Ed Unit 6

Unit VI – International Entrepreneurship
Opportunities
UNIT 6
Slides By
Supreet Juneja Wahee
Learning Objectives
 The nature of International entrepreneurship

 Importance of International business to the firm
 International versus domestics entrepreneurship
 Stages of economic development
 Institutional support for new ventures
 Supporting Organizations ;
 Incentives and facilities ;
 Financial Institutions and Small Scale Industries ,
 Govt. Policies for SSIs
MBA IV :Entrepreneurship Development Supreet Juneja Wahee Slide 2

INTERNATIONAL ENTREPRENEURSHIP
International entrepreneurship is the process of an entrepreneur

conducting business activity across the national boundaries.
It may consist of exporting, licensing, opening sales office in another
country etc.
International entrepreneurship is defined as development of

international new ventures or start ups that from their inception
engage in international business, thus viewing their operation domain
as international from the initial stages of international operation.
The process of creatively discovering and exploiting opportunities

that lie outside a firm’s domestic market in the pursuit of competitive
advantage.

Domestic Entrepreneurship :
Domestic entrepreneur are distinguished by their emphasis on a
production expansion strategy and customer specialization
strategy.
The production specialization strategy consists of focusing on
limited geographical markets.
The customer specialization strategy incorporates the
production of a specialty product that is purchased infrequently.
Thus, for both of the domestic strategies, a consistent
“closeness” between the producer and consumer is implied.
This may be an important basis underlining the new venture's
decision to compete in an exclusive domestic context.
Aspects of Entrepreneurship Across the Border
 Type of System  Religion

 Political-Legal  Education
Environment  Manner’s and Custom’s
 Cultural Environment  Economic system &
 Technological Development
Environment  Available Distribution
 Social Structure Channel

International Vs Domestic Entrepreneurship
International entrepreneurial decisions are more complex

due to uncontrollable factors such as the following;
Economics
 A domestic business strategy is designed under a single
economic system
 Creating a business strategy for multiple countries means
dealing with different levels of economic development
and different distribution systems
 Creating a business strategy for a multi country area
means dealing with differences in:
 Levels of economic development.
 Currency valuations.
 Government regulations.
 Banking, venture capital, marketing, and distribution systems.
Political-Legal Environment
Politics and laws play a critical role in international
business as well as domestic business. Entrepreneur
should be aware about political and legal environment
in the domestic as well as international market.
 Multiple political and legal environments are opening

some opportunities while eliminating others
 Differences in Value added-tax
 Differences in Advertising campaign
 Differences in labeling, ingredients, packaging
 Laws governing business arrangements also vary
greatly in the 150 different legal systems and sets of
national laws
Political risk analysis - An
assessment of a country’s political
A country’s legal system regulates: policies and its stability prior to entry.
Its business practices. Types of political risks:
The manner in which business transactions Operating risk(risk of
are executed. interference with the operation risk
The rights and obligations involved in any that might be present)
business transaction between parties. Transfer risk(risk in attempting to
Critical areas for every entrepreneur: shift assets or other funds out of
Property rights. the country)
Contract law. Ownership risk (risk where the
Product safety. country takes over the venture’s
Product liability. property and employees)
Conflict and changes in the
solvency of the country.

Cultural Environment
 entrepreneur operating at national level should understand
cultural issues persisting in home country and at international
level he has to understand and manage cultural diversity of
customers as well as employees in company
 Understanding the local culture is necessary when developing
worldwide plans
 Language barrier
 Bribes and corruption culture

Technological Environment
 Technology varies significantly across countries
 even though technology is advanced at larger scale , still
there are technological variations persisting in various
countries depending on time of implementation, updation of
technology etc. which has to be analysed by entrepreneur
and accordingly plan in business operations. New products in
a country are created based on the conditions and
infrastructure of that country
 Example of cars based on roads and price of gasoline

Government policy : entrepreneur going in for
internationalization of business have to study
domestic as well as international policy, as
restriction laid in home country for export of
goods affect trade of entrepreneur and
restriction in host country on entering of new
entrepreneurs in their company.

 Language
 One of the biggest problems for the entrepreneur is finding a
translator.
 Significant problems can occur with careless translation.
 Care should be taken to hire a translator whose native tongue is
the target language and whose expertise matches that of the
original authors.

Available Distribution Systems
 Factors to be considered in determining the distribution
system for a country:
 Overall sales potential.
 Amount and type of competition.
 Cost of the product.
 Geographical size and density.
 Investment policies.
 Exchange rates and controls.
 Level of political risk.
 Overall marketing plan.

NATURE OF
INTERNATIONAL ENTREPRENEURSHIP
 International entrepreneurship
is a process of
conducting business activities
across national boundaries.
 It includes exporting, licensing,
or opening a sales office in
another country.
 Main purpose is to satisfy the
needs and wants of target
consumers.

Importance of International Entrepreneurship
International business has become increasingly

important to firms of all sizes
Successful entrepreneur is someone who fully

understand International entrepreneurship
and differs from purely domestic business
and is able to respond accordingly

IMPORTANCE OF INTERNATIONAL
ENTREPRENEURSHIP TO FIRM
 Increased sales and profit : when the

entrepreneurs are not able to earn profit
or demand for their product in domestic
market they can sell their products in
foreign market where life cycle of
product is in favourable condition. E.g.
Apple earned more profits from
international business than in local
market US in the year 1994. ( $ 390
million foreign market / $ 310 in Indian
market .
 Lower manufacturing cost : if
manufacturing cost of product increase in
home country, then company can opt
host country for production process
where resources are cheaper.
E.g. Mc Donald's.

 Advantage of cheap labour : quantity
and quality of labour is one of the major
challenge for every business, if the labour is
cheap in foreign countries then company
can outsource required labour if
organization is into foreign operations. E.g.
increasing cost of labour in china has forced
companies to search for other options for
outsourcing company activity to other
countries where cost of labour is less.
 Utilization of talent : when entrepreneur
are not able to get required talented work
force in country, then they can hire
employee from host country which has
talent.
 Expansion of domestic market :
international business causes domestic
market to expand beyond national
boundaries. When the domestic market has
been fully tapped then company can go for
expansion of business to market their
products in international market. E.g. Sony
 Globalization of customers : When
customers in country prefer purchasing
foreign brand products then domestic
companies have to go for
internationalization of business to keep in
pace with competition to attract customers.
E.g. Tata Motors begin to operate in
international market after entry of foreign
competitors in Indian market like ford.
 Globalization of competitors :
international business motivates companies
to face competition on global level which in
turn leads to growth of market, pursuing
global scale efficiencies etc.
 Expansion and diversification of
business : entrepreneurs whose core
business strategy is expansion and
diversification of business, international
business is one of the primary platform to
achieve these objectives.
 Attracts customers in domestic market
: international business improves image of
the company in domestic market and
attracts more customers in domestic market
due to internationalization of business. E.g.
Ranbaxy
Foreign Market Selection
 One good market selection model employs a five-step

approach:
 Develop appropriate indicators based on past sales
,competitive research, experience and discussions with global
entrepreneurs .
 Overall market size indicators, market growth indicators and product
indicators
 Collect data and convert into comparable indicators.
 Establish an appropriate weight for each indicator.
 Analyze the data.
 Select the appropriate market from the market rankings.

Entrepreneurial Entry into International
Business
The modes of entering an international business

in divided into three categories;
1. Exporting
2. Non-equity arrangements
3. Direct foreign investment

Entrepreneurial Entry into
International Business
1. Exporting: selling goods made in one
country to another
 Indirect exporting involves using a foreign purchaser( or

export management firm) in a local market or selling goods to
another country through a person in the entrepreneur’s home
market
 Direct exporting uses independent distributors or selling

goods to another country by taking care of the transaction
 Opening their own overseas office for sales

Business
2. Nonequity arrangement: Doing international business
through an arrangement that does not involve any investment
 Licensing: Allowing someone else to use something of the

Company’s
 Entrepreneur who is a manufacturer(Licensee) giving a foreign manufacturer
(licensor) the right to use a patent, trademark, technology, production process or
product in return for the payment of royalty
 Turn-Key Projects: Developing and operationalizing

something in a foreign country
 Management Contracts: A method for doing a specific

international task
 Management techniques & skills
 Acquiring foreign expertise without giving ownership of resources to foreigner

Business
3. Direct Foreign Investment: the percentage of

ownership is related to the amount of money
invested, the nature of the industry, and the rules of
the host government
1. Minority interests: Having less than 50%

ownership position
2. Majority Interest: having more than 50%

ownership position
3. Joint Venture: Two Supreet

companies
MBA IV :Entrepreneurship DevelopmentJuneja Wahee
forming a third Slide 24
The joint venture should have
synergy!
 Synergy means that the whole

is greater than the sum of its 11 3
parts or
 The two parties having things
in common

Business
4. Mergers: An entrepreneur can obtain 100% ownership
 Horizontal Merger: combination of at least two firms doing similar

business at the same market level (e.g.; 7 Eleven Stores)
 Vertical Merger: Combination of at least two firms at different market

level (stabilizes supply & production e.g. walls & polka)
 Product Extension Merger: Combination of two firms with

noncompeting products (related production/distribution activities e.g.
Western publishing (kids books) by Mattel (toys))
 Market extension Merger: Combination of at least two firms with

similar products in different geographical markets (e.g. Diamond chain:
west coast retailer by Dayton Hudson a Minneapolis retailer)
 Diversified Activity Merger: Combination of at least two totally

unrelated firms (e.g. Hillenbrand (hospital furniture manufacturer by
American tourists (a luggage manufacturer))
Two types of Export
• Producer sells directly to the

Direct importer
Export • Very little or no knowledge about
the foreign market is needed
This mode gives the company a greater degree of control over its
distribution channels.
• A firm in the domestic country is used to

do the exporting for the manufacturer
Indirect
Export • The sale of a firm’s products in foreign
markets through an export agent
This mode is seen as a good way of gaining knowledge about a
potentially interesting market.

ENTREPRENEURIAL ENTRY INTO NEW BUSINESS
 Exporting : means selling goods made in one country to
another country. Exporting normally involves the sale and
shipping of products manufactured in one country to the
customer located in another country.
 Direct exporting : implies where company takes full
responsibility for making its goods available in the target
market by selling directly to end users normally through
its own agents.
 Indirect exporting : when the exporting company does
not posses the necessary infrastructure to involve itself in
direct exporting, indirect exporting takes place. It takes
place when the export company sells its to intermediaries
who in turn sell the same products to the end users in
foreign markets.
https://www.facebook.com/ialwaysthinkprettythings
 Contractual
 Licensing : involves an entrepreneur who is a

manufacturer ( license ) giving a foreign
manufacturer ( licensor ) the right to use patent,
trade mark, technology, production process, or
product in return for the payment of loyalty.
 Turn key projects : Turnkey refers to something
that is ready for immediate use, generally used in
the sale or supply of goods or services. It is a
contract under which a firm agrees to fully design,
construct and equip a manufacturing/ business/
service facility and turn the project over to the
purchaser when it is ready for operation for a
remuneration.

 Management contract is an arrangement under
which operational control of an enterprise is vested
by contract in a separate enterprise which performs
the necessary managerial functions in return for a
fee. Management contracts involve not just selling a
method of doing things (as
with franchising or licensing) but also doing them. A
management contract involves a wide range of
functions, such as technical operation of a
production facility, management of personnel,
accounting, marketing services and training.
 Foreign direct investment (FDI) is direct
investment into one country by a company in
production located in another country either by
buying a company in the country or by expanding
operations of an existing business in the country

 Minority interest :a company having interest or
ownership of less then 50 percent in another company is
known as minority interest/ A significant but non-
controlling ownership of less than 50% of a company's
voting shares by either an investor or another company.
 Majority interest : majority interest is an ownership
interest greater than fifty percent (50%) of the voting
interest in a business enterprise.
 joint venture (JV) is a business agreement in which
parties agree to develop, for a finite time, a new entity
and new assets by contributing equity. They exercise
control over the enterprise and consequently share
revenues, expenses and assets. A joint venture takes
place when two parties come together to take on one
project. In a joint venture, both parties are equally
invested in the project in terms of money, time, and
effort to build on the original concept.

 Mergers : The combining of two or more companies,
generally by offering the stockholders of one company
securities in the acquiring company in exchange for the
surrender of their stock / Mergers and
acquisitions refers to the aspect of corporate strategy,
corporate finance and management dealing with the
buying, selling, dividing and combining of
different companies and similar entities that can help an
enterprise grow rapidly in its sector.
 Horizontal merger : Horizontal merger occurs when a
firm is being taken over by, or merged with, another firm
which is in the same industry and in the same stage of
production as the merged firm, e.g. a car manufacturer
merging with another car manufacturer / A horizontal
merger is when two companies competing in the same
market merge or join together. E.G amalgamation of
Daimler-Benz and Chrysler

 Vertical merger : is the combination of two or
more firms in successive stages of production that
often involve buyer and seller relationship. This
form of merger stabilize supply and production and
offer more control of these critical areas. ( merger
between Mc Donald's and Philips petroleum )
 Product extension : merger occurs when
acquiring and acquired company have related
production or distribution activities but do not have
products that compete directly with each other. (
merger between western publishing ( children's
books) and Mattel ( toy company ) .

 Product extension merger is a combination of
two firms producing the same product but selling
them in different geographic market. Major
advantage of these mergers is that firms can
economically combine its management skills,
production and marketing with acquired firms. (The
acquisition of Mobilink Telecom Inc. by Broadcom is
a example of product extension merger ). (
Broadcom deals in the manufacturing Bluetooth
personal area network hardware systems and chips
for IEEE 802.11b wireless LAN. Mobilink Telecom
Inc. deals in the manufacturing of product designs
meant for handsets that are equipped with the
Global System for Mobile Communications
technology)

 Market extension merger : A market extension
merger takes place between two companies that
deal in the same products but in separate markets.
The main purpose of the market extension merger
is to make sure that the merging companies can
get access to a bigger market and that ensures a
bigger client base. (Acquisition of Eagle Bancshares
Inc by the RBC Centura )
 Diversified activity merger : this is a
conglomerate merger involving consolidation of two
unrelated firms. (Philip Morris's acquisition of Miller
Brewing)

Barrier’s to Entrepreneurship Across the Border
 Lack of Capital
 Country’s Repute
 Lack of Knowledge and Experience
Lack of
 Rule’s and Regulation’s Attitude
of
informat
ion Lack of
entrepr
 No Government Incentives
network
eneur
 Market Differentiation Political

barrier
Lack of
finance
Barriers to
international
trade
Human
Tariff
resource
barriers
barrier
Cultural Non tariff

barrier barriers
Technic
al
barrier

BARRIERS TO INTERNATIONAL TRADE
 Attitude of entrepreneur : when an
entrepreneur has negative mindset that foreign
market is unknown to him and he might find it
difficult to set up his business in new country will
prove to be a major barrier for international trade.
 Lack of information : as entrepreneur is new
entrant in international market he is unaware about
the market conditions in host country and taste and
preference of customers which may lead to issues
in terms of acceptance and locating product in
market.

 Lack of network influences : network with
established business companies makes it easy for
the entrepreneur in new market but if the
entrepreneur has no contacts in foreign country
then it will be difficult for entrepreneur from initial
stage of getting required permission to establishing
business in country.
 Financing problems : as international business
involves huge risk financial institutions may be
reluctant in terms of providing required finance to
entrepreneurs.

 Tariff barriers : tariff means duty levied by the
government on imports. Imposing tariff raises the
price of imported goods making them less
attractive to consumers and protects makers of
comparable domestic products and services.
 Non tariff barriers : are the obstacles to imports
other than tariffs such as testing, certification, or
bureaucratic hurdles that have effect of restricting
imports. These are administrative measures that
are imposed by a domestic government to
discriminate against foreign goods and in favour of
home goods.

 Technical barriers : basically refers to before a country's
goods enters into foreign market it has to go through
certain test for authentication. In US before food products
from others is marketed in US it will be tested for checking
bacteria content in food item for safety of general public,
which is good for safety of host country but may prove to
be a major barrier to home country exporting product.
 Political barrier : in few country their exist abundant
opportunity for business but political scenario in country
will be instable such as kidnappings, bombings, violent
against business and employees which proves to be major
question mark in terms of future success of business.

 Human resource : presence of labour unions,
hostile management unions relations, strike,
increase coat of labour in foreign country may
prove it difficult for entrepreneur to establish
business in foreign market.
 Cultural barriers : as entrepreneur is new entrant
in host country he may not be aware about
language, education, tradition, religion, values of
citizens which will make it difficult for the
entrepreneur to understand mindset, taste and
preference of customer in market.

Organizations overcoming Barriers to
International Trade
 Trade barriers: Hindrances to doing

international business
 Some countries (Japan) allegedly present

barriers due to their complicated
distribution system
 GATT (the General Agreement on Tariffs

and Trade) seeks to help overcome
barriers
 FTA’s (free trade agreements) such as

NAFTA (North American Free Trade
Agreement )reduce barriers and
encourage investment between countries
(in this case the U.S., Canada and
Mexico)
Entrepreneurial Partnering is
one good strategy of entering
international market!!

STAGES OF ECONOMIC DEVELOPMENT
1.TRADITIONAL SOCIETY : every economy begins with

traditional society which is characterised with low per
capita income and low degree of technical know how
 Features :
 Country is more or less dependent of agriculture for
development in country.
 People in country believe more in family and caste
system which leads to problem of lack of mobility of
labour which hinders employee growth in country.
 Political power in society remains concentrated with
dominant social groups in society.
 Science and technology develop at very slow phase in
economy.

2. PRE CONDITIONS OF TAKE OFF : in this stage of
economy conditions are created conductive of growth.
In this stage entrepreneurs start thinking in terms of
modernization, capital formation, and profit oriented
ventures.
 Features :
 Less dependence on agriculture
 People start giving importance to national and
international developments then merely confining them
to social issues.
 Part of government revenue is imparted towards
infrastructure development in country.
 Decline in birth rate
 Citizens of country give more importance on developing
personal skills in order to face competition in country.
 Focus towards foreign trade

3. TAKE OFF STAGE : in this stage economy is no more
dependent on other countries and is self sustaining in
this stage. Economy can progress without any
external support from other countries.
 Features :
 Development of various sectors like primary,
secondary and tertiary sector takes place in the
country.
 Social framework improves as citizens than being
bonded with family focus on moving to places for
career growth and development.
 Political stability in country indirectly leads to growth
in industrial sector in country creating favourable
condition for trade in country.
 Reinvestment of profit
 Increase in demand for products by consumers in
market.
 Technical development

4. SELF SUSTAINED STAGE : this stage can be defined
as stage in which an economy demonstrates the
capacity to move beyond the original industries which
provides the take off and to apply efficiency over its
worldwide range of resources.
 Features :
 rise in the rate of investment in the country
 Conditions of employment improve and reduces
dependency on agriculture.
 Modern techniques are used during the process of
production in country.
 New political as well as social institution are established
in country.
 Dependency on other countries are considerably
reduced.

5. STAGE OF ECONOMIC AFFLUENCE : in this
stage there is considerable increase in production
and income. Consumption of comforts and luxuries
become a common feature.
 Features :
 More power : country in this stage starts spending
more on military forces.
 Welfare state : standard of living in country
increases as result of development of facilities in
country.
 Increase in consumption : consumption level
increases in this stage as consumers other then
daily consumption products prefers purchasing
durable products.

Institutions Supporting Small
Business Enterprises
Institutional support system is necessary at three stages
enterprise development:
 Inception or Promotion
 Day-to-day management
 Expansion and Diversification
Three dimensions of institutional support system are:

 Central Government
 State Government
 Non-government Support System

Institutions Supporting Small-scale Industries
CENTRAL LEVEL
• SSI BOARD
• KVIC
• SIDO STATE LEVEL
• NSIC
• DIs
• NSTEDB
• NPC • DICs
• NISIET • SFCs
• NIESBUD SSIs
• SIDCs/SIICs
• IIE • SSIDCs
• EDI
OTHERS
• Industry Association
• Non Governmental Organizations
• R & D Laboratories

Small-scale Industries Board (SSI Board)
 Constituted in 1954 to facilitate the coordination and inter-institutional

linkages for the development of SSI sector
 The Board is an apex advisory body constituted to render advice to the
government on all issues pertaining to the SSI sector
 The office of the Development Commissioner (Small-Scale Industry)
serves as the secretariat for the board
 The Board operates broadly in the following areas: -
Policies & programs -
Development of industries in specific region like Northeast - Ancillary
development, quality improvement, mktg. assistance -
Credit facilities, taxation and modernization -
Industrial sickness

Khadi and Village Industries Commission (KVIC)
 Statutory body created by an act of Parliament

 It is charged with planning, promotion, organization and
implementation of the program for the development of Khadi and
other village industries in the rural areas in coordination with other
agencies engaged in rural development
 KVIC’s functions also comprise building up a reserve of raw materials
and implements for supply to producers, creation of common service
facilities for processing of raw materials and provision of marketing of
KVIC products
 KVIC is entrusted with the task of providing financial assistance to
institutions or persons engaged in the development and operation of
Khadi and village industries and guide them through supply of
designs, prototypes and other technical information

Small Industries Development Organization (SIDO)
 Established in 1954 on recommendation of Ford Foundation

 Over the years, it had seen its role evolve into an agency for
advocacy, handholding and facilitation for the small industries sector
 SIDO provides facilities for testing, tool mending, training for
entrepreneurship development, preparation of project and product
profiles, technical and managerial consultancy, assistance for export,
pollution and energy audits, and so on
 SIDO provides economic information services and advises the
government in policy formulation for the promotion and development
of SSIs

National Small Industries Corporation Ltd. (NSIC)
 Established in 1955 by GOI with the main objectives to promote, aid

and foster the growth of SSIs in the country
 Over four decades of transition and growth in the SSI sector, NSIC has
provided strength through a progressive attitude of modernization,
upgradation of technology, quality consciousness, strengthening
linkages with large and medium-scale enterprise and boosting exports
of products from small enterprises
 Main services provided by NSIC are: -
Machinery and Equipment (Hire Purchase / Lease scheme) - Financial
Assistance Scheme - Assistance for
Procurement of Raw Material - Government Store
Purchase Program - Technology Transfer Centre
(TTC) - Marketing Assistance

National Science and Technology
Entrepreneurship Development Board (NSTEDB)
 Established in 1982 by GOI, is an institutional mechanism to help promote
knowledge-driven and technology-intensive enterprises
 Major objectives are: -
promote and develop high-end entrepreneurship for S&T manpower as
well as self-employment by utilizing S&T infrastructure and by using S&T
methods - facilitate and conduct
various informational services relating to promotion of entrepreneurship
- network agencies of support system, academic institutions and R&D
organizations to foster self-employment using S&T with special focus on
backward areas - act as a policy advisory
body with regard to entrepreneurship

National Productivity Council (NPC)
 Autonomous institution functioning under the overall supervision of the

Ministry of Industry, GOI
 Primary objective is to act as a catalyst in enhancing the productivity of
all sectors of the economy, including industry and agriculture
 Administered by a tripartite Governing Council (GC) which has equal
representation from the government, industry and trade unions
 Active in the field of consultancy and training and has a number of
specialized divisions to provide tailor-made solutions to agriculture and
industry. These divisions, manned by trained consultants, deal with
issues related to industrial engineering, plant engineering, energy
management, HRD, informal sector, agriculture and so on
 NPC is a member of the Asian Productivity Organization (APO), Tokyo,
an umbrella body of all productivity councils in Asian region
 To channelise expertise of NPC to small-scale and informal sector,
SIDBI has tied-up with NPC for enhancing technology in small units
National Institute for Small Industry
Extension and Training (NISIET)
 Set up in early 1950s, NISIET acts an important resource and

information centre for small units and undertakes research and
consultancy for small industry development
 An autonomous arm of the Ministry of Small Scale Industries, the
institute achieves its objectives through training, consultancy,
research and education, to extension and information services
 In 1984, UNIDO has recognized NISIET as an institute of
meritorious performance under its Centre of Excellence Scheme to
extend aid

National Institute for Entrepreneurship and
Small Business Development (NIESBUD)
 NIESBUD is an autonomous body under the administrative control of the
Office of the DC(SSI)
 NIESBUD established in 1983 by the Ministry of Industry, GOI, 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 business
 The policy, direction and guidance to the institute is provided by its
Governing Council whose chairman is the Minister of SSI.
 Besides conducting national and international training programs, the
institute undertakes research studies, consultancy assignments,
development of training aids, etc.

State Level Institutions – DIs and DICs
 Directorate of Industries (DIs) – At the State level, the Commissioner/
Director of Industries implements policies for the promotion and
development of small-scale, cottage, medium and large scale industries.
The Central policies for the SSI sector serve as guidelines but each State
evolves its own policy and package of incentives. The Commissioner/
Director of Industries in all the States/UTs, oversee the activities of field
offices, that is, the District Industries Centers (DICs) at the district level
 District Industries Centers (DICs) – In order to extend promotion of
small-scale and cottage industries beyond big cities and state capitals to
district headquarters, DIC program was initiated in May, 1978, as a
centrally sponsored scheme. DIC was established with the aim of
generating greater employment opportunities especially in rural and
backward areas in the country. At present DICs operate under respective
Sate budgetary provisions. DICs extend services of the following nature –
(i) economic investigation of local resources (ii) supply of machinery and
equipment (iii) provision of raw materials (iv) arrangement of credit
facilities (v) marketing (vi) quality inputs (vii) consultancy
State Level Institutions - SFCs
State Financial Corporations (SFCs) – Main objectives are to finance

and promote small and medium enterprises in their respective states for
achieving balanced regional growth, catalyze investment, generate
employment and widen ownership base of industry. Financial assistance
is provided by way of term loans, direct subscription to equity/debentures,
guarantees, discounting of bills of exchange and seed capital assistance.
SFCs operate a number of schemes of refinance of IDBI and SIDBI and
also extend equity type assistance. SFCs have tailor-made schemes for
artisans and special target groups such as SC/ST, women, ex-
servicemen, physically challenged and also provide financial assistance
for small road transport operators, hotels, tourism-related activities,
hospitals and so on. Under Single Window Scheme of SIDBI, SFCs have
also been extending working capital along with term loans to mitigate the
difficulties faced by SSIs in obtaining working capital limits on time

State Level Institutions – SIDC / SIIC and SSIDC
 State Industrial Development / Investment Corporation (SIDC/SIIC) –
Set up under the Companies Act, 1956, as wholly owned undertakings of
the State governments, act as catalysts in respective states. SIDC helps
in developing land providing developed plots together with facilities like
roads, power, water supply, drainage and other amenities. They also
extend assistance to small-scale sector by way of term loans, subscription
to equity and promotional services. 11 out of 28 SIDCs in the country also
function as SFCs and are termed as Twin-function IDCs
 State Small Industrial Development Corporations (SSIDC) –
Established under Companies Act, 1956, as State government
undertaking, caters to small, tiny and village industries in respective
states. Being operationally flexible undertakes the activities like (i) procure
and distribution of scarce raw materials, (ii) supply of machinery to SSI
units on hire-purchase basis, (iii) product marketing assistance, (iv)
construction of industrial estates, allied infrastructure facilities and their
maintenance (v) extending seed capital assistance on behalf of State
government and (vi) providing management assistance to production units
Other State-level agencies Extending
Facilities for SSI Promotion
 State Infrastructure Development Corporations
 State Cooperative Banks
 Regional Rural Banks
 State Export Corporations
 Agro Industries Corporations
 Handloom and Handicrafts Corporations

Other Agencies
National Bank for Set up in 1982, provide refinance assistance to State Cooperative Banks, Regional Rural Banks,
Agriculture and and other approved institutions for all kinds of production and investment credit to SSIs,
Rural Development artisans, cottage and village industries, handicrafts and other allied activities. Helps SSI
(NABARD) entrepreneurs to get loan for setting up SSIs in any part of the country
Housing and Urban Wholly owned company of GOI, incorporated Apr.1970, as a Pvt. Ltd. Co. and subsequently,
Development converted into a Public Ltd. Co. in 1986. Primary objective is to provide assistance for urban,
Corporation Ltd. social sector infrastructure, and the creation of housing facility, of late, to create SSI
(HUDCO) infrastructure. Also extends assistance for the promotion of building material industries,
besides imparting consultancy, training and technical in related matters.
Set up by all-India financial institutions during 70s and 80s to cater to consultancy needs of
Technical SMEs and new entrepreneurs. Services include preparing project profiles and feasibility
Consultancy studies, undertaking industrial potential surveys, identifying potential entrepreneurs and
Organizations provision of technical and management assistance to them, undertake market research and
(TCOs) surveys for specific products, carrying out energy audit and energy conservatism assignment,
project supervision, taking up assignments on a turnkey basis, undertaking export consultancy
for EOU
CENTRAL GOVERNMENT
INSTITUTES

SMALL SCALE INDUSTRIES
BOARD
Established in 1954 to provide effective coordination
and inter-institutional linkages for the benefit of small
scale sector.
It consists of the following members:
 Union Industry Minister
 State Industry Minister
 Selected members of Parliament
 Secretaries of department concerned

 Financial Institutions
 Selected Public Enterprises
 Industry Associations
 Eminent experts in the field

AGRICULTURE AND RURAL
DEVELOPMENT (NABARD)
Services offered by NABARD:
 Attracting youth to rural non-farm sector.
 District Industries Rural Project (DRIP).
 Rural Entrepreneurship Development Programme
(REDP).

DEVELOPMENT ORGANISATION
(SIDO)
Constituted in 1954 to develop support services for
promotion of SSS.
Main objectives of SIDO are:
 To formulate policy for promotion of SSI
 Provide coordination of policies of state government
 To collect and disseminate information

 To provide wide range of extension services through
allied institutions
 To promote facilities for technology upgradation
 To offer consultancy services

Services Rendered by SIDO:
 Entrepreneurship development and Management
training.
 Efforts for skill development.
 Preparation of feasibility reports for different products.
 Provision of testing services.
 Availability of tool room facilities.

NATIONAL SMALL INDUSTRIES
CORPORATION (NSIC)
Set up by government of India in 1955.
Main functions are:
 Supply of machinery and equipment.
 Provision of financial assistance.
 Assistance for arrangement of raw materials.
 Establishment of technology transfer centers.
 Arrangement of marketing assistance.
 Priority in government purchase programme

DEVELOPMENT BANK OF INDIA
(SIDBI)
Subsidiary of IDBI, setup as an act of
parliament.
Provides assistance for:
Setting up of new SSI units, small hotels,
hospitals and so on.
Technological upgradation and modernization,
expansion and diversification.
Quality upgradation.

 Development of markets.
 Development of infrastructure.
 Discounting of bills of manufacturer-seller in selling
either equipments or components.

STATE GOVERNMENT
INSTITUTES

STATE FINANCIAL
CORPORATIONS (SFC)
Objectives:
 Provide term loans for the acquisition of land, building,
plant and machinery.
 Promotion of self-employment.
 Encourage women entrepreneurs.
 Expansion of industry.
 Provide seed capital assistance.

DEVELOPMENT CORPORATION
(SSIDC)
Important functions performed are:
 Procurement and distribution of raw materials.
 Supply of machine on hire-purchase basis.
 Construction of industrial estates.
 Providing assistance for marketing of products of SSI.

TECHNICAL CONSULTANCY
ORGANISATON
Services of TCOs include:
 Preparation of project profiles.
 Undertaking industrial potential surveys.
 Identification of potential entrepreneurs.
 Undertaking market research.
 Project supervision and rendering technical and
administrative assistance.
 Conducting EDPs.

KHADI AND VILLAGE INDUSTRIES
COMMISION (KVIC)
It is engaged in the development of khadi and village
industries in rural areas.
Main objectives of KVIC are:
 Providing employment in rural areas.
 Skill improvement.
 Rural industrialization.
 Transfer of technology.

NON-GOVERNMENT
INSTITUTES

INDIAN COUNCIL OF SMALL
INDUSTRIES (ICSI)
It was established in 1979.
Main functions are:
 Information dissemination.
 Entrepreneurship development.
 Consultancy and managerial support.
 Training and research.

LAGHU UDYOG BHARTI (LUB)
It was founded in 1995.
It is responsible to undertake:
 Entrepreneurial training.
 Technology upgradation.
 Marketing services.

CONCLUSION
The most important development in the post-
independence period has been the growth of a number
of key institutions to promote, assist and develop
entrepreneurs to initiate industrial growth in the
country. The country has laid a strong foundation broad
based its infrastructure and provided much needed
support and assistance.

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Ed Unit 6

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Unit VI – International Entrepreneurship

 The nature of International entrepreneurship

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International entrepreneurship is the process of an entrepreneur

International entrepreneurship is defined as development of

The process of creatively discovering and exploiting opportunities

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 Type of System  Religion

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International entrepreneurial decisions are more complex

 Multiple political and legal environments are opening

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International business has become increasingly

Successful entrepreneur is someone who fully

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 Increased sales and profit : when the

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 One good market selection model employs a five-step

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The modes of entering an international business

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 Indirect exporting involves using a foreign purchaser( or

 Direct exporting uses independent distributors or selling

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 Licensing: Allowing someone else to use something of the

 Turn-Key Projects: Developing and operationalizing

 Management Contracts: A method for doing a specific

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3. Direct Foreign Investment: the percentage of

1. Minority interests: Having less than 50%

2. Majority Interest: having more than 50%

3. Joint Venture: Two Supreet

 Synergy means that the whole

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 Horizontal Merger: combination of at least two firms doing similar

 Vertical Merger: Combination of at least two firms at different market

 Product Extension Merger: Combination of two firms with

 Market extension Merger: Combination of at least two firms with

 Diversified Activity Merger: Combination of at least two totally

• Producer sells directly to the

• A firm in the domestic country is used to

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 Licensing : involves an entrepreneur who is a

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 Market Differentiation Political

Cultural Non tariff

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 Trade barriers: Hindrances to doing

 Some countries (Japan) allegedly present

 GATT (the General Agreement on Tariffs

 FTA’s (free trade agreements) such as

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1.TRADITIONAL SOCIETY : every economy begins with

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Three dimensions of institutional support system are: