to start a business. To do so, most Indians would start slow with capital borrowed from family and friends, the CEO playing the role of salesman and strategist, a professional team assembled months or perhaps years after the business was created, and few, if any, external partners. Compare this with a start-up in Silicon Valley: a Venire Capitalist (VC) or angel investor would be brought in early on; a professional management team would drive the business; a multifunctional team would be assembled quickly; and partnerships would be explored early on to scale up the business. A major challenge for India is to create a handful of areas of excellence- the breeding ground where ideas grow into businesses. Fr example, Gurgaon and Hyderabad for remote services, or Bangalore for IT. One way of strengthening these areas is to consider the role of universities and educational institutions-places where excellence typically thrives.

2. Ensure that Entrepreneurs have access to the Right Skill: A survey conducted by McKinsey & Company last year revealed that most Indian start-up businesses face two skill gaps: entrepreneurial (how to manage business risks, build a team, identify an get funding) and functional (product development know-how, marketing skills, etc.) India can move toward ensuring that the curriculum at universities is modified to address today’s changing business landscape, particularly in emerging markets, and to build ‘centres of entrepreneurial excellence’ in institutes that will actively assist entrepreneurs.

3. Ensure that Entrepreneurs have access to ‘Smart Capital’: For a long time, Indian entrepreneurs have had little access to capital. It is true that in the last few years, several Venture Funds have entered the Indian Market. And, while the sector is still in infancy in India (with estimated total disbursement of less than US$0.5 billion in the year 2003), VCs are providing capital as well as critical knowledge and access to potential partners, suppliers, and clients across the globe. However, India has only a few angel investors who support the idea in the early stages before VCs become involved. While associations such as TIE are seeking to bridge the gap by working at creating a TIE India Angel Forum, this is India’s third challenge creating a global support network of ‘angels’willing to support young business.

4. Enable Networking and Exchange: Entrepreneurs learn from experience-theirs and that of others. The rapid pace of globalization and fast growth of Asian economies present tremendous opportunities and challenges for India. Through planning and focus, India can aspire to create a pool of entrepreneurs who will be the region’s –and the world’s-leaders of tomorrow.

The Future of Entrepreneurship

Both the Central Government and various State Governments are taking increased interest in promoting the growth of entrepreneurship. Individuals are being encouraged to form new businesses and are being provided such government support as tax incentives, buildings, roads, and a communication system to

facilitate this creation process. The encouragement by the central and state governments should continue in future as more lawmakers are realizing that new enterprises create jobs and increase the economic output of the region. Every state government should develop its own innovative industrial strategies for fostering entrepreneurial activity and timely development of the technology of the area. The states should have their own state-sponsored venture funds, where a percentage of the funds has to invested in the ventures in the states.

Society’s support of entrepreneurship should also continue. This support is critical in providing both motivation and public support. A major factor in the development of this societal approval is the media. The media should play a powerful and constructive role by reporting on the general entrepreneurial spirit in the country highlighting specific success cases of this spirit in operation.

Finally, large companies should show an interest in their special form of entrepreneurship-intrapreneurship-in the future. These companies will be increasingly interested in capitalizing on their Research & Development in the hyper competitive business environment today.

Conclusion

The definition of entrepreneurship has evolved over time as the world’s economic structure has changed and become more complex. Risk taking, innovation, and creation of wealth are the criteria that have been developed as the study of new business creations has evolved.

The decision to start an entrepreneurial venture consists of several sequential steps (1) the decision to leave a present career or lifestyle. (2) the decision that an entrepreneurial venture is desirable ; and (3) the decision that both external and internal factors make new venture creation possible.

There are both pushing and pulling influences active in the decision to leave a present career: the “push” of job dissatisfaction or even layoff, and the “pull” toward entrepreneurship of seeing an unfilled need in the market place. The desirability of starting one’s own company is strongly influenced by culture, sub-culture, family, teachers, and peers. Any of these influences can function as a source of encouragement for entrepreneurship, with support ranging from government support that favour business to strong personal role models of family or friends, Beyond the stage of seeing entrepreneurship as a “a good idea”, the potential entrepreneur must possess or acquire the necessary education, management skills, and financial resources for launching the venture.

The study of entrepreneurship has relevance today, not only because it helps entrepreneurs better fulfill their personal needs but because of the economic contribution of the new ventures. More than increasing national income by creating new jobs, entrepreneurship acts as a positive force in economic growth by serving as the bridge between innovation and market place. Although government gives great support to basic and applied research, it has ot had great success in translating the technological innovations to products or services. Although intrapreneurship offers a promise of marriage of those research capabilities and business skills that one expects from a large corporation, the results have not been spectacular. This leaves the entrepreneur, who frequently lacks both technical and business skills, to serve as the major link in the process of innovation development, and economic growth and revitalization. The study of entrepreneurship and education of potential entrepreneurs are essential parts of any attempt to strengthen this link so essential to a country’s economic well-being.

Q:  Similarities & Differences between Entrepreneurs and Managers - Jhaveri

Similarities

When you compare managers and entrepreneurs you need to first look at the definitions of both titles. A

manager is someone who directs a team and an entrepreneur is someone who organizes, manages, and

assumes the risks of a business or enterprise.

Both management and entrepreneurship are brought about as a necessity of a means to an end, not an

end in themselves. Managers try in their quest to turn around a distressed company whilst

entrepreneurs try to use problems either in their own lives, environment or the current market

situation to turn around their own lives or meet a need in the market so to speak.

Again both managers and entrepreneurs are characterised and motivated by the fact that everything

can be done and do not easily take failure as an answer. This does not mean that entrepreneurs

always chalk successes or that everything they touch turn gold, but experience shows that managers

and entrepreneurs try to always look at the bright side of things and persevere to see their dreams

come true.

Entrepreneurs face personal financial risk whereas managers also face career risk in the event of

failure.

Managers and entrepreneurs take moderate risks. They are willing to go every length to achieve

results than with gaining influence in society.

All entrepreneurs must be managers, even if the only person they are managing is themselves. They

are the ones who must make the schedules, see that they are implemented, co-ordinate staff, and deal

with every little problem that comes up.

Both managers and entrepreneurs can be expected to be available 24/7 to address the needs of their

business, and a manager's earning potential is often tied so directly to the company's performance

that it's tantamount to having an ownership stake in the first place.

Both managers and entrepreneurs want and need autonomy and freedom, but the manager must work

within the existing corporate hierarchy.

Differences

Parameter Entrepreneur Manager

Risk bearing Being the owner of enterprise

assumes all the risk and

uncertainty involved in

running the enterprise

Being the servant of a

company does not bear any

risk involved in the

enterprise

Reward Reward for bearing the risk

involved is the profit

generated

Gets salary as reward for his

services. The salary of an

executive is certain and more

or less fixed

Status He is the owner of the

enterprise

He is the servant of the

enterprise owned by the

entrepreneur

Motive To start the venture by

setting up the enterprise.

Entrepreneur understands the

venture for personal

gratification

To render his services in an

enterprise already setup by

the entrepreneur

Innovation Entrepreneurs themselves

think over on how to produce

goods to meet the changing

demand of the customers.

They act as innovators or

change agents

He is just to simply execute

the plans prepared by the

owner of the company i.e.

translate the entrepreneur’s

idea into practice

Qualification Needs to posses qualities and

qualifications like risk

bearing, organizing, vision,

foresight, motivation

Needs academic qualification

in addition to sound

knowledge in management

theory and practices for

senior level positions

Intrapreneurship: - Wasim

Definition:

Intrapreneurship is the act of behaving like an entrepreneur, except within a larger organization.

Brief:

Entrepreneurship is development of entrepreneurs within a large corporation to produce new products, new markets and new technology by employing the enterprise resources in a unique way. Entrepreneurship gives professional managers of the corporation the freedom to take initiatives and try out new ideas hence it is entrepreneurship within an existing business. Big companies and corporations recognize that individuals can make major contributions without becoming entrepreneur or by investing in the company financially. Entrepreneurship has brought major transformation in developed countries of the world. E.g. DuPont, 3M, Xerox, GE, Apple Computers. Indian corporate like Ranbaxy, Dr. Reddy’s, Mahindra and Mahindra, Arvind Mills, TCS, Godrej, Infosys encourage intrapreneurship. Intrapreneurship is therefore corporate entrepreneurship.

History:

The word ‘Intrapreneurship’ was coined by Gifford and Elizabeth Pinchot based on their concept of intra-corporate entrepreneur. They gave credit for their thinking to the 1976 ‘Economist’ article by Norman Macrae. Based on the success of some of the early trials of their methods in Sweden they began a school for intrapreneurs and in 1985 they published their first book, Intrapreneuring, combining the findings from their research and practical applications. In 1992, The American Heritage Dictionary brought intrapreneurism into the main stream by adding intrapreneur to its dictionary, defining it as "a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation".

Difference between an entrepreneur and an intrapreneur: An entrepreneur takes substantial risk in being the owner and operator of a business with expectations of financial profit and other rewards that the business may generate. On the contrary, an intrapreneur is an individual employed by an organization for remuneration, which is based on the financial success of the unit he is responsible for. Intrapreneurs share the same traits as entrepreneurs such as conviction, zeal and insight. As the intrapreneur continues to expresses his ideas vigorously, it will reveal the gap between the philosophy of the organization and the employee. If the organization supports him in pursuing his ideas, he succeeds. If not, he is likely to leave the organization and set up his own business.

Example of intrapreneurship: A classic case of intrapreneurs is that of the founders of Adobe, John Warnock and Charles Geschke. They both were employees of Xerox. As employees of Xerox, they were frustrated because their new product ideas were not encouraged. They quit Xerox in the early 1980s to begin their own business. Currently, Adobe has an annual turnover of over $3 billion.

3M is another company that has reaped the rewards of intrapreneurism. 3M has a standard policy that allows all employees to work on developing their own business ideas at least 15 percent of the time they are at work. One of the big breakthroughs that came from this program was the concept of Post-It-Notes which was pioneered by an employee that wanted something that wouldn't fall out to mark pages in his hymn book at church.

Profile / Characteristics of an intrapreneur:1) Vision:

Intrapreneurs possess the ability to visualize the steps form idea generation to actualization (commercialization). They ride to the discovery of successful ventures on the strength of their vision.

2) Motivation:Intrapreneurs want freedom. They are self motivated but respond to corporate rewards and recognition. Money is not the only incentive for their efforts but the measure of their success.

3) Business skills:Intrapreneurs understand the business intimately. They have technology or marketing background and in the role of intrapreneurship, they take the responsibility of all aspects of business.

4) Action Oriented:All intrapreneurs are action-oriented.

5) Risk:They are moderate risk-takers. They dislike uncontrolled risk and avoid as far as possible. Because of self-confidence, they are willing to accept that risk which depends directly on their skill. They are sensitive to the needs to appear orderly in the organization. They risk their career and reputation if they fail in their mission.

6) Status:Intrapreneurs do mundane jobs that are a part of every new project. Instead of delegation they often do things by themselves. (E.g.: they will do every little things themselves like applying stamps, going to post office etc, because they want to be 100% assured; they do not like delegation).

Comparison between entrepreneurs and intrapreneurs:

Parameter Entrepreneurs Intrapreneurs

Primary Motives They want freedom. They are goal-oriented, self-reliant and self-motivated.

They have access corporate resources they are proactive

Risk Preference Entrepreneurs accept higher risk, have money and are not worried about reputation at least in the initial stages.

Intrapreneurs accept moderate risk. They put their careers, job and reputation on the line of fire.

Attitude to Status Entrepreneurs are willing to accept long periods of low status.

Intrapreneurs considers corporate symbols (E.g.: designation VP, CEO, MD, etc)

Decision Entrepreneurs, they make their own decisions and are not willing to compromise. (Not worried about what others say or think about him)

Intrapreneurs need to get others to share their vision. They are willing to accept compromise. (he needs to pull people towards and along with him)

Resources It is acquired and assembled from the market or families of the entrepreneurs.

Intrapreneurs utilize the resources available within the organization.

Attitudes toward bureaucracy

Entrepreneurs may have done well in the system but has left the organization to start his own individual enterprise.

Intrapreneurs dislikes the system but has learnt to deal with and later on starts manipulating it.

Failures and mistakes Entrepreneurs learn from mistakes but have to pay for the

Intrapreneurs are sensitive to corporate attitudes. Often

errors committed. All the errors are visible and public.

attempts to hide errors. They learn from their mistakes.

Skill and experience For both of them it is same For both of them it is same

Gifford Pinchot's out-of print book "Intrapreneuring" provides 10 commandments for intrapreneurs:

1. Do any job needed to make your project work regardless of your job description.2. Share credit wisely.

3. Remember, it is easier to ask for forgiveness than permission.

4. Come to work each day willing to be fired.

5. Ask for advice before asking for resources.

6. Follow your intuition about people; build a team of the best.

7. Build a quiet coalition for your idea; early publicity triggers the corporate immune system.

8. Never bet on a race unless you are running in it.

9. Be true to your goals, but realistic about ways to achieve them.

10. Honour your sponsors.

Entrepreneurship and the Dynamics of Family Business in India - Satra

Introduction:

Indian Family Owned Business has undergone a paradigm change due to the unanticipated major economic reforms in the year of 1991 brought by the then Finance Minister in the way of opening up the economy. Due to Liberalization, Privatization and Globalization the entrepreneurs who managed their family owned business got very apprehensive of their future business and crafted out the strategy to face the increasingly competitive business world.

Indian Industry is largely dominated by family owned enterprises. They account for significant proportions in all spheres of socio-economic and political life of the country. Family owned enterprises have always been a matter of great curiosity as they are distinctively different from other forms of business enterprises in terms of their entrepreneurial, organizational and managerial behaviors and styles. This is because their behaviors and styles are subject to the forces arising out of emotions of family members, personal and interpersonal pressures of relatives of owners, and conflicting interests and values of family. The uniqueness on these aspects leads a business firm to exhibit a unique set of issue and problems. Traditionally, a Family Business was defined as "an enterprise in which a family or a group of families has invested a major share of capital". This definition has been found satisfactory as it did not clearly brought out the aspects like ownership, control and management of a firm.

Davis (1983) has given an elaborative definition of family business. "Family businesses are those where policy and direction are subject to significant influence by one or more family units. This influence is exercised through ownership and sometime through the participation of family members in management. It is the interaction between two sets of organizations, family and business, that establishes the basic character of the family business and define its uniqueness". The basic characteristics of family business are:

a. A group of people belonging to one or more families in one enterprise

b. Family exercises the influence on the firm's policy direction in the mutual interest of family & business

c. Family control can be seen in the form of ownership or in the form of management of management of the firm where family members are employed on key positions

d. The succession of family business goes to the next generation

In essence, family business is one which is substantially controlled and / or managed by members of family and is succeeded by the next generation.

VIABILITY OF FAMILY BUSINESS

Despite the development of various other forms of enterprises, the family form of business enterprise still dominates. Those who are advocates of professional management argue that the traditional family values of enterprise stability often clash with changing economic goals of sustained investment and growth. They further argue that the traditional family structure is vulnerable in the context of increasing environmental complexity and turbulence. As against this family business provide benefits which are rarely available to professionally managed firms. Entrepreneurship, dedication, commitment family reputation, integrity, leadership and initiative are the some of very important qualities of family business. The question whether family business is a viable proposition in the present context is reasonable enough to be raised here. To answer this, let us discuss the positive and negative sides of the family business.

a. Negative Sidei. Nepotism is one of the marked features of the family business enterprises. The blood relationship

determines the entry into the business and holding of key positions. Merit becomes secondary and even an insignificant criterion for promotion. This affects the loyalty and commitment of the hired professionals. The inefficiency of relative employee is often covered up by the efficient performance of non- relative employees. This ultimately makes the total functioning of organization inefficient.

ii. Overlap between business and family goals is another feature of family business. Logically, the goal of the enterprise is oriented to fulfill the interest and achievement of the family. This, many a time contradicts the survival and growth goals of the firm. Family members very often pursue their personal goals at the cost of sacrificing growth opportunities of the firm. This threatens the long-term survival of the firm.

iii. Family rigidity is the third feature, which imposes poor profit discipline. Family members very often prioritize certain aspects of firms functioning on the basis of family value or family decision. For example, family value is to create a good social image that requires giving to employment to needy people may affect the profit of the firm. Many times, family members unduly support their pet projects, no matter how profitable they are.

iv. Succession is the fourth feature of the family. The continuity of family is achieved by way of handing over the charge of the firm to the next generation. Very often the successors are selected using blood relation as only criterion. They may not have any experience of running a well-established business firm. In the want of proper succession a good number of family businesses get into trouble and sometime are led to closure of business enterprise.

b. Positive Sidei. The basic premise on which family business rests is its stability and continuity, which are linked

from one generation to another. The long-term interest of family members in the business often provides the sentiments of family solidarity and natural loyalty.

ii. Family members work with each other with greater team spirit to attain a common goal. They make personal sacrifices by taking minimum dividends from the firm and bringing in personal financial resources in the time of financial crises. Many time, business get greater priorities under their personal needs. Loyalty and dedication of family members have been responsible for continued operation during the period of hardship.

iii. The image and social reputation of family becomes the goodwill of the firm. It helps in establishing trust and credibility in the market. Bankers and suppliers feel comfortable in dealing with such family owned enterprises because of their good image and reputation. Since stockholders and mangers of the firm works untidily, managers are less sensitive to the criticism based on short-term performance. They enjoy a great amount of freedom and flexibility in concentrating on long-term objectives of the firm. This is possible only in a family business as both stockholders and mangers have mutual understanding and trust. There are conditions in which the choice of the family form of enterprise becomes almost essential.

FAMILY MANAGEMENT PRACTICES

To get aquatinted with the family business, it is necessary to learn some of the commonly employed management practices in family business. An attempt is made to describe to be choices of management control that are available to the founder, internal work environment, organizational structure and delegation.

Management Control Mechanism: Choices

The family business consists of two systems: family and task systems. The task system is subject to the influence of the family system. The task system is determined on the basis of norms, values and principles of family and its members. The family has different options through which it can control and manage the task system. These are as follows:

i. In the first case, the founder may decide to exercise direct control on the management of the firm. This is a normal feature in proprietorship and partnership firms. Under the control systems, family members are given a certain number of shares with the assurance of power of voting by the family members. All-important decisions are taken by the founder, which are binding on the other members of the family.

ii. Another choice the founder has, is to dilute his authority of direct control by consulting a few selected family members before taking important decisions. Certain areas are clearly defined where approval of the family members is needed. For Example, any decision concerning capital investments needs the approval of family members.

iii. The founder uses professionals to carry out the management function. The founder clearly defines the boundaries between business and family decisions. Family members are assured of ownership control while business related decisions are taken by different heads of business.

iv. The founder may decide to place the firm under the full control of the family. Family members are involved in the early stages of enterprise development at different levels to take charge of various management functions.

Internal Environment

Family business consists of two sets of individuals: family members and non-family members. The sentiment system of the family system is at its core and made up of those individuals who are bound by emotions and loyalty. The non-family members are subject to the rules made by the family owing enterprise.

The general feature of the family business is that the top man is surrounded by a loyal cadre of top management personnel who are highly trusted individuals and are with the enterprise from beginning. They have normally grown with the firm and exhibit intense feeling of permanent relationship with the founder. The forces of traditions, kinship, caste and religion support the integrity of the family business.

Relatives of the family members are hired and placed on key positions of the firm. They get fitted in the internal environment of the firm more easily than non-relative employees. The relatives have free access to the top man no matter at what level he is; while non- employees have to strictly adhere to the formal channel. Decisions are taken by the family members and power to take decisions is normally centralized at the top. Professionals are hired to give technical advice and they do not process any decision making power. Objectives and policy direction of family business are oriented towards the goals of the family. Therefore, the internal environment of family business is created to reinforce and perpetuate family pride and tradition.

Organizational Structure and Delegation

Normally, the organizational structure of family business is hierarchical and decision-making authority is centralized at the top. The organization is structured on the functional basis: Functional specialists and mangers at intermediate level are often between top men and workers. In practice, the hierarchical system reduces to One-Man Show. As a result formalizations are kept to minimum.In such organizations, a delegation of power does not really take place in a formal sense. Functional specialists play the role of advisors while managers at intermediate level do not really exist in practice. They are communicated of decisions for which they are responsible for implementation. However, they have no power to take decisions. Very often, family business organizations have a large span of control as almost every one, excepting workers; keep reporting to the top man. To sum up, organization and management in family business is based on personalized modes rather than professional modes.

ISSUES AND PROBLEMS IN FAMILY BUSINESS

Family businesses are often criticized for their lack of professionalism in dealing with environment complexities more efficiently. Intervention of family in the business affects business- like responses to various situations of opportunities and threats. As a result more and more family businesses are getting into trouble. Problems that most of the family gets into are: conflicting business and family norms; rivalry among family members, professionalism and problems of continuity. In the past, these problems have led even the most successful enterprises into sever problems causing sometimes to collapse of business enterprises. Each of these issues and problems is discussed here:

Business Vs Family

Family businesses very often face this unique dilemma to make choice of alternatives that is the best for the business against the family norms. Given this choice, decisions are very often made in the interest of the family and not business. Values, norms and principles of the family are incongruent with that of business. This leads the family business to operate under the normative ambiguity. Human resources and growth opportunities are adversely affected due to this conflict. With regard to human resources, family management due to its obligation towards the family select, promote and compensate its family members and relatives considering the relation as a major criterion.

Rivalry among Relatives

A number of family members of varying age and relationship participate in the family business. They very often clash with each other because of conflict of interests. This causes the breakdown of communication and creates barrier to organizational integrity. Rivalry among relatives often leads to factional decisions that spring up in the organization as the non- relative family starts choosing family members with whom they want to be identified. Many a time, non- family employees do not want themselves to be involved in a family fight until it is restored. This can paralyze the working of the

organization. Such rivalries are the peculiar phenomenon, which obviously arise owing to clashes of interests and ego. The organization becomes directionless. Even the founder becomes helpless to resolve such conflicts as every members tries to defend his action. Slowly the business moves towards disability and finally becomes sick.

Problem of Continuity

Every family business has to face the problem of continuity or succession when the original founder retires or dies. There has to be some one to take the charge of the business to ensure continued inheritance to the next generation. It has been noted that even most successful business firms have suffered a setback due to improper succession or non-availability of competent successors.

Unfortunately, the founder has almost no choice in the selection of the successors. The successors are selected on the basis of blood relationship no matter how competent the successor is in running the business. In fact, in most of the cases the prospective successors are ignorant of business experiences and do not possess entrepreneurial abilities. Further, the in experienced successors often start from the top and therefore remain unaware of dynamics at lower and middle levels.

The outgoing entrepreneur generally tries to groom his successor through informal on the job training. Such training has limited benefit to successors, as the process of learning is unsystematic and inconsistent owing to protective nature of the entrepreneur.

Many a time, succession is unplanned and therefore in the event of death or early retiring of the founder, the eligible successor is chosen to run the business. In such conditions, the successor is not psychologically prepared to take the charge of the business. A few family members or relatives take undue advantage of the situation and try to mislead or misguide the eligible successors.

Apart from the problem of the choice of successor, the process of succession itself is complex. The founder considers the enterprise as his own "baby". Despite his awareness of the need of handling over the charge to the next generation, he keeps hanging on it. Even after his son being in the business, he does not delegate the power and continues to take important decisions. As a result, the son feels overshadowed and frustrated. The successor and the founder continue to resist each other's action on matters concerning any change.

In this case of the second or third generation successors, when there is more than one eligible successor in the family, the distribution of assets and activities of business becomes difficult. It often results in split. If not efficiently handled the business bet paralyzed for want of proper settlement.

The successor often lacks credibility in the organization, as blood relation has been the sole criterion. Employees often resist their authority. Efficient and loyal employees feel threatened and therefore start quitting the enterprise. Suppliers and bankers might also withdraw owing to unstable situations created by the take over by the new comer. Successors are not able to replace the leadership of the previous entrepreneurs. They are often resisted for any initiation of change in the organization.

Because of the peculiar problem of succession, even the most successful business has suffered serious setbacks.

Professionalization in Family Business

It is argued that the family business system is desirable at the stage enterprise initiation and survival. But when the business starts growing, it is desirable to replace family management with professional management. The traditional value oriented family management may clash with economic goals of growth. In the wake of increased competition and complexity, the traditional organizational structure and decision making system is more vulnerable. Family businesses very often are not adoptable to the requirements of modern industry and technological changes. Need of growth and modernization call for adoption of professional management in family business.

Professional management consists of a team manager whose primary occupation is providing management service without having any substantial ownership stake. Professional managers are hired for their expertise. A team of professional managers performs the function of entrepreneurship and management of the firm. The team holds key position in the firm on the basis of technical competence. Professional management is expected to achieve excellence in building a human, physical and financial resources and capture new opportunities of growth with professional approach through research and development.

A few family businesses, which have introduced professional management haven’t been able to cope with the transition problem. Family members continue to keep certain key positions with them. The family members make all critical decisions. Professionals are hired in the capacity of technical advisors only. They are not given full charge of the management of the firm. As a result, professionals remain largely ineffective in the organization. Even cases where professional management has taken over, family members continue to interfere in the working of managers by virtue of ownership right. The performance of professionals is greatly hampered because of non- cooperation and lack of acceptance on the art of the family.

COPING STRATEGIES

To realize the natural resources of family business like commitment, loyalty, initiative entrepreneurship, financial resources, family image, etc. more efficiently it is essential that family business develop certain key advantages and overcome certain inherent weaknesses. Based on some of the successful family businesses, the following coping strategies are suggested:

a. Linking Family & Business Goals

Successful family business are the ones which have been able to establish the close link between family and business by clarifying that the goal of the family can be achieved only if the enterprise achieves its long term goals. This further asserts that participation of the family members would be allowed as long as it contributes to the enterprise’s long-term strengths. Such a stand should be made clearly at the time of enterprise initiation or when the involvement of family begins. Strategically, eliminating some amount of family participation strengthens the leadership of the family members who are in the business which ultimately result in better performance.

b. Recruitment of Relatives

The best-managed family businesses have adopted the policies of not recruiting relative employees at all. The needy relatives are helped by the founders to find jobs elsewhere. This may be considered a too rigid policy as there may be a professionally competent person in his family or relation who would not be selected purely on the ground that he happened to be a relative to the founder. Instead oh having such a rigid policy, one may have a recruitment policy stating that relatives may be considered for employment provided they stand up to the company's standards. This policy would also ensure better cooperation of family and relatives. At the same time, business norms are not sacrificed in the interest of the family.

c. Avoidance of Nepotism

In family business, family members as employees gets several undue benefits. In order to avoid this, the successful businesses adopt firm personnel policies applicable to both relatives and non- relative employees. It may be clearly stated in the personnel policies that one may be given an opportunity to work in the business because of ET relationship factor but his growth within the firm would depend solely on his competence and merit. Relative employees, like no- relative employees, are subject to performance evaluation that would be carried out by independent people. This would greatly help the family business to avoid nepotism and favoritism within the organization.

d. Task Structuring

It will be unrealistic to imagine a family business, however successful it is, to remain away from certain inherent issues pertaining to the family. It is also possible that despite all possible efforts to avoid, a number of family issues in business may continue to remain unresolved. In such a case, to save the business from possible consequences, the primary task structure of the organization may be designed in a manner to minimize the negative effects on its performance. A number of strategies for task structuring are suggested here:

i. The founder must try to identify those critical operational activities that need to be adequately supported to ensure at least the survival of the firm. He may structure them in such a manner that all in important operations continue to take place without any disturbance despite pertaining conflict amongst the family owners-relatives. He may sanction powers to the competent people who need not go to any of the family members for frequent approvals as long as they are carried out as per the guidelines.

ii. The firm must create reserves to meet any contingencies occurring owing non- cooperation or indicating of family members. They could extra staff to compensate the possible loss of work because of family members to carry out a given task.

iii. While carrying out the structuring of the task system those areas should be identified where conflicts among family members likely to arise. In these areas more professionals may be employed. At the same time, family members may be entrusted with those areas where the chances of conflicts are less.

iv. The founder should take extra care to keep moral and motivation of the employees so high that they continue to remain committed and loyal to the firm. They are likely to be the only individuals who can be entrusted with high level of responsibility in times of conflict for ensuring smooth functioning of the organization.

v. Very often the founder refuses to accept certain lapses in the organization, which are results of family issues. This leads to a state of confusion in the organization resulting in family members blaming each other for poor performance. The founder should accept certain given problems and

issues as weaknesses because of family based management system. This would help avoid unnecessary anxiety and politics in the organization.

vi. The task system should be loosely structured so that enough flexibility is built in. The bureaucratic structure is very much vulnerable during a period conflict. In the case of conflicts or blocks being created to routine functions, a middle course should be adopted.

CONCLUSION

Classical management principles and theory have ignored the influence of family in business management and hence management practices in family business are different. Decisions and actions in family business are not always taken in the best interest of the business, its reputation and growth but in the interest of family for its values and principles. Management styles are based more on personalized modes than professional modes. It is therefore; one may suspect that family based management is more vulnerable in the face of uncertainty and complexity of environment. But in practice, things are different with family business. They have not only been able to sustain themselves in the business world but have also grown in large number. Today, family business represents the largest segment in Indian industry and makes significant contribution to the economic development of the country.

The successful performance of family business can be attributed to its natural resources like commitment, dedication, loyalty, initiative, spirit of Entrepreneurship, financial strength etc. However, family business does suffer from certain weaknesses like nepotism, favoritism, rigidity, conservatism etc. These weaknesses can be overcome by adopting certain policies and strategies. Strategically, the founders may eliminate some amount of family participation to strengthen the leadership of those family members who are in business. They should adopt policies to avoid recruitment of family members on the basis of competence; the personnel policies of family business should be equally applicable to both relative and non- relative employees. The task structuring should be done to minimize negative effect of family conflict and allow at least routine functions to take place smoothly in the face any major conflict or calamity.

Cross Cultural Trends in Entrepreneurship – Ram Entrepreneurs are from culturally diverse emvironments. This answer explores to find out about the different trends in entrepreneurships in different cultures.

MOTIVATION:

studies have identified entrepreneurship as a critical factor in the economic growth and development of nations (Birley, 1987; Reynolds, 1987; Morris & Lewis, 1991; Shane, Kolvereid, & Westhead, 1991). This increased interest in entrepreneurship has resulted in the formulation of a wide range of models explaining why businesses are formed (Cooper, 1970; Shapero, 1988; Greenberg & Sexton, 1988; Scheinberg & MacMillan, 1988; Shane, Kolvereid, & Westhead, 1991). One of the earliest models proposed a congruence between ideological constructs and economic behavior. Weber (1930) observed that the rise of Protestantism encouraged hard work, thrift, and striving for material advancement, which in turn gave rise to capitalism. Gibb and Richie (1982) argued that business start-ups can be understood in terms of the situations people encounter and the social groups to which the new firms' founders relate. Other models of entrepreneurship include the trait model in which venture initiators are born

CULTURE AND ENTREPRENEURSHIP:

The relationship between culture and entrepreneurship has received quite a bit of research attention. Hagen (1960) explained entrepreneurial behavior as a means by which disadvantaged minorities seek to alter the status quo. Brenner (1987) argued that it is groups that have lost or face the prospect of losing social status that are driven to take entrepreneurial risks. Ray and Turpin (1987) found that friendship obligations and

social status were important reasons for business start-up in Japan. Schneinberg and MacMillan (1988) in a study of 11 nations found reasons for new business formation to include need for approval, perceived instrumentality of wealth, degree of communitarianism, need for personal development, need for independence, and need for escape.

Shapero and Sokol (1982) observed that entrepreneurial activity varies from society to society because of cultural beliefs about entrepreneurship. Other studies have provided empirical support to the notion that cultural values influence entrepreneurial activity (Huisman, 1985; Wittmann, 1989; Scully, 1988).

McGrath, MacMillan, and Scheinberg (1992), in an exploratory study of cultural differences between entrepreneurs and non-entrepreneurs in cross-cultural setting, found that entrepreneurs share a common set of values despite differences in cultural background. Shane, Kolvereid, and Westhead (1991), in a study of gender and nationality in business formation, identified the "desire for job freedom" as a universal reason for new business formation.

Another example closer to home which you can take is that of the Gujrati community, extremely entrepreneurial in nature. Whereas the South Indian community tends to be less entrepreneurial, and they form a major part of the service class. This is because inherently South Indians are less of risk takers, whereas Gujjus tend to believe that it is beneath them to work under someone else. They would rather take the risk of starting off one’s own business and create wealth.

BUSINESS PLAN, MANTRAS OF BUSINESS PLAN, WHY DO SOME BUSINESS PLAN FAILS - TejasWhat is a business plan?

The business plan is a written document prepared by the entrepreneur describing all relevant external and internal elements involved in starting or running a business activity.

The business plan is an integration of the functional plans such as the marketing plan, finance plan, manufacturing plan, human resources plan, etc.

Business plan addresses both, the long term and short term decision making for at least the first 3 years of operation.

The business plan is also called as the road map or game plan. In the business plan or road map the following questions need to be answered correctly:

a. Where am I now?b. Where am I going?c. How will I get there?

Why you need a business plan?

An entrepreneur needs a business plan for the following reasons

a. for starting a new businessb. diversification, expansion of his existing businessc. buying another businessd. for getting government grants and other incentives from government financial bodies

Who prepares the business plan?

The business plan should be prepared by the entrepreneur himself. However he may consult with many others in its preparation like lawyers, chartered accountants, marketing professionals, engineers and other consultants who are experts in business plan.

Who reads the business plan?

The business plan will benefit various types of people who will be using this plan as a basis for making decisions.

a. potential investorsb. bankers and venture capitalistsc. suppliers and distributorsd. big customerse. employees (top level management)

Outline of a business plan

I. Introductory PageA. Name & Address of the companyB. Name & address of the owners / principals / promoters of the companyC. Nature of BusinessD. Statement of Finance requiredE. Statement of confidentiality of report

II. Executive Summary - Normally 3-4 pages summarising the complete business operation. III. Industry Outlook

A. Future outlook and trendsB. Analysis of Competitors C. Market Segmentation

IV. Description of VentureA. ProductsB. ServicesC. Size of BusinessD. Background of the entrepreneurE. About their set-up (office equipment, personnel, location, factories, offices, etc)

V. Manufacturing PlanA. Production process / technology B. Physical plantC. Machinery & EquipmentD. Raw Materials (& their suppliers)

VI. Operational PlanA. Description of the company’s operationB. Flow of orders for goods and servicesC. Technology utilisation (paperless office, electronic communication)

VII. Marketing PlanA. PricingB. DistributionC. PromotionD. Product ForecastsE. Controls (Eg: Inventory control, promotion control)

VIII. Organisational PlanA. Form of ownership (Pvt Ltd, Public Ltd., Partnership, Under guarantee / no

shareholding eg: BCCI)B. Identification of partners / principal shareholdersC. Authority of the principalsD. Management team background

E. Roles and responsibilities of members of the organisationIX. Assessment of Risk

A. Evaluate weakness of the businessB. New technology making others obsoleteC. Contingency plan

X. Financial PlanA. Capital cost

1. Long Term2. Short Term

B. Income StatementC. Cash Flow ProjectionD. Break Even Analysis E. Sources & application of funds

XI. Benefits of business to community (Not Compulsory)A. Employment generationB. Import substitution (thereby saving foreign exchange)C. AncillarisationD. Environmental protection

XII. Appendix (Not Compulsory)Contain back-up material

A. Market Research DataB. Contracts & leases entered by the companyC. price list from suppliersD. letters and documents received from government and other bodies

WHY DO SOME BUSINESS PLANS FAIL

(NOTE: Business Plan mantras will be the same answer just reverse the points. E.g.:” Unrealistic Financial Projections” ke badle “Make Realistic Financial Projections”)

Many factors comprise an outstanding business plan. However, to create a superb document, it takes time and many revisions. Below are a few of the key mistakes commonly found which lead to failure of the business plan:

1. Unrealistic financial projections: Investors expect to see a business plan that paints a realistic financial picture of the anticipated growth of the company. If the plan is overly aggressive and not consistent with growth in the industry, the plan may be shelved. It is best to be realistic with your financial projections. You need to be prepared to defend and explain all important assumptions concerning your projections.

2. Weak goals: A business plan without detailed goals is like a ship without a rudder.  The business becomes directionless without a purpose.  As the business owner one must have goals for every facet of your business.  We often see is a 5 year revenue goal, but no monthly and yearly goals to lead up to the finale.  Very few business plans include client goals, professional goals, and personal goals.   How many new clients do you want each month?  What are the revenue goals for your products or services?  What information products do you want to produce in the future?    Having goals in life is what drives successful people.

3. Not having a defined target audience: No business will appeal to "everyone." You must clearly define your market and you must present a clear picture of your potential customers — why will they purchase your product or service?

4. Over-hype: Too much hype and the overuse of superlatives can be the downfall of an otherwise sound business plan. Wow them with the business idea not hype or buzz words.

5. Poor research: In an effort to get a business plan together hastily, many business owners do not double-check and substantiate their claims. Make sure your research is accurate, up-to-date, and verifiable.

6. Focus on Cash Flows: Neither sales nor profits guarantee cash flow. You need a good cash flow projection, always. For real businesses, one of the most immediately useful positive results of business planning is a better view of cash flow.

7. No focus on your competition: Some business plans state that there will be "no competition," while others indicate only what the competition has done wrong. Investors reading a business plan expect to see such competition and how you plan to compete in the market. You cannot ignore competition or paint an inaccurate picture. If your idea is a good one and you truly do not have competition today, you will tomorrow. Guaranteed.

8. Failing to focus on value creation: It’s easy to fall into the trap of thinking that the purpose of a business is to make money. But the real purpose of a business is to create value. While it’s possible to make money in the short run without creating much value, in the long run it’s unsustainable. Your business exists to provide some sort of value, both for you and your customers. The better you understand what value you’re trying to provide, the better you’ll be able to focus. The world doesn’t need more selling or more stuff. But it always needs and wants genuine value creation, and that’s where you should direct your efforts.

9. Keeping the plan in your head:  That doesn’t work because the point of the plan is reviewing results vs. assumptions, and changed assumptions, and, frankly, unless we write it down somewhere (hint: leave it on the computer) we lie to ourselves. We forget what our assumptions were. Not some elaborate formal document; just bullets, lists, and projections, but write it down (create it in a usable, retrievable format) so you can track results.

10. The business plan is incomplete: There are many guidelines and templates to use for business plans and they will provide guidance on the areas to include in your business plan. The business plan should include statements of the vision and mission of your business; the core values or guiding principles by which you conduct your business; SWOT analysis; information on the customers, products and services; marketing and sales information; a profile of your management team; analysis of competition; and detailed financial projections (e.g. monthly cash flow and income statements, as well as annual balance sheets–going out at least three years to five years.

11. Too Detailed: One good way to ensure that the plan does not contain too much detail is to organize your plan into an executive summary (1 or 2 pages); the actual business plan narrative (e.g. 10 to 15 pages); and then an appendix with as many pages of details as is necessary.

12. Too Vague : In creating a new business plan, the entrepreneur is required to provide details about a business that does not yet exist. Although it is undoubtedly difficult to predict the future, it's important to be as detailed as possible in describing the current business environment and the challenges the business may face. This includes providing specific information about the markets in which your company will do business.

13. Too futur e -oriented: A business plan walks a fine line between speaking about the company's potential and describing the state of affairs as they currently exist. Naturally, you want your readers to focus on what your business might look like three, five, or even ten years down the road. Your investors and loan officers, on the other hand, are probably more concerned about what it will look like six months from

now. Although your business plan should present a future orientation, it's important to balance long-term perspectives with current and short-term perspectives in order to give the readers an accurate portrayal of where your company stands right now.

14. Business plan presentation is haphazard and inconsistent: The business plan presentation is another expression of your image and inconsistent margins, missing page numbers, incomplete charts and tables without headings or a missing table of contents will all convey a negative image to the reader. It is important to take time to carefully review each section of your business plan.

Quick-start route to ‘Entrepreneurship - Shriram

In order to deliver any amount of output in the arena of business, the prime requisites are the inputs in the form of ‘land, labor, capital and enterprising expertise. The entrepreneurs try to strike a combination of the above 4 resources/inputs along with certain undisputed basics to create and run a successful venture.

Following are certain routes taken by the individuals:

1. FranchisingA. Moderate RiskB. Expertise provided by the franchiserC. Nominal capital requiredD. Moderate responsibilityE. E.g. Fast-food chains, hotels, small time distributors etc

2. Partnerships

A. contribution of capitalB. Like minded collaborationC. High risk and high responsibility depending upon the agreementD. At times it can also take the shape of a joint venture for a specific timeframeE. E.g. Ad agencies, CA firms, and consultancies

3. Internet

A. The quickest route with plethora of opportunitiesB. Land/place, not a constraint-Flexibility of working from homeC. Minimum capital requiredD. Less/no support manpower requiredE. E.g. Education-teaching/learning solutions, travel and tour agents etc4.

4. B-Plan competitions

A. Great exposureB. Arrangement of the required seed capitalC. The competition just got a grander stage thanks to a reality show concept, recently staged by IIT

BombayD. Time saving due to the facilitation of the fund providers and the participants on common grounds

5. Support from a Venture Capitalist/financial institution through a sound business idea

In conjunction to the above, following below are some simple ways to become a successful entrepreneur which will give the answer another perspective. (It is an extract of an article)

1. Make relationship with other Entrepreneurs

2. Find a simple solution to a big problem

Entrepreneurs always keep things simple and sensitive. Simplicity is essential. An entrepreneur always finds a simple solution to a big problem.

3. Attend seminars, events and conferences

Seminars and conferences can help you develop a network easily. You can connect with many personalities and successful entrepreneurs. Maybe you can find your business mentor there.

4. Connect with Entrepreneurs through social media-FB, Twitter, My space and many more

5. Have a personal blog to brand yourself and your business-for interaction and communication

6. Self promotion and marketing

Always be ready and comfortable with self promotion and marketing. Learn the tactics and skills for marketing yourself. Make use of technology to promote your business.

Concluding with some gas like:

1. Clearly drawn out idea2. Precise plan of action3. Discipline with regards to spending, time and activities4. A well crafted business plan if need to approach a VC/bank for funding

Venture Capital – Lacchi & Baba

Venture capital (VC) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. VC investments are generally made as cash in exchange for shares in the invested company. It is typical for VC investors to identify and back companies in high technology industries and start ups.

VC typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms. VC is also associated with job creation, the knowledge economy and used as a proxy measure of innovation within an economic sector or geography.

A core skill within VC is the ability to identify novel technologies that have the potential to generate high commercial returns at an early stage. By definition, VCs also take a role in managing entrepreneurial companies at an early stage, thus adding skills as well as capital (thereby differentiating VC from buy out PE which typically invest in companies with proven revenue) and thereby potentially realizing much higher rates of returns.

The distinguishing feature of VC and non-VC investee companies is one of focus. The prospective VC investee company needs to have a convincing product or line of business potential and an accomplished management team. If the company is generating a cash flow, this will likely be an incipient development. In fact, these two aspects – product and management team – are what the VC investor and his group are ultimately betting on, irrespective of whether the company is generating cash yet or not. Companies with well-established sales and profitability track records generally tend to involve PE financing that more appropriately falls into one of the other non-VC categories of PE unless they are taking on a new business venture under their corporate umbrella.

A Venture Capitalist is a person or investment firm that makes venture investments and these Venture Capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

VC is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company's ownership (and consequently value).

Structure of VC Firms

VC firms are typically structured as partnerships, the general partners of which serve as the managers of the firm and will serve as investment advisors to the VC funds raised. VC firms may also be structured as LLC, in which case the firm's managers are known as managing members. Investors in venture capital funds are known as limited partners. This comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations, insurance companies, and pooled investment vehicles, called fund of funds or mutual funds.

Depending on the business type, the VC firm approach will differ. When approaching a VC firm following aspects must be considered:

1. Business Cycle: Do they invest in budding or established businesses? 2. Industry: What is their industry focus?

3. Investment: Is their typical investment sufficient for your needs?

4. Location: Are they regional, national or international?

5. Return: What is their expected return on investment?

6. Involvement: What is their involvement level?

Targeting specific types of firms will yield the best results when seeking VC financing. It is important to note that many VC firms have diverse portfolios with a range of clients. If this is the case, finding gaps in their portfolio is one strategy that might succeed.

Specialisation by stage

Venture capitalists differentiate themselves not only by sector and geography but also in terms of the point at which they will invest in a start-up. Some VC companies provide first-stage or ‘seed capital’. Others wait until the company has been established and is either making sales or generating cash flow. Seed financing is usually in the range of US$0.5m to US$1m. First stage VC firms tend to be small because larger firms cannot afford the labour-intensive care required at this stage on relatively small investments. However, ‘feeder funds’ are a new niche whereby a large VC firm provides funding for first-stage VC firms in return for the opportunity to make a later-stage investment if the start-up is successful. Another niche is the turnaround VC firm, which will, for example, buy out the founder of an insolvent start-up at a ‘fire sale’ price, usually with an opportunity for the founder to remain with the company in an executive position as a paid employee. The turnaround VC will then offer the company’s creditors a price for their debt holdings with a significant haircut.

Roles within VC Firms

Within the VC industry, the general partners and other investment professionals of the VC firm are often referred to as "venture capitalists" or "VCs". Although the titles are not entirely uniform from firm to firm, other positions at VC firms include:

Venture partners - Venture partners are expected to source potential investment opportunities ("bring in deals") and typically are compensated only for those deals with which they are involved.

Entrepreneur-in-residence (EIR) - EIRs are experts in a particular domain and perform due diligence on potential deals. EIRs are engaged by VC firms temporarily (six to 18 months) and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other). Some EIR's move on to executive positions within a portfolio company.

Principal - This is a mid-level investment professional position, and often considered a "partner-track" position. Principals will have been promoted from a senior associate position or who have commensurate experience in another field such as investment banking or management consulting.

Associate - This is typically the most junior apprentice position within a VC firm. After a few successful years, an associate may move up to the "senior associate" position and potentially principal and beyond. Associates will often have worked for 1-2 years in another field such as investment banking or management consulting.

Structure of the funds

Most VC funds have a fixed life of 10 years, with the possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. In such a fund, the investors have a fixed commitment to the fund that is initially unfunded and subsequently "called down" by the VC fund over time as the fund makes its investments.

It can take anywhere from a month or so to several years for venture capitalists to raise money from limited partners for their fund. At the time when all of the money has been raised, the fund is said to be closed and the 10 year lifetime begins. Some funds have partial closes when one half (or some other amount) of the fund has been raised. "Vintage year" generally refers to the year in which the fund was closed and may serve as a means to stratify VC funds for comparison.

Compensation

Venture capitalists are compensated through a combination of management fees and carried interest (often referred to as a "two and 20" arrangement):

Management fees – an annual payment made by the investors in the fund to the fund's manager to pay for the private equity firm's investment operations. In a typical VC fund, the general partners receive an annual management fee equal to up to 2% of the committed capital.

Carried interest - a share of the profits of the fund (typically 20%), paid to the private equity fund’s management company as a performance incentive. The remaining 80% of the profits are paid to the fund's investor. Strong Limited Partner interest in top-tier venture firms has led to a general trend toward terms more favorable to the venture partnership and certain groups are able to command carried interest of 25-30% on their funds.

Because a fund may run out of capital prior to the end of its life, larger VC firms usually have several overlapping funds at the same time; this lets the larger firm keep specialists in all stages of the development of firms almost constantly engaged. Smaller firms tend to thrive or fail with their initial industry contacts; by the time the fund cashes out, an entirely-new generation of technologies and people is ascending, whom the general partners may not know well, and so it is prudent to reassess and shift industries or personnel rather than attempt to simply invest more in the industry or people the partners already know.

VC funding

Venture capitalists are typically very selective in deciding what to invest in; as a rule of thumb, a fund may invest in one in four hundred opportunities presented to it. Funds are most interested in ventures with exceptionally high growth potential, as only such opportunities are likely capable of providing the financial returns and successful exit event within the required timeframe (typically 3-7 years) that venture capitalists expect.

Because investments are illiquid and require 3-7 years to harvest, venture capitalists are expected to carry out detailed due diligence prior to investment. Venture capitalists also are expected to nurture the companies in which they invest, in order to increase the likelihood of reaching an IPO stage when valuations are favourable. Venture capitalists typically assist at four stages in the company's development:

Idea generation ; Start-up ;

Ramp up ; and

Exit

There are typically six stages of financing offered in Venture Capital, that roughly correspond to these stages of a company's development.

1. Seed Money: Low level financing needed to prove a new idea (Often provided by "angel investors") 2. Start-up: Early stage firms that need funding for expenses associated with marketing and product

development

3. First-Round: Early sales and manufacturing funds

4. Second-Round: Working capital for early stage companies that are selling product, but not yet turning a profit

5. Third-Round: Also called Mezzanine financing, this is expansion money for a newly profitable company

6. Fourth-Round: Also called bridge financing, 4th round is intended to finance the "going public" process

The need for high returns makes venture funding an expensive capital source for companies, and most suitable for businesses having large up-front capital requirements which cannot be financed by cheaper

alternatives such as debt. That is most commonly the case for intangible assets such as software, and other intellectual property, whose value is unproven. In turn this explains why VC is most prevalent in the fast-growing technology and life sciences or biotechnology fields.

If a company does have the qualities venture capitalists seek including a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

Support Organisations - Harshil

Role of Entrepreneurship

Despite the definitional differences, it is commonly agreed that entrepreneurship is a driving force behind SMEs. Available evidence suggests that entrepreneurship can contribute significantly to achieving key policy objectives. Entrepreneurship is an effective means of achieving certain policy objectives, but not all, and at least in the short term, there are trade offs which have to be recognised. Entrepreneurs are the driving force behind SMEs, and SMEs play an important structural and dynamic role in all economies.

Education and Training in Entrepreneurship

Education and training have been recognised in this context as the single most important means for achieving the objective of fostering entrepreneurship in societies. Education and training in entrepreneurship can have two types of effects. First, they can have considerable impact on the performance of entrepreneurs, especially with regard to assisting entrepreneurs increase their firm’s chances of survival, and to a lesser extent, to help make the resulting business more profitable. Education in entrepreneurship increases the chances for start-ups and self-employment and enhances the economic reward and satisfaction of entrepreneurial individuals. Second, although extremely difficult to measure, education in entrepreneurship is also supposed to have some longer term impacts on the degree of entrepreneurial spirit and attitudes which are fundamental for an entrepreneurial population and society.

Institutional Support for Entrepreneurship Development

Generally bankers and Government agencies believe that the borrower must be possessing requisite entrepreneurial competencies. Fact is that this subject is never seriously included in any school/college curricula. That is why we observe almost all the graduates (even engineering graduates) running to search a job after completion of their education and hesitate to set up a n enterprise. In fact, not only new entrepreneurs but also existing entrepreneurs need continuous education/ training to enhance their entrepreneurial competencies and skills. Recognizing this need, the Central Government and several State Governments have setup various training institutes which are engaged in providing entrepreneurship development trainings, in addition to technical training and other rendering other services. Given below is a list of such institutes. The bankers should make all efforts to ensure that their borrowers are made aware of these facilities and get training from time to time.

Name of Institute Place ActivitiesNational Institute of Small Industry Extension and Training (NISIET)

Hyderabad Training, research and consultancy services

Indian Institute of Entrepreneurship Guwahati Training, research and consultancy servicesNational Institute of Entrepreneurship and Small Business Development (NIESBUD)

New Delhi Coordinating and overseeing activities of various institutes /agencies engaged in entrepreneurship development

Integrated Training Centre (Industries) Nilokheri Conducts EDP courseInstitute for Design of Electrical Measuring Instruments (IDEMI)

Mumbai Render services to the instrumentation industry

National Small Industries Corporation New Delhi Supply of machinery, marketing assistance, training

Some other organizations engaged in training and Development of SME Entrepreneurs are:

Indo-German Tool Room at Ahmedabad, Aurangabad and Indore Indo-Danish Tool Room  at Jamshedpur

Hand Tool Design , Development and Training Centre, Nagore, Rajasthan

Central Machine Tool Institute at Bangalore

Central Institute of Plastic s Engineering and Tools at Chennai & Ahmedabad

National Institute of Foundry and Forge Technology at Ranchi

DICs at District levelSmall Industries Development Corporations set up by various State Governments.

A brief of important institutes engaged in entrepreneurial development training is given below:

(i) The National Institute for Entrepreneurship and small Business Development (NIESBUD) : NIESBUD was established in 1983 by the Ministry of Industry (now Ministry of Small Scale Industries), Govt. of India, as an apex body for coordinating and overseeing the activities of various institutions/ agencies engaged in Entrepreneurship Development particularly in the area of small industry and small business. The Institute which is registered as a society under Govt. of India Societies Act (XXI of 1860) started functioning from 6th  July, 1983. Its website can be accessed through www.niesbud.nic.in

Major activities of the Institute are:

Evolving effective training strategies and methodology

Standardising model syllabi for training various target    groups

Formulating scientific selection procedure

Developing training aids, manuals and tools

Facilitating and supporting Central / State/ Other agencies in organising entrepreneurship development    programmes

Conducting training programmes for promoters, trainers    and entrepreneurs.

Undertaking research and exchange experiences globally in development and growth of    entrepreneurship. The Institute is actively involved in creating a climate conducive to    emergence of entrepreneurship.

The trainings conducted by the Institute include:

Training of Trainers/ promoters Accreditation Programme for Entrepreneurial  Motivation Trainers.

Trainers' Training Programme for Enterprise Launching & Management.

Trainers/Promoters Programme for support organisations such as SISIs, DICs, Development Corporations etc.

Small Business Promotion Programme.

Entrepreneurship Orientation Programme for HoDs and Senior Executives.

Evolves  Standardized Material and Research Publications

(ii) National Institute of Small Industry Extension Training (NISIET): NISIET since its inception in 1960 by the Government of India, has taken gigantic strides to become the premier institution for the promotion, development and modernization of the SME sector. An autonomous arm of the Ministry of Small Scale Industries ( SSI ), the Institute strives to achieve its avowed objectives through a gamut of operations ranging from training, consultancy, research and education, to extension and information services. It has been renamed as National Institute of Micro Small and Medium Enterprises (NIMSME) (www.nimsme.org) from April 2007. The primary objective of the Institute was to be the trainer of trainers. Today, with the technological development and ever-changing market scenario, their involvement has undergone changes too. From being merely trainers they have widened their scope of activities to consultancy, research, extension and information services. Its website can be accessed through www.nisiet.gov.in

(iii) Indian Institute of Entrepreneurship (IIE):  With an aim to undertake training, research and consultancy activities in the small industry sector focusing on entrepreneurship development, the Indian Institute of Entrepreneurship (IIE) was established in the year 1993 at Guwahati by the erstwhile Ministry of Industry (now Ministry of Small Scale Industry) , Government of India as an autonomous national institute. The institute started its operations from April 1994 with North East Council (NEC) , Govt. of Assam, Arunachal Pradesh and Nagaland and SIDBI as other stakeholders.

The activities of the Institute include identification of training needs, designing and organizing programmers both for development functionaries and entrepreneurs; evolving effective training strategies and methodologies for different target groups and locations; organize seminars, workshops and conferences for providing fora for interaction and exchange of views by various agencies and entrepreneurs; undertaking research on entrepreneurship development, documenting and disseminating information needed for policy formulation and implementation on self-employment and entrepreneurship.The Institute acts as a catalyst for entrepreneurship development by creating an environment for entrepreneurship in the support system, developing new entrepreneurship, helping in the growth of existing entrepreneurs and propagation of entrepreneurial education. Its website can be accessed through www.iie.nic.in

(iv) Entrepreneurship Development Institute of India (EDII): The Entrepreneurship Development Institute of India (EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely the Industrial Development Bank of India (IDBI), IFCI Ltd. ICICI and State Bank of India (SBI). The Institute is registered under the Societies Registration Act 1860 and the Public Trust Act 1950.

An acknowledged national resource institution, EDI is committed to entrepreneurship education, training and research. The institute strives to provide innovative training techniques, competent faculty support, consultancy and quality teaching & training material.EDI has been spearheading entrepreneurship movement throughout the nation with a belief that entrepreneurs need not necessarily be born, but can be developed through well-conceived and well-directed activities. Its website can be accessed through www.ediindia.org.

(v) The Institute of Small Enterprises and Development (ISED):  The Institute of Small Enterprises and Development (ISED) stand for ‘Sustainable development through enterprise’. It is a multi-faceted Center for advanced learning and practice in the area of development. For the past decade, the Institute for Small Enterprises and Development has focused on research, education, innovative program design and entrepreneurship development initiatives, advocacy and networking dedicated towards sustainable development through enterprise creation. Among the similar institutions ISED’s leading-edge is the identification of methodologies and processes that empower one to break out of existing ‘mental models’ in order to identify new opportunities, while exploiting the emerging niche. ISED's interest in linking research, policy, and action is realized through the programmes of its Activity Centers. The integration of the outcomes takes place at the Centre for Policy Integration. In realizing its vision and fulfilling its mission, the Institute also collaborates with like-minded institutions and individuals. Its website can be accessed through www.isedonline.org.

(vi) Nationalised and Commercial Banks

(vii) SIDBI (Small Industries Development Bank of India)

Established in April 2,1990

Principal Development Financial Institution for :

-- Promotion

-- Financing and

-- Development of Industries in the small scale sector and

--Co-ordinating the functions of other institutions engaged in similar  activities.

SIDBI was established on April 2, 1990. The Charter establishing it, The Small Industries Development Bank of India Act, 1989 envisaged SIDBI to be "the principal financial institution for the promotion, financing and development of industry in the small scale sector and to co-ordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector and for matters connected therewith or incidental thereto.

The business domain of SIDBI consists of small scale industrial units, which contribute significantly to the national economy in terms of production, employment and exports. Small scale industries are the industrial units in which the investment in plant and machinery does not exceed Rs.10 million . About 3.1 million such units, employing 17.2 million persons account for a share of 36 per cent of India's exports and 40 per cent of industrial manufacture. In addition, SIDBI's assistance flows to the transport, health care and tourism sectors and also to the professional and self-employed persons setting up small-sized professional ventures.

Mission

To empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the process of economic growth, employment generation and balanced regional development

  Vision

To emerge as a single window for meeting the financial and developmental needs of the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI Brand as the preferred and customer - friendly institution and for enhancement of share - holder wealth and highest corporate values through modern technology platform

(viii) NSIC (National Small Industries Corporation Limited)

(ix) JBIMS E-Cell

Entrepreneurs are the economic DNA needed to build competitiveness and innovation. The "Entrepreneurial Spirit" is not just a prerequisite for people thinking of starting their own business but is also becoming imperative for every individual who desires to make a mark in the corporate world.

Realizing the need to foster and incorporate the entrepreneurial attitude within the management mould, the Entrepreneurship Cell of JBIMS was founded in January 2006. The vision is to cultivate and nurture an entrepreneurial spirit, a business thought-perspective and an enterprising attitude amongst JBIMS students and the community at large.

E-Cell is in successful collaboration with National Entrepreneurship Network (NEN), a network of academic institutions across India focused on inculcating entrepreneurial spirit amongst students. E-Cell and NEN endeavors to actively contribute towards the development of entrepreneurs.

(x) SPJAIN – Centre for Entrepreneurship Development

(xi) MDI Gurgaon – Centre for Entrepreneurship

The Center for Entrepreneurship (CFE) aims at providing: -

1. A variety of services, on a non-profit basis, to encourage, plan for, and link up entrepreneurs, firms, and organizations in India and abroad;

2. Facilities and networking to entrepreneurs under an Outreach Program;

3. Training to students aspiring to be entrepreneurs;

4. Services and training that may facilitate entrepreneurs to operate in emerging areas;

5. Platform for various national and international centers.

The CFE will endeavor to develop graduates, who will be motivated towards wealth creation rather than towards job specific careers. In this regard the facilities provided would be

An enterprise development track or concentration

A five course curriculum (for specialization)

Infrastructure comprising;

o A local area computer network (LAN) devoted to CFE students

o Counselor(s) for business plan development

o External networking program to link students to affinity groups in the region

o Teaching/counseling by successful entrepreneur(s)

Student Business Plan Competition with awards

Student Entrepreneurship/Internship program

A MDI Student Venture Fund

It is expected that all students in this track will create their own business enterprises.

(xii) SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (SIDO)

SIDO is created for development of various small scale units in different areas. SIDO is a subordinate office of department of SSI and ARI. It is a nodal agency for identifying the needs of SSI units coordinating and monitoring the policies and programmes for promotion of the small industries. It undertakes various programmes of training, consultancy, evaluation for needs of SSI and development of industrial estates. All these functions are taken care with 27 offices, 31 SISI (Small Industries Service Institute) 31 extension centers of SISI and 7 centers related to production and process development.

SMALL SCALE INDUSTRIES - ROLE/IMPORTANCE OF SMALL SCALE INDUSTRIES

An industrial unit is considered as SSI, where the investment in plant and machinery is to the extent of Rs.

1 corer, since 1999. ( In June 2003. SSI investment limits were enhanced the from Rs. 1 corer to Rs. 5 crore

in case of history . hand tools stationery and drugs and pharmaceutical industries, so as to enable technology

upgradation, and modernization.)

SSI units play an important role in the Indian economy . The importance of SSI is highlighted in the

following data :

Performance of SSI 2000-01 2005-06

Number of units (lakhs)

Employment (lakhs)

Production (current prices) Rs. Crore

101

239

261.289

123

295

476,201

Contribution to GDP at current prices 14% 15%

Source : Economic survey 2006-07, page 149

The role and performance of SSI units can be explained as follows :

1. Employment : SSI units play an important role in employment generation. In 2005-06 SSI units

employed 295 lakh people. SSIs provide direct employment They provide direct employment in the

SSI sector. The indirect employment is provided by facilitating the growth of large-scale sector,

services sector as well as that of agriculture

In rural areas, the cottage and SSI units solve the problem of seasonal and disguised unemployment

problem related to agriculture

2. Rural Development :SSI units and cottage units facilitate rural development. To support the small

scale sector, three is development of infrastructure facilities gives a boost to rural development.

3. Contribution to National Income : The SSI units as well as college industries contribute to the

national income. For instance, the value of production (at current prices) of SSI units in 2005-06 was

Rs.4,76,201 crore. This works out to 15% of the GDP of 2005-06.

Industry Part

4. Foreign Exchange : SSI units contribute to the foreign exchange reserves of India SSI units

contribute about 33% of the country’s total exports. Some of the important items of export include

handicrafts , gems and jewellery , textiles, ready-made garments, leather products, light engineering

goods, sports goods, etc.

5. Capital Formation : SSI units facilitate capital formation in the country . By providing

employment to large number of people, SSI units encourage savings of the people The Savings can

be effectively utilized for productive purposes. The SSI unit’s owners also facilitate capital

formation by reinvesting the profits in the business

6. Social Order : SSI units and cottage industries are responsible for social order in the country. By

providing employment opportunities , they create good environment in the country/ Lack of

employment facilities often create problem of social order

7. Service sector Development : SSI units are responsible for service sector development Due to

expansion of the SSI units, the banking sector, the transport sector, the communication sector, the

insurance sector, and other service sectors get a boost .

8. Support large scale Industries : The SSI units support medium and large –scale industries. The

SSI units provide spare parts , and other inputs to the large sector. Again , the SSI units use capital

goods like machinery produced by the large sector.

9. Reduces Regional Disparities: SSI units help to reduce regional disparities. The large- scale sector

perfect to concentrate in urban areas. How ever , SSI units are located in all the states due to the

support of the central and state governments. However, large units prefer to locate in the industrially

developed states like Maharashtra, Gujarat, Tamil Nadu, West Bengal , and Karnataka.

10. Rules Inequality of Income : Development of SSIs ensures a more equitable distribution of

income , rather than concentration of income in few hands. This is due to:

a) Ownership of SSI units is more wide-spread, and

b) More labour intensive and so more employment opportunities .

PROBLEMS OF SMALL SCALE INDUSTRIES

SSI units face a number of problems. A large number of SSI units are sick of weak. It is estimated

that about 99% of the total sick/weak units in the country belong to the SSI sector. The sick or weak

position of SSIs is due to the various problems faced by them

The problems faced by SSI units can be broadly divided into four groups as shown in the following

chart:

I. PRODUCTION PROBLEMS

1. Problem of Raw Materials : SSI units face the problem of raw materials. The problems may be :

Shortage of raw material : SSI units face the problem of shortage of raw material, and as such , the

production cycle gets affected, which in turn create problems for delivery of goods in the market.

Poor Quality of Raw Materials : At times, SSI units have to face the problem quality of raw

materials and other inputs. As a result of this , the quality of production gets affected, which in turn

affects sales and revenues

2. Use of Outdated Technology : SSI units use outdates technology. A good number them purchase

second hand machinery . the use outdated technology affects

Quality and quantity of production .

PROBLEMS OF SSI UNITS

ProductionProblems

Financial Problems

Marketing Problems

Other Problems

Increase the costs, due to increase in wastage, loss due to breakdowns , high maintenance of

machines etc.

3. Lakh Research & Development : SSI units hardly place emphasis on R & D. They continue to

manufacture the same type of goods year after year. There is hardly any innovation in product

features, packaging, and so on . Lack of R & D not only affects the quality of products, but also the

units continue to make goods at higher costs therefore, in order to improve quality, product features,

and to reduce the costs, there is a need to undertake R & D

4. Problem of Infrastructure: SSI units a number of infrastructural problems especially in the area of

transport and power. The small sector units in the rural and semi-urban areas face the worst of

infrastructural shortage. As a result of poor infrastructure , the overall sector units gets affected .

5. Poor Quality Control : Some of the SSI units do not place much emphasis on quality control. As a

result of this the quality of product gets affected. This in turn affects good will of the units. Due to

problem of quality the sale of the SSI units do get affected which in turn may affected their profits,

and at times they have face huge losses

Industry –Part I

6. Under Utilization of Plant Capacity : Quite often, the SSI units are not in a position to utilize plant

capacities. This is due to lack of demand for their products. The SSI units go for plant expansion

without proper analysis of the market demand for their products. It is estimated that 50% of the

installed capacity is not utilized by SSI units in India

II. FINANCIAL PROBLEMS

7. Credit Problems : The SSI units face the problem of finance. They find it difficult to raise working

capital needs, as well as fixed capital needs. The SSIs and cottage moneylenders, as it is difficult to

obtain timely financial assistant from the organized banking sector . However , since 1990, SIDBI is

financing professionally managed SSI units directly as well as indirectly. SIDBI provides indirect

finance through state Financial Corporation’s (SFCs and state Industrial Development Corporations

(SIDCs).

III. MARKETING PROBLEMS :

8. Defective Marketing Strategies : The SSI units face a number of problems. Due to marketing

problems, the SSI units find it difficult to market and promote their products. Due to this, their sale

get affected, and consequently profits. The following are some of the marketing problems faced by

SSI units:

Defective pricing strategies

Poor distribution network

Lack of Marketing Research

Poor and inadequate promotion

Lack of emphasis on after –sale-service

Poor Packaging and design of products

IV. GENERAL PROBLEMS

9. Law Labour Productivity : The SSI units also face personnel problems. A number of SSI units’

owners are harassed by selfish and militant trade unions. Also, the labour productivity is low due to

the following problems :

Unscientific recruitment and selection of employees

Lack of training of development.

Faculty placement of employment.

Faculty ok lack of performance appraisals.

Poor compensation policies.

10. Lack Professionalism in Management : One of the major problems of SSI units is the lack of

professionalism on the part of management. They often lack management and technical skills. The

lack of professionalism is reflected in the following

Dependence on outdated technology

Lack of emphasis on R & D

Improper personnel policies

Emphasis on only profits etc.

11. Adverse Effects of Liberalization and Globalization : Since the post-reform period SSI units

face a tough competition both from cheap imports (due to reduction in customs duties and removal of

quantitative restrictions) and also from within the country. The Government started the process of

dereservation of items reserved for SSI ( on a large extent ) since 2002. As a result, the reserved for

SSI units have come down to 239 in Jan 2007.

The dereservation intended to improve the overall performance of SSIs. However in reality a number

of SSI units have become weak or sick , and several of them have closed down their operations after

the post-reform period

Q: Type of entrepreneurs:

Danhoff has classified entrepreneurs in four types:

1) Innovative entrepreneurs:He/she introduces new goods, discovers new markets, introduces new methods of production and reorganizes the enterprise. Such entrepreneurs can work only when certain level of infrastructure is achieved. The customers often look forward for new products and improvements.

2) Imitative entrepreneurs:Imitative entrepreneurs are ready to adapt successive innovations developed by innovative entrepreneurs. The only imitate the techniques and technology innovated by others where the profit margins are very high, less capital intensive, less technology involved. Such type of entrepreneur is suitable for developing countries and also for underdeveloped regions in any country.

3) Fabian entrepreneurs:It is characterized by very great caution in experimenting any change in the enterprise. They imitate only when failure to do so would result in big loss or collapse of the organization.

4) Drone entrepreneurs:They are characterized by a refusal to adopt opportunities even at the cost of severely reduced returns. Such entrepreneurs may suffer losses but are not ready to make any changes in the existing framework of company.e.g.: Textile Mills of Mumbai

Other types of entrepreneurs:1) Solo operators:

These entrepreneurs essentially work alone. And if needed, will employ the few employees.Most of the entrepreneurs establish their enterprise in this manner.

2) Active partners: They start and carry on an enterprise as a joint venture. All the entrepreneurs participate in the operations of the company.

3) Sleeping partners:Entrepreneurs who only contribute the funds to the enterprise but do not actively participate in the business activity are called sleeping partners.

4) Buyers:These are entrepreneurs who do not like to bare much risk. Hence in order to reduce this risk involved in setting up a new enterprise. They normally like to buy out an ongoing company.

5) Challengers:These are entrepreneurs who plunge into the industry because of the challenge it presents. When challenge seems to be met, they begin to look for new challenges. e.g.: Vijay Mallya into airline business.

New Chapter: Global Vision for an Entrepreneur

Globalisation – it is a well planned program with an agenda for action. This agenda is called the Washington consensus and was drafted by the US government along with the World Bank and the International Monetary Fund (IMF). It stands for 10 policies.

1. Free Trade

2. Free flowing FDI3. Fiscal Disciplines (meaning smaller budget deficits)4. Cut in Subsidies5. Tax Reforms6. Competitive Currency Exchange Rates7. Privatisation8. Deregulation9. Property Rights10. Liberalised Financial Systems

//India’s contribution to world trade (2009) - ~4%India’s contribution (2005) – 0.61India’s contribution (1991) – 0.53

An entrepreneur would like to set up in another country because of Push factor or pull factor. Eg: Africa – higher margins, here – margins lower – hence would want to set up a plant in Africa; similar in case of a region where sales registered will be significantly higher; attracted to business opportunities seen there – Pull Factor

Push Factor – forced to go international / global. If I don’t go outside the country, my business will get killed. //

The concept of international or global entrepreneurship

Global entrepreneurship is a process in which the entrepreneur conducts business activities across national boundaries. This activity of identifying and satisfying the needs and wants of target customers in more than one country is called global entrepreneurship.

Entrepreneurs willing to expand their business globally are motivated by two factors

1. Pull Factor – they are motivated to internationalise their business because of the attractiveness of the foreign market (proactive factors)

2. Push Factor – the push factors are reactive reasons for going global because of compulsion and rigidity in the domestic market.

Entrepreneurs decide to go global for the following reasons. 1. To expand sale (top line)2. Profit advantage (bottom line)3. Domestic market constraints 4. Minimize competitive risk (Eg: saturated markets, too much competitions, etc)5. Government policies and regulation6. Spin-off benefits 7. it may be a strategic mission of the company – the stimulus for globalization comes from the urge to

grow, the need to become competitive, the need to diversify and finally to gain strategic advantage of globalization.

The factors entrepreneurs should consider before going global

Political & Legal Environment1. Stability of the country / government2. Fear of military invasion (Eg: “Uganda where Idli Amin took over”)3. Existing laws for contract 4. Taxation Rate5. Favoured Trading Partners (MFN – Most Favoured Nation)6. Wages, Legislation & Employment Rules – minimum wages, etc

7. Intellectual Property Rights8. Industrial Safety Regulation 9. Product Labelling Requirements – eg: labelling products for calories contained

Technological Environment1. Impact of technology on product offering – a new technology can make your products obsolete2. Impact on cost structure – Eg: watches from China sold at Rs 50 each but bought at Rs. 10 / kg3. Impact on value chain

Social Environment1. Demographics – Age, etc2. Education3. Culture4. Attitude & Leisure interests

Economic Environment1. Type of economic system in operation2. Government intervention – level of interference3. Advantages of business to the host country4. Exchange Rate and stability of currency5. Efficiency of financial market - liquidity, ability to sell and move out6. Economic growth rate7. Inflation rate

New Chapter: Developing a Business Idea

Opportunity is a business concept. Which when turned into a tangible product or service by the enterprise results into profits. Opportunity assessment is a continuous process of gathering data, reviewing the proposition and reformulating the business concept.

Sources of New Ideas

The frequently used sources of ideas are

1. Employees2. Dissatisfied customers - he can be a source for new products. People who are in the habit of

expecting more and complain will be a source for new ideas.3. Improvements in existing products and services4. Distribution channels5. R&D of the company, they also make new technology6. Government of the company – the laws and regulations stated by the country, government protects

certain ideas which are then called patents.

Methods of Generating Ideas

Several methods are used by entrepreneurs to generate and test ideas:1. Focus Group – a moderator leads a group of individuals (8,10,12,14) through an open, in-depth

discussion rather than simply asking questions to understand responses in a structured format.

It leads to conceptualising and developing a new product idea to fulfil a market need. Besides generating ideas, the focus group is an excellent method for screening ideas and concepts.

2. Brainstorming – normally conducted in far away location to avoid distractions like phone calls, etc. the brainstorming method allows a group to be stimulated to greater creativity by meeting and participating in organised group experiences focussing on parameters.

3. Reverse brainstorming – the process usually involves identification of everything wrong of an idea (focussing only on the negative) followed by discussion of the ways to overcome these expected troubles.

4. Brain writing – brain writing is a form of written brainstorming. The method 6-3-5 is very popular. 6 persons, 3 ideas, 5 minutes. Can be done by email or on internet and need not be physically present, saving airfare and is convenient.

5. Problem Inventory Analysis – //it is very similar to dissatisfied customer. The problems are listed (inventory of problems) and you try to solve the problem from which you get new ideas.// A method for obtaining new ideas and solutions by focussing on the problems encountered.

The Product Selection

A product is capable of satisfying the needs and wants of customers. Every products renders some service.

How does one select the right product?

It involves research, careful evaluation and sound judgement.

This activity is called product selection analysis technique and consists of te following eight well defined steps:

1. Idea Generation(Already described in introduction)The following parameters should however be kept in mind.

a. understanding the changing needs and expectations of the customer. b. Visualising the emerging trends in society. c. Good understanding of the economy.

//(new products can be found in magazines, trade fairs, discussions with people, interacting with trade/distribution channels, power of observation, exhibitions, retailers, reading books, journals, newspapers, publications of research organisations)//

2. Idea ScreeningThe following exploratory questions should be asked:

a. Are the customers satisfied with what they are getting presently?b. Can we identify a better alternative?c. Can the basic design be changed? d. Is it agreeable with the company’s objective, strategies and resources of the company?

//this is an elimination round to cut out ideas//

3. Idea Evaluation (Concept development & testing)

//Comparing the pros and cons/ positives and negatives of the ideas left after idea screening//

The product evaluation is done objectively on the following factors:

a. Stability b. Growth factorc. Marketability

d. Company positione. Production facilities

a. Stabilityi. Permanence of Market – the demand for that product will always be there for a significant

period of time (10-15 years)ii. Breadth of Market – iii. Difficult to copy – difficult to copy by othersiv. Stability in recession – similar situation as to what exists just now when there is a greater

demand for white goods

b. Growth Factori. Demand – Supply Relationship – ii. Export possibilities – causing increasing in sales

c. Marketabilityi. Ease of distribution – ii. Freedom of seasonal fluctuation – iii. Minimum after sales service requirement –

d. Company Position / Enterprise Factorsi. to get established – gestation periodii. availability of raw materialsiii. availability of skilled labour iv. transportation facilities

4. Marketing Strategy Developmenti. to find a cost effective and affordable marketing strategy

//Fredrick Smith – air cargo – passenger aircraft - spaceii.5. Preliminary Business Analysis

a. estimating total salesb. estimating total profitc. estimating total market growth

6. Product Development

The product till now existed as a word description, drawing or prototype. In this step the product idea is translated into a technically and commercially feasible product inside the enterprise.

7. Test Marketing and Formal Business Planning

Controlled Test Marketing

Test markets

a. How many cities for test marketing (2,4,6,8; minimum 2) ?b. Which cities? (Select cities like Baroda, Indore, Pune where it is easy to get the feedback)c. Length of test / How long is the test? (No of weeks, months, quarters)d. What information (usage, attitude, satisfaction is to be gathered) ?e. What action needs to be taken?

Formal Business Planning

a. Controlling the product in the introductory Stageb. Using critical path method (CPM)

c. Program evaluation and review technique (PERT)

8. Commercialisation

1. When – Timing is critical

a. first entry (first mover advantage)b. parallel entry (coinciding with competition)c. late entry (Saves cost of educating customers, rectifying mistakes and faults of the first

mover and parallel entry)2. Where (geographical location – single, multiple, national, international)

3. To whom (target / potential customers identified)

4. How (marketing strategy adopted for the purpose)

New Chapter – Government Concessions & Incentives to Entrepreneurs in India

The responsibility of development of small scale industries rests with the government of India. In the pre-liberalised era the small scale industries enjoyed various advantages. However, with the opening up of the economy, the situation has taken a different turn.

1. Reservation of items for exclusive manufacture in the small scale sector (Open General License – OGL, etc)

2. Reservation of items for exclusive purchase from SSI (DGS&D – Director General Supplies & Disposal buys for the government, they buy some items only from SSI on basis of govt directives)

3. Foreign Direct Investment (FDI) – SSI sector 24% allowed4. Export Promotion Council – help entrepreneurs exhibit products in foreign locations, etc; to

overcome the problems of marketing of the SSI products in the overseas market, the Export Promotion Council helps its members

a. Direct Marketingb. Developing Vendor Relationsc. Opening Sales Outlets in foreign destinations

5. Incentive Schemes for ISO 9000 certification – govt of India gives incentive to SSI for acquiring ISO 9000 certification to the extent of the cost incurred subject to a max of Rs. 75000. This scheme is implemented by small industrial development bank of India (SIDBI) for the government of India which takes care of MSMEs in India.

6. Investment limit in plant & machinery lowered to 100 lakhs. 7. Integrated technology upgradation and management programme (Uptech)8. Technology Bureau for Small Enterprises9. Small Enterprise Information & Resource Centre Network (SENET)10. Relaxation under Environmental laws11. Common Effluent Treatment Plants12. Industry related Research institutes – CSIR (Council for Scientific and Industrial Research) has a

pool of scientists capable of providing research & development solutions relating to the industry sector.

13. Exemption & Preferential Treatment from excise duties (Upto 150 lakhs you don’t have to pay excise duty)

14. Priority in Credit Policy – nationalised banks have been instructed accordingly

15. Initiative for Credit – RBI to ensure adequate and timely credit to small scale entrepreneurs has directed the commercial banks to provide working capital requirements to the extent of 20% of the annual sales turnover subject to a limit of 100 lakhs.

16. Interest on Delayed Payments Act – was enacted in 1993 by the Indian Parliament to tackle the problem of settlement of dues from big companies to the SSI units.