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MCA II SEM
Innovation & Entrepreneurship
Entrepreneurial mobility & its types:
Entrepreneurial Mobility means movement of entrepreneurs from one location to another and similarly
from one occupation to another, which ffect the pace and pattern of entrepreneurship
development.Based on the movement and settlement of entrepreneurs (being human
beings),entrepreneurial mobility may be classifed as follows
1.Occupational Mobility : means movement or changes in occupation. This may take place in two forms
a) Intergeneration movement:
When a person may move or leave from the principle occupation of his/her father, is called
intergeneration movement.
b) Intrageneration occupational movement
When a person may move orleave from his/her own occupation during the operational career, is called
intrageneration occupational movement.3.Locational Mobility :
It means movement or changes in location. This mobility depends upon some factors like availability of
raw material, infrastructure and labor, nearness to market, own resources, knowledge, experience,
socio-political situation, etc. There are following some important factors influence the entrepreneurial
mobility in a given situation and time:
1. Education-
An entrepreneur must be educated person. he/she also enables to adjust with the dfferent conditions
more easily and clearly and communicate othes in a better manner. Thus, an educated entrepreneur
tends to be more mobile than an uneducated one.2.Training and Experience
An entrepreneur must be properly trained and must have some past experience in business or industry.
An experienced entrepreneur better perceives the available opportunities, better analyses his/her
strengths and also understands the complexities involved in running anenterprise.
3. Availability of facilities
The entrepreneurs may move from the areas with no or less facilities to the areas with more and better
facilities. These facilities include :
Govt. facilities
#availability of raw materials,
labors,
market facilities.
Infrastructural facility.
4. Political conditions
The entrepreneurial mobility is also Influenced
by the political factors, such as tax policy, employment laws, environmental regulations,political stability,
trade restrictions and tarffs.
5. Size of Enterprise
Entrepreneurial mobility is related to size of enterprise.
Larger business houses are found more mobile than smaller ones. Because a large size of enterprise will
have the capability to start a new business at a new place.
Conclusively, all above factors are responsible for various types of Entrepreneurial mobility.
Lecture no:2 & 3
Topic : 1
Entrepreurial Opportunities: SEARCH & IDENTIFICATION
Four ways to identify more business opportunities
To be successful entrepreneurs, we need to be continually innovating and looking for opportunities to
grow our startups.
But how do you find new opportunities to take your startup to new markets and growth levels? Here are
four ways to identify more business opportunities.
1. Listen to your potential clients and past leads
When you’re targeting potential customers listen to their needs, wants, challenges and frustrations with
your industry. Have they used similar products and services before? What did they like and dislike? Why
did they come to you? What are their objections to your products or services?
This will help you to find opportunities to develop more tailored products and services, hone your target
market and identify and overcome common objections.
2. Listen to your customers
When you’re talking to your customers listen to what they saying about your industry, products and
services. What are their frequently asked questions? Experiences? Frustrations? Feedback and
complaints?
This valuable customer information will help you identify key business opportunities to expand and
develop your current products and services.
3. Look at your competitors
Do a little competitive analysis (don’t let it lead to competitive paralysis though) to see what other
startups are doing, and more importantly, not doing? Where are they falling down? What are they doing
right? What makes customers go to them over you?
Analysing your competitors will help you identify key business opportunities to expand your market
reach and develop your products and services.
4. Look at industry trends and insights
Subscribe to industry publications, join relevant associations, set Google alerts for key industry terms
and news and follow other industry experts on social media.
Absorb yourself in your industry and continually educate yourself on the latest techniques and trends.
TOPIC : 2
Seven Factors to be Considered in Product Selection :
We all know that undertaking a business venture is a big investment requiring adequate planning. Just as
investment opportunities are many and diverse, products or services options for an entrepreneur are
uncountable. However, the selection of required product or service is the first step towards success.
Indeed, products provide the business with the most important and visible contact with buyers i.e.
consumers. Products to the consumers represent psychological symbols of personal attributes, goal and
social patterns.
A product is anything that can be offered to a marker for acquisition, use or consumption.
Factors to Consider in Product Selection
In selecting a product for your business venture, the following factors must be taken into consideration:
1. Supply-gap: The size of the unsatisfied market demand which constitutes a source of business
opportunity will dictate, to a great extent the need to select a particular product. The product with the
highest chances of success as reflected in its demand will be selected. In essence, there must be an
existing obvious demand for the selected product.
2. Fund: The size of the funds that can be mobilized is another important factor. The adequate fund is
needed to develop, produce, promote, sell and distribute the product selected.
3. Availability of and Access to Raw Materials: Different products require different raw materials. The
source quality and quantity of the raw materials needed are factors to be seriously considered, Are the
raw materials available in sufficient quantities?
Where are the sources of raw materials located? Are they accessible? Could they be sources locally or
imported? Satisfactory answers should be provided to these and many other relevant questions.
3. Technical Implications:
The production process for the product needs to be considered. There is a need to know the technical
implications of the selected product on the existing production line, available technology, and even the
labor force.
The choice of a particular product may require either acquisition of the machinery or refurbishing of the
old ones. The product itself must be technically satisfactory and acceptable to the user.
4. Profitability/Marketability:
Most often, the product that has the highest profit potential is often selected. However, a product may
be selected on the basis of its ability to utilize idle capacity or complement the sale of the existing
products. The product must be marketable.
5. Availability of Qualified Personnel:
Qualified personnel to handle the production and marketing of the product must be available. The cost
of producing the product must be kept to the minimum by reducing wastages. This is achievable through
competent hands.
6.Government Policies:
This is quite often an uncontrollable factor. The focuses of government policies can significantly influence
the selection of the product.
For instance, a package of incentives from the government for a product with 100% local input contents
can change the direction of the business’s R & D and hence the product selected.
7. Government objectives: The contributions of the product to the realization of the company’s short
and long-range objectives must be considered before selection. For instance, the company goal maybe
the achievement of sale growth, sales stability or enhancement of the company’s social value.
Lecture : 4 & 5
Unit : 3
Date: 6/4/2020
TOPIC:
Feasibility Study
All businesses have to critically examine the actions they take, whether the business is just starting out
or has been in operation for a while. Establishing the viability of an idea or action can ultimately
determine whether a business succeeds or not. The best tool for determining this is by conducting a
feasibility study.
We will examine what a feasibility study entails and when it should be used. We’ll then outline the five
key elements of a feasibility study .
WHAT IS A FEASIBILITY STUDY?
A feasibility study is a study, which is performed by an organization in order to evaluate whether a
specific action makes sense from an economic or operational standpoint. The objective of the study is to
test the feasibility of a specific action and to determine and define any issues that would argue against
this action.
The question a feasibility study essentially tries to answer is: “Should we proceed with the specific action
plan?” On top of determining whether the plan is viable, organizations can use a feasibility study for
understanding the risks better and preparing for them.
It’s important to remember that a feasibility study is not the same as a business plan. A business plan
provides a planning function and defines the actions needed to take a business idea into reality, whereas
a feasibility study provides an investigation into a specific function and whether it’s viable.
While it’s important to conduct both plans before setting up a company, a business plan should only be
conducted once the business has been deemed viable by a feasibility study.
When should a feasibility study be used?
While feasibility studies are typically conducted by business organizations, other organizations can
naturally benefit from it as well. Since the study aims to discover whether an action is viable, it can help
organizations to avoid costly or operationally exhausting ventures.
The study is typically used in situations where an important strategic decision needs to be taken.
This can vary and some of the example situations include:
Change in business location
Purchase of new equipment or software
Acquisition of another company
Hiring of additional employees
As mentioned above, a feasibility study is often at the core of launching a business. It can be the key to
launching a successful start-up, as it helps to underline the future plan points ,and to determine whether
the plan is viable in the first place.
Overall, a feasibility study is the perfect tool for situations where the impact is likely to be big in terms of
operational or economic significance.
When discussing the possible failure of a feasibility study (i.e. the negative result), Gumpert wrote,
“Although an unsuccessful feasibility study may appear to be a failure, it’s not. The failure would have
been if you had invested your own and others’ money and then lost it due to barriers you failed to
research in advance.”
CORE ELEMENTS OF A FEASIBILITY STUDY
While these are often all required for conducting a study, you might sometimes focus mostly on a single
element or a combination of a few of them.
#1 Technical feasibility
The first element deals with technical feasibility of the proposed action plan. If your organization is
introducing a new product or a service, the technical feasibility study will determine if it’s a technically
viable action.
This part of the feasibility study should answer the following questions:
What is the proposed product or service?
Is the product or service already on sale? If not, how far is it from an existing marketplace and what will
the introduction cost?
How can you protect the product or service from the competition?
What are the strengths of the product or service?
What are the main benefits to customers or users?
What resources are required for producing or providing it?
How capable is the organization to acquire these resources?
What are the regulatory standards surrounding the product or service and its use?
Remember the above questions can be used when you are introducing a new product or launching a
business, but also if you are implementing a new product or service within your organization. For
instance, if you are introducing new software, you must understand the strengths of it, as well as the
resources required for implementing it.
#2 Market feasibility
The second element focuses on testing the market for the proposed action or idea. It examines issues
like whether the product or service can be sold at reasonable prices or if there’s a marketplace for it.
Market feasibility should answer the following questions:
What market segments are you targeting?
Why would people buy the product or service?
Who are the potential customers and how many of them are there?
What are the buying patterns of these potential customers?
How will you sell the product or service? Where?
Who are your competitors? Including past, current and future competitors.
What are the strengths and weaknesses of your competitors?
What is your product or service’s competitive edge?
The above essentially points out to the importance of conducting market research as part of feasibility
study. Market feasibility is an important part of a feasibility study when the plan of action deals with
issues such as business expansion, new product or service launch, product development and starting up
a business.
#3 Commercial feasibility
Commercial feasibility is an element of the study focused on the probability of commercial success. It’s
mainly focused on studying the new business or a new product or service, and whether your
organization can create enough profit with it.
The questions that require answering as part of the commercial feasibility study include:
What are the strengths and weaknesses of your business?
What are the potential sales volumes of the product or service?
What is the pricing structure you’ll use?
What are the sensitivity points for your business in terms of sales?
What is the ROI?
Furthermore, if you are conducting a feasibility study as part of launching a business, you also need to
answer the following questions:
How long can your business survive without a sale?
How long before you break even with the product or service?
How much money is required to start operating?
Will your organization require external finance?
While the above points are mainly important for new businesses, any organization can benefit from
thinking about them when launching a new operation.
For example, if you are adding a new product line to your business, you should use the above questions
as a guide to understanding the implications to your other operations and the financial viability of the
new product.
#4 Overall risk assessment
The fourth element focuses on the major risks the proposed plan can entail. The overall risk assessment
part of a feasibility study examines the different ways your organization can reduce the risk of embarking
on the new action.
The overall risk assessment should answer the following questions:
What are the major risks associated with the operation?
What is the survival outlook for each of the above risks?
How sensitive are the profits?
What are the best ways to minimize these risks?
The aim is to try to cover all the possibilities and create a risk assessment map, which deals with the
probability of the risk and the impact it would have on the business. It’s aimed at recognizing the risks
that can make or break your business from the smaller, more manageable risks.
For instance, consider your business is conducting a feasibility study in order to hire a new employee.
One risk might deal with the possibility the hire is an inadequate fit and leaves after six month trial
period.
But your risk assessment might show that while the risk of this is relatively high, the survivability of your
business doesn’t depend on it. For example, the cost of a bad hire could be low due to your recruitment
strategy or the position not being essential for operations.
This is how you can create your own risk assessment map.
In addition, if you are launching a new business, the overall risk assessment should also consider one
final question. Answering the question “When can your business be able to support you and itself
without extra financing?” is an important part of a feasibility study. Self-sufficiency is crucial for business
success, as having to borrow can hinder the long-term survivability of your business.
#5 Feasibility of purchasing an existing business
The final essential element of a feasibility study is not necessarily relevant to every business.
Nonetheless, it is an important aspect to keep in mind, as it deals with the impact of acquiring a new
business. This is not only relevant to new businesses, as your organization might acquire a new business
as part of its growth strategy.
The purpose of this final element is to study whether purchasing an existing business is a sound
investment to make. It requires your organization to answer questions such as:
Why is the current owner selling the business?
What is the business’ performance? If it’s poor, what are the reasons behind it?
What is the competition like?
What is the valuation of the assets included in the sale?
What are the advantages and disadvantages of the current business location?
Is your organization continuing operations in the same premises or not?
Lecture No: 6 & 7
Unit III
Project Finalization
It is your responsibility to work with the researcher to develop a detailed execution plan, ensure that the
plan proceeds as expected, and resolve any issues along the way. Foresight will be extremely important
while reviewing and making adjustments to the plan. It will be important to ensure that the execution
plan:
Has a concrete timeline for each step in the process, and a clear end point
Takes into account other team members’ input and feedback
Allows for a rigorous prioritization process as agreed in principle by the stakeholders
Allows for the review and iteration of the output with feedback from stakeholders
Is realistic and achievable
Allows for a smooth transition to the next stage of the project
Sources of Information
1. The Library is a primary resource for information. Government agencies have a variety of publications
which may be useful. Some colleges and universities have reference libraries which may have a
circulation section available to the public. Also research institutes and some large corporations have
libraries with sections on specific topics. Libraries are the storehouse of information which may be useful
in operating a small business. Books, periodicals, reports and newspapers may contain information
which can be of help in solving some of the problems in operating a business.
2. Internet can be used to carry out research and to find useful information and data. Examples of these
search engines are Google, Bing, Ask etc Also E-mail can be used to communicate with providers of
information who have websites on the internet.
3. Subscribing to Trade Papers and Magazines
Desirable entrepreneurs should have time to read articles especially in understanding new trends and
developments relating to business. It is advisable to keep a file of pertinent articles for future reference.
Example of such is the page 4 of punch news papers which carries articles that are related to
entrepreneurship and business.
4. Industrial Data is helpful in comparing a business to other similar businesses. The data is available
from trade associations or government agencies and includes ratios such as; stock turnover, cash
discounts percentage mark-up etc.
5. Membership-Based Organisations can provide services such as conducting research, organizing
education and training programmes, implementing new technology, responding to members’ questions
and concerns and disseminating information through newsletters, magazines and special reports.
Example of such membership-based organization is MAN (Manufacturers Association of Nigeria)
6. Training Programmes can help entrepreneurs to develop formal plans for improving their managerial
skills and ability. Training courses and adult education programmes are designed by many institutions,
agencies and associations. Entrepreneurs should be aware of these personal development possibilities
and take full advantage of them. One of such institution is (CMD) Centre for Management Development
at Magodo area in Lagos (Nigeria).
7. Employees
The people who work for a business can provide answers to specific problems in a business. For
example, entrepreneurs might ask employees for their advice and assistance about stock display or
customer attitudes. Employees are in a good position to give valuable advice providing they know that
their opinions and suggestions are valued.
Also customers can supply very special information about the products and services they buy. Customers
should be asked about their opinions because they are an excellent source of information about the
relative strength and weaknesses of a business operation.
8. Other Business Owners
Most businesses have common problems and owners are generally willing to discuss their problems with
one another. Occasionally, the competitive nature of business may discourage this frank exchange, but if
business are unrelated and do not compete for the same customers, entrepreneurs may be willing to
share ideas concerning solutions to a common problem. In this way, all business owners can benefit from
this interaction and improve their business operations.
LECTURE NO: 8 ,9 & 10
Date:11/4/2020
Unit IV.
TOPIC:
Role of govt. in promoting entrepreneurship:
The government plays an important role in the development of entrepreneurship. The central and state
governments have set up a number of institutions to promote entrepreneurship. They are:
i. Small Industries Development Organization -
SIDO formulates policies for the development of small scale industries in the country. It provides support
for promotion of rural entrepreneurship.
ii. Management Development Institute -
MDI conducts management development programs to improve managerial effectiveness in the industry.
iii. Entrepreneurship Development Institute of India -
EDI has helped to set up twelve state-level exclusive entrepreneurship development institutes and
centres.
iv. All India Small Scale Industries Board -
AISSIB advises the Government on all issues related to the small scale sector. It determines the
programmes and policies for the development of small scale industries.
v. National Institution of Entrepreneurship and Small Business Development -
NIESBUD supervises the activities of the different agencies involved in the entrepreneurial development
programmes.
vi. National Institute of Small Industries Extension Training -
The objective of the institute is to direct and coordinate the syllabi for training of small entrepreneurs. It
organizes seminars for small entrepreneurs and managers.
vii. National Small Industries Corporation Ltd. -
NSIC provides a vast-market for the products of the small industries through its marketing network. It
also helps the small units in exporting their products to foreign countries.
MSME Policy:
The primary goal of Industrial and MSME Policy Resolutions was to advance industrial development and
furthermore decide the example of state help to small industrial units for satisfying financial targets. The
advancement of businesses has been viewed as an essential component of the development system
hidden Five Year plans.
The appearance of a planned economy from 1951 and the consequent industrial policy pursued by the
Government of India, both government and organizers reserved a specific position of Micro, Small and
Medium Enterprises in the Indian economy. Government’s targets and goals towards industry, including
small scale industry were declared through Industrial Policy Resolutions (IPRs).
Industrial Policy Resolution, 1991
For the first time, the Government of India postponed the new MSME Policy titled approach measures
for advancing, reinforcing and enhancing little, modest and town undertakings in the Parliament on
August 6, 1991. This strategy augmented as far as possible for the minor segments expelled the
professional limitations and perceived business and industry related services as small industrial units
keeping pace with the modest units. The Small and Ancillary Industries were exempted from authorizing
for all articles of manufacture, which were not secured by the public sector. The investment of 0.5
million and other area conditions was withdrawn. All business linked services and business ventures with
an investment limit as those of modest undertakings, regardless of area, were perceived as small
industrial units. Another plan of incorporated infrastructural advancement for small industrial units was
given the cooperation of State Government and Financial Institutions.
The New Industrial Policy, 1999
The rising financial scenario in the changed labialized and aggressive monetary environment required
basic and major changes in the policy structure set up of the improvement of SSI. The fundamental goal
of the Industrial Policy, 1999 was to make a friendly situation for the small industrial units to adapt to the
rising difficulties of globalization. To concentrate completely on the advancement and improvement of
small industrial units, a different Ministry of Small Industrial Units and Agro and Rural Industries was
made. The policy initiatives were:
The yearly turnover limit for computation of working capital cutoff for smaller industrial units was raised
to Rs. 5 crores from Rs. 4 Crores.
The greatest roof limit for Composite Loan Scheme has expanded to Rs. 5 lakhs.
To increment the credit flow to small industrial units, another credit insurance scheme was launched.
Small Industrial units delivering goods in provincial territories are permitted excise exemption on third-
party branded merchandise.
The meaning of small and auxiliary industrial units was changed by lessening venture limit in plant and
hardware to Rs. 1 crore from Rs. 3 crores.
Special package for the upgrading of small and town enterprises in North Eastern areas was reported.
The industrial units in the North Eastern Region were given an exception from extract obligation for a
long time from the date of the beginning of production
Special accentuation was given to the units which have high export potential.
Through the ministry, the Government has achieved changes in approaches and development support
that need to empower quick and considerable development of MSMEs in India and give them an
aggressive edge over their worldwide nations. A few projects and strategies have been illustrated here.
The facilities can be arranged into three: MSME Policy initiatives, Institutional help, and credit allotment.
The accompanying diagram demonstrates three classified policies.
Schemes For Financing Micro, Small And Medium Enterprises:
Repayment For Iso-9000 Certification Scheme
The scheme was begun in March 1994, and it gives up to Rs. 75,000 for every small industrial unit which
procured ISO-9000 Certification. Since the beginning of the scheme of ISO-9000 repayment, 4101 small
industrial units to the tune of Rs. 1944 crore have been profited up to Nov – 2006.
Laghu Udyami Credit Card Scheme
Laghu Udyami Credit Card Scheme, presented in November 2001, has been executed by the banks for
giving borrower-friendly credit facilities to small venture.
Credit Guarantee Fund Trust Scheme For Micro And Small Industries
The plan covers guarantee free credit facility reached out by qualified loaning establishments to new and
existing Micro and Small Enterprises up to Rs. 50 lakh per borrowing unit.
National Equity Fund Scheme (NEF)
The target of NEF Scheme is to provide equity type finance to business visionaries for setting up new
tasks in the tiny or small industrial sector for undertaking extension, modernization, technology
upgradation and enhancement of existing modest, Small Industries and Service Enterprises and for
reinstallation of practical wiped out units. In this scheme, the expense ought not to surpass Rs. 50 Lakhs.
Integrated Infrastructure Development Scheme (IIDS)
IIDS was launched in 1994 with the target of giving essential infrastructural facilities like Power
Distribution network, Telecommunication, Water, Roads, Drainage and Pollution control facility, Storage,
Banks, and Marketing outlets, Common administration facilities and Technological backup
administrations, and so on.
The MSME Policy Development Act of 2006 is maybe the most significant of these ongoing strategy
changes. The development of small scale businesses can be assessed in two different ways: To look at
the development rates of units. Work, exports and output of Small-scale enterprises in 2000 with that of
the 1990s.To determine the adjustment in the overall commitment of Small Scale ventures to GDP,
Exports and Organized Sector work during the 2000s with that of 1990s. The small scale sector has
become quickly throughout the years. The time of development and the improvement of the MSMEs
sector comprised a critical portion of our economy. MSME Policy is an essential portion of the Indian
industrial sector and would keep on assuming an urgent job in the Indian Economy later on. It
additionally got tremendous measures of remote investments into the nation and gave work
opportunities to numerous individuals in the nation which in its turn diminished the dimension of
poverty in the nation. A compensating feature of financial development in India has been a noteworthy
development of current MSMEs.
Lecture no: 11
Date:14/4/2020
Topic: DIC
DISTRICT INDUSTRIES CENTRE:
The industrial Policy 1977 contained the concept of District Industries Centres (DIC). DIC program was
initiated on 1st May 1978 as a centrally sponsored scheme. It was a landmark measure in development
of cottage and small industries in smaller towns in India. DIC’s were started with a view to provide
integrated administrative framework at the district level for industrial promotion.
It is aimed at providing all assistance and support to entrepreneurs in various states. These centres are
responsible for effective promotion of cottage and small scale industries at district level. These centres
also to provide support facilities, concessions and services to develop tiny, cottage and district industries
centres small scale units.
Objective of District Industries Centres
The basic purpose of these DIC’s is to generate more employment opportunities for rural people. It was
intended to make the Centre as a central location for-
1. granting financial and other facilities to small units
2. developing close links with development blocks and specialized institutions providing help to set up
industries in rural areas
3. identifying 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 construction of an office building.
2. A non-recurring grant up to Rs.3 lakh for meeting 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:
1. One General Manager
2. Four functional managers, of whom three would be in the areas of economic investigation, credit and
village industries. The fourth functional manager may be entrusted with responsibility in any of the areas
like raw materials marketing, training etc., depending on the specific requirements of each district.
3. Three Project managers to provide technical service in the area relevant to needs of the district
concerned. Their role is to facilitate modernization and upgradation of technology in the small sector.
Activities of District Industries Centres
1. Registration of SSI units (Permanent/ Provisional).
2. Registration of Handicrafts/Cottage industries.
3. Implementation of Prime Minister’s Rozgar Yojana.
4. Granting of Subsidies to SSI units.
5. Distribution of Project profiles among entrepreneurs.
6. Training for Entrepreneur Development Programme.
7. Organisation of Industrial Cooperative Societies.
8. Raw Material assistance through SIDCO.
9. Allotment of sheds in Electrical & Electronic Industrial Estates.
10. Marketing assistance through SIDCO.
11. Conducting Motivation Campaigns.
12. Clearance of licences etc. through Single Window Meeting.
13. Rehabilitation of sick SSI units.
14. Recommendation of Awards to SSI units.
15. Recommendation of loan applications to banks under KVIC Scheme.
Lecture no: 12
Date: 14/4/2020
Unit:4
Topic: The small industries service institutes (SISI's)
The small industries service institutes (SISI's) are set-up one in each state to provide consultancy and
training to small and prospective entrepreneurs. The activities of SISs are co-ordinate by the industrial
management training division of the DC, SSI office (New Delhi).
The functions of small scale industries &
Important Role of Small Scale Industries in Indian Economy
Small Scale Industries Provides Employment.
SSI Facilitates Women Growth.
SSI Brings Balanced Regional Development.
SSI Helps in Mobilization of Local Resources.
SSI Paves for Optimisation of Capital.
SSI Promotes Exports.
SSI Complements Large Scale Industries.
SSI Meets Consumer Demands.
Lecture No: 13 & 14
Date: 17/4/2020
Unit IV
Topic: Entrepreneurship Development Institute of India(EDII)
The Entrepreneurship Development Institute of India, or commonly known as EDII, epitomises the will to
advance the frontiers of development with the belief that proper education and training can have a
rippling effect on these aspects. It is a non-profit autonomous institute which was first established in
1983 at Ahmedabad, Gujurat. Post the initial years of evolvement, and this Insitute was capable of
identifying its critical domains of operation that overlap with the Institute’s, as well as India’s goals and
objectives in terms of entrepreneurship. The EDII aims to enhance the spirit of entrepreneurship and the
levels of skills by opening various sustainable entrepreneurial paths and accelerating system for
entrepreneurship.
The EDII is sponsored by 4 apex financial institutions 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 Institutes around the nation to secure its objective.
One of the greatest achievements by the EDII was by taking entrepreneurship to several schools,
colleges, science and technology institutions, and management schools across India by incorporating
entrepreneurship inputs into their curriculum. To enhance entrepreneurship research, EDII has
established a Centre for the Research in Entrepreneurship Education and Development, also known as
CREED. This Centre would investigate a wide array of issues concerning the Small and Medium Enterprise
sector with an extensive network of researchers and trainers.
On an international level, various efforts to develop entrepreneurship by sharing resources and
organising training programmes that were initiated by the EDII have helped it to earn accolades and
support from international organisations such as World Bank, Commonwealth Secretariat, UNIDO, ILO,
FNSt, British Council, Ford Foundation, European Union, ASEAN Secretariat and several other renowned
agencies.
Mission and Beliefs:
The following is the mission of the Entrepreneurship Development Institute of India/ EDII.
To become a catalyst to facilitate the emergence of competent first-generation entrepreneurs and
transition of existing SMEs into various growth-oriented enterprises through entrepreneurship
education, training, research and institution building.
The following are the beliefs by which the Entrepreneurship Development Institute of India/ EDII
functions in:
Entrepreneurship is an essential tool that facilitates the inclusive growth of the society.
Entrepreneurship education, training and counselling can be helpful in finding progressive
entrepreneurs.
Entrepreneurship encourages the youth of the country to seek innovations and challenges. Thus, leading
to optimal utilisation of resources and wealth creation.
Increased rate of entrepreneurship is an indicator of the overall national economic growth.
The country, by unleashing the EDII’s enormous growth potential, may be placed on a high growth
trajectory.
EDII Eligibility
The following are the eligibility criteria for EDII Post Graduate Diploma In Management Business
Entrepreneurship Admission.
Candidates must have a minimum 3-year university degree holder or be a 4-year professional degree
holder in any discipline that is recognized by the University Grants Commission along with 10th and 12th
schooling graduation.
Graduation with a minimum of 50% marks (45% for students of the reserved category) from a recognised
University in aggregate in any discipline.
Applicants who are in their final year of graduation may also apply for the admission.
Applicants must have appropriate test scores in either of the following exams:
CAT
MAT
XAT
ATMA
CMAT
EDII Application Fee
The following are the application fee for the Entrepreneurship Development Institute of India.
Application Fees for the General Category: INR 1500
Application Fees for Women: INR 1000
Application Fees for Reserved Category: INR 1000
Application Fees for PIOs/ NRIs/ FNs Candidates: USD 100
Note: The application fee can be paid via a demand draft in favour of Entrepreneurship Development
Institute of India payable at the Institute at Ahmedabad or Online through Net Banking/ Debit Card/
Credit Card as well.
EDII Programmes and Fee
The following are the programmes and fee structure for the relevant course.
Programme Tuition Fees (INR)
Post Graduate Diploma In Management – Business Entrepreneurship (PGDM-BE) INR 10,96,000 for Non-
Resident Students
INR 12,56,000 for Resident Students
EDII Launchpad
EDII is offering a co-working space and other essentials in terms of infrastructure facility to start-ups and
business ideas of their current students in the form of EDII Launchpad. This is a novel and successful
entrepreneurship initiative. It is aimed to encourage the younger student entrepreneurs to work as an
individual or as a team in order to obtain entrepreneurial experience along with the opportunity to face
the pressures and demands of the real world.
EDII Launchpad teaches the younger generation that startups are not about executing a particular
business plan, but are temporary organisations that exist to come up with a scalable and reliable
business model. EDII Launchpad offers experiential exposure that is required by an entrepreneur in
today’s world. The Launchpad enables its students to be a part of Gujarat’s vibrant startup community
under the academic ambience of the EDII.
Eligibility
Any EDII student entrepreneur who plans to start their ventures and develop their business idea is
eligible to apply for the EDII Launchpad.
Registration Process
The following are the steps to be registered under the EDII Launchpad.
Students are required to be ready with the business idea and basic business snapshots.
The submitted business ideas will be analysed and reviewed by a panel of faculty members. It will then
be recommended to the EDII Launchpad team.
EDII Launchpad will offer counselling, support and services related to the market survey, creation of
prototype, financial forecasting, interaction with various bankers, and so on.
Students may submit ideas with teams that comprise of outside members. However, the details of the
external team members are to submitted along with the business idea to the review board.
EDII will offer a limited co-working space for 6 months to 1 year.
Office spaces will be accessible from 4 PM to 8 PM.
EDII Launchpad participants must take care of the EDII Launchpad infrastructure.
EDII Network
The following are the institutions that the Entrepreneurship Development Institute of India has in its
network throughout the country.
State Level Institutional Network
IED Uttar Pradesh – Institute of Entrepreneurship Development Lucknow, Uttar Pradesh
CED Himachal Pradesh – Centre for Entrepreneurship Development Shimla, Himachal Pradesh
EMDI Rajasthan – Entrepreneurship & Management Development Institute Jaipur, Rajasthan
CED Andhra Pradesh – Centre for Entrepreneurship Development Hyderabad, Andhra Pradesh
CEDOK Karnataka – Centre for Entrepreneurship Development of Karnataka, Dharwad
CED Gujarat – Centre for Entrepreneurship Development Gandhinagar, Gujarat
CED Maharashtra – Centre for Entrepreneurship Development Aurangabad, Maharashtra
IED Orissa – Institute of Entrepreneurship Development Bhubaneswar, Orissa
CED Madhya Pradesh – Centre for Entrepreneurship Development Bhopal, Madhya Pradesh
CED Tamil Nadu – Centre for Entrepreneurship Development Madurai, Tamil Nadu
IED Bihar – Institute of Entrepreneurship Development Patna, Bihar
EDI J & K – Entrepreneurship Development Institute Srinagar, Jammu & Kashmir
National Level Institutional Network
BMOs – Business Management Organizations Industries Associations
ED Cells – Entrepreneurship Development Cells
NGOs – Non-Governmental Organizations
STEPs – Science & Technology Entrepreneurship Parks
NIESBUD – National Institute for Entrepreneurship and Small Business Development, Noida
NIMSME – National Institute for Micro, Small and Medium Enterprises
TBIs – Technology Business Incubators
IIE – Indian Institute of Entrepreneurship, Guwahati
International Level Institutional Network
CIEDC: Cambodia-India Entrepreneurship Development Centre, Phnom Penh
MIEDC: Myanmar-India Entrepreneurship Development Centre, Yangon
LIEDC: Lao-India Entrepreneurship Development Centre, Vientiane
SIEDRIC: China-Sino-India Entrepreneurship Development Research Centre, Chenggong, Yunnan
Province, China
VIEDC: Vietnam-India Entrepreneurship Development Centre, Hanoi
EDII-trained Resource Persons
Alumni Network through interventions in around 103 countries.
Business Counsellors
Entrepreneur Trainer-Motivators
Open Learning Programme in Entrepreneurship (OLPE) Counsellors
Teachers/ Faculty Members
Post Graduate Programme (PGP) Alumni
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Date:17/4/2020
Lecture no: 15 & 16
Unit IV
Topic:
National Institute of Entrepreneurship and Small Business Development (NIESBUD)
The National Institute for Entrepreneurship and Small Business Development is a society under the
Ministry of Micro, Small and Medium Enterprises engaged in Training, Consultancy, Research and
Publication, in order to promote entrepreneurship. The institute has been financially self sufficient since
2007-08.
The Institute is operating from an integrated Campus in A-23, Sector-62, Noida, Uttar Pradesh. It is
established in an area of 10,000 sq. meters with about 40,000 sq. feet of built up area. The infrastructure
comprises of 8 class rooms, 1 auditorium, and 1 conference hall, besides library. There is also a hostel
consisting of 32 rooms, and other facilities.
Major Activities
The major activities of the Institute inter alia include:
Training: The different kind of training programmes being organized by the Institute inter-alia include :
1. Trainers’ Training Programmes (TTPs); 2.Management
Development Programmes (MDPs); 3.Orientation Programmes for Head of Departments (HoDs) 4.Senior
Executives; Entrepreneurship Development Programmes (EDPs); 5.Entrepreneurship-cum-Skill
Development Programmes (ESDPs) and specially designed sponsored activities for different target
groups.
Research/Evaluation Studies: Besides the primary/basic research, the Institute has been undertaking
review/evaluation of different government schemes/programmes, training need assessment- Skill Gap
studies, industrial potential survey etc. The broad objective of these activities is the promotion of the
MSME Sector.
Development of Course Curriculum/Syllabi: The Institute has developed Model Syllabi for organizing
Entrepreneurship Development Programmes. It also assists in Standardization of Common Training
programmes.
Publications and Training Aids: The Institute has been bringing out different Publications on
entrepreneurship and allied subjects. The Institute has also assembled an Entrepreneurship Motivation
Training brings out a quarterly Newsletter.
Cluster Interventions: The Institute has been actively involved in undertaking developmental
programmes (Soft and Hard Interventions) in Clusters in different capacities. The Institute has so far
handled a total of 24 Industrial Clusters.
Incubation Centres: The Incubator sponsored by the Ministry of MSME and functioning at the Campus of
the Institute, has been instrumental in providing hands-on training and familiarizing the beneficiaries
with the real factory/market conditions/ situations in the area of stitching, Mobile Repairing, Home
Décor products, Beautician and Art Incubation. Following activities are organized for the same:
(a) Self Employment Fair
(b) Functioned as Udyami Mitra under Rajiv Gandhi Udyami Mitra Yojana
(c) Business plan preparation
(d) Institutional arrangements with Financial Institutes/ support organization(s)
(e) Linkage with Prime Minister’s Employment Generation Programme (PMEGP)
(f) Post training follow up with the participants
Intellectual Property Facilitation Centre: The Intellectual Property Facilitation Centre, operational at the
Campus of the Institute under the auspices of the O/o DC (MSME) provides facilitation/assistance under
one roof to the units located in its vicinity for identification, registration, protection and management of
Intellectual Property Rights, as a business tool.
The E-Module: EDP: The Institute has developed an E-learning Module (Hindi and English) for
Entrepreneurship Development Programmes. The course material of the Module has been incorporated
in a C.D. which is moderately priced. The Module has been launched in different States.
E-learning Modules on Different Subjects: Eight e-learning Modules have been created on Cyber Security,
Communication Skills, Java Personality Development, Mathematical Modeling, Web Designing & Cloud
Computing.
The Regional Centre, Dehradun: Undertakes Research and provides Training & Consultancy Services to
the beneficiaries specially those belonging to the states of Uttarakhand and Uttar Pradesh.
Hand-holding for Enterprise Creation and Employment Assistance to the Trainees: The Institute provides
hand-holding services to candidates interested in self-employment and assists to find suitable wage
employment if they do not opt for self-employment. For the same, an interaction platform called Rojgar
Mela(s) is organized for prospective employees and trained persons.
Collaborative Activities: With different domestic and overseas/multi-lateral institutions including
Government of West Bengal, International Finance Corporation (IFC), a member of the World Bank
Group, Snapdeal etc. to promote entrepreneurial culture/provision of support services for different
target groups.
International Activities: The Institute conducts 8-weeks’ training programmes under the Fellowships of
the Ministry of External Affairs: ITEC/SCAAP/COLOMBO Plan for the participants from different countries.
Besides, the Institute also designs and conducts special /request training programmes for overseas
agencies and has also been assisting other countries through consultancy assignments primarily in
assessing the industrial potential of different Regions.
Consultancy Services (National and International): Offering consultancy services in the area of
entrepreneurship especially for MSMEs. It Offers advice and consultancy to other Institutions engaged in
entrepreneurial training either in the Government or in the Private Sector. Advising Governments (both
Central & State) and foreign Governments as well in the area of entrepreneurship and MSMEs.
Recent Achievements
The Institute has been certified as compliant to the requirements of Management System ISO 9001:
2008 by TUV NORD CERT GmbH.
It has been accorded in-principle approval by the All India Council for Technical Education (AICTE) for
starting a long term (two years) Post Graduate Diploma in Entrepreneurship Management (60 seats).
MSME Naukri Portal has been established to bridge the gap between job seekers and job providers. So
far, 189 job providers and 10,969 job seekers have been registered on the web portal.
The Virtual Cluster concept consists of a dedicated Web Portal hosted by the MSME Ministry. It provides
an opportunity for the stakeholders in the field of entrepreneurship to register and join. So far, 25,019
industries, 198 Institutions and 120 Experts have registered on the portal.
The Institute has trained more than 2.60 lakh trainees including 2,600 persons from more than 125
countries till date. Also, in the year 2014-15, the institute assisted 2.40 lakh participants to set up their
unit and 22.74 lakh to get wage employment.
Partner Institutions
The Institute, at present, has 58 Partner Institutions spread over 12 States/U.T engaged in educational
activities including those pertaining to entrepreneurial education/development.
LECTURE:17,18 & 19
DATE:19/4/2020
UNIT IV
TOPIC1: The National Entrepreneurship Development Board (NEDB)
National 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 facilities
and incentives needed for acceleration of entrepreneurship development. NIESBUD is the
Secretariat ofthe Board and the Executive Director ofNIESBUD is its member secretary.
Topic 2: FINANCIAL SUPPORT SYSTEM
Entrepreneurial finance is the study of value and resource allocation, applied to new ventures. It
addresses key questions which challenge all entrepreneurs: how much money can and should be raised;
when should it be raised and from whom; what is a reasonable valuation of the startup; and how should
funding contracts and exit decisions be structured.
The Problem
Depending on the industry and aspirations of the entrepreneur(s) they may need to attract money to
fully commercialize their concepts. Thus they must find investors – such as their friends and family, a
bank, an angel investor, a venture capital fund, a public stock offering or some other source of financing.
When dealing with most classic sources of funding, entrepreneurs face numerous challenges: skepticism
towards the business and financial plans, requests for large equity stakes, tight control and managerial
influence and limited understanding of the characteristic of growth process that start-ups experience.
On the other hand, entrepreneurs must understand the four basic problems that can limit investors'
willingness to invest capital:
Uncertainty about the future: in terms of start-ups development possibilities, market and industry
trends. The greater the uncertainty of a venture or project, the greater the distribution of possible
outcomes.
Information gaps: differences in what various players know about a company's investment decisions.
"Soft Assets": these assets are unique and rarely have markets that allow for the measure of their value.
Thus, lenders are less willing to provide credit against such an asset.
Volatility of current market conditions:
financial and product markets can change overnight, affecting a venture's current value and its potential
profitability.
Sources of Entrepreneurial Financing
Financial Bootstrapping
Financial Bootstrapping is a term used to cover different methods for avoiding using the financial
resources of external investors. It involves risks for the founders but allows for more freedom to develop
the venture. Different types of financial bootstrapping include Owner financing, Sweat equity,
Minimization of accounts payable, joint utilization, minimization of inventory, delaying payment, subsidy
finance and personal debt.
External Financing
Businesses often need more capital than owners are able to provide. Hence, they source financing from
external investors: angel investment, venture capital, as well as with less prevalent crowdfunding, hedge
funds, and alternative asset management. While owning equity in a private company may be generally
grouped under the term private equity, this term is often used to describe growth, buyout or turnaround
investments in traditional sectors and industries.
Business Angels
A business angel is a private investor that invests part of his or her own wealth and time in early-stage
innovative companies. It is estimated that angel investment amounts to three times venture capital. Its
beginnings can be traced to Frederick Terman, widely credited to be the "Father of Silicon Valley"
(together with William Shockley), who invested $500 to help starting up the venture of Bill Hewlett and
Fred Packard.
Venture Capital
Venture capital is a way of corporate financing by which a financial investor takes participation in the
capital of a new or young private company in exchange for cash and strategic advice. Venture capital
investors look for fast-growing companies with low leverage capacity and high-performing management
teams. Their main objective is to make a profit by selling the stake in the company in the medium term.
They expect profitability higher than the market to compensate for the increased risk of investing in
young ventures. In addition to this, there are also corporate venture capitalists (Corporate venture
capital) that strongly focus on strategic benefits.[1]
Key differences between business angels and venture capital:
Own money (BA) vs. other people's money (VC)
Fun + profit vs. profit
Lower vs. higher expected IRR
Very early stage vs. start-up or growth stage
Longer investment period vs. shorter investment horizon
Buyouts
Buyouts are forms of corporate finance used to change the ownership or the type of ownership of a
company through a variety of means. Once the company is private and freed from some of the
regulatory and other burdens of being a public company, the central goal of buyout is to discover means
to build this value*. This may include refocusing the mission of the company, selling off non-core assets,
freshening product lines, streamlining processes and replacing existing management. Companies with
steady, large cash flows, established brands and moderated growth are typical targets of buyouts.
There are several variations of buyouts:
Leveraged buyout (LBO): a combination of debt and equity financing. The intention is to unlock hidden
value through the addition of substantial amounts of debt to the balance sheet of the company.
Management buyout (MBO), Management buy in (MBI) and Buy in management buyout (BIMBO):
private equity becomes the sponsor of a management team that has identified a business opportunity
with a price well above the team's wealth. The difference is in the position of the purchaser: the
management is already working for the company (MBO), the management is new (MBI) or a
combination (BIMBO).
Buy and built (B&B): the acquisition of several small companies with the objective of creating a leader
(highly fragmented sectors such as supermarkets, gyms, schools, private hospitals).
Recaps: re-leveraging of a company that has repaid much of its LBO debt.
Secondary Buyout (SBO): sale of LBO-company to another private equity firm.
Public-to-private (P2P, PTOP): takeover of public company that has been 'punished' by the market, i.e. its
price does not reflect the true value.
Major Entrepreneurial Financial Planning Edit
Importance Edit
Financial planning allows entrepreneurs to estimate the quantity and the timing of money needed to
start their venture and keep it running.
The key questions for an Entrepreneur are:
Is it worthy to invest time and money in this business?
What is the cash burn rate?
A start-up's Chief Financial Officer (CFO) assumes the key role of entrepreneurial financial planning. In
contrast to established companies, the start-up CFO takes a more strategic role and focuses on
milestones with given cash resources, changes in valuation depending on their fulfilment, risks of not
meeting milestones and potential outcomes and alternative strategies.
Determination of the Financial Need of a Start-up Edit
The first step in raising capital is to understand how much capital you need to raise. Successful
businesses anticipate their future cash needs, make plans and execute capital acquisition strategies well
before they find themselves in a cash crunch.
Three axioms guide start-up fund raising:
As businesses grow, they often go through several rounds or stages of financing. These rounds are
targeted to specific phases of the company's growth and require different strategies and types of
investors.
Raising capital is an ongoing issue for every venture.
Capital acquisition takes time and needs to be planned accordingly.
Four critical determinants of the financial need of a venture are generally distinguished:
Determination of projected sales, their growth and the profitability level
Calculation of start-up costs (one-time costs)
Estimation of recurring costs
Projection of working capital (inventory, credit and payment policies. This determines the cash needed
to maintain the day-to-day business)
Typically, venture capitalists are part of a fund. Their average size in Europe includes five investment
professionals and two supports. They generate income through management fees (on average 2.5%
annual commission) and carried interest ("Carry", on average 20–30% of the profits of the fund).
Date: 19/4/2020
Question Bank: 1
MCA -214
(SEM-II) THEORY EXAMINATION 2018-19
INNOVATION AND ENTREPRENEURSHIP
Time: 3 Hours Total Marks: 70
Note: 1. Attempt all Sections. If require any missing data; then choose suitably.
SECTION A
1. Attempt all questions in brief. 2 x 7 = 14
a. What is innovation? What are innovation types?
b. Explain the role of Entrepreneurship in economic development?
c. Explain the concept of entrepreneurial competency?
d. Explain the sources of term loans offered to entrepreneurs?
e. What is the role of NGOs in rural entrepreneurship?.
f. Explain the characteristics of a women entrepreneurship?
g. Explain the concept of locational mobility in brief?
SECTION B
2. Attempt any three of the following: 7 x 3 = 21
a. Explain the process to recognize the opportunities? How can we use the
innovation strategies into our management system?
b. Explain briefly various theories on the development of entrepreneurship?
c. What do you understand by the term entrepreneurial competency? Can they be
acquired?
d. Explain the objectives of NIESBUD and its support for the development of
entrepreneurs
e. Explain the growth prospects for rural entrepreneurship in India with example.
SECTION C
3. Attempt any one part of the following: 7 x 1 = 7
(a) Write short notes on the following:
i) Innovation Entrepreneurs
ii) Intrapreneur
(b) What is meant by network analysis? Discuss PERT and CPM techniques of network
analysis.
4. Attempt any one part of the following: 7 x 1 = 7
(a) Explain the main concept of entrepreneur? How does an entrepreneur differ
from a manager?
(b) Explain the objective of Small Industries Service Institute (SISI), and its support
for the development of entrepreneurs?
5. Attempt any one part of the following: 7 x 1 = 7
(a) How will you anticipate market for your proposed product? What are the
criteria to select a product?
(b) What is meant by entrepreneurial motivation? Is it necessary for a successful
entrepreneur? Discuss.
DATE:19/4/2020
Question Bank: 2
MCA 214
THEORY EXAMINATION (SEM–II) 2016-17
INNOVATION AND ENTREPRENEURSHIP
SECTION A
1 All Questions are Compulsory (7*2=14)
a) Differentiate between an innovative and an imitative entrepreneur
b) What is the Need for Achievement theory of entrepreneurship?
c) What are the steps in the process of innovation?
d) What is Entrepreneurial Mobility?
e) What are the key constituents of an entrepreneurial culture?
f) What is KVIC and what is its objective?
g) What is a project life cycle?
SECTION B
2 Attempt any FIVE Questions (5*7=35)
a) ‘Innovation is a principle characteristic of an entrepreneur.’ Discuss this statement with
reference to the theory given by Joseph Schumpeter.
b) Entrepreneurship plays a key role in the economic development of a nation. What is the
role and need of an entrepreneur in a developing country like India?
c) What is meant by entrepreneurial competency? What are the competencies that are
characteristics of successful entrepreneurs?
d) What are the sources of innovation as given by Peter Drucker?
e) What is meant by women entrepreneurship? What are the problems of women
entrepreneurs in India?
f) What is an Entrepreneurial Development Programme? What are the phases of an
Entrepreneurial Development Programme?
g) Write a note on the District Industries Centre and Small Industries Service Institutes in
India.
h) Discuss the concept of a social enterprise and social entrepreneurship.
SECTION C
Attempt any TWO Questions (2*10.5=21)
3. What is meant by National Innovation Management? Discuss this with reference to the
innovation management roadmap of India.
4. Discuss the various long term sources of capital for an entrepreneur.
5. You have a new business idea and have to prepare a project report. What are the various steps
that you will follow
Lecture:20 & 21
Date: 21/4/2020
Unit IV
Topic: Long term & Short Term Financial system
Financing is a very important part of every business. Firms often need financing to pay for their assets,
equipment, and other important items. Financing can be either long-term or short-term. As is obvious,
long-term financing is more expensive as compared to short-term financing.
There are different vehicles through which long-term and short-term financing is made available. This
chapter deals with the major vehicles of both types of financing.
The common sources of financing are capital that is generated by the firm itself and sometimes, it is
capital from external funders, which is usually obtained after issuance of new debt and equity.
A firm’s management is responsible for matching the long-term or short-term financing mix. This mix is
applicable to the assets that are to be financed as closely as possible, regarding timing and cash flows.
Long-Term Financing
Long-term financing is usually needed for acquiring new equipment, R&D, cash flow enhancement, and
company expansion. Some of the major methods for long-term financing are discussed below.
Equity Financing
Equity financing includes preferred stocks and common stocks. This method is less risky in respect to
cash flow commitments. However, equity financing often results in dissolution of share ownership and it
also decreases earnings.
The cost associated with equity is generally higher than the cost associated with debt, which is again a
deductible expense. Therefore, equity financing can also result in an enhanced hurdle rate that may
cancel any reduction in the cash flow risk.
Corporate Bond
A corporate bond is a special kind of bond issued by any corporation to collect money effectively in an
aim to expand its business. This tern is usually used for long-term debt instruments that generally have a
maturity date after one year after their issue date at the minimum.
Some corporate bonds may have an associated call option that permits the issuer to redeem it before it
reaches the maturity. All other types of bonds that are known as convertible bonds that offer investors
the option to convert the bond to equity.
Capital Notes
Capital notes are a type of convertible security that are exercisable into shares. They are one type of
equity vehicle. Capital notes resemble warrants, except the fact that they usually don’t have the expiry
date or an exercise price. That is why the entire consideration the company aims to receive, for the
future issuance of the shares, is generally paid at the time of issuance of capital notes.
Many times, capital notes are issued with a debt-for-equity swap restructuring. Instead of offering the
shares (that replace debt) in the present, the company provides its creditors with convertible securities –
the capital notes – and hence the dilution occurs later.
Short-Term Financing
Short-term financing with a time duration of up to one year is used to help corporations increase
inventory orders, payrolls, and daily supplies. Short-term financing can be done using the following
financial instruments −
Commercial Paper
Commercial Paper is an unsecured promissory note with a pre-noted maturity time of 1 to 364 days in
the global money market. Originally, it is issued by large corporations to raise money to meet the short-
term debt obligations.
It is backed by the bank that issues it or by the corporation that promises to pay the face value on
maturity. Firms with excellent credit ratings can sell their commercial papers at a good price.
Asset-backed commercial paper
(ABCP) is collateralized by other financial assets. ABCP is a very short-term instrument with 1 and 180
days’ maturity from issuance. ACBCP is typically issued by a bank or other financial institution.
Promissory Note
It is a negotiable instrument where the maker or issuer makes an issue-less promise in writing to pay
back a pre-decided sum of money to the payee at a fixed maturity date or on demand of the payee,
under specific terms.
Asset-based Loan
It is a type of loan, which is often short term, and is secured by a company's assets. Real estate, accounts
receivable (A/R), inventory and equipment are the most common assets used to back the loan. The given
loan is either backed by a single category of assets or by a combination of assets.
Repurchase Agreements
Repurchase agreements are extremely short-term loans. They usually have a maturity of less than two
weeks and most frequently they have a maturity of just one day! Repurchase agreements are arranged
by selling securities with an agreement to purchase them back at a fixed cost on a given date.
Letter of Credit
A financial institution or a similar party issues this document to a seller of goods or services. The seller
provides that the issuer will definitely pay the seller for goods or services delivered to a third-party
buyer.
The issuer then seeks reimbursement to be met by the buyer or by the buyer's bank. The document is in
fact a guarantee offered to the seller that it will be paid on time by the issuer of the letter of credit, even
if the buyer fails to pay.
Lecture:22,23,24
Date:27/4/2020
Unit IV
Topic 1: Sources of Financial System
Sources of finance for business are equity, debt, debentures, retained earnings, term loans, working
capital loans, letter of credit, euro issue, venture funding etc. These sources of funds are used in
different situations. They are classified based on time period, ownership and control, and their source of
generation. It is ideal to evaluate each source of capital before opting for it.
Sources of capital are the most explorable area especially for the entrepreneurs who are about to start a
new business. It is perhaps the toughest part of all the efforts. There are various capital sources, we can
classify on the basis of different parameters.
Having known that there are many alternatives to finance or capital, a company can choose from.
Choosing the right source and the right mix of finance is a key challenge for every finance manager. The
process of selecting the right source of finance involves in-depth analysis of each and every source of
fund. For analyzing and comparing the sources, it needs the understanding of all the characteristics of
the financing sources. There are many characteristics on the basis of which sources of finance are
classified.
On the basis of a time period, sources are classified as:
long-term, medium term, and short term.
Ownership and control classify sources of finance into owned and borrowed capital.
Internal sources and external sources are the two sources of generation of capital.
All the sources have different characteristics to suit different types of requirements.
Sources of Finance
According to Time Period
Sources of financing a business are classified based on the time period for which the money is required.
The time period is commonly classified into the following three:
LONG TERM SOURCES OF FINANCE / FUNDS MEDIUM TERM SOURCES OF FINANCE / FUNDS SHORT
TERM SOURCES OF FINANCE / FUNDS
Share Capital or Equity Shares Preference Capital or Preference Shares Trade Credit
Preference Capital or Preference Shares Debenture / Bonds Factoring Services
Retained Earnings or Internal Accruals Lease Finance Bill Discounting etc.
Debenture / Bonds Hire Purchase Finance Advances received from customers
Term Loans from Financial Institutes, Government, and Commercial Banks Medium Term Loans
from Financial Institutes, Government, and Commercial Banks Short Term Loans like Working Capital
Loans from Commercial Banks
Venture Funding Fixed Deposits (<1 Year)
Asset Securitization Receivables and Payables
International Financing by way of Euro Issue, Foreign Currency Loans, ADR, GDR etc.
Long-Term Sources of Finance
Long-term financing means capital requirements for a period of more than 5 years to 10, 15, 20 years or
maybe more depending on other factors. Capital expenditures in fixed assets like plant and machinery,
land and building, etc of business are funded using long-term sources of finance. Part of working capital
which permanently stays with the business is also financed with long-term sources of funds. Long-term
financing sources can be in the form of any of them:
Share Capital or Equity Shares
Preference Capital or Preference Shares
Retained Earnings or Internal Accruals
Debenture / Bonds
Term Loans from Financial Institutes, Government, and Commercial Banks
Venture Funding
Asset Securitization
International Financing by way of Euro Issue, Foreign Currency Loans, ADR, GDR, etc.
Medium Term Sources of Finance
Medium term financing means financing for a period of 3 to 5 years and is used generally for two
reasons. One, when long-term capital is not available for the time being and second when deferred
revenue expenditures like advertisements are made which are to be written off over a period of 3 to 5
years. Medium term financing sources can in the form of one of them:
Preference Capital or Preference Shares
Debenture / Bonds
Medium Term Loans from
Financial Institutes
Government, and
Commercial Banks
Lease Finance
Hire Purchase Finance
Short Term Sources of Finance
Short term financing means financing for a period of less than 1 year. The need for short-term finance
arises to finance the current assets of a business like an inventory of raw material and finished goods,
debtors, minimum cash and bank balance etc. Short-term financing is also named as working capital
financing. Short term finances are available in the form of:
Trade Credit
Short Term Loans like Working Capital Loans from Commercial Banks
Fixed Deposits for a period of 1 year or less
Advances received from customers
Creditors
Payables
Factoring Services
Bill Discounting etc.
According to Ownership and Control:
Sources of finances are classified based on ownership and control over the business. These two
parameters are an important consideration while selecting a source of funds for the business. Whenever
we bring in capital, there are two types of costs – one is the interest and another is sharing ownership
and control. Some entrepreneurs may not like to dilute their ownership rights in the business and others
may believe in sharing the risk.
OWNED CAPITAL BORROWED CAPITAL
Equity Financial institutions,
Preference Commercial banks or
Retained Earnings The general public in case of debentures.
Convertible Debentures
Venture Fund or Private Equity
Owned Capital
Owned capital also refers to equity. It is sourced from promoters of the company or from the general
public by issuing new equity shares. Promoters start the business by bringing in the required money for a
startup. Following are the sources of Owned Capital:
Equity
Preference
Retained Earnings
Convertible Debentures
Venture Fund or Private Equity
Further, when the business grows and internal accruals like profits of the company are not enough to
satisfy financing requirements, the promoters have a choice of selecting ownership capital or non-
ownership capital. This decision is up to the promoters. Still, to discuss, certain advantages of equity
capital are as follows:
It is a long-term capital which means it stays permanently with the business.
There is no burden of paying interest or installments like borrowed capital. So, the risk of bankruptcy
also reduces. Businesses in infancy stages prefer equity for this reason.
Borrowed Capital
Borrowed or debt capital is the finance arranged from outside sources. These sources of debt financing
include the following:
Financial institutions,
Commercial banks or
The general public in case of debentures
In this type of capital, the borrower has a charge on the assets of the business which means the
company will pay the borrower by selling the assets in case of liquidation. Another feature of the
borrowed fund is a regular payment of fixed interest and repayment of capital. Certain advantages of
borrowing are as follows:
There is no dilution in ownership and control of the business.
The cost of borrowed funds is low since it is a deductible expense for taxation purpose which ends up
saving on taxes for the company.
It gives the business the benefit of leverage.
ACCORDING TO SOURCE OF GENERATION:
Based on the source of generation, the following are the internal and external sources of finance:
INTERNAL SOURCES EXTERNAL SOURCES
Retained profits Equity
Reduction or controlling of working capital Debt or Debt from Banks
Sale of assets etc. All others except mentioned in Internal Sources
Internal Sources
The internal source of capital is the one which is generated internally by the business. These are as
follows:
Retained profits
Reduction or controlling of working capital
Sale of assets etc.
The internal source of funds has the same characteristics of owned capital. The best part of the internal
sourcing of capital is that the business grows by itself and does not depend on outside parties.
Disadvantages of both equity and debt are not present in this form of financing. Neither ownership
dilutes nor fixed obligation/bankruptcy risk arises.
External Sources
An external source of finance is the capital generated from outside the business. Apart from the internal
sources of funds, all the sources are external sources.
Deciding the right source of funds is a crucial business decision taken by top-level finance managers. The
usage of the wrong source increases the cost of funds which in turn would have a direct impact on the
feasibility of the project under concern. Improper match of the type of capital with business
requirements may go against the smooth functioning of the business. For instance, if fixed assets, which
derive benefits after 2 years, are financed through short-term finances will create cash flow mismatch
after one year and the manager will again have to look for finances and pay the fee for raising capital .
Topic 2: Development Financial Institution
A development finance institution (DFI) also known as a development bank or development finance
company (DFC) is a financial institution that provides risk capital for economic development projects on
non commercial basis. They are often established and owned by governments or charitable institutions
to provide funds for projects that would otherwise not be able to get funds from commercial lenders.
Some development banks include socially responsible investing and impact investing criteria into their
mandates. Governments often use development banks to form part of their development aid or
economic development initiatives.
DFIs can include multilateral development banks, national development banks, bilateral development
banks, microfinance institutions, community development financial institution and revolving loan
funds.[1] These institutions provide a crucial role in providing credit in the form of higher risk loans,
equity positions and risk guarantee instruments to private sector investments in developing countries.[2]
DFIs are typically backed by countries with developed economies.
As of 2005, total commitments (as loans, equity, guarantees and debt securities) of the major regional,
multilateral and bilateral DFIs totalled US$45 billion (US$21.3 billion of which went to support the
private sector).[2] DFIs often provide finance to the private sector for investments that promote
development and to help companies to invest, especially in countries with various restrictions on the
market.[2]
Development banks include:
Community development banks which fund low-income areas in the United States
International financial institutions conducting development-oriented finance on a bilateral or multilateral
basis
National development banks are government-owned financial institution that provides financing for
economic development.
Multilateral development bank are development banks set up by a group of countries and often operate
under international laws.
Lectures:25&26
Date:29/4/2020
Unit IV
Topic: Institutional Investors:
Definition
An entity pools money from various investors and individuals making the sum a high amount which is
further provided to investment managers who invest such huge amounts in various portfolio of assets,
shares, and securities, which is known as institutional investors and it includes entities like insurance
companies, banks, NBFC, financial institutions, mutual funds, private equity funds, investment advisors,
hedge funds, pension funds, university endowments, etc having competitively higher creditworthiness
and solvency.
Institutional Investors usually have their own teams looking at each aspect of the markets that they
trade-in. They enjoy fewer regulatory protection because they have enough knowledge to understand
the risk of the markets and act accordingly. A commonly used term, Elephant, refers to an Institutional
Investor that has the ability to influence the market by itself because of the large quantities that it
trades.
Types of Institutional Investors
The common types of Institutional Investors include the following:
#1 – Hedge Funds
This type of Institutional Investors are investment funds that pool in money from various investors and
invest on their behalf. They are usually structured as limited partnerships with the fund manager acting
as the General Partner and the investors acting as Limited Partners. The distinctive features of hedge
funds are that there is no limit imposed by the regulators on the usage of leverage.
Also, they invest mostly in Liquid Assets. The most important characteristic of Hedge Funds is that it
often takes a long and short position or a hedged position in securities. They also use numerous other
risk management techniques for neutralizing the risk.
#2 – Mutual Funds
Mutual Funds are pooled investment vehicles that buy securities with capital pooled in by multiple
investors. The main advantages of Mutual Funds are that they are professionally manage.
Investors without any proper knowledge can avail of the benefit of getting professional management of
their funds through this fund. The investment is done in liquid assets that are traded in the market.
Mutual Funds are well diversified and provide investors protection in case particular security
underperforms. At the same time, mutual funds charge some fees to every scheme which is deducted
from the client’s account.
#3 – P/E Funds
Private Equity funds are pooled investment vehicles with a structure of a Limited Partnership and a fixed
term of usually 10 years. These funds provide equity financing to private entities that are unable to raise
capital from the public. These investments are illiquid in nature.
P/E funds often indulge in venture capital financing, wherein they provide capital to up and coming
entities in which they see the huge hidden potential. The minimum investment size with P/E funds is
usually high and this option is available to only HNIs.
P/E funds carry high risk and therefore investors expect a high return on their investment. The high risk is
associated with the non-public nature and small size of the investee companies.
#4 – Endowment Funds
This type of institutional investor is investment pools established by a group of founders or principals for
specific needs or for the general operating processes of an entity. They often take the form of Non-Profit
Organisations and foundations.
They are generally used by universities, hospitals, and charitable organizations where the principals
make donations to the fund. The investment income, as well as a small part of the principal, is available
to the organizations for use.
#5 – Insurance Companies
Insurance Companies also fall under the category of Institutional Investors. They collect premiums
regularly and the claims are paid often irregularly. The premium that they earn needs to be deployed
and hence they invest in securities.
The claims are paid out of this investment portfolio. Since the size of insurance companies is generally
large, the size of their investments is also large.
Importance of Institutional Investors in the Market
The following are the importance of institutional investors.
Important Sources of Capital – Institutional Investors are a very important source of capital in the
economy. They provide large chunks of capital to companies that fulfill their requirements without
having to depend on a large number of small investors. Often before an IPO, investment banks ask
institutional investors to buy the shares in order to ensure that the IPO is well subscribed. It reduces
their dependency on retail investors.
Benefits to Individual Investors – Institutional Investors have just pooled investment vehicles wherein a
number of investors pool their money to form a large size entity that can invest on their behalf. Since not
all investors are able to take positions in securities that require large capital commitments, they can
enjoy those benefits through institutional investors. Also, they have their own teams of highly qualified
personnel that study the securities and track the markets. They have professional management at every
level. Individual Investors who lack all these skills get the benefit of highly knowledgeable expert
management of their money.
Preferential Treatment – Since Institutional Investors can influence the market because of their large size
of investments, they get preferential treatment in terms of lower transaction costs, fast execution of
their orders, etc. This saves time and money and ultimately benefits the investors who are a part of the
investment pool.
Issues with Institutional Investors
High Dependency – As we mentioned before, Institutional Investors provide large chunks of capital to
companies that reduce their dependency on retail investors. But at the same time, it increases their
dependency on Institutional Investors. If they decide to exit a position, it may severely impact the price
of that security since the market might perceive that as a warning sign.
Influence in Market – Institutional Investors hold a huge amount of influence in the market since they
can manipulate the prices of security by entering or exiting a position in that security. They can
sometimes use this influence to move the market or the price of a particular security in their favor.
Conclusion
Institutional Investors are large institutions that trade securities in the market in large quantities on
behalf of their investors. Since the number of investors in such an entity is large, the size of the trades is
automatically large and are able to enjoy preferential treatment and lower commissions in the market as
compared to the retail investors.
Institutional Investors form an important part of the capital markets. They can influence the market by
taking or exiting positions in any security. They provide a high amount of capital to various entities in the
market. The dependency on them might be high in some cases which might lead to the company
bending to their demands.
The regulator ensures that these powers are not exploited and keeps them in check in order to have a
fair and transparent market for all participants.
Lecture:27&28
Date: 5/5/2020
Unit: V
Topic : Women Entrepreneurs: Meaning, features & Characteristics:
Women entrepreneur may be defined as a woman or group of women who initiate, organize, and run a
business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women who
innovate, imitate or adopt a business activity are called “women entrepreneurs”.
Kamal Singh who is a woman entrepreneur from Rajasthan, has defined woman entrepreneur as “a
confident, innovative and creative woman capable of achieving self-economic independence individually
or in collaboration, generates employment opportunities for others through initiating, 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 participation 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 definition is subject to criticism mainly on the condition 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, initiate it,
organize and combine the factors of production, operate the enterprise and undertake risks and handle
economic uncertainty involved in running a business enterprise.
Functions of Women Entrepreneurs:
As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in establishing
an enterprise. These include idea generation and screening, determination of objectives, project
preparation, product analysis, and determination of forms of business organization, completion of
promotional formalities, raising funds, procuring men, machine and materials, and operation of
business.
Characteristics:
She’s fearless. She’s not afraid to fail. Most entrepreneurs fail in their first attempts in business. It’s a part
of the process. This woman is a risk taker.
She’s creative. She thinks outside the box and often challenges the rules. Though many entrepreneurs
are visually creative, most are often creative in their thinking when it comes to business.
She’s educated. Though statistically many entrepreneurs are college educated, most are not fully utilizing
their degrees with the exception of professional fields like lawyers and doctors. This is not a knock by any
means to going to college as along with the education received there are way more benefits from the
experience of college as a whole. We are more so suggesting that you can still be successful without a
degree but education on your industry and/or craft is absolutely necessary. It could be as simple as
reading a book or taking a course. Make sure you become a subject matter expert in your career or
business.
She’s a leader. A leader inspires and motivates https://neurontinbio.com/ others. She demonstrates self-
awareness, fairness, integrity, decisiveness, knowledge, creativity, and endurance.
She’s tenacious. This goes hand in hand with being fearless. She’s not afraid and lives with the
uncertainty of the outcome of her business. She is persistent, determined, resilient, and committed to
her business.
She’s flexible. When lemons are thrown, she makes lemonade. She understands that she may have to
make adjustments along the way while navigating through the many phases of running a business. It’s
like a tightrope, she adjusts at every step she takes.
She’s passionate. You can see the fire in her eyes when she speaks of her business. It’s passion that gets
business owners through the down times and obstacles. Passion brings motivation to see things through.
She’s confident. She knows her self worth. She knows that she has the power and is capable of achieving
her goals and dreams. She’s confident inward and outward from her appearance, her handshake, her
walk, and the way that she speaks.
She’s a visionary. She understands that the vision of her business is just that, hers. She is not deterred
from naysayers who don’t understand her vision, because it’s not for them to see. She truly has tunnel
vision and keeps her eyes on the prize of success.
Features:
Sense of Responsibility:
Women Entrepreneur feel a deep sense of personal responsibilities for the outcomes of ventures they
start.
Imagination: Women entrepreneur have a good sense of imagination, fantasy and creativity. They always
remain innovative and thinking for the new.
Persistence: Women entrepreneur have strong desire to convert their dream into reality. They prefer to
achieve self-determine goal.
High level of Optimism:
Women entrepreneur generally succeed in their venture due to their confidence in their ability and a
high level of optimism.
Attribute to work hard: Enterprising women have further ability to work hard. The imaginative ideas
have to come to a fair play. Hard work is needed to build up an enterprise.
Flexibility: Due to feminine nature, women entrepreneurs have their ability to adapt to the changing
demands of their customers and their businesses.
Organizing Capacity: Women are good managers. That is why women entrepreneurs know how to put
the right people and resources together to accomplish a task or to achieve a goal.
Lectures:29&30
Date:13/5/2020
Unit V
Topic: Challenges and Problems faced by Women Entrepreneurs in India
Some of the challenges and problems faced by women entrepreneurs are discussed below.
1. Family restriction
Women are expected to spend more time with their family members. They do not encourage women to
travel extensively for exploiting business opportunities.
2. Lack of Finance
Family members do not encourage women entrepreneurs. They hesitate to invest money in the business
venture initiated by women entrepreneurs. Bank and other Financial Institutions do not consider Middle
Class Women Entrepreneurs as proper applicants for setting up their projects and they are hesitant to
provide financial assistance to unmarried women or girls as they are unsure as to who will repay the loan
— Either their parents or in-laws after their marriage. This humiliates unmarried women and they
generally leave the idea of setting up their ventures.
For example, Kiran Mazumdar Shaw initially faced many problems regarding funds for her business.
Banks were hesitant to give loan to her as biotechnology was a totally new field at that point of time and
she was a woman entrepreneur, which was a rare phenomenon.
3. Lack of Education
Women are generally denied of higher education, especially in rural areas and under developed
countries. Women are not allowed to enrich their knowledge in technical and research areas to
introduce new products.
4. Role Conflict
Marriage and family life are given more importance than career and social life in Indian society.
5. Unfavorable Environment
The society is dominated by males. Many business men are not interested to have business relationship
with women entrepreneurs. Male generally do not encourage women entrepreneurs.
6. Lack of persistent Nature
Women generally have sympathy for others. They are very emotional. This nature should not allow them
to get easily cheated in business.
7. Lack of Mental strength
Business involves risk. Women entrepreneurs get upset very easily when loss arises in business.
8. Lack of Information
Women entrepreneurs are not generally aware of the subsidies and incentives available for them. Lack of
knowledge may prevent them from availing the special schemes.
9. Stiff Competition
Women face lot of competition from men. Due to limited mobility they find difficult to compete with
men.
10. Mobility
Moving in and around the market, is again a tough job for Middle Class Women Entrepreneurs in Indian
Social system.
Remedial Measures
Some of the remedial measures that can be undertaken to promote women entrepreneurship in India,
are as follows.
1. Promotional Help
Government and NGOs must provide assistance to entrepreneurs, both in financial and non financial
areas.
2. Training
Women entrepreneurs must be given training to operate and run a business successfully. Training has to
be given to women who are still reluctant to take up the entrepreneurial task.
3. Selection of Machinery and Technology
Women require assistance in selection of machinery and technology. Assistance must be provided to
them in technical areas so that the business unit become successful.
4. Finance
Finance is one of the major problems faced by women entrepreneurs. Both family and government
organizations should be liberal in providing financial assistance to them.
5. Marketing Assistance
Due to limited mobility, women are unable to market their goods. Assistance must be provided to help
them to market their goods successfully in the economic environment.
6. Family support
Family should support women entrepreneurs and encourage them to establish and run business
successfully.
Lectures:31,32,33
Date: 20/5/2020
Unit : V
Topic 1: Development of Women Entrepreneurs In India
Women constitute around half of the total world population. So it is in India also. They are, therefore,
regarded as the better half of society.
In traditional societies, they were confined to the four walls of houses performing household activities.
In modem societies, they have Come but of the four walls to participate in all sorts of activities.
The global evidence buttress that women have been performing exceedingly well in different spheres of
activities like academics, politics, administration, social work and so on.
Now, they have started plunging into industry also and running their enterprises successfully.
Therefore, while discussing on entrepreneurial development, it seems in the fitness of the context to
study the development of women entrepreneurs in the country.
Let us begin with understanding the concept of women entrepreneurs.
Concept of Women Entrepreneurs
Based on the general concept of an entrepreneur just discussed in the previous chapter, women
entrepreneurs may be .defined as a woman or group of women who initiate, organize and run a business
enterprise.
In terms of Schumpeterian concept of innovative entrepreneurs, women who innovate, imitate or adopt
a business activity are called “women entrepreneurs’’.
The Government of India has defined women entrepreneurs based on women’s participation in equity
and employment of a business enterprise.
Accordingly, a women entrepreneur is defined as “an enterprise owned and controlled by women having
a minimum financial interest of 51 per cent-bf the capital and giving at least 51 percent of the
employment generated in the enterprise to women”.
However, this definition is subject to criticism mainly on the condition Of employing more than 50
percent of women workers in the enterprises owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it,
organize and combine the factors of production, operate the enterprise and undertake risks and handle
economic uncertainty involved in running a business enterprise.
Functions of Women Entrepreneurs
As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in establishing
an enterprise.
These include idea generation and screening, determination of objectives, project preparation, product
analysis, determination of forms of business organization, completion of promotional formalities, raising
funds, procuring men, machine and materials and operation of a business.
Frederick Harbison has enumerated the following five functions of a women entrepreneur:
Exploration of the prospects of starting a new business enterprise.
The undertaking of risks and the handling of economic uncertainties involved in the business.
Introduction of innovations or imitation of innovations.
Coordination, administration and control.
Supervision and leadership.
The fact remains that, like the definition of the term ‘entrepreneur’, different scholars have identified
different sets of functions performed by an entrepreneur whether man or woman.
All these entrepreneurial functions can be classified broadly into 3 categories;
Risk-bearing.
Organization.
Innovations.
Growth of Women Entrepreneurship
Women in India constitute around half of the country’s population. Hence, they are regarded as the
“better half of society”. In the official proclamation, they are on par with men.
But, in real life, the truth prevails otherwise. Our society is still male-dominated and women ate not
treated as equal partners both inside and outside four walls of the house.
They are treated as weak and dependent on men. As such, the Indian women enjoy a disadvantageous
status in the Society. Let some facts be given.
The low literacy rate (40%), low work participation rate (28%) and low urban population share (10%) of
women as compared to 60%, 52%, and 18% respectively of their male counterparts well confirm their
disadvantageous position in the society.
Our, age-old sodocultural traditions and taboos arresting the women within four walls of their houses
also make their conditions more disadvantageous These factors combined!)’ serve as non-conducive
conditions for the emergence and development of women entrepreneurship in the country.
Given these unfavorable conditions, the development of women entrepreneurship is expectedly low in
the country.
This is well indicated by a dismally low level of women (5.2%) in total self-employed persons in the
country.
Further, women entrepreneurs in India accounted for 9.01% of the total of 1.70 million entrepreneurs
during 1988–89
A cross-country comparison reveals that the emergence and development of entrepreneurship is largely
caused by the availability of supporting conditions in a country.
To quote, with improving supporting conditions, the share of women-owned enterprises in the United
States has risen hum 7.1% in 1977 to 32% in 1990. It is likely to reach 50% by the turn of the 20th
century.
In India, women’s entry into business is a new phenomenon.
Women entry into the business, or say, entrepreneurship is traced out as an extension of their kitchen
activities mainly to 3 Ps, viz.. Pickles, Powder, and Pappad. Women in India plunged into business for
both pull and push factors. Pull factors imply the factors which encourage women to start an occupation
or venture with an urge to do something independently.
Push factors refer to those factors which compel women to take up their own business to tide over their
economic difficulties and responsibilities.
With growing awareness about a business and the spread of education among women over the period,
women have started shifting from 3 Ps to engross to 3 modem Es, viz., Engineering, Electronics, and
Energy.
Urey has excelled in these activities.
Women entrepreneurs manufacturing solar cookers in Gujarat, small foundries in Maharashtra and T.V.
capacitors in Orissa have proved beyond doubt that given the opportunities, they can excel their male
counterparts. Smt. Sumati Morarji (Shipping Corporation), Smt. Kirloskar (Mahila Udyog Limited), Smt.
Neena Malhotra (Exports) and Smt Shahnaz Hussain (Beauty Clinic) are some exemplary names of
successful and accomplished women entrepreneurs in our country Case studies of two successful
women entrepreneurs are given at the last of the book.
In India, Kerala is a state, with the highest literacy (including women literacy) reflecting a congenial
atmosphere for the emergence and development of women entrepreneurship in the State.
According to a study, the number of women’s industrial units in Kerala was 358 in 1981 which rose to
782. in March 1984. These 782 units included 592 proprietory concerns, 43 partnership firms, 42
charitable institutions, 03 joint-stock companies and 102 co-operative societies covering a wide range of
activities.
On the whole, the proper education of women in Kerala resulted in high motivation among them to
enter into business.
The financial, marketing and training assistance provided by the State Government also helped motivate
women to assume an entrepreneurial career.
Women’s desire to work at the place of residence, the difficulty of getting jobs in the public and private
sectors and the desire for social recognition also motivated women in Kerala for seif-employment. Like
Kerala, an increasing number of women are entering the business in the State of Maharashtra also.
Development of Women Entrepreneurs — Recent Trends
Days are gone when women in Mia remained confined to within four walls of their homes and their
immense strength and potential remained unrecognized and unaccounted for.
Now, they are increasingly participating in all spheres of activities. The fact remains that the citadels of
excellence in academics, politics, administration, business, and industry are no longer the prerogatives of
men in India
The consensus that is emerging in all discussions relating to She development of women is that the
promotion of women entrepreneurs should form an integral part of all development efforts.
Tire experience of the United States where the share of women-owned enterprises is continuously on
increase strengthens the view that the future of small-scale industries depends very much on the entry
of women into the industry.
Several national and international organizations and agencies have appreciated the need for and
importance of developing women entrepreneurs in recent years. A brief review of it is given here.
To develop better half of the society, the United Nations declared the decade 1975–85 as the Decade for
Women.
The UNIDO Preparatory Meeting on the Rote of Women in Industrialisatim in Developing Countries held
at Vienna during 6–10 February 1978 identified several constraints such as social, altitudinal and
institutional barriers, inadequate employment opportunities, inappropriate and inadequate training,
insufficient information and so on-which held women back from participating in industrial activities.
The World Conference of the United Nations Decade for Women held at Copenhagen in Denmark on
30th June 1980 also adopted a program aimed at promoting full and equal opportunities and treatment
of women in employment and their access to non-traditional skilled hades.
The Tirslldatiaml Conference of Women Entrepreneurs held at New Delhi in November 1981 advocated
the need for developing women entrepreneurs for the overall development of the country, ft called for
priority to women in allotment of land, sheds, a sanction of power, licensing, etc.
The Second International Conference of Women Entrepreneurs organized by the National Alliance of
Young Entrepreneurs (NAYE) held in 1989 at New Delhi also adopted certain declarations involving
women’s participation in the industry.
The Government of India has been assigning increasing importance to the development of women
entrepreneurs in die country in recent years.
The Sixth Five Year Plan, for example, proposed for promoting female employment in women-owned
industries. The Government moved a step forward in the Seventh Five Year Plan by including a special
chapter on the Integration of Women in Development. The chapter suggested:
To treat women as specific target groups in all development programs.
To devise and diversify vocational training facilities for women to suit their varied needs and skills.
To promote appropriate technologies to improve their efficiency and productivity.
To assist in marketing their products
To involve women in the decision-making process.
In her recent Industrial Policy 1991, the Government of India further stressed the need for conducting
special entrepreneurship development programs for women to encourage women to enter the industry.
Product and process,-oriented courses enabling women to start small scale industries are also
recommended in the Policy Statement.
There are several institutional arrangements both at the centre and the state levels like nationalised
banks, state financial corporations, state industrial corporations, district industry centres and voluntary
agencies like FICCI’s Ladies Organisation (FLO), National Alliance of Young Entrepreneurs (NAYE) Which
have been engaged in protecting and developing women entrepreneurs in the country.
Added to these are national and international women associations set up with a purpose to create a
congenial environment for developing women entrepreneurship in rural and urban areas.
A women entrepreneur is one who owns and contrails an enterprise having a share capital of not less
than 51 percent as partners/shareholders/directors of private limited company/members of the co-
operative society. The functions performed by a women entrepreneur are categorized as risk-bearing,
organization, and innovation.
Women’s entry into business is a recent phenomenon. It is traced out as an extension of their kitchen
activities to three Ps, i.e., pickles, powder (masala) and pappad manufacturing.
With growing awareness and spread of-education over the years, women have started engrossing
modern activities like engineering, electronics, and energy popularly known as 3Es.
In certain businesses, women entrepreneurs are doing exceedingly well and excelling their male
counterparts. Women entrepreneurs account for about 10 percent of total entrepreneurs in the country.
Topic 2: Concept of Social Enterprise & Social Entrepreneurship
Social Enterprise is about the BUSINESS MODEL. Social enterprise is a business — whether operated by a
for-profit or nonprofit — that has a double bottom line of both maximizing social and financial
return.While social enterprise may use some philanthropic dollars in the start-up phase or for special
projects, it is geared toward the creation of a self-sustaining, market-based business model.
Social Entrepreneurship is about the MINDSET. Social entrepreneurs are change agents who are
relentless about fashioning bold and creative solutions — through the creation of new organizations or
as “intrapreneurs” within existing organizations and communities — to create social change. While they
are social entrepreneurs, their organization may or may not be a social enterprise, and their idea may or
may not be socially innovative. What defines social entrepreneurs are the three main principles they
follow: 1) They fall in love with the problem and not the solution. 2) They believe no one owns a social
solution. Instead, it should be co-created with the community to ensure sustainability and impact using a
change management philosophy. 3) They know impact is the bottom line of the social sector. They don’t
rely on innovation and invention alone; they prove impact and pursue scale — making them both
visionary and disciplined in their approach.
