OMBC-207 Enterpreurship Development

UNIT 1
ENTREPRENEUR
Objectives
A er going through this unit, you will be able to:
· Understand who Entrepreneur's are ;

· What are their characteris cs?
· Understand the role of women Entrepreneur.
Structure
1.1 Introduc on
1.2 The Entrepreneur: Defini ons and Concept
1.3 Entrepreneurial Traits
1.4 Characteris cs and Skills
1.5 Entrepreneur vs. Professional Managers
1.6 Successful Entrepreneurs
1.7 Women Entrepreneurs
1.8 Summary
1.9 Self-Assessment Ques ons
1.10 Model Answers
1.1 INTRODUCTION
No sector of the economy is as vital, dynamic, and crea ve as entrepreneurship. For

the past thirty years, the impact of entrepreneurs and small- business owners in the
crea on of new ventures has been felt in virtually all the world's mature as well as
developing economies. The startling growth of entrepreneurial ventures forms the
heart of our changing economic system as more employees work for these owners
than for any other sector of the economy. In the Indian economy today, the number
of employees in small and entrepreneurial ventures is growing faster than in any
other sector of the labor force, and there is no sign of a reversal in this trend. The
Global Entrepreneurship Monitor states that as much as one-third of the differences
in economic growth among na ons may be due to differences in entrepreneurial
ac vity. A key factor affec ng the Indian economy is the annual crea on of 600,000
to 800,000 new companies, which produces many new jobs.
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ENTREPRENEUR
Entrepreneurship—the process of planning, organizing, opera ng, and assuming the

risk of a business venture—is now a mainstream ac vity. Star ng a business is never
easy; it requires a special blend of courage, self-confidence, and skills—all of which
determine the success or failure of an enterprise. The Internet has fundamentally
changed the way entrepreneurs can flourish. It not only provides up-to-date market
and technology informa on but also offers many useful support networks to
entrepreneurs. Business schools everywhere teach the fundamentals of
entrepreneurship, which were not even part of the curriculum un l the 1990s.
Throughout this text, you'll read about entrepreneurs from many types of businesses.
Their stories will help you explore possible paths for building your own successful
career. You'll also have the opportunity to assess your present career profile and
strategy and contrast them with the approaches these entrepreneurs have
developed. The career choices and paths you take are deeply embedded not only in
rela onships but also in individual.
1.2 THE ENTREPRENEUR: DEFINITIONS AND CONCEPT
The word entrepreneur came into English use in the seventeenth century from the
French word entreprendre, which refers to individuals who “undertook” the risk of
new enterprise. Early entrepreneurs were also “contractors” who bore the risks of
profit or loss, and many were soldiers of fortune, adventurers, builders, and
m e r c h a n t s . E a r l y r e f e r e n c e s t o t h e e n t r e p r e n d e u r s p o ke o f t a x
contractors—individuals who paid a fixed sum of money to a government for the
license to collect taxes in their region. Tax entreprendeurs bore the risk of collec ng
individual taxes. If they
collected more than the sum paid for their licenses, they made a profit; if not, they lost
money. Today the defini on of entrepreneurship includes more than the mere
crea on of a business; it also includes the genera on and implementa on of an idea.
Understanding this team concept is cri cal if you wish to be a successful entrepreneur.
The idea of a sole individual being able to take on enormous risks, a empt
innova ons, leap without the appropriate background research, and succeed by
working long hours and persevering at all costs is no longer relevant in today's global
economy. Entrepreneurs also communicate effec vely not only to their teams but also
to external “stakeholders” such as investors, bankers, and corporate partners, who are
necessary components of their growth path.
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ENTREPRENEURSHIP DEVELOPMENT
• Mark Casson – “ An entrepreneur is a person who specializes in taking

judgmental decision about the coordina on of scarce resources”.
• Peter Drucker – “An entrepreneur is one who always searches for change,
responds to it & exploits it as an opportunity”.
In short, an entrepreneur is a person who has possession of a new enterprise, venture

or idea and assumes significant accountability for the inherent risks & the outcome.
They are ambi ous leader who combines land, labour and capital to o en create &
market new goods or services.
1.3 ENTREPRENEURIAL TRAITS
Common traits of successful entrepreneurs:
1. Vision
Successful entrepreneurs have a clear vision of what their business will be and
can concisely ar culate its purpose, goals and market posi on. They have
iden fied (and can succinctly describe) the who, what, where, when and why
of their business.
2. Passion
A successful entrepreneur is passionate about their business. It is hard work,
and pu ng in long hours will be tough if you don't love what you are doing.
People with passion know what it is that drives them to keep working to
achieve their vision.
3. Tenacity
Entrepreneurs remain tough when the going gets rough. They don't give up
easily. They can accept rejec on and are willing to learn from their mistakes.
They are willing and able to adapt and modify their plan in order to be
successful the next me around.
4. Willingness to work hard

Being an entrepreneur is harder than being an employee. To be successful, the
entrepreneur must be willing to put in the me and effort required, o en for
li le or no pay at the beginning. Successful entrepreneurs recognize the risk
and necessary work that achieving their goals will entail.
5. Confidence
Successful entrepreneurs have confidence in themselves and in their business.
They must believe in their ability and in their idea. Every entrepreneur will face
rejec on along the way and successful entrepreneurs are those with the
confidence to keep going and bounce back a er a setback.
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ENTREPRENEUR
6. Flexibility
Things do not always go as planned. A successful entrepreneur is flexible. They
learn from their mistakes and are willing to adapt and change as they go along.
They take advice from others and are open to trying new approaches.
7. Can sell
An entrepreneur must be comfortable selling. Even with a sales team, the
leader must be an expert at networking and be able to promote themselves
and their business to bankers, customers, suppliers and staff.
8. Prudent with money

Successful entrepreneurs are good money managers. They prudently invest in
overhead and always keep track of the money and manage their cash flow.
9. Willing to ask for and accept help

An entrepreneur needs to be a jack of all trades but the most successful
entrepreneurs know their limita ons, realize they can't do everything and are
willing to delegate to others. They are willing to ask for help. They seek out and
pay for expert advice when needed.
10. Resilience
No ma er how successful your business, there will be bumps along the road. A
successful entrepreneur is resilient and can bounce back from a setback. They
use setbacks as an opportunity to learn and grow. They understand that failure
is part of the game.
1.4 ENTREPRENEURIAL CHARACTERISTICS AND SKILLS
A)Importance of Entrepreneurs
• Develop new markets: Entrepreneurs are resourceful & crea ve. They can
create customers or buyers.
• Discover new sources of materials: Entrepreneurs are never sa sfied with

exis ng sources of materials. Due to this, they persist on discovering new
sources of materials to improve their enterprise.
• Mobilize Capital Resources: Entrepreneurs are the organizers and

coordinators of major factors of produc on i.e. land, labor & capital. They
properly mix these factors of produc on to create goods & services.
• Introduce new technologies: Apart from being innovators & reasonable

risk takers, they take advance of business opportuni es & transform into
profits.
• Create Employment: The biggest employer is the private business sector.
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Millions of jobs are provided by the factories, service industries, agricultural

enterprises.
B) Func on of Entrepreneurs
Primary Func on of Entrepreneurs
• Planning: It is the first step in the direc on of se ng up of an enterprise.

It involves following steps:
• Scanning of the best suitable idea.

• Selec on of product line.
• Determina on of type of business organiza on – individual,
partnership or corporate
• Es ma on of the capital needed
• Selec on of capital resources
• Selec on of loca on
• Organiza on: An entrepreneur coordinates, assembles & supervises

land, labor & capital during promo on stage & at the performance
stage, for op mum u liza on of the resources.
• Management: It includes future expansion & policies in the long run.

Direc on of men, machine, material, money for the enterprise.
• Decision-Making: As a decision maker they takes various decisions e.g.
• Determina on of the business objec ves of the enterprise.

• Decision regarding procurement of machine, material, men, money
& market.
• Risk bearing: S/He undertakes the responsibility for loss that may arise
due to unforeseen con ngencies in future.
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ENTREPRENEUR
Entrepreneurs Func on
Entrepreneurs Func on
• Idea Genera on: Most important func on, it can be possible through
vision, observa on, experience, educa on, training & exposure of
the entrepreneur.
• Determina on of objec ves: To determine & lay-down the objec ves
of the business.
• Raising of Funds: It is the most important func on of an
entrepreneur. All the ac vi es of a business depend upon the finance
& its proper management.
• Procurement of Raw Materials.
• Procurement of Machinery.
• Recruitment of Manpower.
• Implementa on of the project.
1.5 ENTREPRENEUR VS. PROFESSIONAL MANAGERS
Difference between Entrepreneur and Manager
· The key difference between an entrepreneur and a manager is their

standing in the company. An entrepreneur is a visionary that converts an
idea into a business. He is the owner of the business, so he bears all the
financial and other risks. A manager, on the other hand, is an employee,
he works for a salary. So he does not have to bear any risks.
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• The focus of an entrepreneur lies in star ng the business and later expanding
the business. A manager will focus on the daily smooth func oning of the
business.
• For an entrepreneur the key mo va on is achievements. But for the managers,
the mo va on comes from the power that comes with their posi on.
• The reward for all the efforts of an entrepreneur is the profit he earns from the
enterprise. The manager is an employee, so his remunera on is the salary he
draws from the company.
• The entrepreneur can be informal and casual in his role. However, a manager's
approach to every problem is very formal.
• The entrepreneur by nature is a risk taker. His has to take calculated risks to
drive the company further. A manager, on the other hand, is risk-averse. His job
is to maintain the status quo of the company. So he cannot afford risks.
1.6 SUCCESSFUL ENTREPRENEURS
Owning your own business gives you a sense of freedom and empowerment. You can
build things and watch them grow.
Entrepreneurs make decisions for themselves, realize their crea ve visions, and
develop las ng rela onships with other entrepreneurs, customers, and vendors.
1. Get gri y
Grit is perseverance. Grit is the go-get-'em a tude that we expect of entrepreneurs.
Grit is the ability to keep working when everyone tells you that you should give up.
If you want to be a successful entrepreneur, you have to be gri y.
Honestly, without hard work and perseverance , you're not going anywhere in the
entrepreneurial world.
2. Challenge yourself
If you want to be a successful entrepreneur, you have to challenge yourself. No one
else is going to push you, so it's up to you to do it.
Challenges keep entrepreneurs nimble and on their toes. If you're constantly looking
for the next challenge, you'll always be prepared for what comes your way.
Consider this example:

You're going to the gym to build your upper body strength. You start doing bicep curls
with a 10-pound weight. It feels pre y heavy at first. But as you build up your
strength, it gets easier.
Would you stop there? No!

Then it's me to do bicep curls with a 20-pound weight. Once you've done bicep curls
with a 20-pound weight, going back to a 10-pound weight will feel easy.
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ENTREPRENEUR
Challenging yourself with new and difficult tasks will make your other tasks seem
even simpler. Just like the 10-pound weight feels light a er you li a 20-pound weight.
As an entrepreneur, you always have to be looking for the next big challenge.
3. Be passionate
If you don't love what you do, don't do it. I truly believe it's as simple as that.
As an entrepreneur, you're going to have to put in long hours and make sacrifices for
your business.
When you're passionate about what you do, pu ng in the long hours won't feel like a
sacrifice anymore.
If you're not passionate about what you do, you're not going to have the mo va on to
keep going when you're stressed and red.
Have you ever no ced those entrepreneurs who never seem to get red? Those
entrepreneurs who get that gleam in their eye when they talk about what they do?
Forty-four percent of entrepreneurs started their business because they saw an
opportunity to create something great. They are passionate about their business. Are
you?
Be passionate about what you do, and being an entrepreneur gets just a li le bit
easier.
4. Take risks
Humans are generally risk-averse, but part of being an entrepreneur is recognizing
the risks that you should take.
Successful entrepreneurs take risks. It's part of the job.
Successful entrepreneurs also know which risks to take and which they shouldn't.
Learn to recognize the risks that will benefit your business and take them.
Taking risks has a dangerous side, but the opportuni es they present o en far
outweigh the poten al dangers.
Learn how to iden fy which risks are worth taking and you'll learn how to be a
successful entrepreneur.
5. Trust yourself
If you don't believe in yourself, who will?
Being a successful entrepreneur means that you've learned to listen to your intui on
and rely on your wisdom when making decisions.
Your ability to trust and believe in yourself will show your confidence. People are
more likely to follow and trust confident leaders.
Trus ng in your own skills will also take some of the pain of uncertainty out of being
an entrepreneur.
When you feel uncertain, remember how much experience and knowledge you have.
Most entrepreneurs start their business a er years of experience working for
someone else.
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There's nothing wrong with asking for help when you need it or turning to a mentor
for advice, but you also have to learn to trust yourself and your own judgment
without input from others.
Learn to trust yourself and you're already star ng down the path of entrepreneurial
success.
6. Reduce fear
Fear stops ac on. Entrepreneurs have to be able to pivot and quickly take ac on
when they see an opportunity or recognize a mistake.
With fear riding on your shoulder, you won't be a successful entrepreneur.
As an entrepreneur, if you let fear be your guide, you won't be able to listen to your
intui on, you'll be afraid to take the necessary risks, and your judgment will be
clouded by emo on.
Find ways to reduce and manage your fear and you'll be a much more successful
entrepreneur.
Remember, fear has to do with your perspec ve.
Research has shown that the more crime TV that you watch, the more likely you are
to fear crime. Reduce your fear by changing your perspec ve.
My favorite p for managing fear as an entrepreneur is to do confidence-building

exercises.
For me, I like to take a few moments at night to think of the decisions I made that day
that had a successful outcome.
Thinking each day about the decisions that you made that benefited you, others, or
your business will help you to quickly build your confidence and reduce fear.
7. Visualize goals
This p is less abstract than you might think, so bear with me.
When I recommend that entrepreneurs visualize their goals, I don't intend for them
to close their eyes and see the goal in front of them.
What I want you to do to visualize your goal is to define it so clearly that it's real and
tangible.
For example, which of these is a more accomplishable:
1. I want to become a successful entrepreneur.
2. I will become a successful entrepreneur by star ng a business that solves a
problem for this specific niche of my audience.
The second one, right?
When you can clearly ar culate and visualize your goal, it becomes more achievable.
There are many ways to visualize your goal if you aren't sure how to start. You can
write it down or draw it out.
You can tell someone, such as a friend or business partner, or take photographs that
represent your goal. Go with your strengths.
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ENTREPRENEUR
When you ask a successful entrepreneur what their goal is, they can tell you in great
detail what it is that they're working to achieve
1.7 WOMEN ENTREPRENEURS
Women Entrepreneurs: Concept and Func ons of Women Entrepreneurs!
Concept:
Women entrepreneur may be defined as a woman or group of women who ini ate,
organize, and run a business enterprise. In terms of Schumpeterian concept of
innova ve entrepreneurs, women who innovate, imitate or adopt a business
ac vity are called “women entrepreneurs”.
Defini on of woman entrepreneur as
“A confident, innova ve and crea ve woman capable of achieving self-economic

independence individually or in collabora on, generates employment
opportuni es for others through ini a ng, establishing and running the enterprise
by keeping pace with her personal, family and social life.”
The Government of India has defined women entrepreneurs based on women

par cipa on in equity and employment of a business enterprise. Accordingly, the
Government of India (GOI2006) has defined women entrepreneur as “an enterprise
owned and controlled by a women having a minimum financial interest of 51 per cent
of the capital and giving at least 51 per cent of the employment generated in the
enterprise to women.” However, this defini on is subject to cri cism mainly on the
condi on of employing more than 50 per cent women workers in the enterprises
owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business

enterprise, ini ate it, organize and combine the factors of produc on, operate the
enterprise and undertake risks and handle economic uncertainty involved in running
a business enterprise.
Func ons of Women Entrepreneurs:

As an entrepreneur, a woman entrepreneur has also to perform all the func ons
involved in establishing an enterprise. These include idea genera on and screening,
determina on of objec ves, project prepara on, product analysis, and
determina on of forms of business organiza on, comple on of promo onal
formali es, raising funds, procuring men, machine and materials, and opera on of
business.
Frederick Harbison (1956) has enumerated the following five func ons of a woman
entrepreneur:
1. Explora on of the prospects of star ng a new business enterprise.
2. Undertaking of risks and the handling of economic uncertain es involved in
business.
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3. Introduc on of innova ons or imita on of innova ons.

4. Coordina on, administra on and control.
5. Supervision and leadership.
1.8 SUMMARY
The defini on of an entrepreneur has evolved over me as the surrounding

economic structures have become more complex. Today, entrepreneurship is
defined as the process of crea ng something different by devo ng the necessary
me and effort; assuming the accompanying financial, psychic, and social risks; and
receiving the resul ng monetary rewards and personal sa sfac on. Before
embarking on an entrepreneurial journey, you should take some me to reflect on
your own a ributes, par cularly your need to be in control. This will help you iden fy
an opportunity and create a plan of ac on that is suited to you and increase the
likelihood of success.
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UNIT 2
ENTREPRENEURSHIP
Objectives
· What is entrepreneurship;
· Success story of Entrepreneurs.
Structure
2.1 Introduc on
2.2 Entrepreneurship : Meaning, Defini on
2.3 Examples of successful entrepreneurs
2.4 Summary
2.6 Model Answers
2.1 INTRODUCTION
The concept of an entrepreneur is refined when principles and terms from a
business, managerial, and personal perspec ve are considered. In almost all of the
defini ons of entrepreneurship, there is agreement that we are talking about a kind
of behaviour that includes:
· ini a ve taking,
· the organizing and reorganizing of social and economic mechanisms to turn
resources and situa ons to prac cal account and
· acceptance of risk or failure.
To an economist, an entrepreneur is one who brings resources, labour, materials, and

other assets into combina ons that make their value greater than before, and also
one who introduces changes, innova ons, and a new order. To a psychologist, such a
person is typically driven by certain forces; the need to obtain or a ain something, to
experiment, to accomplish, or perhaps to escape the authority of others. To one
businessman, an entrepreneur appears as a threat, an aggressive compe tor,
whereas to another businessman the same entrepreneur may be an ally, a source of
supply, a customer, or someone who creates wealth for others, as well as finds be er
ways to u lize resources, reduce waste, and produce jobs others are glad to get.
In this Chapter we shall discus entrepreneurial development and its rela onship
with economic theories. What is the role of the entrepreneur in the economic
development of his society? What are his objec ves for se ng up the firm? What are
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ENTREPRENEURSHIP
the traits he must possess to progress in business? What are those aspects of
entrepreneurship that enables businesses to succeed? These issues many more shall
be addressed in this chapter.
2.2 ENTREPRENEURSHIP
Entrepreneurship is the dynamic process of crea ng incremental wealth. The wealth
is created by individuals who assume the major risks in terms of equity, me and/or
career commitment or provide value for some product or service. The product or
service may or may not be new or unique, but value must somehow be infused by the
entrepreneur by receiving and loca ng the necessary skills and resources efficiently
and effec vely.
Entrepreneurship is thus considered as the process of crea ng something new with

value by devo ng the necessary me and effort, assuming the accompanying
financial, psychic, and social risks, and receiving the resul ng rewards of monetary
and personal sa sfac on and independence that comes with it.
This defini on stresses four basic aspects of being an entrepreneur regardless of the
field. First, entrepreneurship involves the crea on process, crea ng something new
of value. The crea on has to have value to the entrepreneur and value to the
audience for which it is developed. This audience could be
1. the market of organiza onal buyers for business innova on,

2. the hospital's administra on for a new admi ng procedure and so ware,
3. prospec ve students for a new course or even college of entrepreneurship,
or
4. the cons tuency for a new service provided by a non-profit agency.
Secondly, entrepreneurship requires the devo on of the necessary me and effort.
Only those going through the entrepreneurial process appreciate the significant
amount of me and effort it takes to create something new and make it opera onal.
For the person who actually starts his or her own business, the experience is filled
with enthusiasm, frustra on, anxiety, and hard work. There is a high failure rate due
to such things as poor sales, intense compe on, lack of capital, or lack of managerial
ability. The financial and emo onal risk can also be very high. What, then, causes a
person to make this difficult decision? The ques on can be best explored by looking at
the decision process involved in becoming an entrepreneur.
Entrepreneurship is an essen al element for economic progress as it manifests its

fundamental importance in different ways by:
· iden fying, assessing and exploi ng business opportuni es;

· crea ng new firms and/or renewing exis ng ones by making them more
dynamic; and
· driving the economy forward through innova on, competence, job crea on
and by generally improving the wellbeing of society.
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Entrepreneurship is the ac ve process of recognising an economic demand in an
economy, and supplying the factors of produc on (land, labour and capital) to sa sfy
that demand, usually to generate a profit. High levels of poverty combined with slow
economic growth in the formal sector have forced a large part of the developing
world's popula on into self-employment and informal ac vi es. But this is not
necessarily nega ve; microenterprises contribute significantly to economic growth,
social stability and equity.
This sector is one of the most important vehicles through which low-income people
can escape poverty. With limited skills and educa on to compete for formal sector
jobs, these men and women find economic opportuni es in microenterprises as
business owners and employees. If successful, entrepreneurship is likely to result in a
small- to medium-enterprise (SME). They include a variety of firms; village
handicra s makers, small machine shops, restaurants, and computer so ware firms
etc. that possess a wide range of sophis ca on and skills, and operate in very
different markets and social environments.
ECONOMIC ROLE OF THE ENTREPRENEUR

An entrepreneur is an individual who establishes a firm. Because of their importance
in the modern economy, entrepreneurs should be at the heart of microeconomics.
Entrepreneurs set up firms in response to economic incen ves. In turn, firms create
and operate markets that provide mechanisms of exchange for consumers. Firms also
create and manage organiza ons that provide internal coordina on and market
interac ons. The ac ons of entrepreneurs are the essen al force that helps to drive
the economy towards equilibrium.
Entrepreneurs are endogenous to the economy in the general theory of the firm. The
entrepreneur is, before anything, a consumer. The consumer becomes an
entrepreneur by choosing to establish a firm. Consumers bring to the task of
entrepreneurship their judgment, knowledge, and technology. Consumers decide to
become entrepreneurs based on their personal characteris cs and their judgment of
available market opportuni es. Entrepreneurs act ra onally and purposefully based
on maximizing their net benefits.
A firm is defined to be a transac on ins tu on whose objec ves are separate from
those of its owners. All firms involve some combina on of market mechanisms and
organiza onal structures. A market is a transac on mechanism that brings buyers
and sellers together. A market can be a store, a web site, a matchmaker, or an auc on.
An organiza on is a mechanism for managing nonmarket transac ons inside the
firm, including those between owners and managers, between managers and
employees, and between employees, and for managing the firm's market
transac ons. An organiza on can involve hierarchies, bureaucracies, groups, teams,
and networks.
Entrepreneurs establish firms. Firms create and manage markets and organiza ons.
Consumers and firms interact through market mechanisms and organiza ons.
Individual members of the society establish firms to facilitate, formalize, and enhance
economic rela onships. The social and economic origins of the firm should be
reflected in the structure of the economic theory of the firm. Rather than being given
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ENTREPRENEURSHIP
exogenously, firms arise endogenously because consumers choose to become

entrepreneurs. Consumer characteris cs are the givens and firms are the result of
consumer decisions. The existence of firms, their purpose, and their organiza onal
structure depend on the decisions of the entrepreneur.
2. 3 EXAMPLES OF SUCCESSFUL ENTREPRENEURS
A) Dhirubhai Ambani
Dhirubhai Ambani true rags-to-riches story, Dhirajlal Hirachand Ambani, has been
undisputedly India's most enterprising entrepreneur. Born in a gujara family
Dhirubai moved toYemen at the age of 16, where he worked as a dispatch clerk with
A. Besse & Co.
A er working in Dubai for some me he later returned to India where he founded the
Reliance Commercial Corpora on with a meager capital of Rs. 15000. He set up the
business in partnership with Champaklal Damani from whom he split in 1965.
Dhirubhai started his first tex le mill at Naroda, near Ahmedabad and launched the
brand "Vimal". He later diversified into petrochemicals and sectors like
Telecommunica ons, Informa on Technology, Energy, Power, Retail, Tex les, Capital
Markets and Logis cs.
He rose from humble beginnings to create India's largest industrial empire, and in the
process, became one of the world's richest men. He rewrote India's corporate history
for which he was featured among the select Forbes billionaires list. He also figured in
the Sunday Times list of top 50 businessmen in Asia.
Credited for star ng the equity cult in India, Dhirubhai was praised for his key role in
shaping India's stock market culture by a rac ng hordes of retail investors to a
market monopolized by state-run financial ins tu ons.
He never followed the tradi onal way and was o en targeted for his business
strategies due to which he courted controversy all throughout his life. The 'Dhirubhai
school of management' firmly believed that the only thing which ma ered were the
end results and the benefits which infiltrated directly to the shareholders.
He won many awards and accolades during his life me. In 2000, he was conferred the
'Man of the Century' award by Chemtech Founda on and Chemical Engineering
World for his contribu on to the growth and development of the chemical industry in
India. In 1998, he was awarded the Dean's Medal by The Wharton School, University
of Pennsylvania, for se ng an outstanding example of leadership. Dhirubhai Ambani
was also named the "Man of 20th Century" by the Federa on of Indian Chambers of
Commerce and Industry (FICCI).
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A perfect amalgama on of grit and determina on, Dhirubai believed in his dreams
and he lived it. He was of the belief “Dhirubhai will go one day. But Reliance's
employees and shareholders will keep it afloat. Reliance is now a concept in which
the Ambanis have become irrelevant.”
In 1986 a er a severe heart stroke he handed over Reliance Group to his sons
Mukesh and Anil. A er his death, the colossal corporate group was split into
Reliance Industries, headed by Mukesh Ambani and Reliance Anil Dhirubhai
Ambani Group (ADAG), led by Anil Ambani.
A visionary by birth, his life has been an inspira on for many and will serve as a
beacon light for the genera ons to come.
B) Ratan Naval Tata
Reading success stories of greatest professionals s mulates mo va onal enzyme

within us and we all wish to emulate them on path of success. Exactly with this aim
MBARendezvous.com - India's content lead MBA website is presen ng you series of
success stories of Professionals who have carved niche in their own way and have
become icons of Management Fraternity.
Following above you will read today success story of Mr. Ratan Naval Tata :
One of the most well-known and respected industrialists in India, Ratan Naval
Tata is the Chairman of Tata Sons and Tata Group. At the age of 73, Tata heads
one of the country's largest conglomerates which comprise nearly 100 firms with
revenues totalling about USD 67 billion. He is also the chairman of major Tata
companies such as Tata Steel, Tata Motors, TataTata Teleservices. Power, Tata
Consultancy Services, Tata Tea, Tata Chemicals, The Indian Hotels Company and
Tata was born on December 28, 1937 in Mumbai, in one of the richest families.
His great grandfather was Jamsedji Tata, founder of the Tata group. As a young
boy, Tata had a disturbed childhood a er his parents split. He was raised by his
grandmother, Lady Navajbai in the lap of luxury at Tata Palace. America held a
special fascina on for the Tata scion and he went to Cornell University to study
architecture and structural engineering. Later he pursued a management course
from Harvard University.
In 1962, he joined the Tata Group and his first job involved working with the Tata
Steel division in Jamshedpur, where he worked with the blue-collar employees
shoveling stone and working with the furnaces. He was appointed the Director-
in-Charge of the Na onal Radio & Electronics Company Limited (Nelco) in 1971
and was successful in turning Nelco around.
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ENTREPRENEURSHIP
Tata later paved his way to become the Chairman of Tata Industries and was
instrumental in ushering in a wide array of reforms. It was under his stewardship that
Tata Consultancy Services went public and Tata Motors was listed in the New York
Stock Exchange giving it more interna onal power and recogni on. He is credited
with leading the Tatas' successful bid for Corus- an Anglo-Dutch steel and aluminum
producer as well as Jaguar and Land Rover brands from the Ford Company.
During his tenure the company witnessed the launch of india's first truly Indian car,
'Indica'. The car was the brainchild of Tata. In 2000 Tata's food division acquired tea
firm Tetley for GBP 70 million. In the year 2009-10 the group's revenues have grown
nearly 12-fold, totalling USD 67.4 billion. Tata also serves on the boards of Fiat SpA and
Alcoa and is also on the interna onal advisory boards of Mitsubishi Corpora on, the
American Interna onal Group, JP Morgan Chase, Rolls Royce, Temasek Holdings and
the Monetary Authority of Singapore.
In year 2000, he was honored with Padma Bhushan by the government of India. He
was also conferred an honorary doctorate in business administra on by Ohio State
University, an honorary doctorate in technology by the Asian Ins tute of Technology,
Bangkok, and an honorary doctorate in science by the University of Warwick. Tata has
a personal fortune of GBP 300 million and owns less than 1% of the colossal group.
Over two thirds of Tata Group is owned by charitable trusts that finance good causes.
Tata set a perfect example of generosity and leadership during the 26/11 a acks.
Unarmed he stood all alone outside the Taj hotel and supervised the ac vi es to help
the vic ms. He showcased his humane gesture by personally visi ng the families of all
the 80 employees who were killed or injured. He le no stone unturned to provide
relief to the vic ms and even asked the families and dependents as to what they
wanted him to do.
His re rement may s ll be a year away, but Tata has started chalking out plans on his
post-re rement. He plans to set up a design centre of interna onal standards and
scale. He has led development of many innova ve designs and products, the most
celebrated being Nano. The idea of Nano was born with his concern for the safety of
nuclear families commu ng on two-wheelers. He was the one who suggested that the
miniature car should be fi ed with just one windscreen wiper. This reduced its price
and maintenance cost.
His also steered plan to provide cheap and clean drinking water and helped a few
Pune-based designers develop a sub-Rs 1,000 water purifier, Swach. Design
Direc ons Private Limited took more than three years to make this 560-mm unit for
purifying water.
A bachelor in real life, Tata loves privacy and shuns media spotlight. He has only CDs,
books and dogs for company. The business baron drives himself to work in an
unremarkable Tata sedan.
Standing tall with his contemporaries with a staggering fortune and world
recogni on, Ratan Tata has amazingly never featured in the 'Forbes billionaires list'.
17 | Page
C) Mr. Ajay Piramal
Mr. Ajay Piramal is a well known Indian businessman and the chairman of Piramal
Enterprises Limited. A er facing myriad troubles in life he proved himself as a
phoenix. Mr. Ajay Piramal's story is of a remarkable business transforma on, from
tex le magnet to becoming India's 4th largest pharmaceu cal manufactures. Today,
he is the chairman of Rs 400 billion group, comprising Nicholas Piramal, the fourth-
largest pharmaceu cal company in India, Morarajee Weaving and Spinning and
Gujarat Glass.
Mr. Ajay Piramal was born on 20 December, 1955. He completed his Gradua on in
Bachelor of Science from Jamnalal Bajaj Ins tute of Management Studies. He has
also done his post gradua on from the same college.
Mr. Ajay Piramal was 29 when his hard working father died suddenly in New York. His
brother Ashok took over the family business, but the cloud of grief was not yet off.
Five years later his brother too died, leaving behind his young widow, Urvi, with three
children aged less than 10 years. Just before that, his other brother Dilip had decided
to separate his business. Meanwhile, a year-long tex le strike dealt a crippling blow
to the tex le industry and Morarjee Mills, the group's main business venture then,
was in dark.
Despite, having faced so much of sorrow and troubles Mr. Ajay Piramal never had a
sense of despair. Life looked bleak to him when he became chairman of the group at
the age of 29. But he survived and how. From owning what was then an almost
defunct tex le company, Piramal today is the chairman of Rs 40 billion group,
comprising Nicholas Piramal, the fourth-largest pharmaceu cal company in India,
Morarajee Weaving and Spinning and Gujarat Glass. Piramal is also the chairman of
the group's retail opera ons, which are now looked a er by his nephew, son of Urvi
Piramal. "Disabili es and misfortune can make you stronger," Mr. Piramal says, “The
Lord must be pleased, indeed.”
In 1988, he heard from a friend that Nicholas Laboratories, an Australian MNC that
was exi ng India, is up for sale. There were many large suitors but Piramal decided to
meet Mike Barker, the man in charge of selling the company, and told him that he had
no track record, was only 33 but was confident of achieving his dream of pu ng
Nicholas among the top five pharmacy companies in India (from 48th at that me).
Barker laughed with disbelief but he could see the spark in Mr. Ajay Piramal's eyes and
decided to sell the company to him a er hearing out the "young and untried
entrepreneur's" turnaround plan. At that me it wasn't a very large investment, the
total market capitalisa on of Nicholas Laboratories was Rs 5-6 crore. The investment
was not very large. So nobody thought that it could be significant por on of Piramals
business other than Mr. Ajay Piramal.
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ENTREPRENEURSHIP
Not Many people know that the first shopping mall in India -”Crossroad” is a
brainchild of Mr. Ajay Piramal. His company had a large factory in the centre of
Mumbai and if he wanted to expand, civic permission was impossible to get. The cost
of manufacturing too was one of the highest in India. The three factory buildings of
the pharmaceu cal company were converted into retail space with the help of
architects from Singapore. On the opening day, cars lined up for miles and the
McDonald's ice-cream shop in the mall sold more cones in a day at the Crossroads
than in any other store in Asia.
Ajay Piramal started with tex les and today, his Rs 9 billion Piramal Enterprises
comprises pharmaceu cal firms placed among India's top 5. He talks passionately
about how he diversified from tex les to a totally unrelated area like
pharmaceu cals, "Manufacturing is finite but human intellect is infinite. Tex le is all
about manufacturing and industries like pharmaceu cals are all about human
intellect," Mr. Piramal says.
The influence of the Lord is omnipresent. So is evident in his life and in his office too.
The office walls have inscrip ons from the Bhagavad Gita. Zen-style sculptures of
the 18 verses in pure black granite rock, billions of years old; from near the ancient
city of Hampi has also been given a separate place. “Bhagavad Gita is one of the
greatest management books as it prescribes op mism and freedom from stress” says
Mr. Ajay Piramal.
Mr. Ajay Piramal has a deep sense of concern for India. His take on government's role
in the current scenario of liberalisa on clearly put forth his intellectual and sharp
mind. "Many people say that in a liberalised world there is li le for the government to
do, but the fact is that there is much for the government to do in fewer areas. One
such area is to provide infrastructure," he said. To give an example, he spoke of the
internet "Today people should be able to access the Internet easily, which can help us
bridge the gap with the developed world. The key task before us is how do we catch
up with the developed world? The Internet can bring us much closer to the developed
world. But the government is not providing the necessary infrastructure."
According to Mr. Ajay Piramal, today India doesn't only lack a stable government. It
rather lacks Leadership. He has a very clear cut idea about the same. To him
leadership is more than just managing economic reforms it means giving broad
direc on, take up challenges which other people cannot do.
He feels that Indian companies might buckle up under the threat of foreigners. Indian
companies have created a first-class distribu on network in the country which
outsiders will find difficult to break. He quotes an instance, “no major petrochemical
company has come in because Reliance has such a wonderful distribu on network.
So we are not worried about any mul na onal company coming in; I am sure we can
take on them, or for that ma er, so can Ranbaxy." Mr. Ajay Piramal has truly
experienced the same. The Swiss giant, was unable to introduce any drug in India for
16 years, and finally sold its Indian wing to Mr. Ajay Piramal. A er that, Roche under
Piramal has introduced six new products.
Mr. Ajay Piramal has seen myriad phases of life. He has come out of such miserable
condi ons which is not easy for anyone. Today, when People find him in Forbes
19 | Page
ranking #7 among richest Indians they look up at him as idol. But very know about the
hardship he has faced and how he has come up. He is truly a mo va onal personality
for many.
D) Dr Preetha Reddy
India has given birth to great businessmen and businesswomen, and Dr Preetha
Reddy is one of them. She is not only the managing director of Apollo Hospitals but
she is also one of the pioneer businesswomen in India's healthcare industry.
Dr Preetha Reddy is responsible for the opera ons of the Apollo Hospitals group and
works closely with healthcare prac oners at Apollo Hospitals to come up with
contemporary protocols and raise the bar on clinical outcomes.
Dr Preetha Reddy took guidance from her father, Dr Prathap C Reddy, who is the
pioneer of corpora zed healthcare in the country, and joined Apollo Hospitals as the
Joint Managing Director in 1989. In this posi on, she worked hard to enhance the
compe veness of Apollo Hospitals and in five years, she became the Managing
Director of Apollo Hospitals.
As a Managing Director, she spearheaded the growth of Apollo Hospitals as

quaternary and ter ary care hospitals and primary care and diagnos c family clinics
and took the healthcare consul ng, business process opera ons and healthcare
technology services to a whole new level.
Apart from carrying out her du es as the Managing Director of Apollo Hospitals, Dr
Preetha Reddy works closely with government and industry bodies to shape policies
and related decisions on key healthcare issues.
Under Dr Preetha Reddy's leadership, Apollo Hospitals came up with 'Save A Child's
Heart' ini a ve, where over 5,000 surgeries have been performed on children
suffering from heart diseases. Dr Preetha Reddy is also responsible for the
development of Apollo Isha Vidya Rural School, which focuses on the overall
development of children in rural areas.
For her outstanding work and contribu on to the healthcare sector, Dr Preetha
Reddy has been ranked in the interna onal list of '50 Most Powerful Women in
Business', compiled by Fortune, for three consecu ve years – 2009, 2010, and 2011.
In addi on, she has been included in the list of 'The Most Powerful Women in
Business', compiled by Fortune India, for 2011, 2012, and 2013. For her foresight and
contribu on to the fields of healthcare and social science, Dr Preetha Reddy received
the Life Time Achievement Award from the Loyola Forum for Historical Research.
Dr Preetha Reddy was always interested in the Sciences and management roles,
which is why she completed her Bachelor's degree in Chemistry from Stella Maris
20 | Page
ENTREPRENEURSHIP
College Chennai and Master's degree in Public Administra on from Madras

University. Later, she was conferred the Doctor of Science degree by the Tamil Nadu
Dr M.G.R. Medical University for her outstanding contribu on in healthcare.
Dr Preetha Reddy became successful in life because she had a clear purpose and was
certain about her goals. She was determined to enhance the field of healthcare in
India and she did that despite the challenges in life.
Even a er gaining success, she did not forget the underprivileged in the society – not
only did she come up with healthcare ini a ves to cure diseases but she also
established educa onal programs for the poor. This is what we should learn from Dr
Preetha Reddy.
No ma er how successful we are, we should think about how we can help the poor. In
addi on, we should always follow our dreams and never lose track of our goals
despite the difficul es and challenges.
2.4 SUMMARY
Entrepreneurship development plays an important role in sharpening skill of
prospec ve entrepreneur ,Hence its important to explore and understand
entrepreneurship development, It is always advisable to go through experiences of
successful; entrepreunres to avoid mistakes,their experiences can lead you to be er
understanding of market and compe tor
21 | Page
UNIT 3
Objectives
· Understand who Entrepreneur's are ;

· What are their characteris cs?
· Understand the role of women Entrepreneur.
Structure
3.1 Introduc on
3.2 Entrepreneurship Environment
3.3 Entrepreneurship Development Program and Training
3.4 Problems of Entrepreneurship
3.5 Growth of Entrepreneurs
3.6 Entrepreneurial Failures
3.7 Summary
3.9 Model Answers
3.1 INTRODUCTION
Entrepreneurship development is a procedure where the knowledge and skills of the

entrepreneurs are improved via mul ple classroom and training programs. And the
basic idea behind this program is to grow the number of entrepreneurs in the world.
With the help of the entrepreneurship development programs, the pace at which
new ventures or businesses are created becomes a lot more be er than it was before
the program. And if we look at the larger picture, this program creates rooms for
employment and enhances the economy of the country as well as the business.
3.2 ENTREPRENEURIAL ENVIRONMENT
In upcoming economies across the world, interest in entrepreneurship is presently

more than ever due to burgeoning youth popula on and a desire to move up the
value chain.
Three major components are iden fied in this environment that community leaders
need to address −
· Culture − Acknowledgement of the importance of entrepreneurs to the local as
well as na onal economy, apprecia on of the values that entrepreneurs earn,
welcoming entrepreneurs who o en tend to beat off a different drummer,
accep ng failure as a part of the process and willingness to mo vate and
22 | Page
uncondi onal support to entrepreneurs when some of their ventures do not

pan out.
· Infrastructure − Moving beyond the tradi onal no on of layout to involve
tradi onal and non-tradi onal leadership strategies. For example,
educa onal ins tu ons like community schools, colleges and regional
universi es, cultural and recrea onal resources, quality schools, and social
enterprises that are different and stress on crea vity.
· Entrepreneurial support elements − Precise programs and ini a ves
created to facilitate a range of support to entrepreneurs of all types when
and how they require it. This involves providing services like the Chamber
and Small Business Development Centers, help centers, counseling office,
networking organiza ons and opportuni es, financing programs, business
incuba on services, mentoring and coaching, and youth entrepreneurship
educa on in and outside the schools.
Having a complete knowledge about these components helps in building an
entrepreneurial environment that facilitates our community to become more
entrepreneurial.
We need to consider our readiness for entrepreneurship. How can we and should
get started? We may wish to start by ge ng a sense of how suppor ve our
community's current environment is towards entrepreneurs.
Role of Family
A lot has been documented about the importance of the entrepreneur's access to
financial capital, as well as educa onal achievement and progress, to the
enterprise's ul mate success. The family background of an entrepreneur is o en an
unrecognized aspect of success. Few facts regarding the role of family for
entrepreneurs are −
· Two to three mes more business is owned by the children of industrialists
than those whose parents don't own a business. So it is pre y clear that,
business ownership runs within the family but the ques on here is does it
lead to success?
· Entrepreneurs working in their family business before star ng a business of
their own, tend to be 10 to 40 percent more successful than they would be
otherwise.
· The would-be entrepreneur gains valuable experience through informal
learning and appren ceship that occurs while working in a family business.
· Who can teach us be er than our own parents? A brilliant way of learning
the “name of the game” of running an own business is first working in the
family business.
· Family business is a golden cket for family members to hold human capital
linked to opera ng a business. It is not necessary to gain this experience in
the same industry, probably because basic business experience is what
counts.
The major scope through which families shi their business success across
23 | Page
genera ons is by working through experience. However, a major drawback is the

cycle of low rates of business ownership could be easily broken and rela vely worse
business outcomes could be passed from one genera on to the next. It is very
important to address the lack of opportuni es to work in family businesses.
Role of Society
The major role of the society in entrepreneurship is support. Entrepreneurs
contribute to the society in the following ways −
· Business yields and allots products and services to meet certain public
requirements. Business has to be very flexible and frequent research on
consumer demands should be done to increase profit.
· Entrepreneurs create job opportuni es. Income is ensured through
entrepreneurship. It is a very important factor to consider.
· Entrepreneurship has its own contribu on in the na onal well-being. It
ensures it in different ways, assis ng the government to preserve and
manage all kinds of public, social ins tu ons and services, etc.
Entrepreneurs facilitate in enlightening and educa ng people and mo va ng their
growth at a personal level. Due to high level of compe on in the market, it is
important for both businessmen as well as their employees to be involved in the
constant process of learning and improving personal skills and abili es like
crea vity, determina on, communica on skills and vision for new business
chances.
3.3 ENTREPRENEURSHIP DEVELOPMENT PROGRAM AND

TRAINING
Entrepreneurship Development Programme (EDP) is a programme which helps in

developing the entrepreneurial abili es. The skills that are required to run a business
successfully is developed among the people through this programme. Some mes,
people may have skills but it requires polishing and incuba on. This programme is
perfect for them. This programme consists of a structured training process to develop
an individual as an entrepreneur. It helps the person to acquire skills and necessary
capabili es to play the role of an entrepreneur effec vely. As per Na onal Ins tute of
Small Industry Extension Training, Hyderabad, an EDP is an effort of conver ng a
person to an entrepreneur by passing him through a thoroughly structured training.
An entrepreneur is required to respond appropriately to the market and he/she is
also required to understand the business needs. The skills needed are varied and they
need to be taken care in the best possible way. EDP is not just a training programme
but it is a complete process to make the possible transforma on of an individual into
an entrepreneur. This programme also guides the individuals on how to start the
business and effec ve ways to sustain it successfully.
Objec ves of EDP

The objec ve of this programme is to mo vate an individual to choose the
entrepreneurship as a career and to prepare the person to exploit the market
24 | Page
opportuni es for own business successfully. These objec ves can be set both in the
short-term and long-term basis.
· Short-term objec ves: These objec ves can be achieved immediately.In the
short-term, the individuals are trained to be an entrepreneur and made
competent enough to scan exis ng market situa on and environment. The
person, who would be the future entrepreneur, should first set the goal as an
entrepreneur. The informa on related to the exis ng rules and regula ons is
essen al at this stage.
· Long-term objec ves: The ul mate objec ve is that the trained individuals
successfully establish their own business and they should be equipped with
all the required skills to run their business smoothly.
The overall objec ves of EDP are mainly to help in rapid industrialisa on by supplying
skilled entrepreneurs. At the same me, it also industrialises underdeveloped areas.
The performance of small and medium scale industries are expected to improve by
this and therefore providing a huge scope of employment genera on in these
sectors. This programme primarily aims at providing self-employment to the young
genera on.
3.4 PROBLEMS OF ENTREPRENEURSHIP
These are the factors you have to take into account if you are opera ng in India. If
managed correctly, these can be advantages; otherwise these can lead to serious
problems for the enterprise.
Bureaucracy:
The word bureaucracy comes from the French word bureau, which refers to an 'office'
and the Greek suffix kratos, which means 'power' or 'rule.' So, bureaucracy refers to
the 'rule of the office.'
Max Weber is one of the most influen al social thinkers to have studied bureaucracy
in detail. According to Weber, some of the main characteris cs of bureaucracy are as
follows:
1. Official business is conducted on a con nuous basis.
2. Official business is conducted according to wri en rules.
3. Roles and responsibili es are defined within a hierarchy, with rights of super-
vision and appeal.
4. Official and private business and income is strictly separate.
Public offices are set up for the good of the people and the officials manning the posts
are referred to as public servants. But, if le unchecked, these public officials can
become self-serving and corrupt.
Firstly, there are a large number of procedures to be followed and clearances to be

obtained to start and operate a business. Secondly, each of these procedures can take
an inordinately large amount of me.
25 | Page
Procedures are established to safeguard the interest of the common man. But,
some mes, the rules and regula ons stop serving the purpose they were designed
for. Rules become tyrannical in nature and an enormous wasted effort is directed
towards compliance with rules and regula ons.
Lack of resources is one of the major problems faced by entrepreneurial firms. In this
situa on, new ventures find it extremely taxing to divert me and a en on to me-
taking procedural issues.
Corrup on:
While under no circumstances, corrup on can be jus fied, it is a bi er truth that it is
rampant in many government departments. Even private sector is not spared by it.
We have to make a collec ve effort to curb this social evil. As it hampers growth of the
business, it is a challenge for budding entrepreneurs.
Some mes, people pay money to just hasten processes and do not ask for any undue
favours. According to Kauffman and Wei (1999), in an environment in which
bureaucra c burden and delay are exogenous, an individual firm may find bribes
helpful to reduce the effec ve red tape it faces.
For example, the bank is not releasing money even though it has sanc oned release
of funds. There might be some official who has raised an unwarranted objec on. In
such cases, some people are tempted to grease the palms to get things flowing.
Some people also pay bribes to get something beyond the scope of what is fairly due
to them, for example paying bribe to get money released from bank even though the
paperwork is not in order. Some mes, this is carried to a ridiculous extent such as
paying money to ensure that the compe tor's funds are not released from the bank.
Many entrepreneurs have experienced a higher degree of corrup on among
employees of large private-sector companies than in the government. How you
prefer to deal with corrup on is your personal choice. There are some entrepreneurs
who have taken the difficult path and have played it by the book.
Many entrepreneurs have chosen the middle path and have given in to corrup on in
some instances but later have fought vehemently against it and succeeded. There are
also some dangerous entrepreneurs who use their access to corrupt officials as a
compe ve edge. But, such prac ce does not give them success in the long run.
Corrup on has also spawned a business of 'consultants' whose only ac vity is to
mediate between the corrupt officials and those seeking favours from them. Some
entrepreneurs use them to secure funding from banks, get approvals for
construc ons, and for periodic submissions rela ng to labour laws, taxes, and
industrial approvals.
The situa on is now changing rapidly and there is hope that corrup on will come
down in the near future. The factors likely to lead to a lesser degree of corrup on are
as follows:
1. There is greater transparency in procedures to be seen across government
departments. A number of departments have ini ated e-governance ini a ves,
which decrease public interface with officials by enabling registra on, filing,
payments, and registering complaints through the Internet.
2. The right to informa on (RTI) Act has significantly changed the situa on by
giving greater access of government records to interested or affected members
of the general public.
26 | Page
3. The media too has played an ac ve and visible role by conduc ng s ng op-
era ons to expose corrup on at many levels. The public humilia on suffered by
officials caught in these opera ons has served as a deterrent to corrup on.
Labour:
Lack of manufacturing capability in India has been a ributed to red tapism and
corrup on, but the low produc vity of labour is also a big factor. In the early days of
offshoring, firms from the US and Western Europe preferred to set up manufacturing
facili es in Thailand, Mexico, and China, rather than in India. Though these countries
too had an equally bad record of red tapism and corrup on, the labour in these
countries was found to be more produc ve.
In spite of our huge popula on and high economic growth, it was only in 2006 that the
economy of India overtook that of Mexico in terms of GDP.
An ac ve workers' union is not bad, but some mes, in India, there may be more than
one union (e.g., one affiliated to CITU and the other to AITUC), with differing agendas,
claiming to represent the workers' interests.
Since India is a secular country, religious beliefs of every religion are respected. So, it
has holidays on occasions such as Christmas, Good Friday, Holi, Diwali, Muharram, Id-
ul-Zuha, Guru Nanak's Birthday, Buddha Jayan , and Mahavir Jayan . There are also
holidays on occasions of na onal importance.
As a result, the number of working days in a year is reduced. Furthermore, long breaks
in work brought about by bandhs, regional unrest, and breakdown of suppor ng
infrastructure in mes of floods, earthquakes, and other natural calami es also
disrupt the work.
Welfare measures that restrict long hours of work, protect women workers, and
prohibit underage employees are desirable; but, misuse of these clauses to halt
legi mate business prac ces is harmful for the growth of industry.
The Indian labour is cheap because of a compara vely low wage structure. But, the
produc vity of the cheap labour is not always sa sfactory. Employers o en need to
keep a regular check on their employees.
The manufacturing sector is now beginning to take off, and there has been a
spectacular growth in the services sector. There is a tremendous shortage of skilled
and semi-skilled manpower. There are not enough ins tu ons in India geared to train
employable youth on skills that are in demand in the job market.
The manufacturing sector is facing a dearth of fi ers, welders, dra smen, and
machine operators. The lack of elementary skills in many call centre and BPO
employees has been very well documented by NASSCOM and other industry
watchers.
Finally, stringent laws governing lay-off of employees make it very difficult to fire
workers in case of non-performance or during mes of financial distress when it
becomes impera ve to lay-off workers to maintain the financial viability of the
business opera ons.
Regional Sen ments:

Many businesses have failed because they failed to take into account the sen ments
of the local popula on. Many successful businesses have managed to iden fy and
27 | Page
respond to local sen ments. Many outlets of interna onal fast food chains such as
Pizza Hut and McDonald's do not serve beef or pork as a sign of respect for local
mores. On the other hand, scores of businesses suffer because of an -social
elements trying to score poli cal points by going on a rampage.
The local community expects to gain from every business being set up in its vicinity.
This is especially true when businesses come up in economically backward areas with
very li le industrializa on. The local community expects employment in the firm and
does not react favourably to employment of migrant workers.
Grey Market and Counterfeit Goods:

The grey market refers to the flow of goods through a distribu on channel not
authorized or intended by the manufacturer. Usually, this happens when the price of
a product in the domes c market is much higher than in other nearby markets.
Some mes, this may be because of high local taxa on. In India, the goods that are
usually smuggled in are cell-phones, electronic goods, jewellery, and alcohol. Chen
(2002) even suggests that grey marke ng ac vi es can develop a situa on of fair
compe on in which social welfare increases. In India, the prices of cell-phones used
to be very high but rampant smuggling has prompted a change in taxes and prices,
greatly reducing the differen al between India and Singapore or Dubai.
Another problem is that of counterfeit goods. Even though, strictly speaking

counterfeit goods are not part of the grey market, increasingly people are clubbing
the two together and including counterfeit goods in the defini on of 'grey' products.
The existence of a well-entrenched grey market is a truth in the Indian business

scene. The problem of 'grey markets' can be visualized as exis ng at various levels. Let
us look at the following situa ons to have a clearer percep on.
Suppose a customer is interested in buying a DVD player. She goes to an authorized

dealer and the authorized dealer tries to sell her a spurious product. This is common
in the case of branded electronic items, clothes, perfumes, and accessories. It is very
easy for unscrupulous manufacturers to make imita on of the actual product and try
to sell it as the real thing.
Some mes, in the case of pirated products, the buyers know that they are buying fake
items. They are willing to buy a product that gives them the same u lity as the real
product at a much lower cost. In many parts of India, people make a living by selling
pirated copies of so ware, movies, and video games to customers who know that
they are buying a pirated copy for a frac on of the cost of a legally procured copy.
Social Capital:
It is also loosely defined as Pehchaan in India or Guanxi in China. Social capital has
been defined as the aggregate of the actual or poten al resources that are linked to
rela onships of mutual acquaintance and recogni on (Bourdieu 1983). It can also be
referred to as connec ons or rela onships. Unlike other forms of capital, social
capital is not depleted by its use; rather, it is depleted by its non-use.
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People like to do business with people they know. Conversely, it becomes easier to do
business if you know the right people. They may be the people either in the industry
or in the bureaucracy. When rela onships take precedence over the principles of fair
play and rules, it leads to cronyism and nepo sm. Some mes, these rela onships
extend to doing special favours to others in your social group or caste and those
connected by kinship.
Portes (1998) has iden fied the following nega ve consequences of misuse of social
capital:
i. Exclusion of meritorious outsiders
ii. Excessive claims on group members
iii.Restric ons on individual freedom
iv. Norms aimed at downward levelling
Measuring social capital can prove to be tricky, but it depends on how many people
you know, how powerful are those people, and what they are willing to do for you.
There are a number of cases of entrepreneurs who have benefited by knowing the
right people and using it to their advantage.
Similarly, there will be a lot of cases of business failure that can be a ributed to not
having a close rela onship with some significant individuals. Whether use of social
capital for business purpose is right or wrong, can be argued for long, but its existence
is a reality that every entrepreneur has to deal with.
3.5 GROWTH OF ENTREPRENEURIAL
The entrepreneur in us sees opportuni es everywhere we look, but many people

see only problems everywhere they look. The entrepreneur in us is more concerned
with discrimina ng between opportuni es than he or she is with failing to see the
opportuni es."
Michael Gerber
Growth is a risky but necessary procedure for startups to survive. Growth may be
assessed in the context of employees, customers, revenue, liquidity, profit,
geographic loca ons and a variety of other dimensions. Regardless of the growth
type, hurdles always exist. An entrepreneur who understands the risks, and
knowingly takes them, will have a chance to grow; whereas one who is not willing to
take risks will not.
This ar cle describes both the risks and benefits associated with growth. It then
examines six hurdles entrepreneurs face when a emp ng to grow a company:
compnay culture, networks, strategic planning, money, company strucutre, and skill
development.
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Growth Risks
All companies undergo periods of growth. Periods of growth are turbulent for any
company, as they are inherently unstable and carry risk. In prac ce, there will always
be barriers impeding growth. It is both the will and the ability to overcome these
barriers which enable a firm to grow. The will, as an extension of the entrepreneurial
spirit, is needed as there are many companies which stagnate due to their
unwillingness to take the risks associated with growth. While growth may appear
risky compared to temporary stability, stagna on in a high-tech company increases
the risk of failure. Innova ng in response to changes in the market is a good way to
mi gate risk. Careful planning can decrease risk. Being able to an cipate the majority
of risks involved and successfully naviga ng them is what allows firms to grow.
Growth Benefits
Growth helps firms to establish legi macy, crea ng new op ons to grow. Larger firms
are sta s cally less likely to fail, encouraging trust in costumers and poten al
investors. It is during and right a er a period of growth that firms find it easiest to
acquire investment capital. Firms which are perceived as having crossed their ini al
startup hurdles are seen as being stable. With size comes an increase in profitability
and liquidity for the firm. This gives a firm a history, which partners and investors are
more willing to trust. Assets and finances will thus become more a ainable than they
were before. With growth, the firm forms new connec ons and is able to access new
markets. This results in an increase in sales, profitability and influence.
Company Culture and Networks

The personali es of the founders of a startup can be an important driving force in the
growth of the startup. The founders will determine the scope and vision of the
company, as well as the risks and deals the company will take. Founders are
responsible for shaping the culture of the company.
As the company grows, the founders will make na onal and interna onal
connec ons with suppliers, compe tors, customers and investors. Founders with
na onal and interna onal connec ons are more likely to grow their companies than
those with only regional connec ons. A large network allows companies to easily
expand and find partners in new regions which in turn allows them to quickly expand
their customer base. Being able to choose from a variety of markets, as well as the
ability to innovate internally, gives a company a greater ability to adapt to a globally
changing marketplace. This in turn allows for steady growth.
Strategic Planning
Firms require strategic planning, both short and long term, in order to succeed. Long
term success requires effec ve daily management and strategic decisions. It also
requires that these are not at the expense of the long term plan. Firms that do less
short and long term planning are at a greater risk for failure. Many firms pursue short
term contracts and quick profits without considering the long term impact of their
choices.
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It is easy for a firm to get discouraged when a long term strategy does not net
immediate results. Firms o en do not realize that se ng a long term goal, and
making strategic choices for that goal, will not give immediate posi ve results. Being
able to execute short term plans while aligning with long term goals may be difficult,
but is necessary to give the firm a vision which allows focus and unity amongst the
employees. A firm which only chases short term returns may be able to make profit
for a while, but will have a difficult me a emp ng to grow. Being able to set frequent
milestones and to guide ac ons towards a long term goal can be an effec ve way to
manage short term tasks. This allows short term goals to be put in the context of the
larger picture, while allowing for the tackling of each individual instance to be molded
for specific circumstances. It is a good idea for a company and its employees to know
their 1, 2, 3 and 5 year plans to unify the goals and allow transparency on how the
company is reaching its milestones.
Money Ma ers
Many companies plan poorly or take too many risks and face fiscal issues. Lack of
capital is a characteris c of a startup. Over-op mism on the cash that will be available
may be a deadly characteris c of a startup. Due to the high failure rates of startups, it
is difficult to secure large amounts of financing if one cannot guarantee a return on
investment. Most banks are unwilling to fund startups. Venture capital and angel
funding is also difficult to obtain as there are many more companies seeking such
funds than there are funds being given out. For many, government programs which
are usually less well known and thus have less compe on provide an alterna ve
funding source. Trade credit with suppliers is also a possibility.
Many startups bootstrap as a means to get started, as this method will not incur a
large debt. The best form of financing for a startup is from the customer that buys
products and services. This method allows for growth with a predictable increase in
income. Fiscal problems are common and repe ve during a startup's lifecycle. Being
aware that these problems will occur, and being prepared with a plan to proceed with
a limited budget, allows for a startup to grow with much less risk than one which
assumed that the money would be there when it was needed. The company must
plan for the possibility that it will not have the en rety of the finances it needs, and
come up with con ngencies. Financial planning needs to be an integral aspect of
short and long term strategic plans, with allowances for there never being as much
money as a company wants or expects.
Company Structure
When a company is small, it is possible for all informa on channels to be centralized
around one person, usually the founder, enabling that person to make decisions
quickly based on informa on directly from the source. During and a er growth, as
the firm loses some internal transparency, it is o en not possible for a single
individual to keep track of all the informa on without se ng up formal
communica ons channels. As the company expands, managing daily opera ons will
become exponen ally difficult, if the same managerial structure is kept. This creates
a double impact, giving the central figure less me to communicate with others, as
they spend increasing allotments of me a emp ng to manage opera ons. Many
firms find this difficult in the first growth cycle as the founder will o en not feel
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psychologically comfortable with giving up direct control over all aspects of the
company. Having a deep structure of shared rules and beliefs within the company will
allow such transi ons to flow smoothly. This allows the employees to work towards a
purpose rather than work at a specific job. The purpose will remain the same even
during turbulent growth, le ng employees know what is expected and what they
should do.
Skills Development
Inter-company training is a good way to accomplish stability during growth. Training
of employees should focus on the needs of the company, rather than what is available
externally to the company. Through a holis c training approach, it is possible to
create a deep structure which encourages employees to focus on goals and to strive
towards them. Training allows growth transi ons to pass easier as employees know
what is required of them in the overall context of the company, which allows them to
con nue to effec vely func on even when the individual details of their jobs change.
Training ins lls a sense of career into individuals who expect to stay and grow with the
company. Training makes it possible to switch employees' mindsets to that of the
company's culture, making them a be er fit for the company.
Closing Thoughts
Growth carries risk and the greater the growth, the greater the risk. It is not possible
for a startup to grow without being exposed to risk. Wai ng for a period of no risk
before a emp ng to grow will cause stagna on. The entrepreneurial spirit of
founders allows them to take risks and find opportuni es for growth in a variety of
circumstances. It is the ability to face failure, and the refusal to get discouraged which
leads to success.
There are numerous benefits to growth, as long as the growth occurs with an overall
long term purpose in mind. Every startup will run into funding issues, at concep on
and during growth cycles. Success will come to those who plan and do not give up or
stagnate. Growth will be turbulent for a company, so a company will have to be
flexible and adaptable during and a er a period of growth. Having a future vision and
se ng policies which everyone knows can help mi gate the turmoil. One cannot plan
for all risks, nor can one succeed without being able to take risks. The successful
entrepreneur will be flexible enough to work with any issue that arises, while not
losing focus on their long term goals.
3.6 ENTREPRENEURIAL FAILURE
As per a Harvard Business School study by Shikhar Ghosh, 75% of venture backed
startups fail. Overall, almost 90% startups and small businesses fail to survive beyond
the 5th year.
In India, the percentage of startups going to the IPO stage or providing an exit to
investors through M&A is lower than that in the USA, showing how difficult it is to
build a successful business in a matured startup environment like Silicon Valley's, or in
a developing one like India's.
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WHY DO STARTUPS FAIL?
I. PREMATURE SCALING — THE SILENT PREDATOR
One of the biggest killers for startups, and something which is not o en talked about,
is premature scaling. Premature scaling is o en camouflaged by short-term spike in
key metrics, when the business model, in reality, may not be as efficient as the metrics
suggest, and hence goes undetected l the business is on the verge of shu ng down.
Premature scaling means spending money on hiring and marke ng before you have
an efficient business model, or burning a lot more than your revenue without
securing funding for the immediate future.
A large majority of startups which have raised outside investment face this problem
at least once. The ones which succeed are mostly the ones which have founders who
are eager to learn more, have the right mentors to provide the right guidance at the
right me, and are hence able to pivot once or twice.
II. MENTORSHIP
Let us not confuse mentors with the hands-on approach VCs. In most of the cases, the
hands-on approach VCs have li le or no effect in the opera onal efficiency of the
business. The answers to all the problems do not lie in infusion of more funds to hire
more (apparently, be er) execu ves.
One key ingredient which most of the founders (first me) miss in their journey of
building a successful business is the right mentor. Somebody with segment
M o n it o r in g a n d
knowledge and exper se, and experience of troubleshoo ng and building a co n tro
successful business could, at mes, be the missing piece of the jigshaw.
III. OTHER COMMON REASONS WHY STARTUPS FAIL:

1. Lack of domain specific business knowledge
2. Overes ma on of the market need
3. Not having the right team
4. Underes ma on of the compe tors
5. Poor knowledge of the target group, resul ng in poor marke ng
6. Lack of passion and commitment in the founding team
3.7 SUMMARY
The Startups need to focus on entrepreneurial environment to develop the tool to
conquer the market .It is also necessary to keep a check on reasons of failure to save
business from that.
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UNIT 4
ROLE OF GOVERNMENT
Objectives
· Various roles of government in Entrepreneurial development;

· Various government organiza ons;
· Their Func oning.
Structure
4.1 Introduc on
4.2 DIC-District Industries Centre
4.3 SISI-Small Industries Service Ins tute
4.4 EDII-Entrepreneurship Development Ins tute of India.
4.5 Summary
4.7 Model Answers
4.1 INTRODUCTION
Government plays a very important role in developing entrepreneurship.

Government develop industries in rural and backward areas by giving various
facili es with the objec ve of balances regional development.The government set
programmes to help entrepreneurs in the field of technique,finance,market and
entrepreneurial development so that they help to accelerate and adopt the changes
in industrial development.Various ins tu ons were set up by the central and state
governments in order to fulfill this objec ve.
4.2 DIC-DISTRICT INDUSTRIES CENTRE
WHEN AND WHY WERE DISTRICT INDUSTRIES CENTRES INITIATED?
The industrial Policy 1977 contained the concept of District Industries Centres (DIC).
DIC program was ini ated on 1st May 1978 as a centrally sponsored scheme. It was a
landmark measure in development of co age and small industries in smaller towns in
India. DIC's were started with a view to provide integrated administra ve framework
at the district level for industrial promo on.
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ROLE OF GOVERNMENT
It is aimed at providing all assistance and support to entrepreneurs in various states.

These centres are responsible for effec ve promo on of co age and small scale
industries at district level. These centres also to provide support facili es,
concessions and services to develop ny, co age and district industries centres small
scale units.
OBJECTIVE OF DISTRICT INDUSTRIES CENTRES

The basic purpose of these DIC's is to generate more employment opportuni es for
rural people. It was intended to make the Centre as a central loca on for-
1. gran ng financial and other facili es to small units
2.developing close links with development blocks and specialized ins tu ons
providing help to set up industries in rural areas
3. iden fying and helping new entrepreneurs
RESOURCE FOR DISTRICT INDUSTRIES CENTRES

Financial assistance is provided by the Government of India for District Industries
Centre in the following manner:
1. A non-recurring grant up to Rs.2 lakh for construc on of an office building.
2. A non-recurring grant up to Rs.3 lakh for mee ng the expenditure on furniture
and fixtures, office equipment and vehicles.
3. Recurring establishment expenditure to the extent of 75 percent of the actual
expenditure, limited up to Rs.3.75 lakhs.
STRUCTURE OF DISTRICT INDUSTRIES CENTRES
DIC's comprise of:
One General Manager
Four func onal managers, of whom three would be in the areas of economic
inves ga on, credit and village industries. The fourth func onal manager may be
entrusted with responsibility in any of the areas like raw materials marke ng, training
etc., depending on the specific requirements of each district.
Three Project managers to provide technical service in the area relevant to needs of
the district concerned. Their role is to facilitate moderniza on and upgrada on of
technology in the small sector.
Ac vi es of District Industries Centres
1. Registra on of SSI units (Permanent/ Provisional).
2. Registra on of Handicra s/Co age industries.
3. Implementa on of Prime Minister's Rozgar Yojana.
4. Gran ng of Subsidies to SSI units.
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5. Distribu on of Project profiles among entrepreneurs.
6. Training for Entrepreneur Development Programme.
7. Organisa on of Industrial Coopera ve Socie es.
8. Raw Material assistance through SIDCO.
9. Allotment of sheds in Electrical & Electronic Industrial Estates.
10. Marke ng assistance through SIDCO.
11. Conduc ng Mo va on Campaigns.
12. Clearance of licences etc. through Single Window Mee ng.
13. Rehabilita on of sick SSI units.
14. Recommenda on of Awards to SSI units.
15. Recommenda on of loan applica ons to banks under KVIC Scheme.
4.3 SISI-SMALL INDUSTRIES SERVICE INSTITUTE
At the heart of all agencies dealing with development of small industry is small
industries development organiza on, SIDO. It was originally know as central small
industries organiza on (CSIO). A ached to the ministry, SIDO administers small
industries service ins tute (SISI's). The small industries service ins tutes (SISI's) are
set-up one in each state to provide consultancy and training to small and prospec ve
entrepreneurs. The ac vi es of SISs are co-ordinate by the industrial management
training division of the DC, SSI office (New Delhi). In all there are 28 SISI's and 30
Branch SISI's set up in state capitals and other places all over the country.
SISI has wide spectrum of technological, management and administra ve tasks to

perform.
Func ons of SISI
1.To assist exis ng and prospec ve entrepreneurs through technical and

managerial counseling such as help in selec ng the appropriate machinery and
equipment, adop on of recognized standards of tes ng, quality performance
etc;
2. Conduc ng EDPs all over the country;
3. To advise the Central and State governments on policy ma ers rela ng to small
industry development;
4. To assist in tes ng of raw materials and products of SSIs, their inspec on and
quality control;
5. To provide market informa on to the SISI's;
6. To recommend SSI's for financial assistance from financial ins tu ons;
7. To enlist entrepreneurs for par on in Government stores purchase
programme;
8. Conduct economic and technical surveys and prepare techno-economic feasible
reports for selected areas and industries.
9. Iden fy the poten al for ancillary development through sub-contract
exchanges;
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ROLE OF GOVERNMENT
10. Organize seminars, Workshops and Industries Clinics for the benefit of
entrepreneurs.
The Small Industries Service Ins tutes have been generally organizing the following
types of EDPs on specialized courses for different target groups like energy
conserva on, pollu on control, Technology up-grada on, Quality improvement,
Material handling, Management technique etc. as men oned earlier.
General EDP for educated unemployed youth, ex-service personnel etc. for a dura on
of four weeks. In these programmes, classroom lectures and discussions are held on
issues such as facili es and assistance available from State and Central government
agencies, banks, financial ins tu ons and Na onal Small Industries Corpora on.
Apart from this, exposure is given informa on regarding market survey, product
iden fica on and selec on, technologies involved, management of small
enterprises, par cularly in ma ers rela ng to financial management, marke ng,
packaging and exports.
The par cipants also interact with successful small scale entrepreneurs as a part of
their experience sharing Informa on of quality; possibili es of diversifica on and
expansion are also given.
The entrepreneurs are helped to prepare Project Reports based on their own
observa ons and studies for obtaining financial assistance as may be required. Such
courses have benefi ed many entrepreneurs to set up units of their own choice
4.4 EDII-ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF

INDIA
Overview
The EDII is sponsored by 4 apex financial ins tu ons which are the IDBI Bank, IFCI
Limited, ICICI Bank Limited, and the State Bank of India (SBI). The Gujarat State
Government had pledged 23 acres of land where the EDII campus is currently
situated at. The EDII has helped to set up 12 State-level exclusive Entrepreneurship
Development Centres and Ins tutes around the na on to secure its objec ve.
One of the greatest achievements by the EDII was by taking entrepreneurship to

several schools, colleges, science and technology ins tu ons, and management
schools across India by incorpora ng entrepreneurship inputs into their curriculum.
To enhance entrepreneurship research, EDII has established a Centre for the
Research in Entrepreneurship Educa on and Development, also known as CREED.
This Centre would inves gate a wide array of issues concerning the Small and
Medium Enterprise sector with an extensive network of researchers and trainers.
On an interna onal level, various efforts to develop entrepreneurship by sharing

resources and organising training programmes that were ini ated by the EDII have
helped it to earn accolades and support from interna onal organisa ons such as
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World Bank, Commonwealth Secretariat, UNIDO, ILO, FNSt, Bri sh Council, Ford
Founda on, European Union, ASEAN Secretariat and several other renowned
agencies.
Mission and Beliefs

The following is the mission of the Entrepreneurship Development Ins tute of India/
EDII.
To become a catalyst to facilitate the emergence of competent first-genera on

entrepreneurs and transi on of exis ng SMEs into various growth-oriented
enterprises through entrepreneurship educa on, training, research and ins tu on
building.
The following are the beliefs by which the Entrepreneurship Development Ins tute of
India/ EDII func ons in.
· Entrepreneurship is an essen al tool that facilitates the inclusive growth of

the society.
· Entrepreneurship educa on, training and counselling can be helpful in
finding progressive entrepreneurs.
· Entrepreneurship encourages the youth of the country to seek innova ons
and challenges. Thus, leading to op mal u lisa on of resources and wealth
crea on.
· Increased rate of entrepreneurship is an indicator of the overall na onal
economic growth.
· The country, by unleashing the EDII's enormous growth poten al, may be
placed on a high growth trajectory.
Func ons of EDII

Crea ng a mul plier effect on opportuni es for self-employment,
Augmen ng the supply of competent entrepreneurs through training,
Augmen ng the supply of entrepreneur trainer-mo vators,
Par cipa ng in ins tu on building efforts,
Inculca ng the spirit of 'Entrepreneurship' in youth,
Promo ng micro enterprises at rural level,
Developing new knowledge and insights in entrepreneurial theory and prac ce
through research,
Facilita ng corporate excellence through crea ng intrapreneurs,
Improving managerial capabili es of small scale industries,
Sensi zing the support system to facilitate entrepreneurs establish and manage their
enterprises,
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ROLE OF GOVERNMENT
4.5 SUMMARY
To develop and nurture the entrepreneurial sector, the support of the government is
crucial. Policies need to be adopted that can give a fillip to this sector. The Indian
government has taken several steps to ensure the growth of this sector and ins tuted
several bodies to promote entrepreneurial development in the country.Many
financial ins tu on for financing the small scale sector, providing development and
support services for promo ng small industries, and engaging with other ins tu ons
engaged in similar ac vi e.
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UNIT 5
ROLE OF FINANCIAL INSTITUTIONS
Objectives
· Various roles of Financial ins tu ons in Entrepreneurial development;

· Func ons of Financial organiza ons;
· Characteris cs of Financial organiza on.
Structure
5.1 Introduc on
5.1.1 Role of Financial Ins tu ons
5.2 NIESBUD -Na onal Ins tute for Entrepreneurship and Small Business
Development
5.3 NEBD- Na onal entrepreneurship Board of Development
5.4 Summary
5.6 Model Answers
5.1 INTRODUCTION
Role of Financial Ins tu ons
Generally, a 'Financial ins tu on' is established mainly to provide longterm capital for
Industries & agriculture. These financial Ins tu ons play an important role in the
development of SSIs and entrepreneurship. They have mostly been set up statutorily
by the government but some private sector par cipa on in the ownership and
func oning of some of them may also exist. Usually recognized as specialized
ins tu on, they are also recognized as "Development Bank" or Term Lending
Ins tu on or "Special Development Financial Ins tu on." In this context
Government of India (GOI) started a series of financial ins tu on since independence
to provide term finance to the industry such as IFCl, SFCs, ICICI, IDBI, Unit Trust of
India (UTI), Na onal Industrial Development Corpora on (NIDC) and Na onal Small
Industries Corpora on (NSIC) etc. which are discussed as under: Industrial Financial
Corpora on of India (IFCI): To meet the longterm finance needs of entrepreneurs
several commission and commi ees such as "Industrial Commission (1916-18), the
External Capital Commi ee (925) and the Indian Central Banking Enquiry Commi ee
(1929-31) had stressed the need for se ng up of such ins tu ons, but no ac on was
taken by the Government. But the greater need to finance the over-worked units
during the Second World War period forced the Government to set up Industrial
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ROLE OF FINANCIAL INSTITUTIONS
Finance Corpora on of India, which came into existence on the 1st July 1948. The
Corpora on came into existence with an aim to provide medium and long term credit
to large scale 55 industries, organized as public limited companies or coopera ve
socie es in India, engaged or proposing to engage in manufacturing, preserva on or
pricing of goods, mining, genera on and distribu on of electric power or any other
source of power, shipping and hotel industries in India par cularly in circumstance
when normal banking accommoda on is inappropriate or resource to capital issue
method is imprac cable. IFCI is the first term-financial Ins tu on which was set up in
July 1948 by the Government of India under the IFCI Act 1948 with objec ve of
providing medium and long-term loans to largest small Industrial concerns in the
private sector.' However, joint and public sector also have been made eligible for its
assistance. It provide direct rupee and foreign currency loans for new industrial
projects and for expansion, diversifica on, renova on and moderniza on of exis ng
units, It also underwriter and directly subscribe to industrial security, provided
financial guarantees merchant banking services and leave finance.
Main resources of the IFCI are;

(a) Loan from RBI,
(b) Share capital,
(c) Repayment of loans,
(d) Retained earning,
(e) Loan from Government,
(f) Lines of credit from foreign lending agencies; and
(g) Commercial borrowings in interna onal capital market.
It has introduced a number of financial promo onal schemes on its own.The le er

includes eight consultancy fee subsidy schemes, and two entrepreneurship
development schemes. It has formed IFCI Financial Limited.
5.2 NIESBUD -Na onal Ins tute for Entrepreneurship and Small
Business Development
Na onal Ins tute for Entrepreneurship and Small Business Development (NIESBUD):
In 1983, the Ministry of Industry, Government of India established Na onal Ins tute
for Entrepreneurship and Small Business Development (NIESBUD) for
entrepreneurship development especially in areaof SSIs. NIESBUD was established as
an apex body to co-ordinate the ac vi es of various ins tutes and agencies engaged in
entrepreneurship development to organise and conduct training programmes for
them. The Ins tute is registered as a society under Government of India Socie es Act,
XXI of 1860 and started func oning from 6th July, 1983. It is also the secretariat of the
Na onal Entrepreneurship Development Board the apex body which determines
policy for entrepreneurship in the country. The ins tute provides training to various
target groups by evolving standardised model syllabi for the respec ve groups. The
programmes organised by the Ins tute are government funded and its training
ac vi es are restricted to s mula ng, suppor ng and sustaining entrepreneurship, in
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areas where the demand for such programmes is high or where there are no
organisa ons conduc ng such programmes. 80 NIESBUD plays a suppor ve role in
developing the efficiency of organisa ons which are directly or indirectly engaged in
promo ng entrepreneurship. The main objec ves of the Ins tute are to accelerate the
process of entrepreneurship development and to support and help
ins tutes/agencies involved in entrepreneurship development to improve their
efficiency. The other objec ves are to evolve standard processes of selec on, training,
support and sustenance to poten al entrepreneurs, to provide vital informa on and
to provide func onal forums, for interac on and exchange of experiences helpful for
policy formula on and modifica on at various levels. The policy direc on and
guidance to the ins tute is provided by its governing council whose chairman and vice-
chairman are the Union Industry Minister and Union State Minister of Industry
respec vely.
5.3 NEBD- Na onal entrepreneurship Board of Development
The Na onal Entrepreneurship Development Board was formed in 1983 with Industry
Ministry as its Chairman and Minister of State as its Vice-Chairman along with other 20
members. This Board is the apex body for recommending policy issues covering
facili es and incen ves needed for accelera on of entrepreneurship development.
NIESBUD is the Secretariat of the Board and the Execu ve Director of NIESBUD is its
member secretary.
5.4 SUMMARY
To develop and nurture the entrepreneurial sector, the support of the financial
ins tu ons is crucial. Policies need to be adopted that can give a fillip to this sector.
Financial ins tute give ample of support to flourish and develop company to the
entrepreneurs.
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UNIT 6
DOING BUSINESS IN INDIA
Objectives
· What all it takes to do business in India;

· What are major issues and challenges;
· What are various type of organiza on ;
· Legal compliances for opera ng business .
Structure
6.1 Introduc on
6.2 Major Issues and Challenges
6.3 Ethical Approach
6.4 Types of Organiza on
6.5 Legal Compliances.
6.6 Summary
6.8 Model Answers
6.1 INTRODUCTION
Doing Business In India
Know your market
The Indian market is as diverse and extensive as the country itself. The overall market
is made up of a complex collec on of submarkets. Each of these smaller markets
requires its own approach, geared to the sectors and intended customers. Iden fy
your specific customer group clearly and think carefully about how you want to
achieve them. Entrepreneurs must tailor their products to local needs and
requirements. Consult the large amount of secondary data available on the Indian
market and the various submarkets.
The key points to ponder on are :
Iden fy suitable local partners
Many companies that have successfully entered the Indian market underline that it is
important to put a lot of effort into finding a suitable local partner. The Indian market
is very complex and personal networks and connec ons are very important. Local
43 | Page
partners can give input to local networks and connec ons that are difficult for foreign
entrepreneurs to approach. Dutch companies that have invested me and effort in
finding the "perfect match" have experienced that they could thus save the task of
finding other partners. RVO.nl can also help you find suitable business partners.
Become familiar with the business culture
The Indian way of doing business is based on rela onships. Indians want first to build
a good rela onship and mutual trust before they hit nails. This requires a lot of me
and a en on, both on a business and personal level. Avoid the "Dutch" directness
and do not immediately nego ate when you are s ll building the rela onship.
Become familiar with the bureaucra c and legal system
The legal system and procedures are well-developed in India, but for newcomers they
can be incoherent and difficult to fathom. It is important to know exactly what
implica ons the legal system has to prevent legal or bureaucra c problems at a later
stage. Unexpected tax levies on lump sum payments, royal es, and payments may
affect your business model. Most companies outsource the regula on of government
and tax issues or gain professional advice to prevent unnecessary complica ons.
Become familiar with the business system
The juridical structure and shareholder distribu on of your company is very

important. Think about this carefully. If this is not done with care, a company can
spend a lot of money on unnecessary taxes. Certain legal structures require a local
partner who represents your company in India. If a local partner is required, carry out
a due diligence inves ga on and a careful inspec on of the intended joint venture
company. It is advisable to call in professional support for this process to proceed
smoothly.
Become familiar with the networking and nego a ng structures
Nego a ons are an essen al part for doing business. Indians assume that
nego a ons must take place during business mee ngs and it is customary for them
to show their emo ons.
Agreements and contracts are not laid out in stone and provisions are o en
renego ated. The inten on, based on a rela onship, is ul mately much more
important than the signature.
It is advisable to include detailed force majeure and arbitra on condi ons in the
agreements, in addi on to clear dissolu on provisions in the occurrence of certain
circumstances.
Make sure that property rights can be transferred to the company and not under a
power of a orney.
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Management and employers
Inves gate whether it is really necessary to place Dutch people in certain posi ons,
especially as a director, since the use of local employees offers great advantages.
Before you determine the HR policy, you should know how all local employment
condi ons, income levels and social costs are regulated. The biggest challenge is to
create a good and effec ve link with the parent company in the Netherlands. In this
context, it is advisable to ensure a balanced mix of Dutch and local employees.
Business development techniques
Tapping into the Indian market requires a long-term strategy and pa ence.
Companies must do their homework and master the specific characteris cs of doing
business in India with a flexible and open mind. Ensuring awareness and emphasizing
how your product can contribute to specific market niches are important steps in the
further development of your business in India.
Gain advice from a professional
In these recommenda ons we give a concise overview of the points of a en on, but
entering the Indian market requires more in-depth research. Doing business in India
is a complex ma er and there is more to it than we can deal with in this advice. Dutch
companies are ac ve on a wide variety of Indian (sub) markets and sectors. You are
strongly advised to seek expert advice in the following areas when entering the Indian
market: market research, fundraising, cross-border acquisi on, assistance with joint
ventures, transac ons and insurance, tax planning, transfer pricing, and government
and infrastructure.
6.2 MAJOR ISSUES AND CHALLENGES
In 2011 in a published WB report, India is ranked 132nd, in terms of 'ease of doing

business' and a disheartening 166th, in terms of 'star ng up new businesses'.
It's quite apparent that it's a lot more difficult to start a new business in India than it is
to remain engaged in doing an exis ng one. I propose to iden fy some of the
behavioural and policy issues, which we need to address in such an environment, so
that a fast-growing market can be a profitable one too.
The gaps in the rankings essen ally means that having navigated the regulatory
environment to overcome the start-up challenges, the organisa on is rela vely
be er-equipped to manage the business going forward, as the hurdles are less, with a
be er ranking for “ease of doing business”. Yet, one cannot ignore the key policy and
regulatory challenges that companies and organisa ons face in India. This gets even
more amplified for new ventures.
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ISSUES AND CHALLENGES
GOVERNANCE FRAMEWORK
The biggest challenge that most mul na onal companies face is the unique
architecture of the Indian governance framework, which is badly intertwined
between the Central and State structures. Hence, the a rac veness of con guity of
geography needn't enable simplicity of market access, and may not even offer
benefits of scale due to logis cs op misa on.
The reasons are simple. State laws and incen ves are structured to a ract
investments which local leadership see as cri cal to driving economic growth, and are
also dependent on electoral cons tuencies of ruling par es.
An interes ng example is alcohol. You can buy a bo le of wine or beer within a mile's
length of desire in Bangalore, but 50 km away in the state of Tamil Nadu, you would be
hard-pressed to even locate a store.
It's not uncommon for neighbouring State Governments to have vastly differing
legisla ons on labour, land acquisi on, commercial taxes, priority sector
categorisa on for incen ves, and intrastate movement of goods.
These come into play in a substan al way when planning investments in India. Very
o en, companies get lured with incen ves and/or hinterland market access, yet
realise much later that it doesn't translate to improved returns on capital employed.
A classic example is the currently applicable duty on automobiles, which includes

customs duty, CENVAT, excise duty, central sales tax, motor vehicles tax, passenger
and goods tax, state sales tax, and addi onal road user/toll taxes. All of which ensure
that you could buy a car manufactured in Gurgaon at a much cheaper price 2,000 km
away in Goa or Pondicherry .
In addi on, du es and levies see frequent changes in the Annual Central and State
budgets presenta on exercise.
POLICY ENVIRONMENT
And not all MNCs are able to cope with the uncertainty and want of clarity around the
policy environment. A good example of the recent past is the telecom sector, which
saw a huge enthusias c entry of large MNCs when the sector was opened up for FDI,
and soon enough, many exited, thanks to the ever-changing policy framework. The
few that survived were mostly Indian, and earned good returns. The boldest of them
all, Vodafone, a start-up MNC, con nues to ba le the Government in the Indian
courts. The risk of an uncertain regulatory environment eventually ensures that those
who survive usually do so with good returns. This brings us to an interes ng
conundrum, when we compare ourselves with China. While most sta s cs reveal
that FDI in China is almost three mes that of India, yet, in terms of GDP growth, China
delivers just a percentage point more than India. Consequently, it may be assumed,
with some degree of certainty that the return on capital for investments, made by
foreign firms in India is, on an average, higher than China.
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A recent McKinsey study showed that the nine market leaders by category in India
enjoyed a ROCE (Return on Capital Employed) of 48 per cent, and even the next 26
enjoyed a ROCE of 36 per cent. Implicit in the return is the reward for managing the
regulatory risk. Interes ng inclusions in the list are Korean white-goods-maker LG and
automobile giant Hyundai, and Japanese automo ve giant Suzuki. Surprisingly, these
companies don't enjoy market leadership in their very own home countries, which
score far higher than India in terms of 'ease of doing business' or 'star ng up anew'.
The one common theme visible across these companies is their willingness to remain
engaged with the regulatory environment and manage the concomitant
uncertain es. Their ability to win includes, in large measure, their capacity to allow
scale to subsume the vagaries of an uncertain poli cal and regulatory environment.
Very few markets on the planet con nue to offer the opportunity of scale to drive
interest from policymakers at a Government-to-Government level. This, in a sense,
forces the Government to ensure modera on in policy level interven ons, and limits
the risk of any poten ally-destabilising policy dispensa on. Simultaneously, it leaves
enough on the table to help enhance returns by carefully understanding the policy
regimen. As all countries emerge from their current crises, there will be increased
regula on, and business leaders need to build a deep understanding of the
regulatory environment and governance frameworks, to deliver improved returns for
their enterprise.
JOINT VENTURES
The coming decade will be a decade of momentous change, as India integrates be er
with the global economy, focuses on driving greater compe veness, and draws up a
policy framework to enable a more transparent governance structure. Those MNCs
that par cipate in this process are likely to posi on themselves more strongly to
succeed, compared to those that rely on local Indian partners or JVs. The reason isn't
difficult to fathom. Indian JV partners would be mostly family-owned or state PSUs,
and, in most cases, diversified. Consequently, they may o en have compe ng
priori es in leveraging their rela onship with the Government, and hence deferring
to them for insights is fraught with inherent risks.
In fact, many a mes these conflic ng interests can make the task of se ng up a new
business in India appear a lot more difficult than it might actually be. From my own
experience of having been involved in the se ng up two new businesses for an MNC
in India, a key driver of success has been the ability to understand the regulatory
environment and factor in the risk-reward from policy changes in the “best case
scenario”, while developing the business forecasts. You may not always get it right,
but if you do, then your fastest growing market could well be your most profitable one
too. A story that most shareholders like!
(The author is Global Head, Business Intelligence and Strategy Analysis, Shell India
Markets Pvt Ltd. The views expressed are personal.)
Land acquisi on in India

Land acquisi on remains complex, because of the difficul es in establishing legal
ownership and a 'clean' holding for purchase. There may be li ga ons due to
47 | Page
inheritance, fragmented holdings, and demands by sellers to be paid in cash.

Establishing true land ownership is fraught with issue.
Construc on permits
India was ranked 185 among 190 na ons surveyed by the World Bank in 2017 over
the me it takes to receive a construc on permit a er filing an applica on.
Previously, it took 164 days and 42 pro-cesses to get a construc on permit in
Mumbai, and 213 days and 29 processes in Delhi. Now it takes only 60 days following
eight online procedures to get a construc on permit in both ci es, but thorough
guidance is needed to navigate the complex process in other parts of the country.
Electricity
The Indian government's rural electrifica on programme saw the country move up to
the 26th spot in the World Bank's electricity accessibility ranking in 2017, from 99th
spot in 2014.
The me to obtain an electricity connec on in Delhi has dropped from 138 days four
years ago to 45 days, involving five procedures. But demand is currently outstripping
supply, as the economy booms, and there is a poten al for power outages.
Infrastructure
There is much focus on infrastructural development, boos ng road transport,

crea ng dependable power genera on, and modernising state-owned railways.
Roads, ports, railways, and solar energy are vibrant investment opportuni es. But
whilst the investment is much needed, it will be several years un l it comes to
frui on. In the mean me, an infrastructure straining at the seams poses a challenge
to distribu on and logis cs.
Registering property
Registering a property can be a me-consuming process, with a bewildering range of

charges. The registra on fee for property documents is 1% of the value of the
property, subject to a maximum of Rs 30,000. Stamp duty is compulsory but different
rates of stamp duty are payable in different states, depending on the legisla on
prevalent in that state. Professional guidance is recommend-ed.
Investor protec on and enforcing contracts
In order to afford adequate protec on to the investors, provisions have been

incorporated in dif-ferent legisla ons such as the Companies Act, Securi es
Contracts (Regula on) Act, Consumer Pro-tec on Act, Depositories Act, and Lis ng
Agreement of the Stock Exchanges supplemented by many guidelines, circulars and
press notes issued by the Ministry of Finance, Ministry of Company Affairs and SEBI
from me to me.
The ini a ves taken by SEBI in the area of “ease of doing” business include
ra onalisa on of know-ing your customer (KYC) norms, increasing the number of
arbitra on centres and simplifying FPI (foreign por olio investor) norms for inves ng
48 | Page
in the debt market. Likewise, the Indian govern-ment is tackling the country's poor
track-record in enforcing contracts.
Some of them include new insolvency norms, increased rights for minority investors,
and designat-ing a few district courts in Delhi and Mumbai as commercial courts, able
to hear cases involving dis-putes of under Rs 1 crore. The government and the
regulators are pro-ac vely learning from global best prac ces.
However, there are s ll a few areas that need improvement, for instance fixing the
accountability of auditors, and improving regulatory oversight and enforcement, but
it will be a take me before new measures come into force.
India ranks s ll ranks a low 164th among 190 countries on enforcing contracts,
according to the World Bank. On average, it takes 1,445 days (almost four years) for a
dispute to be resolved, com-pared to 165 days in Singapore, which topped the list, or
1,102 days (three years) in South Asian countries, which include India's neighbours.
And it takes, on average, 31% of the value of the claim to se le a dispute.
Exports and imports
Exporters and investors face non-transparent and o en unpredictable regulatory and

tariff regimes.
Despite government legisla on to improve interna onal trade, there are s ll various
hurdles to impor ng and expor ng goods. Custom duty rates can be specific (rupees
per unit) or ad valorem (percentage of value). In general, duty varies anywhere from
0% to 150%.
Other fees related to Custom du es includes Landing Charge, Countervailing Duty

(CVD), Educa on Cess, Addi onal CVD, and Integrated Goods & Services Tax (IGST).
Several layers of bureaucracy make it challenging to move goods efficiently, and
companies must file a long list of documents before moving products across borders.
India has implemented a Goods & Service Tax (GST) with effect from 1st July, 2017
which now requires the exporters to obtain a Le er of Undertaking (LUT) / Bond prior
to export without payment of GST in India.
To encourage exports, the government of India provides certain benefits to exporters

from me to me. For instance, the Service Exports from India Scheme (SEIS) of the
Foreign Trade Policy 2015-2020 has been launched since 1 April 2015, offers service
exporters a grant of a transferable duty credit scrip @ 2% to 5% of Net Exports that
can be used for a variety of purposes, including payment of customs duty.
Intellectual property protec on
The government of India made it easier in 2016 to register trademarks online with the
newly hired 100 trademark examiners and reduced the 13-month review period for
trademarks to eight months with the goal of lowering it to just one month. Cu ng the
average me for addressing pending intellectual property rights applica ons from
more than five years to 18 months is also on the agenda.
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Despite these efforts, India's overall score improved only marginally in the fi h
edi on of a global intellectual property index compiled by US business-lobbying
group, the US Chamber of Commerce, and published in 2017. The annual index
printed along with a report tled “The Root of Innova on,” gave the country a score
of 8.75 out of 35, compared to 7.05 in 2016, ci ng “fundamental weaknesses” in the
country's intellectual property framework.
The index scores countries in six categories: patents, copyrights, trademarks, trade
secrets and market access, enforcement, and ra fica on of interna onal trea es.
India ranks a poor 43 out of 45 countries.
Despite increased legal protec on, copyright infringement is s ll rampant in India

due to lax administra on and enforcement prac ces and are not in line with many
developed economies.
Recruitment in India
Accessing the right skills can be a challenge, as can staff reten on and high levels of
employee turnover. Employment laws in India are complex although again, the
government is seeking to im-prove the legisla ve hurdles to employing indigenous
Indians, and foreign na onals. At present, there is a huge variety of laws, ranging
from payment of gratui es to gender discrimina on.
6.3 ETHICAL ISSUES
BUSINESS ETHICS AND CORPORATE GOVERNANCE
The term ethics describes a set of principles that provide a framework for conduct.
Ethics is all about rules governing the way in which we determine what is 'right' or
'wrong', 'good' or 'bad'. The golden rule of ethics is o en termed as 'Ethics of
Reciprocity', which states that “Do unto others as you would have them to unto you”
i.e. “treat others as you would like to be treated, if you were them”. Business Ethics is
concerned with the applica on of ethics to the business ac vi es. Ethical business
behaviour facilitates and promotes good to society, improves profitability, fosters
business rela ons and employee produc vity. Corporate Governance is a set of
systems and prac ces to ensure that the affairs of the business are being managed in
a way which ensures accountability, transparency, fairness in all its transac ons in
the widest sense and meet its stakeholders aspira ons and societal expecta ons. In
the new environmental context, corporate governance is no longer a luxury but a
necessity. The quality of governance has become one of the key tests and one of the
major drivers of shareholders value. Be er governance facilitates easier access to
capital from domes c market. A transparent regulatory framework and be er
disclosure system are crucial for a rac ng foreign investors as well. In India,
corporate governance has assumed significance and urgency due to the changing
profile of corporate ownership, preferen al allotment of shares to promoters,
increasing flow of foreign capital and dismantling of control that hitherto provided
protec ve cover to poorly managed corporates.
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ETHICAL ISSUES IN BUSINESS

The issues of business ethics have become increasingly important in the globalized
business environment where compara ve advantage and compe ve edge are
central to business decision-making. In a highly diverse and intensely compe ve
environment, managers are faced with difficult situa ons and o en have to take
tough decisions, which are not only right, fair, and proper (Hosmer, 1991) but also
effec ve (Hosmer, 2000). Managements are faced with ethical issues frequently and
with increasing pressure on individuals and businesses both for ethical behaviour
(Ford and Richardson, 1994 and Trevino, 1984), they are expected to have a well-
developed moral imagina on (Werhane, 1998) in order for them to act ethically. An
ethical dilemma exists when two or more values are in conflict. Jackson (1996:8)
suggests that there are two kinds of difficul es we face―
Difficulty of iden fica on, which is recognizing what is your duty in a par cular
situa on, and
Difficulty of compliance, which is doing your duty, once you know what it is (1996:8).
This means that when faced with an ethical issue, first and foremost, it is the ability to
recognize the moral issue in order to make ethical decisions. Next come the choices
that one makes in order to act ethically.
A number of factors may influence the ethical decision making process. According to
Hunt and Vitell (1986) the individual ethical percep on of the situa on is influenced
by a sum of cultural, organiza onal and industrial environment along with personal
experiences. For Trevino (1986), in organiza onal context both the individual and
situa onal factors affect the decision-making. 3 Examples of Ethical Issues in Business
Reputa on is a company's biggest asset so you would think companies would avoid
engaging in shady business prac ces. However, many large corporate find their
reputa ons and credibility destroyed due to prac ces that are harmful and illegal.
3 Walmart
The standard business prac ces of "bigger is be er" does not seem to hold true when
it comes to ethics, for sheer size by itself raises allega ons of poor business ethics, as
seen in the case of Wal-Mart. Wal-Mart very o en finds itself slapped with lawsuits
that accuse it of predatory pricing, or pricing products too low to drive compe on
out of business and gain a monopoly in local markets. Among several lawsuits, the
one in 2003 struck, where Germany's High Court ruled Wal-Mart's low-cost pricing
strategy "undermined compe on."
3.1.2. Ci Bank Deciding to spend $50 million on a new private jet a er taking $45
billion in taxpayer funds to stay afloat, as Ci bank did is a textbook example of bad
business ethics. To make ma ers worse for Ci Bank, CEO Vikram Pandit lied to
Congress that he received a compensa on of one million a year when the actual
figure was $11 million.
4. INDIAN SCENARIO Much has been wri en about the benefits of doing business in
India — low input costs, easy access to labor and a massive consumer base. Less has
51 | Page
been said about the ability of companies in India to thrive by bending rules, greasing
palms and broadening ethical boundaries. At a me when the issue of corrup on
threatens the stability of the Indian government and scandals unearthed in sectors
from sports to telecommunica ons total tens of billions of dollars, it is becoming
increasingly cri cal for mul na onal managers to ask whether business success in
India comes at an ethical cost. India's lax ethical standards, coupled with a rigid
bureaucracy and weak enforcement mechanisms, have certainly hurt the country in
many ways. The causes of this fiscal pain can be seen at the government, corporate
and individual levels. As Ratan Tata, chairman of the Tata Group, observed, “If you
choose not to par cipate in corrup on, you leave behind a fair amount of business.”
Scandals in the poli cal and business spheres seem to have become endemic in India.
The infamous “2G” scandal of 2008, in which the government granted
telecommunica on licenses on a first-come-first-served basis instead of through an
auc on, is es mated to have cost taxpayers US$40 billion. Lax corporate governance
has also hurt investor confidence, as illustrated by the revela on of ques onable
accoun ng prac ces at Satyam Computer Services. This 2009 scandal saw US$70
million in real assets transformed into US$1 billion in imaginary assets and sent the
Bombay Stock Exchange tumbling 5% in a single day. Goldman Sachs India admi ed
that growth to date has been slow, as the company's priority has been to protect its
reputa on by dealing only with clients with the highest ethical standards. The
German firm Enercon, the world's fi h-largest wind turbine manufacturer, was
forced to walk away from its US$566 million joint venture a er being in midated by
authori es and failing to find legal recourse to what it termed “government-abe ed
the .” In a market economy, the customer is supposed to be the 'king' who
determines what to produce, how to produce and by whom to produce. The
economic wheel moves around his whims and fancies. Businesses which disregard
the wishes of their customers fade away into oblivion, says management books. Yet,
customers across all regions of India are taken for a ride by unethical business
prac ces.
6.4 TYPES OF ORGANIZATION
According to different methods of distribu on of authori es and responsibili es, the

organisa on are of following types: 1. Line or Scalar Organisa on 2. Func onal
Organisa on 3. Line and Staff Organisa on 4. Line, Staff and Func onal Organisa on
5. Commi ee Organisa on.
Type # 1. Line or Scalar Organisa on:
This type of organisa on is also known as departmental or military type of

organisa on.
In this type of organisa on business ac vi es are divided into three groups, namely fi-
nance and accounts, produc on and sales. Each of this department is sub-divided
into certain self-contained departments, i.e., sec ons.
Each departmental head has sole control over his sec on and has full authority to
select his labour, staff, purchase of raw materials, stores and to set the standards of
52 | Page
output, etc. Foreman of each shop trains new men and supervises the quality of
output.
In such a system superior exercises a direct authority over his subordinates who
become en rely responsible for their performance to the commanding superior. No
opera on is under two bosses:
The following is the chart of line organisa on:
This is known as military type organisa on, because in military discipline is of high
order. Orders and instruc ons issued from the top have to be followed by the lowers.
Similarly in this type of organisa on, order of General Manager are to be carried out,
without any say by subordinates and hence no chances of shi ing of responsibility as
in military and hence known as military type organisa on.
This is known as military type organisa on, because in military discipline is of high
order. Orders and instruc ons issued from the top have to be followed by the lowers.
Similarly in this type of organisa on, order of General Manager are to be carried out,
without any say by subordinates and hence no chances of shi ing of responsibility as
in military and hence known as military type organisa on.
As in this organisa on, the flow of authority moves from top to bo om in ver cal
lines, therefore, this is also called line or scalar organisa on.
Advantages:
1. A clear-cut division of authority and responsibility, hence no scope of shi ing the
responsibility.
2. Strong in discipline.
3. It permits quick decisions.
4. As responsibility of each individual is fixed, hence faults can be easily and quickly
known.
5. Everybody from top to bo om remains busy like a machine and hence total cost of
product will be less.
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6. It is simple to understand.
7. Flexible and able to extend or contract.
Disadvantages:
1. It requires different departmental heads to be expert in their respec ve
func ons, hence lack of specialisa on.
2. Departmental heads are over-burdened with various rou ne jobs, hence no me

for further expansion and planning.
3. Certain people become key points and they are loaded maximum with work.
4. Chances of accidents, wastage of material and labour are more because of

insufficient knowledge of all the work by one man.
5. Chances of delay in reaching the orders of General Manager or any other

departmental head upto the workers and, therefore, possibility of distor on,
due to long channel.
6. Over-burdened foreman may not be able to give sufficient me for each job and
will cause wastage and error.
7. It has no means of rewarding good workers.
Applica ons:
1. Such organisa ons are suitable for factories of small and medium size, in which
subordinate and opera onal staff is not too much.
2. Suitable for con nuous process such as sugar, paper, oil refining, spinning and
weaving industries etc.
3. Suitable where labour problems are not difficult to solve.
4. Suitable where automa c plants are used.
Type # 2. Func onal Organisa on:
The difficul es in finding all round qualified man to be foreman in the line
organisa on are overcome with this type of organisa on. He is replaced by various
func onalised people.
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This system is advantageous because each supervisor is specialised in a par cular

field and he a ends to one factor in all the departments. Below is its layout:
In chart (b) these different bosses are just like foreman. In some factory, they are
called foreman and in another factory they may be designated as gang boss, speed
boss etc. Each boss goes to individual workman for instruc ng and guiding about his
ac vity.
Chart (b) is a short and simplified form showing the structure of func onal type of
organisaion, chart (c) shows the order of authority and the stages in the organisa on.
In this, specialised people like chemists, purchasers, engineers, designers etc. are
employed under the produc on superintendent and everybody is supposed to give
his func onalised advice to all other foreman (bosses) and workers. Every foreman
(boss) will go to individual worker for his related func on.
This type of organisa on is some me called “Taylor's organisa on” as it was for the
first me introduced by F.W.Taylor. Taylor said that the well qualified foreman
required brain, educa on (special or technical knowledge), manual strength, tact,
energy, honesty, judgment or common sense and good health.
He believed that a man with three of these quali es could be hired at any me. If four
were required, it was necessary to secure a higher priced man. The man combining
five of the quali es was hard to find and the one with six, seven or eight almost
impossible to discover.
Therefore, Taylor employed func onalised bosses and as far as the workman was
concerned, instead of coming in contact with the management at one point, only he
was to receive his daily orders and help directly from eight different bosses. Four of
these were located in the planning room and four in the shop as shown in chart (c).
Advantages:
1. Due to specialisa on quality of work is be er.
2. This system provides more specialised knowledge and guidance to individual

workers through experts.
3. It helps mass produc on by standardisa on and specialisa on.
4. If any opera on needs improvement, it can be improved even upto the last
moment.
5. Considerable expansion of the factory is possible.
6. Since for every opera on expert guidance is there, hence wastage of material
will be minimum which will reduce prime cost.
7. Unnecessary overloading of responsibili es will not be there, as was in the case

of line organisa on.
8. No special knowledge of workers is required as the instruc ons are supplied by

drawing and experts.
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Disadvantages:
1. It is complicated from control point of view as every func onalized expert feels him-
self to be superior than the other and there is no one-man control over the workers.
Therefore, it makes discipline problem difficult to solve among lower level.
2. By employing high waged experts, the total cost of job may become high.
3. As line workers will not be using their skill, their ini a ve cannot be u lised.
4. Shi ing of responsibility is possible.
5. The failure of any of the expert will largely affect the produc on because, if any
expert tells wrong opera on, there is no other body to correct him. This will result in
large wastage of material.
6. Proper co-ordina on of the work of different departments is required but it is

difficult to maintain as everybody is working individually.
Applica on:
In prac ce a pure func onalised system is rarely found. In fact, a factory where
responsibili es are divided on a func onal basis, line rela onship may also exist. This
is suitable for large manufacturing concerns which are capable of expansion in future.
Type # 3. Line and Staff Organisa on:

In a firm of large size opera ng on big scale, managers cannot give careful a en on to
every part of management. They are unable to think and plan. They are busy with
ordinary task of produc on and selling. Hence 'Some Staff is deputed to do other
works like inves ga on, research, recording, planning and advising to managers.
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Thus staff brings specialisa on by assis ng the line officers. The line maintains
discipline and stability. Staff provides expert informa on and helps to improve the
overall efficiency. Thus the staffs are 'thinkers' while lines are 'doers'.
A staff man usually controls one func on of business of which he is an expert. Usually
the staff has no administra ve authority, but an expert in some phase of opera on.
He reports to the execu ve and gives the advice on the subject of his specialty.
Advantages:
1. It is a planned specialised system.
2. Quality of product will be be er.
3. Wastage will be less.
4. Expert knowledge is available.
5. Sufficient me is available to general manager for future planning and
expansion.
6. Discipline problem is solved because of line rela onship.
Disadvantages:
1. Sufficient expert knowledge and guidance is not available as compared with
func onal type.
2. Lack of responsibility among higher levels and hence the discipline as a whole
will be poor.
3. The overhead cost of product may rise, because of high salaried staff.
4. The slackness of any sec on or department will largely affect whole working.
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Applica on:
Now-a-days this type of organisa on is preferred for medium and large scale
industries, depending upon internal structure, nature of produc ve ac vi es and
span of business area. It is applied in automobile industries and other intermi ent
nature of industries.
Type # 4. Line, Staff and Func onal Organisa on:
Because of scien fic methods, enough market compe on and complica ons in the
business, to obtain a sound system, the combina on of line, staff and func onal type
of organisa on is required.
In this system, as regards the discipline and output are concerned, the workers are
kept under the direct control of foreman.
As regards quality, the inspector will have the proper authority to control the quality
and he can directly order the workman as in the func onal organisa on.
In the staff rela onship, there may be research department for the analysis of raw
materials, semi-finished and finished products to withstand market compe on.
In this way all the three are combined together and as this is complicated in nature,
therefore, also called complicated type of organisa on.
Applica on:
Now-a-days this pa ern is followed by all government and private concerns, in which
much complicated processes or opera ons are involved, i.e., in big chemical plants,
electricity boards, steel plants and other huge undertakings.
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Type # 5. Commi ee Organisa on:

A commi ee is a group of persons formed for the purpose of giving advice on certain
important problems, which cannot usually be solved by an individual. It helps by
pooling the thoughts of several persons on problems involving several func ons and
offered for cri cism. Therefore, now-a-days many large companies add a network of
commi ees to the line and staff organisa on.
These commi ees may be either “Permanent” some mes referred to as standing
commi ees or they may be organised to serve a temporary func on only. Examples
of committees are Research Commi ee, Co-ordina on, and Advisory Commi ee,
Purchase Commi ee, Educa on Commi ee etc.
6.5 LEGAL COMPLIANCES
The new business can get overwhelming with a lot of stuff to do in hand. While
opera onal and managerial ni y-gri y is one thing, startups o en get deluged by the
legali es.
Like it gets frustra ng to decide whether to register a private company, to choose an
LLP, or go for other structures.
This is why startups should consider the following to ensure legal compliance.
1. Op ng for a Business Structure

While it seems easy at a first glance, there's a lot to ponder over this one. From
roughly 10 types of business structure to choose from, op ng for a perfect one for
your startup can give you some sweet headache.
To choose the best suitable op on, first, you need to iden fy the nature of your
business, tax efficiency, and compliance requirement for each structure and its
forma on cost. The recent startup scenario in India is witnessing a surge in registering
a private limited company as it creates a great opportunity to raise funds ini ally.
2. Get the licensing right

Businesses need to be cau ous when it comes to licensing requirement. Not doing so
can jeopardize the business with legal suits. This even lowers the chances of gaining
funds. Investors may lose faith and may eventually lead the business to shut.
Therefore, licensing is one of the basic hygiene an early stage startup should go for. It
requires a verified business incorpora on cer ficate when applying for your business
specific license.
3. Adhering to Audi ng and Taxa on Compliances

One of the major annual legal compliances for a business is taxa on and accoun ng.
Indian businesses should be no alien to the concept of GST as it is applicable for
different goods and services classified under mul ple tax slabs.
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Another aspect is the books of accoun ng. For early-stage startups, maintaining
books of accoun ng is a sign of ideal startup hygiene which involves audi ng on a
regular basis.
Slight negligence in this may lead to some serious accoun ng incongruity that may
create inconvenience in annual compliances. Go with one internal auditor and then
hiring any 3rd party auditor to fulfil annual audits requirements. Startups should
declare tax liabili es during the me of incorpora on to avoid hassles.
4. Financial Sources and its Management

The everyday, opera onal requirement of a startup will require some capital and
other funds. This requires startups to introduce working capital that will have
mul ple ways for bringing in finance. The best is to keep a close watch of your
finances-on-paper to acknowledge the legal stand it holds.
So an early stage startup would typically require looking at various sources of
finances.
- Ge ng Shared Capital on Board

A typical company scenario will involve approval of other members for acquiring
share capital on a longer run. During its incorpora on, startup pays for a required
fee towards stamp duty that men ons the amount of share capital it can raise.
The same amount is stated in the MOA of the company.
- Raising Further Capital

There are other ways apart from shared capital that a freshly incorporated
startup can raise capital when registered as a private limited company. One of the
op ons involves offering shares to the employees via an ESOP program. Equity
stakes extended to the exis ng company members and Private Placement is also
another way to do so. The bigger route is, of course, ge ng it through an IPO for a
Public Limited Company.
- Raising From VCs

The venture capitalists and even and term loan providers invest for a mely
return from the startup. The money is invested with a long term commitment.
For this to happen, startups may well consider sta ng their financial planning
beforehand in a precise manner. This, in turn, will help you gain the trust of
investors and VCs from an early stage.
5. Undertaking Agreements
The opera onal requirements will require startups to enter into agreements. This will
require working policies in place for the par es involved.
The recent startup trends also prefer shareholders' agreement and co-founders'
agreement. Such agreements specifically demarcate the roles and responsibility of
the involved co-founders.
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Also, the new startups will have the A-Team covered in the contract as well.
Employee contract will have details about salary, stock op ons, and even the scope
of employees' work. Having such detailed clarity from the start of business will
mi gate the risks and help a startup to scale up effec vely.
Even vendors will require effec ve contract management though it is not a part of
compliance. It helps to secure your business transac ons with symbio c contracts
with third par es.
6.6 SUMMARY
Developing a new business in any country takes lots of efforts and capital hence it
is always be er to do the preliminary work first before introducing any business in
market .India is land of opportunity but various challenges are also there avoiding
and solving which you may do flourishing business in India .
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UNIT 7
PROJECT MANAGEMENT
Objectives
· What is project management;

· Understand Business Ideas;
· Understand business and Marke ng plan;
· Know social entrepreneurship.
Structure
7.1 Introduc on
7.2 Project: Concept and Classifica on Ethical Approach
7.3 Search for a Business Idea
7.4 Making a Business Plan
7.5 Marke ng Plan and Successful Projects of Social Entrepreneurs
7.6 Summary
7.8 Model Answers
7.1 INTRODUCTION
A project is temporary in that it has a defined beginning and end in me, and
therefore defined scope and resources.
And a project is unique in that it is not a rou ne opera on, but a specific set of
opera ons designed to accomplish a singular goal. So a project team o en
includes people who don't usually work together – some mes from different
organiza ons and across mul ple geographies.
The development of so ware for an improved business process, the

construc on of a building or bridge, the relief effort a er a natural disaster, the
expansion of sales into a new geographic market — all are projects.
And all must be expertly managed to deliver the on- me, on-budget results,
learning and integra on that organiza ons need.
Project management, then, is the applica on of knowledge, skills, tools, and

techniques to project ac vi es to meet the project requirements.
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It has always been prac ced informally, but began to emerge as a dis nct profession in
the mid-20th century. PMI's A Guide to the Project Management Body of Knowledge
®
(PMBOK Guide) iden fies its recurring elements:
Project management processes fall into five groups:

1. Ini a ng
2. Planning
3. Execu ng
4. Monitoring and Controlling
5. Closing
Project management knowledge draws on ten areas:

1. Integra on
2. Scope
3. Time
4. Cost
5. Quality
6. Procurement
7. Human resources
8. Communica ons
9. Risk management
10. Stakeholder management
All management is concerned with these, of course. But project management brings a
unique focus shaped by the goals, resources and schedule of each project.
7.2 PROJECT: CONCEPT AND CLASSIFICATION ETHICAL APPROACH
According to the PMBOK (Project Management Body of Knowledge) 3rd edi on, A
project is defined as a “temporary endeavor with a beginning and an end and it must
be used to create a unique product, service or result”. Further, it is progressively
elaborated. What this defini on of a project means is that projects are those ac vi es
that cannot go on indefinitely and must have a defined purpose.
Defini on
A project is an ac vity to meet the crea on of a unique product or service and thus
ac vi es that are undertaken to accomplish rou ne ac vi es cannot be considered
projects.
For instance, if your project is less than three months old and has fewer than 20 people
working on it, you may not be working in what is called a project according to the
defini on of the term.
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PROJECT MANAGEMENT
It has to be remembered that the term temporary does not apply to the result or
service that is generated by the project. The project may be finite but not the result.
For instance, a project to build a monument would be of fixed dura on whereas the
result that is the monument may be for an indefinite period in me.
A project is an ac vity to create something unique. Of course, many of the office

buildings that are built are similar in many respects but each individual facility is
unique in its own way.
Finally, a project must be progressively elaborated. This means that the project
progresses in steps and con nues by increments. This also means that the defini on of
the project is refined at each step and ul mately the purpose of the progress is
enunciated. This means that a project is first defined ini ally and then as the project
progresses, the defini on is revisited and more clarity is added to the scope of the
project as well as the underlying assump ons about the project.
What are the basic phases of a project and their purposes ?

The phases of a project make up the project life cycle. It is convenient for the project
managers to divide the project into phases for control and tracking purposes. Each
milestone at each stage is then elaborated and tracked for comple on. The basic
phases of a project are dependent on the kind of project that is being carried out. For
instance, a so ware project may have requirement, design, build, test,
implementa on phases whereas a project to build a metro or a building may have
different names for each phase.
Thus, the naming of the phases of a project depends on the kind of deliverables that is
sought at each phase. For the purpose of defini on, the phases may be divided into
ini al charter, scope statement, plan, baseline, progress, acceptance, approval and
handover. This classifica on is according to the PMBOK. Thus, the phases of a project
are closely correlated with that of the project cycle.
The purpose of each phase of the project is a set of deliverables that are agreed upon
before the project starts. For instance, in a so ware project, the requirement phase
needs to generate the requirement documents, the design phase the design
document etc. The build phase in a project delivers the completed code whereas the
test phase is about the completed tes ng for the deliverables.
Each phase of the project is associated with a certain milestone and the set of
deliverables that each phase is expected to deliver is then tracked for compliance and
closure. The Project Life Cycle consists of the ini a ng, execu ng, controlling and
closing processes of the framework as described in the PMBOK. Each of these
processes is necessary to ensure that the project stays on track and is completed
according to the specifica ons.
Understanding Project Management

Generally speaking, the project management process includes the following stages:
planning, ini a on, execu on, monitoring, and closing.
Different industries have developed project management methodologies or

frameworks that are specific to their unique needs.
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From start to finish, every project needs a plan that outlines how things will get off the
ground, how they will be built and how they will finish. For example, in architecture,
the plan starts with an idea, progresses to drawings and moves on to blueprint
dra ing, with thousands of li le pieces coming together between each step. The
architect is just one person providing one piece of the puzzle. The project manager
puts it all together.
Every project usually has a budget and a me frame. Project management keeps
everything moving smoothly, on me, and on budget. That means when the planned
me frame is coming to an end, the project manager may keep all the team members
working on the project to finish on schedule.
Example of Project Management

Let's say a project manager is tasked with leading a team to develop so ware
products. They begin by iden fying the scope of the project. They then assign tasks to
the project team, which can include developers, engineers, technical writers, and
quality assurance specialists. The project manager creates a schedule and sets
deadlines.
O en, a project manager will use visual representa ons of workflow, such as Gan
charts or PERT charts, to determine which tasks are to be completed by which
departments. They set a budget that includes sufficient funds to keep the project
within budget even in the face of unexpected con ngencies. The project manager also
makes sure the team has the resources it needs to build, test, and deploy a so ware
product.
When a large IT company, such as Cisco Systems Inc., acquires smaller companies, a
key part of the project manager's job is to integrate project team members from
various backgrounds and ins ll a sense of group purpose about mee ng the end goal.
Project managers may have some technical know-how but also have the important
task of taking high-level corporate visions and delivering tangible results on me and
within budget.
7.3 SEARCH FOR A BUSINESS IDEA
Many people believe star ng a business is a mysterious process. They know they want
to start a business, but they don't know the first steps to take. In this chapter, you're
going to find out how to get an idea for a business--how you figure out exactly what it
is you want to do and then how to take ac on on it.
But before we get started, let's clear up one point: People always wonder if this is a
good me to start their business idea. The fact is, there's really never a bad me to
launch a business. It's obvious why it's smart to launch in strong economic mes.
People have money and are looking for ways to spend it. But launching in tough or
uncertain economic mes can be just as smart. If you do your homework, presumably
there's a need for the business you're star ng. Because many people are reluctant to
launch in tough mes, your new business has a be er chance of ge ng no ced. And,
depending on your idea, in a down economy there is o en equipment (or even en re
businesses!) for sale at bargain prices.
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PROJECT MANAGEMENT
Es mates vary, but generally more than 600,000 businesses are started each year in
the United States. Yet for every American who actually starts a business, there are
likely millions more who begin each year saying "OK, this is the year I am going to start
a business," and then don't.
Everyone has his or her own roadblock, something that prevents them from taking
that crucial first step. Most people are afraid to start; they may fear the unknown or
failure, or even success. Others find star ng something overwhelming in the
mistaken belief they have to start from scratch. They think they have to come up with
something that no one has ever done before--a new inven on, a unique service. In
other words, they think they have to reinvent the wheel.
But unless you're a technological genius--another Bill Gates or Steve Jobs--trying to
reinvent the wheel is a big waste of me. For most people starting a business, the
issue should not be coming up with something so unique that no one has ever heard
of it but instead answering the ques ons: "How can I improve on this?" or "Can I do
this be er or differently from the other guy doing it over there?" Or simply, "Is there
market share not being served that makes room for another business in this
category?"
Get the Juices Flowing

How do you start the idea process? First, take out a sheet of paper and across the top
write "Things About Me." List five to seven things about yourself--things you like to do
or that you're really good at, personal things (we'll get to your work life in a minute).
Your list might include: "I'm really good with people, I love kids, I love to read, I love
computers, I love numbers, I'm good at coming up with marke ng concepts, I'm a
problem solver." Just write down whatever comes to your mind; it doesn't need to
make sense. Once you have your list, number the items down one side of the paper.
On the other side of the paper, list things that you don't think you're good at or you
don't like to do. Maybe you're really good at marke ng concepts, but you don't like to
meet people or you're really not that fond of kids or you don't like to do public
speaking or you don't want to travel. Don't overthink it; just write down your
thoughts. When you're finished, ask yourself: "If there were three to five products or
services that would make my personal life be er, what would they be?" This is your
personal life as a man, woman, father, husband, mother, wife, parent, grandparent--
whatever your situa on may be. Determine what products or services would make
your life easier or happier, make you more produc ve or efficient, or simply give you
more me.
Next, ask yourself the same ques on about your business life. Examine what you like
and dislike about your work life as well as what traits people like and dislike about you.
Finally, ask yourself why you're seeking to start a business in the first place. Then,
when you're done, look for a pa ern to emerge (i.e., whether there's a need for a
business doing one of the things you like or are good at).
They Delivered
Here's a business startup story that's a great example of seeing a need and filling it.
Entrepreneur magazine is located in Irvine, California, a planned community. Many
years ago, there weren't many fast-food restaurants in the business area. Most were
66 | Page
across town, where the neighborhoods were. Two young men in Irvine found this
lunch situa on very frustra ng. There weren't many affordable choices. Sure, there
were some food courts located in strip centers, but the parking lots were really small
and the wait was horrendous.
One day, as they were lamen ng their lunch problem, one of them said, "Wouldn't it
be great if we could get some good food delivered?" The proverbial light bulb went
on! Then they did what many people don't do--they did something about their idea.
Coincidentally, they purchased one of Entrepreneur's business startup guides and
started a restaurant delivery business.
To date, their business has served more than 15 million people! It's neither a
complicated business nor an original one. Their compe on has go en s ffer, and
yet they're doing phenomenally well. And it all began because they listened to their
own frustra ons and decided to do something about them. Li le did they know that
research cites the shrinking lunch hour as one of the biggest complaints by American
workers. Some only get 30 minutes, making it nearly impossible to get out, get lunch
and get back on me. So while these young entrepreneurs ini ally thought they were
responding to a personal need in their local area, they actually struck a universal
chord.
That is one way to get ideas--listening to your own (or your co-workers', family's or
neighbors') frustra ons. The opportuni es are all there; you just need to search them
out. If your brain is always set in idea mode, then many ideas may come from just
looking around or reading. For instance, if you had read an ar cle about the shrinking
lunch hour, and if you were thinking entrepreneurially, you would say "Wow, maybe
there's an opportunity there for me to do something. I should start researching it."
Inspiring Moments
Inspira on can be anywhere. Here's another classic startup story: Ever get charged a
fee for returning a video late? Bet you didn't do anything about it. Well, when Reed
Has ngs got a whopping $40 late charge, instead of ge ng mad, he got inspired.
Has ngs wondered "How come movie rentals don't work like a health club, where,
whether you use it a lot or a li le, you get charged the same?" From this thought,
Ne lix.com, an online DVD rental service, was born. From its start in 1999, Ne lix has
grown into a big business with revenues topping $1.3 billion.
Ge ng an idea can be as simple as keeping your eyes peeled for the latest hot
businesses; they crop up all the me. Many local entrepreneurs made tons of money
bringing the Starbucks coffeehouse concept to their hometowns and then expanding
from there. Take Minneapolis-based Caribou Coffee. The founders had what they
describe as an "aha moment" in 1990, and two years later launched what is now the
na on's second-largest company-owned gourmet coffeehouse chain. Other coffee
entrepreneurs have chosen to stay local.
And don't overlook the tried and true. Hot businesses o en go through cycles. Take
gardening. For the last few years gardening products and supplies have been all the
rage, but you wouldn't consider gardening a 21st century business.
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PROJECT MANAGEMENT
In other words, you can take any idea and customize it to the mes and your
community. Add your own crea vity to any concept. In fact, customizing a concept
isn't a choice; it's a necessity if you want your business to be successful. You can't just
take an idea, plop it down and say "OK, this is it." Outside of a McDonald's, Subway or
other major franchise concept, there are very few businesses that work with a one-
size-fits-all approach.
One of the best ways to determine whether your idea will succeed in your community
is to talk to people you know. If it's a business idea, talk to co-workers and colleagues.
Run personal ideas by your family or neighbors. Don't be afraid of people stealing
your idea. It's just not likely. Just discuss the general concept; you don't need to spill
all the details.
Just Do It!
Hopefully by now, the process of determining what business is right for you has at
least been somewhat demys fied. Understand that business startup isn't rocket
science. No, it isn't easy to begin a business, but it's not as complicated or as scary as
many people think, either. It's a step-by-step, common-sense procedure. So take it a
step at a me. First step: Figure out what you want to do. Once you have the idea, talk
to people to find out what they think. Ask "Would you buy and/or use this, and how
much would you pay?"
Understand that many people around you won't encourage you (some will even
discourage you) to pursue your entrepreneurial journey. Some will tell you they have
your best interests at heart; they just want you to see the reality of the situa on.
Some will envy your courage; others will resent you for having the guts to actually do
something. You can't allow these naysayers to dissuade you, to stop your journey
before it even begins.
In fact, once you get an idea for a business, what's the most important trait you need
as an entrepreneur? Perseverance. When you set out to launch your business, you'll
be told "no" more mes than you've ever been told before. You can't take it
personally; you've got to get beyond the "no" and move on to the next person--
because eventually, you're going to get to a "yes."
One of the most common warnings you'll hear is about the risk. Everyone will tell you
it's risky to start your own business. Sure, star ng a business is risky, but what in life
isn't? Plus, there's a difference between foolish risks and calculated ones. If you
carefully consider what you're doing, get help when you need it, and never stop
asking ques ons, you can mi gate your risk.
You can't allow the specter of risk to stop you from going forward. Ask yourself "What
am I really risking?" And assess the risk. What are you giving up? What will you lose if
things don't work out? Don't risk what you can't afford. Don't risk your home, your
family or your health. Ask yourself "If this doesn't work, will I be worse off than I am
now?" If all you have to lose is some me, energy and money, then the risk is likely
worth it.
Determining what you want to do is only the first step. You've s ll got a lot of
homework to do, a lot of research in front of you. Buying this book is a smart first step.
68 | Page
Most important: Do something. Don't sit back year a er year and say "This is the year
I'm going to start my business." Make this the year you really do it!
7.4 MAKING A BUSINESS PLAN
Every business needs to have a wri en business plan. Whether it's to provide
direc on or a ract investors, a business plan is vital for the success for your
organiza on. But, how do you write a business plan?
SBA.gov recommends that a business plan include:
· Execu ve summary -- a snapshot of your business

· Company descrip on -- describes what you do
· Market analysis - research on your industry, market and compe tors
· Organiza on and management -- your business and management structure
· Service or product -- the products or services you're offering
· Marke ng and sales -- how you'll market your business and your sales
strategy
· Funding request -- how much money you'll need for next 3 to 5 years
· Financial projec ons -- supply informa on like balance sheets
· Appendix -- an op onal sec on that includes résumés and permits
However, ge ng started may be difficult to do. So, here are seven steps for wri ng a
perfect business plan.
1. Research
“Research and analyze your product, your market and your objec ve exper se,”
William Pirraglia, a now-re red senior financial and management execu ve, has
wri en. “Consider spending twice as much me researching, evalua ng and thinking
as you spend actually wri ng the business plan.
“To write the perfect plan, you must know your company, your product, your
compe on and the market in mately.”
In other words, it's your responsibility to know everything you can about your
business and the industry that you're entering. Read everything you can about your
industry and talk to your audience.
2. Determine the purpose of your plan.

A business plan, as defined by Entrepreneur, is a “wri en document describing the
nature of the business, the sales and marke ng strategy, and the financial
background, and containing a projected profit and loss statement.” However, your
business plan can serve several different purposes.
As Entrepreneur notes, it's “also a road map that provides direc ons so a business can
plan its future and helps it avoid bumps in the road.” That's important to keep in mind
if you're self-funding or bootstrapping your business. But, if you want to a ract
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PROJECT MANAGEMENT
investors, your plan will have a different purpose and you'll have to write a plan that
targets them so it will have to be as clear and concise as possible. When you define
your plan, make sure you have defined these goals personally as well.
3. Create a company profile.

Your company profile includes the history of your organiza on, what products or
services you offer, your target market and audience, your resources, how you're going
to solve a problem and what makes your business unique. When I cra ed my
company profile, I put this on our About page.
Company profiles are o en found on the company's official website and are used to
a ract possible customers and talent.
However, your profile can be used to describe your company in your business plan.
It's not only an essen al component of your business plan; it's also one of the first
wri en parts of the plan.
Having your profile in place makes this step a whole lot easier to compose.
4. Document all aspects of your business.
Investors want to make sure that your business is going to make them money.
Because of this expecta on, investors want to know everything about your business.
To help with this process, document everything from your expenses, cash flow and
industry projec ons. Also, don't forget seemingly minor details like your loca on
strategy and licensing agreements.
5. Have a strategic marke ng plan in place.
A great business plan will always include a strategic and aggressive marke ng plan.
This typically includes achieving marke ng objec ves such as:
· Introducing new products

· Extending or regaining market for exis ng products
· Entering new territories for the company
· Boos ng sales in a par cular product, market or price range. Where will this
business come from? Be specific.
· Cross-selling (or bundling) one product with another
· Entering into long-term contracts with desirable clients
· Raising prices without cu ng into sales figures
· Refining a product
· Having a content marke ng strategy
· Enhancing manufacturing/product delivery
“Each marke ng objec ve should have several goals (subsets of objec ves) and
tac cs for achieving those goals,” states Entrepreneur.
70 | Page
“In the objec ves sec on of your marke ng plan, you focus on the 'what' and the
'why' of the marke ng tasks for the year ahead. In the implementa on sec on, you
focus on the prac cal, sweat-and-calluses areas of who, where, when and how. This is
life in the marke ng trenches.”
Of course, achieving marke ng objec ves will have costs. “Your marke ng plan needs
to have a sec on in which you allocate budgets for each ac vity planned,"
Entrepreneur says. It would be beneficial for you to create separate budgets for for
internal hours (staff me) and external costs (out-of-pocket expenses).
6. Make it adaptable based on your audience.
“The poten al readers of a business plan are a varied bunch, ranging from bankers
and venture capitalists to employees,” states Entrepreneur.
“Although this is a diverse group, it is a finite one. And each type of reader does have
certain typical interests. If you know these interests up-front, you can be sure to take
them into account when preparing a plan for that par cular audience.”
For example, bankers will be more interested in balance sheets and cash-flow
statements, while venture capitalists will be looking at the basic business concept and
your management team. The manager on your team, however, will be using the plan
to “remind themselves of objec ves.”
Because of this, make sure that your plan can be modified depending on the audience
reading your plan. However, keep these altera ons limited from one plan to another.
This means that when sharing financial projec ons, you should keep that data the
same across the board.
7. Explain why you care.
Whether you're sharing your plan with an investor, customer or team member, your
plan needs to show that you're passionate and dedicated, and you actually care about
your business and the plan.
You could discuss the mistakes that you've learned, list the problems that you're
hoping to solve, describe your values, and establish what makes you stand out from
the compe on.
When I started my payments company, I set out to conquer the world. I wanted to
change the way payments were made and make it easier for anyone, anywhere in the
world to pay anyone with few to no fees. I explained why I wanted to build this. My
passion shows through everything I do.
By explaining why you care about your business you create an emo onal connec on
with others so that they'll support your organiza on going forward.
71 | Page
PROJECT MANAGEMENT
7.4 MARKETING PLAN AND SUCCESSFUL PROJECTS OF SOCIAL

ENTREPRENEURS
The defini on of 'Marke ng plan'

“A marke ng plan is a comprehensive document that outlines a company's overall
marke ng effort. It is a blueprint that outlines how a company will implement its
marke ng strategy, and use a combina on of resources to achieve business
objec ves including sales targets or customer acquisi on.”
Due to the ever-changing environment and marke ng tools that become available,
the modern day marke ng plan tends to be rela vely short in nature, covering from
one to a few years.
A marke ng plan tends to include
· An Introduc on and broad objec ves
· Marke ng overview
· The market landscape
· SWOT analysis
· Specific objec ves
· Brand strategy
· Promo onal strategy
· Ac ons, deadlines and budgets
Social Entrepreneurship
If your goal is to provide social services to assist the poor or launch a green ini a ve,
now is the perfect me to get started. Social entrepreneurship is needed, highly
valued, and is achievable today. This chapter gives you a prac cal framework and plan
for doing what you might have thought was not possible: becoming a driving force for
a be er society. Social entrepreneurship is taking off as not only a way of doing
business but as a movement. It is a rac ng growing amounts of talent and even
venture capital a en on. There are various theories proposed to explain this growth.
The consensus appears to be that the so-called millennium genera on is exposed
through global media to the major challenges for the poorer na ons, the under-
privileged in the developed world as well as possible cataclysmic impacts on the
planet from global warming, energy demands, pollu on, water shortages, epidemics,
aging popula ons, chronic diseases, wealth gaps, urbaniza on, famine, and so on. At
the same me, there is a strong feeling of disenfranchisement with established
organiza ons, which seem increasingly unable to deal with these major complex
issues. We see deadlock in governments, corrup on in businesses, and the inability of
large bureaucracies to act with any urgency or coherence in their plans. These
frustra ons with the inability of our established ins tu ons to deal with major social
ills and problems are triggering the entrepreneurial spirit to find innova ve ways to
meet these major challenges. The possibility to make a major impact with limited
resources is helped by the emergence of the Internet and its ability to spread
72 | Page
knowledge, bypass censorship, expose ques onable behaviors, and empower large
groups to cooperate in new ways. But what does social entrepreneurship actually
mean? It has become a catchall category with flexible and ill-defined boundaries. If
you ask 100 people “what is social entrepreneurship,” you will get 100 different
answers ranging from anyone who seeks to address societal problems in innova ve
ways, to defini ons that include for-profit and not-for-profit companies, and to
defini ons that are essen ally those that are debated when people try to define the
term entrepreneurship in general. It is generally believed that the term social
entrepreneur was first coined by William Drayton in 1972. Drayton is the founder and
current chair of Ashoka: Innovators for the Public, a nonprofit organiza on dedicated
to finding and fostering social entrepreneurs worldwide. Drayton also chairs the
Community Greens and Get America Working! organiza ons. Drayton's philosophy of
social entrepreneurs involves individuals with innova ve solu ons to society's most
pressing social problems. For the purposes of this chapter, we will narrow this
viewpoint to defining social entrepreneurs as those who use market-oriented
entrepreneurial approaches to address social issues. Both parts of this choice of
defini on, the use of market-oriented entrepreneurship approaches, and a social
issue being addressed, set social entrepreneurial ventures apart from tradi onal
chari es and nongovernmental organiza ons on the one.
DIFFERENCES BETWEEN BUSINESS AND SOCIAL ENTREPRENEURS
The concept of entrepreneurial mind-set introduced in this Chapter describes a set of

behaviors that can be manifest anywhere; we can build on our understanding of
social entrepreneurship on this strong tradi on of entrepreneurship theory and
research. Social entrepreneurs are just one category of entrepreneur. However,
because of the focus on a social mission, they face dis nc ve challenges. Their
opportunity recogni on is driven by the impact of this mission rather than by wealth
crea on. Wealth is just a means to an end for social entrepreneurs. With business
entrepreneurs, wealth crea on is how success is measured. They are subject to
market discipline; if they do not shi resources to more economically produc ve
uses, they tend to fail. Markets do not work as well for social entrepreneurs. In
par cular, markets do not do a good job of valuing social improvements, and the
provision of benefits for people who cannot afford to pay. As a result, it is much harder
to determine whether a social entrepreneur is crea ng sufficient social value to
jus fy the resources used in crea ng that value. The survival or growth of a social
enterprise is not necessarily proof of success. Of course, social entrepreneurs do
operate in markets, but these o en do not provide the right discipline. Perhaps fees
are paid for services, but are these true market prices? Social entrepreneurs also
compete for dona ons, volunteers, and other kinds of support. But the discipline of
these so markets is usually only loosely aligned with the mission. In addi on, it is
inherently difficult to measure social value crea on. How much value is created by
reducing pollu on in a trout stream, by saving a toad species, or by providing
companionship to the lonely? Even when benefits can be measured, it is o en
difficult to a ribute them to a specific ac vity. Are lower crime rates in a subdivision
due to the Neighborhood Watch Program, police on bicycles, or just lowered
unemployment? Even when improvements can be measured and linked to a given
ac vity, social entrepreneurs o en cannot capture the value they have created in an
73 | Page
PROJECT MANAGEMENT
economic form to pay for the resources they use. Who pays for a cleaner
stream or managing a neighborhood watch program? Whom do they charge
for cleaning the stream or running the Block Watch? To offset this value-
capture problem, social entrepreneurs o en rely on subsidies, dona ons, and
volunteers, further dilu ng market discipline.
7.6 SUMMARY
Social entrepreneurs drive social change through market-based methods.

Social ventures can not only drive social change and help to ameliorate social
needs, but can also create personal wealth for the entrepreneur. Social
ventures are social mission–driven, and this leads to special challenges for the
venture. Stakeholders, internal and external to the venture, place the venture
under a higher level of scru ny than they would for a pure business venture.
Founders need to exhibit a true passion for changing society and be able to
communicate this simply and clearly to all stakeholders.
74 | Page

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UNIT 1

A er going through this unit, you will be able to:

· Understand who Entrepreneur's are ;

No sector of the economy is as vital, dynamic, and crea ve as entrepreneurship. For

Entrepreneurship—the process of planning, organizing, opera ng, and assuming the

1.2 THE ENTREPRENEUR: DEFINITIONS AND CONCEPT

• Mark Casson – “ An entrepreneur is a person who specializes in taking

In short, an entrepreneur is a person who has possession of a new enterprise, venture

1.3 ENTREPRENEURIAL TRAITS

Common traits of successful entrepreneurs:

4. Willingness to work hard

8. Prudent with money

9. Willing to ask for and accept help

1.4 ENTREPRENEURIAL CHARACTERISTICS AND SKILLS

• Discover new sources of materials: Entrepreneurs are never sa sﬁed with

• Mobilize Capital Resources: Entrepreneurs are the organizers and

• Introduce new technologies: Apart from being innovators & reasonable

• Create Employment: The biggest employer is the private business sector.

Millions of jobs are provided by the factories, service industries, agricultural

Primary Func on of Entrepreneurs

• Planning: It is the ﬁrst step in the direc on of se ng up of an enterprise.

• Scanning of the best suitable idea.

• Organiza on: An entrepreneur coordinates, assembles & supervises

• Management: It includes future expansion & policies in the long run.

• Decision-Making: As a decision maker they takes various decisions e.g.

• Determina on of the business objec ves of the enterprise.

1.5 ENTREPRENEUR VS. PROFESSIONAL MANAGERS

Diﬀerence between Entrepreneur and Manager

· The key diﬀerence between an entrepreneur and a manager is their

1.6 SUCCESSFUL ENTREPRENEURS

Consider this example:

Would you stop there? No!

My favorite p for managing fear as an entrepreneur is to do conﬁdence-building

1.7 WOMEN ENTREPRENEURS

Women Entrepreneurs: Concept and Func ons of Women Entrepreneurs!

Deﬁni on of woman entrepreneur as

“A conﬁdent, innova ve and crea ve woman capable of achieving self-economic

The Government of India has deﬁned women entrepreneurs based on women

In nutshell, women entrepreneurs are those women who think of a business

Func ons of Women Entrepreneurs:

3. Introduc on of innova ons or imita on of innova ons.

The deﬁni on of an entrepreneur has evolved over me as the surrounding

To an economist, an entrepreneur is one who brings resources, labour, materials, and

Entrepreneurship is thus considered as the process of crea ng something new with

1. the market of organiza onal buyers for business innova on,

Entrepreneurship is an essen al element for economic progress as it manifests its

· iden fying, assessing and exploi ng business opportuni es;

ECONOMIC ROLE OF THE ENTREPRENEUR

exogenously, ﬁrms arise endogenously because consumers choose to become

2. 3 EXAMPLES OF SUCCESSFUL ENTREPRENEURS

B) Ratan Naval Tata

Reading success stories of greatest professionals s mulates mo va onal enzyme

C) Mr. Ajay Piramal

As a Managing Director, she spearheaded the growth of Apollo Hospitals as

College Chennai and Master's degree in Public Administra on from Madras

· Understand who Entrepreneur's are ;

Entrepreneurship development is a procedure where the knowledge and skills of the

3.2 ENTREPRENEURIAL ENVIRONMENT

In upcoming economies across the world, interest in entrepreneurship is presently

uncondi onal support to entrepreneurs when some of their ventures do not