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TRANSCRIPT
Chapter-4
Role of Entrepreneur and Entrepreneurial Development
Entrepreneur:
Definition:
Is one who has strong desire to start a Business enterprise Is a person who undertakes a commercial or Productive venture Is one who
Innovates a venture
Promotes a venture
Rises to the occasion
Assembles the other forces of production
Sets the business group Is a purposeful activity involved in
Initiative
Promoting
Manufacturing
economic activities for the
Production of wealth
Distribution of wealth Entrepreneur Qualities:
An entrepreneur should posses the following qualities to succeed in business
Firm determination
Fore sightedness
Shrewed thinking
Creativiteness
Risk taking ability
Business ethics Clarity of views
Relative approach
Leadership
Tactfulness
Energetic & hard working
Successful Entrepreneurship:
To become a successful Entrepreneur, one should have
Regular information related to
Buyers
Consumers
Distributors
Dealers
Retailers
Transporters In addition to above to get successful entrepreneurship the following points should be kept in mind
An aspirant entrepreneur should have the attitude of
Satisfying the needs of customers
Quality achievement and its maintenance
An aspirant entrepreneur should have
Innovative ideas Improving productivity attitude The attitude of motivating people Time management
Role of an Entrepreneur:Role In Society:
An entrepreneur as owner of the enterprise, plays a very crucial role in the development of enterprise as well as society
The role of economic progress of a nation depends upon its rate of innovation
Hence entrepreneurship talent in the population leads to economic growth An entrepreneur contributes to the economic development through
capital formation
Improvement in per capita income
Employment generation
Balanced regional development
Improved productivity
New technologies
New products
New services
Entrepreneur Expectations:
An entrepreneur expects to achieve the following by the way of starting a business
Sprit of service to the society
correct assessment of societys needs
Zeal of facing the challenges
Better management of resources Commitment and total movement
Contribution to national economy
Creative thinking
To stand as a successful example or role model
Entrepreneurship Vs Management:
A manager (Technocrat) is one who
Enters the field of business with a pre concept of management principles
Entrepreneur may be from among any educated unemployed persons who
Enters the field of business with a strong desire of self employment Entrepreneurship Vs Management:Entrepreneurial styleManagement style
1. Lack of knowledge in the field of business1.Sufficient knowledge in the relevant field of business
2. Fairly strong ambition2.Ambition level is normal
3. Need not consult anybody.3.Has to consult for executing a decision
4. Motivated by profits4.Motivated by goals and rewards
5. Lack of knowledge5.Sufficient knowledge
6. Adequate training is required6.Training not required
7. Depends on technical personnel7.Commands the technical personnel
8. Cannot analyze the problem8.Analyzes the problem and solves it
9. Quality is inconsistent9.Quality is consistent
10. Adopts thumb rules10.Adopt scientific management
Risks & Rewards of Entrepreneurship:
Are broadly related to
1. Financial aspects
2. Career aspects
3. Personal aspects1. Financial aspects:Risks related to finance:
Lack of experience in assessing fixed and working capital
Excess purchase of raw materials
Over estimated labor
Suffering from finance
Failure in getting credit from financial institutions
Rewards related to finance:
Standing capacity
Achieving targets
Self sufficiency
Possibility for expansion 2. Career aspects:Risks related to Career:
Losing chances for employment elsewhere
He/She may not be interacting with other industrialists
Rewards related to Career
Continuance of the unit
Modernization of the unit
Assurance from the Government3. Personal aspects:Risks related to personal aspects:
Shyness and inhibition
Poor decision making
Lack of family and community support
lack of managerial skills
Lack of morale and confidence
Dependency on others
Rewards related to personal aspects:
Dynamism
Shrewedness
Self confidence
Independent Thinking
Surprising and encouraging other aspirantsSmall Scale Industries (SSI)Definition:
An industrial undertaking having
Investments in fixed assets upto one crore rupees
Held on ownership
Held on lease basis
Held on hire purchase basisAn industrial unit
Employing less than 50 persons if using power
Employing less than 100 persons without using power
With a capital investment not exceeding rupees one crore
An undertaking with an investment on plant and
machinery of not more than rupees one crore Ancillary Industries (AU)Definition:
Are those small scale industries which are engaged in the manufacture of
Parts
Components
Sub-assembly of parts
Tooling etc.
for supply against
known demand
Anticipated demand
of one or more large industries.
Tiny Units:Definition:
A tiny industry is one in which investment on plant and machinery does not exceed Rs 25 lakhs.Small Scale Service & Business Enterprises (SSSBEs)Definition:
An Industry related services and business enterprise, is one in which the investment on fixed assets (excluding land and building) will not exceed Rs 10 lakhs
Performance of Small Scale Industries The performance of SSI will reflect on the following areas:
Employment.
Production.
Exports.
List of items reserved for Small Scale IndustriesThe following items are reserved for manufacturing in SSI:
Food and Allied Industries
Textile products including Hosieries
Artificial Silk/Man-Made Fiber Hosieries
Wood and Wood products
Paper products
Leather and leather products including foot wear
Rubber products
Plastic products
Injection Moulding Thermo plastic products.
Chemical and chemical products laboratories
Natural essential oils
Glass and ceramics
Roofing Tiles
Flooring Tiles.
Mechanical Engineering transport equipment.
Electrical machines, appliances and apparatus including electronics
Mathematical And Survey Instruments
Sports Goods
Stationery Items
Clocks And Watches
Others
Small Scale Industry
Advantages:
It provides better and quick employment
It is labour intensive and capital saving
Highly Sophisticated Machines are not needed It attracts small savings and diverts them to productive channels
It provides economic development by rapid industrialization
It provides check on monopoly
It reduces imbalance of income and properties
Small Scale Industry
Regulations:
Environmental Regulations
Foreign Exchange Regulations
Income Tax Regulation Quality Standards
The Factories Act
The Industrial Establishment act
The Minimum Wages Act
Employees Provident Fund Act Workmen's Compensation Act
Employees state Insurance Act
Trade Union Act
The Air and Water Pollution Act
Environmental Protection Act.
The Industrial Dispute Act.
Delayed Payment Act.
Registrations:
Small scale and ancillary units should seek registration with the Director of Industries (DIC) of the Concerned state government
Benefits Of Registration
The registration scheme has no statutory requirement
But units get registered, would normally avail some
Benefits
Incentives
Support given either by the central or by the state government The regime of incentives offered by the central government
Credit prescription (priority sector lending)
Differential rates of Interest
Excise Exemption scheme
Exemption under Direct Tax Laws
Statutory support such as reservations and interest on Delayed Payment Act States / UTs have their own packages of facilities and incentives for small scale industries, such as.
Development of Industrial Estates
Tax Subsidies
Power tariff Subsidies
Capital Investment SubsidiesTypes of Registrations:Registration of S.S.I. is done in two stages:
1. Provisional registration
2. Permanent registration
1. Provisional registration certificate
This is given for the pre-operative periods and enables the units to obtain,
The term loans
Working capitals
Facilities for accommodation
Tax Subsidies
Power tariff Subsidies
Capital Investment Subsidies
2. Permanent registration certificate Enables the unit to get the following incentives/concessions
Excise duty exemptions
Income tax exemptions and sales tax exemptions as per
state government policy
Incentives and concessions in power tariffPromotion
To promote upcoming entrepreneurs, the Government of India have formulated policies and schemes to promote small scale industries
The policies and schemes can be summarized under the headings of
General
Priority sectors
Funding and financial
Modernization and training
Policies
Policy of reservation
Items reserved for manufacturing
Trade policy-imports & exports
Price & purchase preference policy
Labour policies
Rehabilitation of sick units
General schemes
Single window scheme
Industrial estates
National awards for outstanding SSI entrepreneurs
National awards for quality products in small scale sectors
Policies on priority sectors like
Tiny sectors Cottage Industries Village Industries Handicrafts Khadi Handlooms Development of backward areas Prime Ministers Rojgar Yozana Self Employment scheme for educated unemployed Assistance to SC/St entrepreneurs Policies related to Funding & Finance
Policy of financial support
Policy of priority credit
Equity participation
OTC Exchange (over the counter) Excise exemption scheme, Tax Holiday
Venture capital
National Equity Fund Scheme
Other SIDBI Schemes
NSIC Schemes
Policies related to modernization & training Quality certification schemes (ISO 9000).
Policy of technology up gradation
Technology Bureau of small enterprises
Policy for development of information technologies
Schemes related to modernization & training Technology Development Fund Schemes
Testing Center
Integrated Infrastructure Development
Training Infrastructure
Growth Center
Technology Development & Modernizations
Self employment schemes
Self-employment schemes are developed by both central and
state governments for the promotion of small scale industries
Some of the self- employment schemes:
Prime Ministers Rojgar Yojana (PMRY)
Under the scheme
One can start industry/business venture with project cost upto Rs 1 lakh 95% project cost will be financed by banks To get loan, candidates age shall be between 18-35 years Beneficiary has to repay the loan within 3 to 7 years
Some of the self employment schemes:
National equity fund scheme
The main objective of this scheme
Is to provide equity type of support to small entrepreneurs tiny or small sector Soft loan is provided for a maximum 15% of project cost within a ceiling of Rs 75,000/- per project
Refinance scheme for modernizationThe main objective of this scheme is
To encourage SSIs to over come the backlog of modernization To adopt improved and updated technology Modernization includes replacement or renovation of plant
and machinery
Some of the Self employment schemes:Single window scheme This scheme is eligible for new units whose project cost does not exceed Rs 10 lakhs
Under this scheme Rs 5 lakhs working capital loan is granted
Permissible term loan for fixed assets can also be provided
Self employment scheme for ex-servicemen Separate self employment schemes are designed exclusively for ex-servicemen candidates
Ex:- Arms to farms introduced in 2005
Self employment for physically handicapped Self employment schemes are designed exclusively for physically handicapped candidate
Site Selection
One of the important aspects of project planning is the
location of site for the plant
An ideal location of site is one where
Unit cost of production is minimum
Distribution cost is minimum
Volume of sales will be more
Abundant availability of skilled workers
Sufficient water availability etc
Factors influencing site selection:Site characteristics
Selection of site depends on:
Contour of site
Soil structure (clayey, sandy, rocky etc.)
Access to rail, road and river
Possibility of future expansion
Cost of site
Risk Involved in Site characteristics
History of floods in surrounding area
Past occurrence of earthquakes etc
Distance from industrial installations
Fire hazards in surrounding areas
Risks of wars
Ex:- Reliance industries situated at Jamnagar in
Gujarat
Availability of supplies
Availability of raw materials from the source at the shortest distance
Availability of raw material from the existing or future suppliers
Availability of substitute material Availability of
Electrical power
Fuel
Cost of
Electrical power
Fuel
Availability of water source Cost of unit of water at siteAspects of waste disposal
Facilities for discharging or depositing waste
Restrictions if any in waste disposal
Local regulations
Labour aspects
Availability of skilled and unskilled labour in the proposed area
Stability of labour rates
Nature of local labour
Aspects of transportation
Facilities for transportation such as railway stations, ports etc
Emergency air travel facility
Facilities for transportation of water, fuel etc Some general factors who can be considered for the selection of site:
Cultural aspects
Rules and regulations of panchayat
Rules and regulations of municipal corporation
Concessions and incentives available
Law of taxation
Government laws
Plant Layout
Definition:
Is the optimum arrangement of different facility including
Men
Machine
Equipment
Material A technique of locating different machines and plant services within the factory so that the greatest possible output of high quality at the lowest possible total cost can be available
Objectives of Plant Layout: Overall simplification of production process in terms of
Equipment utilization
Minimization of delays
Minimization of manufacturing time
Better provision for maintenance
Overall integration of resources
Men
Material
Machines
Saving in floor space with less congestion
To provide better working conditions
Provide safety
Avoids hazards
Minimization of material handling cost
To aim for
Improved morale
worker convenience
Worker satisfaction
To aim for higher productivity
To reduce the waiting time for semi-finished products
To aim for higher flexibility and adaptability to changing conditions
Factors affecting:
Types of industry
Involving synthetic process (Ex:- Cement industry) Involving analytical process (Ex:- petroleum refineries) Involving extraction process (Ex:- Iron & steel making) Involving conditioning process (Ex:- Jute Industry)
Types of Product
Heavy or light
Liquid or solid
Large or small
Volume of production
Job production
Batch production
Mass production
Volume of people
Workers
Managers Method or process
Material handling
Store room provision
Tool room provision
Principles of Plant Layout:
According to Muther, there are six basic principles for best layout
Principle of overall integration
Where integration of all resources is present
Principle of minimum distance
The distance between men and materials should move between operations
Principle of flow
Flow of all materials should be smooth and uninterruptive
Principle of cubic space
Effective utilization of all available space
Principle of satisfaction and safety
The working conditions should be
Pleasant
Satisfying
Safer
Principle of flexibility
Ability to get arranged at
Minimum cost
Least inconvenience
Types of Plant LayoutThere are three types
Product or line layout
Process or functional layout
Fixed position layout
1. Product or line layout This type of layout is preferred for continuous or mass production
All the machines and equipment are arranged according to the sequence of operations
The raw material enters at one end and leaves the other end as a finished product
Only one type of product is produced
This is layout is highly suitable for continuous or mass production industries like cars, bearings, fasteners etc.
Ex:-
Cars
Bearings
Fastener
Production or line layout advantages:
Low cost material handling due to straight and short path
Smooth flow of materials, free from bottle necks
Better utilization of men and machines
Effective inspection of work
Lower cost of manufacturing per unit
Disadvantages:
Break down of one machine leads to complete stoppage of work
It is difficult to increase production beyond the capacities of the production lines
All machines in the arrangement cannot be used to their maximum capacity
Product change cannot be possible
Process defect is difficult to identify hence, rejection rate will be more
2. Process layout (function layout):
It is characterized by keeping similar machines or similar operations at one location
Ex:- Lathe machines will be at one place
All milling machines at another place etc
This type of layout is generally employed for industries engaged in
Job order production
Non-repetitive kind of manufacturing
This layout is very suitable where low volume of production is required
Ex:- Manufacture of grinding wheels
Manufacture of refrigerators
Process layout advantages:
The layout is flexible, hence it can be easily modified according to our requirement
High degree of machine utilization
Change in product design and volume can be easily adopted
Any break down of one machine does not affect production
Better utilization of the available equipment
There is greater scope for expansion
Better product quality
This layout can be utilized for many products
Disadvantages Handling and back-tracking of materials is too much.
For the same amount of production, process layout needs more space.
Total production cycle time is more, due to long distances and waiting.
Production control becomes difficult.
Work in process inventory is large.
3. Fixed position layout: In this type of layout, the materials, major components remains in fixed position, while men, machinery and tools and other supporting equipment are brought to the product location.
The cost of movement of men, materials and machinery is cheaper than the cost of moving the product, which is bulky.
This type of layout is used in ship building, air craft manufacturing, big pressure vessel fabrication, satellites, etc.
Advantages of Fixed position layout: It involves least movement of materials.
Capital investment on layout is minimum
Production cost becomes less.
There is maximum flexibility for all sorts of changes in product and process.
Transporting cost of bulky products is avoided.
Disadvantages of Fixed position layout: High skilled workers are required.
Complicated jigs and fixtures are required.
More time is required to move machines and tools to reach the product.
It involves high equipment handling costs.
Need For Planned And Coordinated Effort An entrepreneur should take expert opinion of industrialists, bankers, professional consultants for planning and managing their enterprise
An entrepreneur should be aware of
Scope for new products
Assistance available from various agencies
Marketing facilities
Procedure for registration of the firm
Details of raw material and machinery
Follow up and institutional supportVarious organizations and institutions have been set-up for the promotion support of the entrepreneurs especially in the areas of
Technical
Financial
Managerial
Marketing
Infrastructure
Supporting Institutions
National level institutions
State level institutions
National level institutions Small Industries Development Organization (SIDO)
National Small Industries Corporation (NSIC)
National institute for entrepreneurship and small business
Central Institute of Tool Design (CITD)
Small Industries Service Institute (SISI)
Entrepreneurship Development Institute of India (EDII)
State Level Institutions Directorate of Industries
District Industries Centre (DIC)
A.P Industrial Development Corporation
A.P State Small Industries Development Corporation (APSSIDC).
A.P Industrial Infrastructure Corporation (APIIC).
Services provided by National Level InstitutionsSmall industries development organization (SIDO)SIDO provides services like:
Entrepreneurship development programmes
Management training
Skill development
Preparation of product profiles
Market supports
Plant modernization
Three national awards/year for out standing SSI entrepreneur in the country.
National Small Industries Corporation Limited (NSIC)NSIC provides services like
Machinery and equipment purchase and lease
Financial assistance
Assistance for procurement of raw material
Marketing assistance
Government stores purchase
Technology transfer centers
Export programmers.
National Institute Of Small Industries Extension And Training (NISIET)NISIET Trains
Entrepreneurs
Managers/Officers of the govt.
Research and consultancy for SSI.
Services Rendered by State Level InstitutionsDirectorate Of IndustriesThe main function is
Promotion and development of the small industries sector.
District industries centre (DIC)The main functions are
Economic investigation of local resources
Supply of machinery and equipment
Provision of raw materials
Marketing.
A.P state industries development corporation (APSSIDC)The main functions are:
Supply of machinery
Raw materials
Marketing assistance
Seed capital assistance
Construction of industries estates.
A.P Industrial Infrastructure Corporation (APIIC)APIIC helps in providing infrastructure like
Industrial estates
Sheds
Internal roads
Power
Water
Financial assistance Financial assistance and credit facilities assistance to SSI units are available with the following institutions and banks.
Industrial development banks
Commercial banks
Investment corporations.
The financial assistance is provided for purchase of
Raw materials
Machinery and equipment
Construction of factory premises
And also to meet the needs of
Working capital.
Schemes of Financial Organization Bills discounting
Refinance scheme for rehabilitation and modernization of small enterprise
Seed capital scheme
Working capital scheme
Special finance schemes for artisans, SC/ST/PH and women entrepreneurs.
Financial Institutions1. Small Industries Development Bank Of India (SIDBI)
2. National Small Industries Corporation (NSIC)
3. Industrial Finance Corporation Of India (IFCI)
4. Industrial Credit and Investment Corporation of India (ICICI )
5. National Bank for Agriculture and Rural Development (NABARD)
6. Life Insurance Corporation of India (LIC)
7. Unit Trust of India (UTI)
8. A.P State Financial Corporation (APSFC)
9. Commercial Banks.