Form No.

AC08
Jansons Institute of Technology
Karumathampatti, Coimbatore – 641 659

COURSE DELIVERY PLAN

Faculty Name : Mr. N. Srinivasan Staff code : jit0151

Subject Name : Entrepreneurship Development Subject code : ME2035
Academic Year : 2015 – 2016 Semester : VIII
Program & Branch : B.E Mechanical Engineering Section :

Sl. No. Course Objectives (As given in the Syllabus) Mapping with corresponding program objectives
Study of this subject provides an understanding of the scope of an
1. entrepreneur, key areas of development, financial assistance by the
institutions, methods of taxation and tax benefits, etc.

Sl. No. Course Outcome (As given in the Syllabus) Mapping with corresponding program outcome
Upon completion of the course, students will be able to gain knowledge
1.
and skills needed to run a business successfully.

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 Form No. AC08
Lecture Time Detailed Topics to be covered Actual Deviations (with HOD Principal
Hour Allocated Completion reasons) if any
(Mins) Date Period
UNIT I - ENTREPRENEURSHIP Corresponding course objective No’s met: 01

50 Entrepreneur: Introduction, Concept / Meaning

1
50 Entrepreneur: Characteristics, Functions of an entrepreneur,
difference between entrepreneur & manager
20 Ø Characteristics
2
15 Ø Functions of an entrepreneur
15 Ø Difference between entrepreneur & manager
50 Types of entrepreneurs, Meaning of Intrapreneur, Difference btw
entrepreneur & intrapreneur

3 Ø Types of entrepreneurs
25
25 Ø Difference btw entrepreneur & intrapreneur

50 Concept of Entrepreneurship
4 50 Ø During the period of pre-independence A case study

50 Concept of Entrepreneurship
5 50 Ø During the period of post-independence A case study

50 Growth of entrepreneurship
6 25 Ø During the period of post-independence
25 Ø During the period of pre-independence
50 Role of Entrepreneurship in economic development of state /

7 nation

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 Form No. AC08
50 Factors affecting Entrepreneurial Growth
Ø Economic factors
8 25 Ø Non-economic factors
25 Ø Government Actions

50 Unit 1 Overview
9 50 Ø Entrepreneurship and its concepts

UNIT II - MOTIVATION Corresponding course objective No’s met: 01

50 Motivational aspects of an Entrepreneur, Motivation theories

10 25 Ø Motivational aspects
25 Ø Motivation theories
50 Motivating factors, influencing an Entrepreneur

20 Ø Creativity
11
20 Ø Self-efficiency & communication
10 Ø Locus of control

50 Achievement Motivation

12 25 Ø Training, tools
25 Ø Techniques to assess

13 50 Self-rating, Business game

14 50 TAT

50 Entrepreneurial competencies

15 25 Ø Major Entrepreneurial competencies

25 Ø Developing Entrepreneurial competencies

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 Form No. AC08
50 Entrepreneurship Development Program (EDP)
15 Ø Need

16 10 Ø Objective
15 Ø Course contents
10 Ø Curriculum

17 50 EDP

30 Ø Various phases
20 Ø Evaluation methodology

18 50 Unit 2 Overview
25 Ø Description
25 Ø Applications
UNIT III – BUSINESS Corresponding course objective No’s met: 01

50 Small Enterprises

19 25 Ø Definition, Objectives
25 Ø Scope & its importance
50 Role of Small Enterprises
20 25 Ø In economic development,
25 Ø problems of small enterprises
50 Small enterprises:

21 25 Ø Ownership Structures
25 Ø Advantages & Disadvantages SIDCO SSIB
50 Steps involved in setting up a Business
22
50 Ø Finacial assistance

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 Form No. AC08
Ø Government Support, & Regulations

23 50 Business Identification & Selection

24 50 Techno economic feasibility

50 Market Survey, Research and Analysis
25 25 Ø Opinion pooling method
25 Ø Life cycle segment analysis
50 Project Report:
10 Ø Significance
26
20 Ø Contents & Formulation,
20 Ø Preparation of a Preliminary Project Report

27 50 Project appraisal: Concept and methods

28 50 Sources of information
UNIT IV – FINANCING AND ACCOUNTING

29 50 Financial planning, sources of finance

50 Various financial institutions
20 Ø Leasing Aggrements
30
20 Ø Commercial Banks
10 Ø Other financial aids

50 Break Even Analysis

31 25
Ø Costing
25 Ø Product Pricing

50 Network analysis techniques

32 Ø Concept
25
25 Ø Importance
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 Form No. AC08
50 Accounting
33 25 Need & objective
25 Accounting Process

34 50 Various financial risks faced by small enterprises

35 50 Reasons and remedial actions for financial risks

36 50 Taxation for Small Enterprises

10 Ø Tax Benefits & IT
20 Ø Investment Allowances
20 Ø Patents and copyrights

37 50 Unit IV review

UNIT V – SUPPORT TO ENTREPRENEURS Corresponding course objective No’s met: 01

38 50 Concept of Industrial Sickness in small business
Signals and symptoms of Industrial sickness,
39 50
Magnitude of Industrial Sickness

40 50 Causes & Consequences of Industrial Sickness

41 50 Corrective measures

25 Govt. policy for small enterprises

42
25 Govt. support for small enterprises
43 50 Growth strategies: Objective, various stages
Ø Expansions

44 50 Ø Diversification
Ø Joint Venture

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 Form No. AC08
45 50 Unit V review

Note: where tutorial is included in the syllabus, course plan also to indicate the hours during which tutorials are planned meeting the syllabus
requirements on the total hours of tutorials to be covered.

Assignments (Minimum of 2 assignments):

Unit and Portions Mode of assignment* Planned Date Actual Date Remarks
1 unit & 2 unit
Home Assignments
30 % of portions
2 unit & 3 unit
Home Assignments
30 % of portions
4 unit & 5 unit
Home Assignments
40 % of portions

Note(*): Mode of Assignment can be individual/ group/ class/ home assignments/ seminar presentations/ mini projects as decided by the individual faculty
etc.

CIA Test Planning:

Test No. Portions to be completed Portions covered in the test Date of test Remarks
1 1 unit & 2 unit - 30 % of portions
2 2 unit & 3 unit - 30 % of portions
3 4 unit & 5 unit - 40 % of portions

Any other method identified by the faculty in order to ensure the achievement of the course objective / outcome:
Method Supporting course objective Course Outcome Method of assessment

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 Form No. AC08

TEXT BOOKS:

1. Dr. S.S.Khanka “Entrepreneurial Development” S.Chand & Co. Ltd. Ram Nagar New Delhi,1999.

REFERENCES:
1. Poornima M Chanrantimath “Entrepreneurship development small business enterprises” Pearson publications.
2. Kuratko & Hodgetts, “Enterprenuership – Theory, process and practices”, Thomson learning 6th edition.

Date: Course Faculty HOD Principal

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Rev.No.00;Rev.Date xx.xx.2015
ENTREPRENEURSHIP DEVELOPMENT

UNIT- I ENTREPRENEURSHIP

Srinivasan N
Mechanical Engg. 12/4/2015
 UNIT PLAN
Name of the unit: ENTREPRENEURSHIP
2
General Educational Objectives
1.To understand the functions of entrepreneur
2. To know about the entrepreneurial growth

S. No. Activity Time

1 Introduction to entrepreneurship 1
2 Characteristics & Functions of Entrepreneur 2
3 Types & Concepts of entrepreneurship 2
4 Entrepreneurial Growth & factors 2
Revision 1
Total 8
ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015
 UNIT- I ENTREPRENEURSHIP
3

Entrepreneur – Types of Entrepreneurs – Difference

between Entrepreneur and Intrapreneur –
Entrepreneurship in Economic Growth, Factors
Affecting Entrepreneurial Growth.

Books
1. S.S.Khanka “Entrepreneurial Development” S.Chand & Co. Ltd.
Ram Nagar New Delhi,1999.
2. Poornima M Chanrantimath “Entrepreneurship development
small business enterprises” Pearson publications

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 I. Entrepreneurship
4

¨ Definitions
¨ Importance of Entrepreneurship
¨ Characteristics of an Entrepreneur
¨ Classification of entrepreneurs
¨ Entrepreneurial Development Models
¨ Problems faced by entrepreneurs
¨ Growth of entrepreneurship in India
¨ Role of Entrepreneurship in Economic Development
¨ Factors affecting Entrepreneurial Growth
¨ Profile of successful Indian Entrepreneurs

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 DEFINITIONS
5

According to Peter.P. Drucker

Definition of Entrepreneur
¤ “Innovation is the specific tool of entrepreneurs, the means by
which they exploit changes as an opportunity for different
business or a different service”
Definition of Entrepreneurship
¤ “Entrepreneurship is neither a science nor an art. It is a
practice. It is knowledge base. Knowledge in
entrepreneurship is a means to an end, that is, by the
practice”.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Difference Between
6

ENTREPRENEUR ENTREPRENEURSHIP
ü PERSON ü PROCESS
ü VISUALIZER ü VISION
ü CREATOR ü CREATION
ü ORGANIZER ü ORGANISATION
ü INNOVATOR ü INNOVATION
ü PLANNER ü PLANNING
ü LEADER. ü LEADERSHIP.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Importance of Entrepreneurship
7

Mainly for the Two reasons,

¨ To Capitalise on new opportunities : Provides employment to
huge mass of people, Contributed towards research and
development system
¨ To Create wealth & New Jobs : Creates wealth for nation

and for individuals as well

ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015

 Characteristics of an Entrepreneur
8

Some of the Characteristics of an Entrepreneur are,

¨ Mental Ability – Entrepreneur must have creative thinking

and must be able to analyze problems and situations. He

should be able to anticipate changes.
¨ Business Secrecy – He should guard his business secrets

from his competitors.

¨ Clear Objectives – He must have clear objectives as to the

exact nature of business or the nature of goods to be

produced.
¨ Human Relations – He must maintain good relation with his

customers, employees, etc.

ED: UNIT-1 Entrepreneurship Source: Khanka & Poornima 12/4/2015
 Characteristics of an Entrepreneur cont.,
9

¨ Communication Ability – He should have good communication

skills means both the sender and the receiver should understand
each others message.
¨ Technical Knowledge – He should have sufficient technical
knowledge.

ED: UNIT-1 Entrepreneurship Source: Khanka & Poornima 12/4/2015

 Function of Entrepreneur
10

¨ Some of the functions are,

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 The Entrepreneurship Process
11

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Classification of entrepreneurs
12

Based on Functional Characteristics

¨ Innovative : Innovative entrepreneur is one who assembles
and synthesis information and introduces new combinations of
factors of production.
¨ Imitative/ Adoptive: simply adopts successful innovation

introduced by other innovators

¨ Fabian: very much skeptical in their approach in adopting or
innovating new technology in their enterprise.
¨ Drone: never like to get rid of their traditional business and
traditional machinery or systems of the business.
ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015
 Classification of entrepreneurs cont.,
13

¨ Based on business type

a) Manufacturing: Produce the products
b) Wholesaling: Sell it to a middle man
c) Retailing: Buying the ongoing one
d) Service: Servicing rather selling

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Classification of entrepreneurs cont.,
14

¨ Based on various point of view

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Distinction between an Entrepreneur and a
Manager
15

Point for Distinction Entrepreneur Manager

1. Goal An entrepreneur starts a But the main aim of a
Management venture by setting up a new manager is to render his
enterprise for his personal service in an enterprise
gratification already set up by
someone.

2. Status Entrepreneur is the owner of A manager is the servant in

enterprise. the enterprise.

3. Risk An entrepreneur bears all A manager being a servant

risks and uncertainty does not bear ay risk involved
involved in the enterprise. in the enterprise.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Distinction between an Entrepreneur and a Manager cont.,
16

Point for Distinction Entrepreneur Manager

4. Rewards Entrepreneur for his risk A manager receives salary as
bearing role he receives reward for service rendered
profits. It is not only which is fixed and regular can
uncertain and irregular but never be negative.
can at times be negative.

5. Innovation As an innovator he is called A manager executes the plans

as change agent who of the entrepreneur. Thus a
introduces goods and manager translates the ideas
services to meet into practice.
changing needs of the
customer

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Factors Influencing Entrepreneurship
17

¨ Some of the factors which influence the entrepreneurships

are,

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Entrepreneurial Development Models
18

The models suggested for the development of

entrepreneurship fall in the following categories,
¨ Psychological models
¨ Sociological models
¨ Integrated models

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Problems faced by entrepreneurs
19

¨ Problems of entrepreneurs may divided into two groups –

External and Internal
¨ Internal Problems
1. Planning
a) Technical feasibility

b) Economic Viability

2. Implementing
3. Production
¤ Like, Production Management (Mgt), Labour Mgt,
Marketing Mgt, Financial Mgt , Administrative Mgt
ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015
 Problems faced by entrepreneurs
20

External Problems
1. Infrastructural 8. Technology
2. Financial 9. Government Policy
3. Marketing 10. Administrative Hurdles
4. Taxation 11. Lack of direction
5. Raw Material 12. Competitive & Volatile
6. Industrial & Financial Environment
regulations
7. Inspections
ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015
 Intrapreneurship
21

¨ Intrapreneurship is defined as entrepreneurship within an

existing business set– up.
¤ Intrapreneurship is corporate entrepreneurship
¨ Intrapreneur is a manager who focuses on innovation and
creativity; who brainstorms, dreams and puts ideas into
profitable venture by operating within the organisational
environment.
¨ It is a tool for capitalizing the entrepreneurial spirit of
employees in the organisation. It gives managers the freedom to
try new ideas by employing firm’s resources in a unique way.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Intrapreneurship cont.,

Characteristics of an Intrapreneur.
22

¨ The major difference being that an entrepreneur risks his own

money where as an intrapreneur works with his employer’s
money
¨ Vision – Intrapreneur has ability to visualise from idea to
implementation.
¨ Motivation – Intrapreneur is generally self motivated, but
expect corporation reward and recognition.
¨ Orientation – Intrapreneur is achievement oriented.
¨ Risk Appetite – Intrapreneurs are moderate risk takers since risk
acceptance depends on their skills

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Intrapreneurship cont.,
Characteristics of an Intrapreneur cont.,
23

¨ Locus of status – Intrapreneurs want to do the work on their own

rather than delegate like managers
¨ Failure and Mistakes – Intrapreneur hide risky projects and
ideas to ensure learning without political cost and public failure.
They develop multi disciplinary team in the organisation and
may go beyond organisation boundaries for results.
¨ Goal set up – Intrapreneur are determined to do things not
even asked for. They set goals and quality standards.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Growth of entrepreneurship in India
24

¨ The growth of entrepreneurship in India is presented into two

sections,
1. Entrepreneurship during Pre-Independence
2. Entrepreneurship during Post-Independence

1.Entrepreneurship during Pre-Independence

¨ Entrepreneurship traced back early as Rigveda, when metal
handicrafts existed in the society
¨ Indian people were organised in the economic and social
system of the village community
ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015
 Growth of entrepreneurship in India cont.,
Entrepreneurship during Pre-Independence cont.,
25

¨ Elaborate Caste-based division of workers consists of,

¤ Farmers, Artisans (Village Servants), Religious Priests

¨ Royal patronage supports the artisans industries

¨ Indian craftsmanship brought ever-lasting name & fame
¤ Like, Nagpur for Silk-bordered clothes

¤ Kashmir for Shawls

¤ Banaras for Metal wares

¨ India enjoyed the prestigious status of the queen of the

international trade with the help of its handicrafts

ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015

 Growth of entrepreneurship in India cont.,
Entrepreneurship during Pre-Independence cont.,
26

¨ Unfortunately, Indian handicraft industry declined at the end of

18th century due to,
¤ Disappearance of Indian royal courts
¤ Lukewarm attitude of the British government towards Indian crafts

¤ Low priced British made goods

¤ Changes in the taste & habits of Indian

¤ Development of transport in Indian facility makes easy access of

British products
¤ Unwillingness of the Indian craftsmen to adapt to the changing
tastes and needs of the people

ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015

 Growth of entrepreneurship in India cont.,
Entrepreneurship during Pre-Independence cont.,
27

¨ East Indian company establish first ship-building in Surat

¨ Ranchodlal Chotalal, setting up the textile manufacturing on the
modern factory lines lies in 1847, but failed, In his second
attempt, he succeeded in 1861 at Anamedabad
¨ Swadesi campaign emphasis on indigenous goods for
developing nationalism in the country
¨ The second wave of entrepreneurial growth in India began at
the first world war
¨ Indian government agreed to ‘discriminating’ protection to
certain industries, It helped establishing and extending the
Indian manufacturing factory during 20th century decades
ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015
 Growth of entrepreneurship in India cont.,
28

2. Entrepreneurship during Post Independence

¨ After 1947, Government of India took 3 Important measures in

Industrial resolutions
1. To maintain proper distribution of economic power between
private and public sector
2. To encourage the tempo of industrialisation by spreading
entrepreneurship
3. To disseminate the entrepreneurship from dominant
communities to large no. of industrial potential people
¨ For these, government emphasis on developing small-scale

industries
ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015
 Growth of entrepreneurship in India cont.,
Entrepreneurship during Post Independence cont.,
29

¨ Since, 3rd Five year plan in the form of,

¤ Capital, Technical Know-how, Markets & Land

¨ Due to this efforts, Small size industries increase in No.

¤ In 1966 it’s 121,6119

¤ In 1970 it’s become 190,727

¨ After the Second world war,

¤ Entrepreneur grew from Small to Medium; Medium to Large

¨ The family entrepreneur like Tata, Birla, Dalmia, Kirloskar grew

beyond the expected size and establish new frontiers in this
period
ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015
 Role of Entrepreneurship in
30
Economic Development
¨ Economic development is a process of upward change whereby
the real per capita income of a country increases over a long
period of time
¨ Adam smith (foremost classical economist) extolled, By
improvement in productivity to the increase dexterity of each
worker due to division of labour
¨ David Ricardo identify 3 factors for production,
¤ Machinery, Capital & Labour

¤ Profits leads to saving of wealth i.e, Capital formation

¨ Sayigh describes ‘Entrepreneurship is a dynamic force’

¤ It act as a catalyst or Agent in economic development
ED: UNIT-1 Entrepreneurship Source: Khanka 12/4/2015
 Role of Entrepreneurship in Economic Development cont.,

31

¨ Some of the important roles plays by entrepreneurship

in the economic development are,
¤ It provides capital formation by saving the public
¤ It provides immediate large scale employment

¤ It promotes country’s export trade

¤ It simulates the equitable redistribution of wealth, income

etc.,
¤ It encourages effective resource mobilisation of capital and
skill
¤ It reduces the concentration of economic power

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Factors affecting Entrepreneurial Growth
32

1. Economic Factors
a) Lack of adequate overhead facilities
¤ Profitable innovations require basic facilities like transportation,
communication power supply etc. They reduce cost of production
and increase profit.
b) Non availability of capital
¤ Inventions are capital oriented. In less developed countries most
capital equipment have to be imported which involves foreign
exchange which acts as a difficult problem.

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Factors affecting Entrepreneurial Growth
33

2.Non-economic Factors
a) Sociologist factors
n Legitimacy of entrepreneurship:
n Social mobility
n Marginality
n Security
b) Psychological factors
n Need Achievement
n Withdrawal of Status Respect

ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015

 Profile of successful Indian
34
Entrepreneurs
Profile of successful Indian Entrepreneurs
¨ Dhirubhai Ambani

¨ Kasanbhai Patel : Nirma Story

¨ Kunjachan.P.J : The king of Omega 3

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Profile of successful Indian Entrepreneurs cont.,
35
Rags to Riches: Dhirubhai Ambani
¨ Dhirubhai Ambani born to Jamunaben & Hirachand
Govardhandas Ambani, a low paid school teacher in a village
of Gujarat
¨ At the age of 17 he followed his elder brother in filling gas at
a shell pump for a monthly salary of Rs. 300
¨ He started trading in spices (ginger, turmeric)

¨ In 1959, Dhirubhai switched his trading business from spices to

yarn. He expanded a small textile unit
¨ This was also a period when Indian Government faced as

massive foreign exchange crisis for importing nylon fabric

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015
 Profile of successful Indian Entrepreneurs cont.,

Rags to Riches: Dhirubhai Ambani cont.,

36

¨ This provides Ambani’s company a massive profits made from

exports to Russia, Poland, and other countries
¨ And another major resources was Reliance ‘Petrochemical’ which
was India’s largest private sector company with sales crossing
Rs.4,000 crore mark
¨ Reliance was a first instance of an Asian company entering the
US market
¨ Dhirubai dedicated the world’s largest grassroots refinery
worth Rs 25,000 crore to the nation

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Profile of successful Indian Entrepreneurs cont.,
37
The Nirma Story: The saga of Karsanbhai Patel
[Business opportunity Identification]
¨ Karsanbhai Patel worked as a chemist at Gujarat Mineral
Development in Ahamedabad
¨ Karsanbhai Patel recognised that there is a vacuum in the rural

Indian Market for affordable detergent and the low quality

soap bars didn’t wash well
¨ With accurate belief he started conducting experiments in his
kitchen, he finally yield a ‘Whitish-Yellow’ powder. He named it
as ‘Nirma’

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Profile of successful Indian Entrepreneurs cont.,

The Nirma Story: The saga of Karsanbhai Patel cont.,

38

¨ He produced small quantities of washing powder and sell it to

his neighbours
¨ He gained the support from Hindustan Lever with his homespun
unit, Which is cheaper than Surf
¨ Every morning Patel got on his bicycle and went from door to
door selling his washing powder
¨ The cheap washing powder became a boon to housewives who
are struggling to balance their monthly budgets
¨ As word-of-mouth spread, Kasanbahi got more & more
customers to whom he effected his deliveries on foot

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Profile of successful Indian Entrepreneurs cont.,

The Nirma Story: The saga of Karsanbhai Patel cont.,

39

¨ As television reach spread India during late 1970s. The little

girl on the pack became a symbol of Nirma with good quality
& low price
¨ Nirma sells over 8,00,000 tones of detergent annually, giving it
a 35 % share to the market
¨ Karsanbhai Patel did not start up a media assalut until the
entire distribution network had the product in place
¨ Additional Nirma Products: Low-priced toilet soap, toothpaste

ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015

 Profile of successful Indian Entrepreneurs cont.,

The King of Omega3: P.J Kunjachan

40
¨ Kunjachan started his career as a proofreader in local daily

with Rs. 1.50 per day as wages

¨ He was the fourth of six children, his education came to a halt
after his pre-degree course due to family condition
¨ He began a joint venture supply chain at home due to
insufficient money he became the partner in newspaper
distribution in his village
¨ He learnt about the scope of running the distribution of a
fertilizer manufacturing company in his locality through
newspapers
¨ His inborn talent of maintain excellent human relations make him
a CEO
ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015
 Profile of successful Indian Entrepreneurs cont.,

The King of Omega3: P.J Kunjachan cont.,

41

¨ He became the distributor of fertilizer for the state of Kerala,

His business grew steadily
¨ He ventured into more risky field of manufacturing. He started
a ‘bone meal’ (Crused bone as fertilizer) factory in Tamilnadu to
minimise the operational costs and also avoid political
interference
¨ Kunjachan took up another ambitious project to set up a plant
for manufacturing Omega-3 fatty acids from fish oil
¨ His company ‘Arjuna Natural Extracts Ltd’ won awards from
government & Non-government agencies for export and
innovation
ED: UNIT-1 Entrepreneurship Source: Poornima 12/4/2015
 Summary
42

¨ Definitions
¨ Importance of Entrepreneurship
¨ Characteristics of an Entrepreneur
¨ Classification of entrepreneurs
¨ Entrepreneurial Development Models
¨ Problems faced by entrepreneurs
¨ Growth of entrepreneurship in India
¨ Role of Entrepreneurship in Economic Development
¨ Factors affecting Entrepreneurial Growth
¨ Profile of successful Indian Entrepreneurs
ED: UNIT-1 Entrepreneruship Source: Khanka & Poornima 12/4/2015
ENTREPRENEURSHIP DEVELOPMENT

UNIT- II MOTIVATION

Srinivasan N
Mechanical Engg. 12/4/2015
 UNIT PLAN
Name of the unit: MOTIVATION
2
General Educational Objectives
1.To understand the functions of entrepreneur
2. To know about the entrepreneurial growth

S. No. Activity Time

1 Introduction to entrepreneurship 1
2 Characteristics & Functions of Entrepreneur 2
3 Types & Concepts of entrepreneurship 2
4 Entrepreneurial Growth & factors 2
Revision 1
Total 8
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 UNIT- II MOTIVATION
3

Major Motives Influencing an Entrepreneur –

Achievement Motivation Training, self Rating,
Business Game, Thematic Apperception Test – Stress
management, Entrepreneurship Development
Programs – Need, Objectives.

Books
1. S.S.Khanka “Entrepreneurial Development” S.Chand & Co. Ltd.
Ram Nagar New Delhi,1999.
2. Poornima M Chanrantimath “Entrepreneurship development
small business enterprises” Pearson publications
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 II - Motivation
4

¨ Nature and Characteristics of Motivation

¨ Importance of Motivation
¨ Process of Motivation
¨ Motivation Incentives
¨ Theories of Motivation
¨ Motivation Factors
¨ Achievement Motivation
¨ Business Game
¨ Stress Management
¨ Entrepreneurship Development Programmes
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Motivation
5

¨ Motivation is the word derived from the word ’motive’ which

means needs, desires, wants or drives within the individuals.
¨ In the work goal context the psychological factors motivating
(stimulating) the people’s behaviour can be,
¤ Desire for money
¤ Success Motivation is defined as “the process that
¤ Recognition motivates a person into action and induces
¤ Job-satisfaction
him to continue the course of action for the
achievement of goals”
¤ Team work etc.

ED: UNIT-2 Motivation Source: Khanka 12/4/2015

 Nature and Characteristics of Motivation
6

¨ Motivation is an Internal Feeling

Motivation is a psychological phenomenon which generates in the mind of
an individual the feeling that he lacks certain things and needs those
things.
¨ Motivation is Related to Needs
Needs are deficiencies which are created whenever there is a
physiological or psychological imbalance.
¨ Motivation Produces Goal-Directed Behaviour
Goals are anything which will alleviate a need and reduce a drive. An
individual's behavior is directed towards a goal.
¨ Motivation can be either Positive or Negative
Positive or incentive motivation is generally based on reward.
ED: UNIT-2 Motivation Source: Khanka 12/4/2015
 Importance of Motivation
7

¨ Motivation is a very important for an organization because of the

following benefits it provides,
1. Puts human resources into action
2. Improves level of efficiency of employees
3. Leads to achievement of organizational goals
4. Builds friendly relationship
5. Leads to stability of work force

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Importance of Motivation cont.,

Motivation is important to an individual as: Motivation will help him

achieve his personal goals.
¤ If an individual is motivated, he will have job satisfaction.
¤ Motivation will help in self-development of individual.
Motivation is important to a business as: The more motivated the
employees are, the more empowered the team is.
¤ The more is the team work and individual employee contribution, more
profitable and successful is the business.
¤ During period of amendments, there will be more adaptability and
creativity.
¤ Motivation will lead to an optimistic and challenging attitude at work
place.
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Process of Motivation
9
Needs Goal-directed
(Motives) behaviour

Interpretation Accomplishment
of goals of goals

¨ Motivation is a dynamic process which produce a goal-directed

behaviour
¨ Goal-directed behaviour begins with individual needs
¨ These needs give an energising thrust to the individual towards
certain goals

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Motivation Incentives
10
¨ Incentive is an act or promise for greater action. It is also
called as a stimulus to greater action.
¨ Incentives really can sometimes work to accomplish the goals of
a concern.
The need of incentives can be many,
¤ To increase productivity,
¤ To drive or arouse a stimulus work,

¤ To psychologically satisfy a person which leads to job satisfaction,

¤ To enhance commitment in work performance,

¤ To inculcate zeal and enthusiasm towards work,

etc.,
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Motivation Incentives cont.,

11

Management has to offer the following two categories of

incentives to motivate employees:-
1.Monetary incentives- These incentives which satisfy the
subordinates by providing them rewards in terms of rupees.
2.Non-monetary incentives- Besides the monetary incentives, there
are certain non-financial incentives which can satisfy the ego and
self- actualization needs of employees.
• Security of service
• Praise or recognition
• Suggestion scheme- Taking suggestions from the subordinates
• Job enrichment- Improve the quality of a worker job
• Promotion opportunities
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Motivation Incentives cont.,

12

Positive Incentives
¨ Positive incentives are those incentives which provide a positive

assurance for fulfilling the needs and wants.

¨ Positive incentives generally have an optimistic attitude behind and

they are generally given to satisfy the psychological requirements

of employees.
¤ For example-promotion, praise, recognition, perks and allowances, etc.
Negative Incentives
¨ Negative incentives are those whose purpose is to correct the

mistakes or defaults of employees.

¨ The purpose is to rectify mistakes in order to get effective results.

¤ For example- demotion, transfer, fines, penalties.

ED: UNIT-2 Motivation Source: Khanka 12/4/2015
 Approaches / Theories of Motivation
13

Classification of motivation theories are,

¨ Content theories : Deals with what motivates an individual

1. Maslow’s Need Hierarchy Theory

2. Herzberg’s Two-Factor Theory
3. McClelland’s Achievement Theory etc.,
¨ Process theories: Deals with how behaviour is caused
1. Victors Vroom’s Expectancy Theory
2. Adam’s Equity Theory
¨ Reinforcement theory: Deals with way in which behaviour is learned
1. Skinner’s Behaviour Modification Theory

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 1.Maslow’s hierarchy of needs theory
14

¨ Abraham Maslow is well renowned for proposing the Hierarchy

of Needs Theory in 1943. This theory is based on the
assumption that there is a hierarchy of five needs within each
individual.
These five needs are as follows,
¨ Physiological needs : These are the basic needs of an individual
which includes food, clothing, shelter, air, water, etc. These needs
relate to the survival and maintenance of human life.
¨ Safety needs : These needs are also important for human beings.
Everybody wants job security, protection against danger, safety of
property, etc.
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Maslow’s hierarchy of needs theory cont.,

15

¨ Social needs : These needs emerge from society. These needs

become important. For example- belongingness, friendship,
conversation, etc.
¨ Esteem needs : These needs relate to desire for self-respect,
recognition and respect from others.
¨ Self-actualization needs : These are the needs of the highest
order and these needs are found in those person whose previous
four needs are satisfied. This will include need for social service,
meditation.

ED: UNIT-2 Motivation Source: Khanka 12/4/2015

 2. Herzberg’s Two-Factor Theory
16

¨ In 1959, Frederick Herzberg, a behavioural scientist proposed a two-

factor theory or the motivator-hygiene theory.
¨ According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction.
¨ According to Herzberg, the opposite of “Satisfaction” is “No
satisfaction” and the opposite of “Dissatisfaction” is “No Dissatisfaction”.

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Two - Factor Theory cont.,

Herzberg classified these job factors into two categories,

17
a) Hygiene factors : Hygiene factors are those job factors which are
essential for existence of motivation at workplace.
¨ These do not lead to positive satisfaction for long-term. But if these
factors are absent / if these factors are non-existant at workplace,
then they lead to dissatisfaction.
¨ Hygiene factors are also called as dissatisfiers or maintenance
factors as they are required to avoid dissatisfaction.
¨ These factors describe the job environment / scenario.
¨ The hygiene factors symbolized the physiological needs which the
individuals wanted and expected to be fulfilled.

ED: UNIT-2 Motivation Source: Khanka 12/4/2015

 Two - Factor Theory cont.,

18

b) Motivational factors- According to Herzberg, the hygiene factors

cannot be regarded as motivators. The motivational factors yield
positive satisfaction.
¨ These factors are inherent to work. These factors motivate the

employees for a superior performance. These factors are called

satisfiers.
¨ These are factors involved in performing the job. Employees find

these factors intrinsically rewarding.

¨ The motivators symbolized the psychological needs that were

perceived as an additional benefit.

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Two - Factor Theory cont.,
Motivational factors cont.,
19

Motivational factors include:

¨ Recognition- The employees should be praised and
recognized for their accomplishments by the managers.
¨ Sense of achievement

¨ Growth and promotional opportunities

¨ Responsibility- The managers should give them ownership of

the work.
¨ Meaningfulness of the work

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Two - Factor Theory cont.,

20

¨ Comparison of Maslow’s and 2 Factor theory

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 3.McClelland’s Theory of Needs
21
¨ David McClelland has developed a theory on three types of
motivating needs :
(i) Need for Power (n Pow)
(ii) Need for Affiliation (n Aff)
(iii) Need for Achievement (n Ach)
¨ Basically people for high need for power are inclined towards
influence and control.
¤ They like to be at the center and are good orators.

¤ They are demanding in nature, forceful in manners and ambitious

in life.
¤ They can be motivated to perform if they are given key positions
or power positions.
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 McClelland’s Theory cont.,

22
¨ In the second category (n Aff) are the people who are social in
nature.
¤ They try to affiliate themselves with individuals and groups.
¤ They are driven by love and faith.
¤ They like to build a friendly environment around themselves.
¤ Social recognition and affiliation with others provides them motivation.
¨ People in the third area (n Ach) are driven by the challenge of
success and the fear of failure.
¤ Their need for achievement is moderate and they set for themselves
moderately difficult tasks.
¤ They are analytical in nature and take calculated risks.
¤ Such people are motivated to perform when they see at least some
chances of success.
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 McClelland’s Theory cont.,

23

¨ In case of entrepreneur, the high need for achievement (n Ach)

are characterised by the following,
¤ They set SMART (Specific, Measurable, Attainable, Realistic &
Time bound) goals
¤ Prefer to situations for finding solutions

¤ Feedback of the current performance

¤ They look for challenging tasks

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Motivation Factors
24

¨ Some of the factors motivate entrepreneurs to start enterprises.

Research studies identify the factors that motivate people to
start business enterprises
¨ Sharma classified all the factors motivating the entrepreneurs
into two types
¤ Internal Factors: like, Desire to do new things, Education,
Experience etc.,
¤ External Factors: like, Government assistance & support, Raw
material & Labour availability etc.,

ED: UNIT-2 Motivation Source: Khanka 12/4/2015

 Motivation Factors cont.,
25

¨ Murthy et.al classified motivating factors on three different

bases,
¤ Ambitious Factors : having or showing ambition

¤ Compelling Factors : able to be made or give evidence

¤ Facilitating Factors : make easier

¨ Khanka studied 50 small-scale entrepreneurs in Kumaun Division

of Uttar Pradesh and concluded that,
¤ Previous experience has been the most motivating factor

¤ The next factor is heavy demand for a particular product in

the market
ED: UNIT-2 Motivation Source: Khanka 12/4/2015
 Motivation Factors cont.,
26

¨ After the foregoing analysis, the majority of entrepreneur

motivated to enter industry mainly because of the following 4
factors
1. Possessed technical knowledge or experience in related line
2. Heavy demand for a particular product
3. Governmental and institutional assistance facilities for an
individual to enter into industry
4. Enterprising attitude

ED: UNIT-2 Motivation Source: Khanka 12/4/2015

 Achievement Motivation
27

¨ Need for achievement plays an important role in making an

entrepreneur as successful
¨ It is an inner spirit that activates an entrepreneur to strive for
success (desire to do well)
¨ There is the need for developing achievement motivation for
developing entrepreneurship in an economy
¨ David C. McClelland suggested that achievement motivation
can be developed through training and experience
¨ For this, McClelland conducted his experiments with group of
businessmen in three countries (Malawi, India & Equator)

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Achievement Motivation cont.,
28

¨ McClelland carried out a separate full-fledged training

programme in India. This successful experiment is popularly
known as ‘Kakinada Experiment’
Kakinada Experiment
¨ Kakinada is an industrial town in Andhra Pradesh. The

experiment started in Jan,1964

¨ A total of 52 persons were selected from business and
industrial community of the town
¨ The main Objective of the experiment was, to break the barrier

of limited aspiration by including achievement motivation

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Achievement Motivation cont.,

Kakinada Experiment cont.,

29

¨ The participants are spitted into 3 batches and they were

given an orientation programme at Small Industry Extension
Training Institute (SIETI), Hyderabad for 3 months
¨ It could help the trainee to improve imagination and enable
them introspect their motivation
¨ The programme included the following items in the syllabi,
¤ Individuals strived to attain concrete & regular feedback
¤ Participants sought models of achievement to imitate

¤ Participants thought of success & accordingly set plans & goals

¤ Participants were encouraged to think and talk positively

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Achievement Motivation cont.,

Kakinada Experiment cont.,

30

¨ The impact of the training program on the participants

behaviour was observed after a period of 2 years. The
observations were encouraging
¨ It was found that those attended the programme performed
better than those didn’t
¨ The participant’s ‘Need for Achievement’ was evaluated using
‘Thematic (relating to a particular subject) Appreciation Test
[TAT]
¨ In the TAT, ambition related pictures (related to achievement)
were displayed to the trainees and they were asked to
interpret the result pictures
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Achievement Motivation cont.,

Kakinada Experiment cont.,

31

McClelland reached to the conclusion that,

¨ The training programme positively influenced the
entrepreneurial behaviour of the participants
¨ The traditional belief and imitation of western culture didn’t
determine one’s behaviour as an entrepreneur
¨ The ‘Need for Achievement’ motivation can be developed more
especially in younger minds is well supported by the cross-
country experiments
¨ Accordingly, efforts have made to include success stories from

history & legends in the curriculum of the students to induce the

‘Need for Achievement’ of young minds
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
 Business Game
32

Some of the exercises or game,

Exercises or Objectives
Game
Micro-Lab To help trainees familiarize themselves with each other
& Expectations of trainees
TAT •To determine the level of achievement motivation
among trainees
•To emphasize the formation and usage of
achievement language in thinking and action
Who am I? To know themselves, goals, strengths & weakness
Tower To Know goal setting ability, understanding of help
Building behavior, decision making
ED: UNIT-2 Motivation 12/4/2015
Source: S.S Khanka
 Business Game
33

Some of the exercises or game,

Exercises or Objectives
Game
Achievement To help trainees internalize thought process related
Planning to high need for achievement
Exercises
Convince and To know the process of influencing others,
crown [GD] leadership, communication skills.
Creative games To remove the barriers of creative thinking

ED: UNIT-2 Motivation 12/4/2015

Source: S.S Khanka
 Business Game
34

According to Thomas Hellmann,

Entrepreneurship / Business Game has one simple objective:
¨ To experience the challenges of starting and financing a new

company
Overview of the Game
¨ Entrepreneurs work in teams. Teams will have dual roles,

both as entrepreneurs and investors.

¨ As entrepreneurs, teams will develop a business

opportunity. They will write a “business proposal,” which

can be thought of as a reduced version of a business plan.
ED: UNIT-2 Motivation 12/4/2015
Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Business Game cont.,
35

¨ There will be two consecutive sections of this undergraduate

elective. There will not be two separate games, but one
integrated game.
Grading of the Game
¨ The main motivation for playing this game comes from being

evaluated by your peers and by outside panelists

¨ 10% comes from the class presentation.
¨ 25% comes from what I call the unweighted team
performance.
¨ Another 25% comes from the weighted team performance.
ED: UNIT-2 Motivation 12/4/2015
Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Business Game cont.,
36

¨ Class presentations
¨ Communication is very important in the game. Each team will
have the opportunity to present to the class.
¨ Team meetings
¨ To know about the progress and the challenges you face.
¨ Protection of intellectual property
¨ Each person is responsible for protecting his or her intellectual
property
¨ Pre-existing and concurrent business plans

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Prediction of Stress
37

Write down "yes" or "no" to the following stress test

questions and see how you rate.
1. Do you worry about the future?
2. Do you sometimes have trouble falling asleep?
3. Do you become irritated over basically insignificant matters?
4. Do you have less energy than you seem to need or would like to
have?
5. Do you have too many things to do and not enough time to do
them?

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Stress Management cont.,
38

Write down "yes" or "no" to the following stress test

questions and see how you rate.
6. Do you have headaches or stomach problems?
7. Do you feel pressure to accomplish or get things done?
8. Are you very concerned about being either well-liked or
successful?
9. Do you perform well enough in life to satisfy yourself?
10. Do you get satisfaction from the small joys or simple
pleasures of life?
11. Are you able to really relax and have fun?
ED: UNIT-2 Motivation 12/4/2015
Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Stress Management cont.,
39

Scoring
¨ 1-8: one point for each yes answer.
¨ 9-11: one point for each no answer.
¨ A score of 4 or more suggests that you may be under significant
stress.

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Stress
40

¨ Stress is the reaction people have to excessive pressures or other

types of demand placed upon them. It arises when they worry
that they can’t cope.

¨ Stress is Mental and physical response to change

¨ Stressorà any physical, social, or psychological event or

condition that causes the body to adjust to a specific situation

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Types of Stress
41

¨ Eustress
¤ Manageable Stress can lead to growth and enhanced
competence
¨ Distress
¤ Uncontrollable, prolonged, or overwhelming stress is
destructive.
¨ Acute Stress
¤ Immediate response to a threat or challenge

¨ Chronic Stress
¤ Ongoing exposure to stress, may seem unrelenting

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Stress Management
42

The Four Common Types of Stress

¨ Dr Karl Albrecht, a management consultant and conference

speaker based in California, is a pioneer in the development of

stress-reduction training for businesspeople. He defined four
common types of stress in his 1979 book, "Stress and the
Manager."
¨ Albrecht's four common types of stress are:

¤ Time stress – Based on time availability

¤ Anticipatory stress – Based on future events
¤ Situational stress – Based on the current situation
¤ Encounter stress – Based on unexpected events
ED: UNIT-2 Motivation 12/4/2015
Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Sources of Stress
43

¨ Change
¨ Petty annoyances, irritations, frustrations
¨ Pressure to work faster to meet demands or higher
standards
¨ Disparity between goals and actual behaviors
¨ Decisions between two competing motives
¨ Overload
¨ Discrimination, harassment, unemployment, poverty

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Causes of Stress
44

¨ External causes
¤ Family, work, economics, work, school, major life
changes, unforeseen events, etc.

¨ Internal causes
¤ Worry, uncertainty, fear, attitudes, unrealistic
expectations, etc.

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.mindtools.com/pages/article/albrecht-stress.htm
 Stress Management cont.,

How Entrepreneurs Can Manage Stress

45

Some guidelines to make it a little easier on yourself

¨ Effective time management.

¤ Plan your time and establish priorities on a daily “to do” list..
¨ Focus on the urgency of the task.
¤ Make a habit of completing every task that start without having
to go back to it.
¨ Eliminate distractions.
¤ Notice what are the four or five big time-wasters are and learn
techniques to eliminate them or compensate for them.

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.powerhomebiz.com/leadership-management/stress/how-to-manage-stress.htm
 Stress Management cont.,

How Entrepreneurs Can Manage Stress cont.,

46

¨ Make an effort to adjust your thinking

¤ Worry constructively
¤ Don’t rush into action

¤ Consider alternatives

¨ Stay in contact with people.

¨ Give your home business as much of a separate and distinct
physical identity as possible.
¨ Take care of your major business asset: YOU.

ED: UNIT-2 Motivation 12/4/2015

Source: http://www.powerhomebiz.com/leadership-management/stress/how-to-manage-stress.htm
 Stress Management cont.,

Simple Techniques to Manage Stress

47

¨ Talk to someone. You don't have to fix the problem, just report it.
¨ Notice if any of the muscles in your body are tense. Just noticing
that will often relax the muscle.
¨ Ask your boss if you're doing OK. This simple question can make a
lot of difference and verify wrong impressions.
¨ Delegate.
¨ If you take on a technique to manage stress, tell someone else. They
can help you be accountable to them and yourself.
¨ Cut down on caffeine and sweets. Take a walk instead. Tell someone
that you're going to do that.

ED: UNIT-2 Motivation 12/4/2015

Source: http://managementhelp.org/personalproductivity/time-stress-management.htm
 Stress Management cont.,

Simple Techniques to Manage Stress

48

¨ Use basic techniques of planning, problem solving and decision

making.
¨ Concise guidelines are included in this guidebook. Tell someone that
you're going to use these techniques.
¨ Monitor the number of hours that you work in a week. Tell your boss,
family and/or friends how many hours that you are working.
¨ Write weekly status reports. Include what you've accomplished last
week and plan to do next week. Include any current issues or
recommendations that you must report to your boss. Give the written
status report to your boss on a weekly basis.
¨ Do something you can feel good about.
ED: UNIT-2 Motivation 12/4/2015
Source: http://managementhelp.org/personalproductivity/time-stress-management.htm
 Entrepreneurship Development Programmes
(EDP’s)
49

Objective of EDPs
¨ Develop and strength their entrepreneurial quality.

¨ Analysis environmental set up relating to small industry and

small business.
¨ Select product

¨ Formulate project for the product

¨ Know pros and cons in becoming an entrepreneurs

¨ Develop a broad vision about the business.

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Entrepreneurship Development Programmes (EDP’s) cont.,
50

Course contents and curriculum of EDPs

1. General instruction to Entrepreneurship
2. Motivation Training
3. Management Skills
4. Support system and procedure
5. Fundamentals of project feasibility study
6. Plant visits

ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015

 Entrepreneurship Development Programmes (EDP’s) cont.,

Phases of EDPs
51

1) Pre- training Phase

a) Selection of entrepreneurs
b) Arrangement of infrastructure
c) Tie-up of guest faculty for the training purpose. Like that
2) Training Phase
a) Purpose of training is to develop „need for achievement‟
b) Role play as like entrepreneur
3) Post-training Phases
a) Follow- up
b) Review the pre- training work
c) Review the process of training programmes and
d) Review past training approach
 Summary
52
¨ Nature and Characteristics of Motivation
¨ Importance of Motivation
¨ Process of Motivation
¨ Motivation Incentives
¨ Theories of Motivation
¨ Motivation Factors
¨ Achievement Motivation
¨ Business Game
¨ Stress Management
¨ Entrepreneurship Development Programmes
ED: UNIT-2 Motivation Source: Khanka & Poornima 12/4/2015
1 ENTREPRENEURSHIP DEVELOPMENT

UNIT- III BUSINESS

Srinivasan N
Mechanical Engg. 12/4/2015
 UNIT PLAN
Name of the unit: BUSINESS
2
General Educational Objectives
1.To understand the small enterprise function
2. To know about the project report
S. No. Activity Time
1 Small Enterprises 2
2 Forms of Business Ownership 1
3 Opportunity Identification and Selection 1
4 Formulation of Business Plan 2
5 Project Appraisal 1
Revision 1
Total 8
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 UNIT- III BUSINESS
3

Small Enterprises – Definition, Classification –

Characteristics, Ownership Structures – Project Formulation –
Steps involved in setting up a Business – identifying,
selecting a Good Business opportunity, Market Survey and
Research, Techno Economic Feasibility Assessment –
Preparation of Preliminary Project Reports – Project
Appraisal – Sources of Information – Classification of Needs
and Agencies.
Books
1. S.S.Khanka “Entrepreneurial Development” S.Chand & Co. Ltd.
Ram Nagar New Delhi,1999.
2. Poornima M Chanrantimath “Entrepreneurship development
small business enterprises” Pearson publications
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 III. BUSINESS
4

¨ Small Scale Enterprise

¨ Classification of Small Enterprises
¨ Characteristics of a Small-Scale Enterprises
¨ Scope of Micro & Small Enterprises
¨ Objectives of Micro Enterprises
¨ Problems faced by SSI
¨ Ownership Structure
¨ Formulation of Business Plan / Project Report
¤ Network Analysis
¨ Steps involved in Starting small business
¨ Project Identification
¨ Project Selection
¨ Project Appraisal
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Small Scale Enterprise
5

Definition of Enterprises in Manufacturing Sector

a) A Micro Enterprise, where the investment in plant and
machinery does not exceed Rs 25 Lacks;
b) A Small Enterprise, where the investment in plant and
machinery is more than Rs 25 Lacks but does not exceed Rs 5
crores;
c) A Medium Enterprise, where the investment in plant and
machinery is more than Rs 5 crores but does not exceed Rs 10
crore.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Small Scale Enterprise cont.,
6

Definition of Enterprises in Services Sector

a) A Micro Enterprise, where the investment in equipment does
not exceed Rs 10 lakh;
b) A Small Enterprise, where the investment in equipment is
more than Rs 10 lakh but does not exceed Rs 2 crore;
c) A Medium Enterprise, where the investment in equipment is
more than Rs 2 crore rupees but not exceed Rs 5 crore.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Classification of Small Enterprises
7

1. Manufacturing Industries: Produce complete articles

2. Feeder Industries: Specialised in certain type of
products and services
3. Servicing Industries: Provide service more than
producing
4. Ancillary to large industries
5. Milling and Quarrying

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Characteristics of a Small-Scale Enterprises
8

Some of the characteristics are,

¨ Low Startup Costs

¤ The initial startup costs for a small-scale business are usually pretty
low, depending on the specific business model and what products or
services are being sold
¨ Portability
¤ A small-scale business is generally portable, making it easy to set up
and tear down.
¨ Employees
¤ Usually very few employees, if any, work for a small-scale business.
This type of business may have one or two employees for busy times.
ED: UNIT-3 Business Source: http://smallbusiness.chron.com/characteristics-
12/4/2015
smallscale-business-43390.html
 Scope of Micro & Small Enterprises
9

Some important activities are,

¤ Manufacturing Activities

¤ Servicing / Repairing Activities

¤ Retailing Activities

¤ Financial Activities

¤ Whole-Sale Activities

¤ Construction Activities

¤ Infrastructural Activities

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Objectives of Micro Enterprises
10

1. To generates immediate and large scale opportunities with

low investment
2. To eradicate unemployment problem
3. To encourage dispersal of industries to all over country
4. To bring backward areas too in the mainstream of national
development
5. To promote balanced regional development
6. Equitable distribution of Nation’s Income
7. To encourage effective mobilisation of untapped resources
8. To improve the level of the living people
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Problems faced by SSI
11

Small-scale industries in India could not progress

satisfactorily due to various problems that they are
confronted with while running enterprises.
¤ Problem of skilled manpower
¤ Inadequate credit assistance

¤ Irregular supply of raw material

¤ Absence of organised marketing

¤ Lack of machinery and equipment:

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Problems faced by SSI cont.,
12

¤ Absence of adequate infrastructure

¤ Competition from large-scale units and imported articles

¤ Other problems: poor project planning, managerial

inadequacies, old and orthodox designs, high degree of
obsolescence and huge number of bogus concerns

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure
13

Proprietorship

Co-operative Ownership Partnership

society Structure

Company

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
Proprietorship
14

¨ The vast majority of small businesses start out as sole

proprietorships. These firms are owned by one person,
usually the individual who has day-to-day responsibilities for
running the business.
¨ Sole proprietors own all the assets of the business and the
profits generated by it. They also assume complete
responsibility for any of its liabilities or debts.
Advantages of a Sole Proprietorship
¨ Easiest and least expensive form of ownership to organize.

¨ Sole proprietors are in complete control, and within the

parameters of the law, may make decisions as they see fit.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Ownership Structure cont.,
Proprietorship
15
cont.,
Advantages of a Sole Proprietorship cont.,
¨ Sole proprietors receive all income generated by the business

to keep or reinvest.
¨ Profits from the business flow directly to the owner's personal

tax return.
¨ The business is easy to dissolve, if desired

Disadvantages of a Sole Proprietorship

¨ Sole proprietors have unlimited liability and are legally

responsible for all debts against the business. Their

business and personal assets are at risk

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
Partnership
16

¨ In a Partnership, two or more people share ownership of a

single business. Like proprietorships, the law does not
distinguish between the business and its owners.
¨ The partners should have a legal agreement that sets forth

how decisions will be made, profits will be shared, disputes will

be resolved,
Advantages of a Partnership:
¨ Partnerships are relatively easy to establish; however time
should be invested in developing the partnership agreement
¨ The business usually will benefit from partners who have

complementary skills.
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Ownership Structure cont.,
Partnership
17
cont.,
Advantages of a Partnership cont.,
¨ The profits from the business flow directly through to the

partners' personal tax returns.

¨ Prospective employees may be attracted to the business if

given the incentive to become a partner.

Disadvantages of a Partnership
¨ Partners are jointly and individually liable for the actions of the

other partners.
¨ Profits must be shared with others.

¨ Since decisions are shared, disagreements can occur.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
18

Company
¨ A company is an artificial person being created by the law

that has an existence separate and apart from its owners.

Companies take various forms such as:
¨ Voluntary associations which may be registered as a Nonprofit

organization
¨ A group of soldiers

¨ Business entity with an aim of gaining a profit

¨ Financial entities and Banks

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,

Private
19
Company cont.,
¨ It's minimum number of persons is two and the maximum is 50.

¨ It makes the use of private limited after its name.

¨ It can commence its business operation after getting certificate

of incorporation.
¨ The memorandum of association and the articles of association

is signed by at least two persons.

¨ The filling of both memorandum and article of association is

obligatory.
¨ It does not require the filling of the prospectus or statement-in-

lieu of prospectus.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,

Private
20
Company cont.,
¨ It cannot sell shares to the general public in the open market.

¨ Transfer of share is restricted in the articles of association.

¨ There are of least two directors and they need not retire by
rotation.
¨ There is no legal restriction on director's remuneration.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,

Public
21
Company cont.,
¨ It's minimum number of persons is seven and the maximum is
unlimited.
¨ It makes the use of the word limited after the name.

¨ It requires both the certificate of incorporation and the

certificate of commencement for its commencement.

¨ It's memorandum and articles of association is signed by at
least seven persons.
¨ It must file prospectus or statement in lieu of prospectus before
allotment of shares.
¨ It sell shares to the general public in the open market.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,

Public
22
Company cont.,
¨ Transfer of shares is not restricted and as such shares are
freely transferable and are quoted in the stock exchange.
¨ It has at least 3 directors and they are subject to retire by
rotation.
¨ The directors cannot draw remuneration more than 11 percent

of the net profit of the company.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
Company
23

Advantages of a Cooperative
¨ Professional Management

¨ Expansion Potential

¨ Transferability of Shares

¨ Diffusion of Risk

Disadvantages of a Cooperative
¨ Lack of Secrecy

¨ Management Mischief's

¨ Lack of Personal Interest

¨ More legal restriction

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Ownership Structure cont.,
Cooperative
24

¨ A cooperative may also be defined as a business owned and

controlled equally by the people who use its services or who
work at it.
¨ In the cooperative, the members have a close association with

the enterprise as producers or consumers of its products or

services, or as its employees.
¨ It is based on the values of self-help, self-responsibility,

democracy and equality.

Advantages of a Cooperative
¨ Easy Formation: Any ten persons can voluntarily start a business

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
Cooperative
25

Advantages of a Cooperative cont.,

¨ Limited liability, Perpetual Existence (Separate legal entity)

¨ Open membership: Independent of caste, economic status

¨ State assistance: Govt. adopted cooperatives as an effective

instrument of socio-economic change
Disadvantages of a Cooperative
¨ Lack of secrecy and Interest in between members

¨ Corruption may taken part

¨ Lack of mutual interest

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
26

Selection of an appropriate form of ownership structure

¨ Nature of business- if business require pooling of capital and

skill are generally run as partnership

¨ Areas of operation- local operation require proprietorship.
National and international businesses require company
ownership structure.
¨ Degree of control – direct control over business operation is
required suitable ownership may be proprietorship.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Ownership Structure cont.,
27

Selection of an appropriate form of ownership structure cont.,

¨ Capital requirement- if capital requirement is more so it is

better to choose partnership firm.

¨ Duration of business – if business have a definite period of
time it suitable for proprietorship or partnership.
¨ Government regulation- if the owner not like much more
government involvement so he can choose partnership or
proprietorship.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Formulation of Business Plan / Project Report
28

Business Plan
¨ It’s the blue print of all the activities that an entrepreneur
proposes to engage in establishing the business enterprise
¨ It gives a course of action of what to achieve ?, how to achieve ?

Contents of Business Plan

1. Title Page
2. Executive Summary
§ Vision Statement
§ Fact Sheet

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Formulation of Business Plan / Project Report cont.,
Contents of Business Plan Cont.,
29
3. Company Plan
¤ Company description
¤ Merchandising Plan
¤ Operating Plan
¤ Organisational Plan
4. Marketing Plan
¤ Marketing description and Target market
¤ Competition Analysis
¤ Method of Distribution
¤ Advertising
¤ Product Design
¤ Industry Trends 12/4/2015
ED: UNIT-3 Business Source: Khanka & Poornima
 Formulation of Business Plan / Project Report cont.,
Contents of Business Plan Cont.,
30
5. Financial Plan
¤ Summary of Financial Needs
¤ Cash flow statement
¤ Break even analysis
¤ Balance Sheet
¤ Income Statement
6. Supporting documents
¤ Personal resumes
¤ Personal Financial statement
¤ Credit Report
¤ Letter of References
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Formulation of Business Plan / Project Report cont.,
31
Network Analysis
¨ Network is a set of symbols connected with each other with

sequential relationship with each step making the completion of a

project/ Event
¨ Number of Network techniques have been developed for project
scheduling
¨ Some of them are,

¤ Programme Evaluation and Review Technique (PERT)

¤ Critical Path Method (CPM)
¤ Graphical Evaluation and Review Technique (GERT)
¤ Line of Balance (LOB)
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Formulation of Business Plan / Project Report cont.,

Network
32
Analysis Cont.,
¨ Program (Project) Evaluation and Review Technique (PERT) is a
project management tool used to schedule, organize, and
coordinate tasks within a project.
¨ It is basically a method to analyze the tasks involved in

completing a given project, especially the time needed to

complete each task, and to identify the minimum time needed to
complete the total project.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Formulation of Business Plan / Project Report cont.,

PERT
33
Network Analysis Cont.,
PERT planning involves the following steps,
¤ Identify the specific activities and milestones.

¤ Determine the proper sequence of the activities.

¤ Construct a network diagram.

¤ Estimate the time required for each activity.

¤ Determine the critical path.

¤ Update the PERT chart as the project progresses

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Formulation of Business Plan / Project Report cont.,
Network Analysis Cont.,
34
¨ The Critical Path Method is an algorithmic approach to finding

critical paths.
There are five steps in CPM:
1. Creating a network showing the task names, durations, and
precedence relationships,
2. Making a Forward Pass through the network, determining the early
start and early finish for every task.
3. Making a Backward Pass through the network, determining the late
start and late finish for every task.
4. Calculating the float for every task.
5. Finding the paths that consist entirely of tasks with zero float. These
paths will go from the very first task to the very last one.
 Formulation of Business Plan / Project Report cont.,

Differences between PERT and CPM

35

PERT CPM
PERT was developed by the US Navy for CPM was developed by Du Pont and the
the planning and control of the Polaris emphasis was on the trade-off between
missile program and the emphasis was on the cost of the project and its overall
completing the program in the completion time
shortest possible time
ERT considers optimistic, likely and CPM takes only a single time for any
pessimistic time, thereby adding an task
element of probability to the final figure This time typically would be the 'likely‘
one obtains time for the task
PERT is a probabilistic tool using 3 CPM is a deterministic tool, with only
estimates of duration for completion of single estimate of duration. CPM also
activities of a project and is basically allows an explicit estimate of costs in
a tool for planning and control of time addition to time, thereby CPM can control
both time and costs
 Formulation of Business Plan / Project Report cont.,
Network Analysis Cont.,
36
Differences between PERT and CPM
PERT CPM
PERT is more suitable for R&D related CPM is best suited for routine and those
projects where the project is performed projects where time and cost estimates
for the first time and the estimate of can be accurately calculated
duration are uncertain
PERT is event oriented CPM is activity oriented.
CPM network is built on the basis of
activities.
 Formulation of Business Plan / Project Report cont.,
37

Common Errors in Business Plan

¨ Product Selection : Wrong product selection

¨ Capacity Utilization Estimate : Make over-optimistic estimates of

capacity utilization
¨ Market Study

¨ Technology Selection

¨ Location Selection

¨ Selection of Ownership Form

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Steps involved in Starting small business
38

1. Selection of a project
a. Product or service selection
b. Location selection
c. Project feasibility study
d. Business plan preparation
e. Prepare project profile
2. Decide on the contribution (Based on business type)
3. Obtain SSI Registration (Provisional Registration Certificate [PRC],
Permanent Certificate [PMC])
4. Obtain clearance from departments (if applicable)
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Steps involved in Starting small business
39

5. Arrange for Land / Shed

6. Arrange for Plant and Machinery
7. Arrange for Infrastructure
8. Prepare project report
9. Apply and obtain finance
10. Proceed to Implement

¤ Obtain final clearance

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Identification
40

Project
¨ It is defined as a typically has a distinct mission that it is

designed to achieve and a clear termination point, the

achievement of the mission
Idea Generation
¨ Project selection process starts with the generation of a product
idea. The project ideas can be discovered from various internal
and external sources.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Identification cont.,
41

Idea Generation
They may be,
1. Knowledge of potential customer needs
2. Watching emerging trends in demand for certain products
3. Scope for producing substitute product
4. Going through certain professional magazines catering to
specific interest like electronics, computers etc.,
5. Success stories of known entrepreneurs or friends or relatives.
6. A new product introduced by the competitor.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection
42

¨ It starts from where project identification ends. After having

some project ideas, these are analysed in the light of existing
economic conditions, the government policy and so on.
¨ A tool generally used for this purpose is, what is called the
managerial jargon, SWOT analysis.
¨ On the basis of this analysis, the most suitable idea is finally
selected to convert it into an enterprise.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
43

¨ SWOT Analysis
¨ It has always been important for a business to know and
understand how it fits in and interacts with the surrounding
environment on both an internal (office/factory/shop
environment) and external view (how your business operates
with the outside world).
¨ Researching your environment will benefit you and/or your
management team by putting you in a position to develop a
strategy for both the long and short term.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
44

¨ Analyzing the Business

¨ The most influential way of doing this is to perform a SWOT
analysis of the company. It is a common phrase used to
abbreviate Strengths, Weaknesses, Opportunities and Threats.
¨ Each term is a heading for a separate analysis of the business
but they can be related as seen below:
¨ Strengths provide an insight to your business opportunities
& weaknesses in your business can cause immediate threats

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
45

Performing SWOT
¨ Recognizing the Strengths and Weaknesses before tackling

the Opportunities and Threats is the best way to approach

the analysis: the more Strengths and Opportunities the
better they can both be seen as the bigger influences for
the success of your company.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨ Performing SWOT
46
Strengths
¨ The Strengths can be considered as anything that is favourable

towards the business for example:

¨ Currently in a good financial position (few debts, etc)

¨ Skilled workforce (little training required)

¨ Company name recognized on a National/Regional/Local level

¨ Latest machinery installed

¨ Own premises (no additional costs for renting)

¨ Excellent transport links (ease of access to/from the Company)

¨ Little/non-threatening competition

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨
47
Performing SWOT
¨ Weaknesses
¨ Recognizing the Weaknesses will require you being honest and
realistic. Don‟t leave anything out as this is an important part
as to realize what needs to be done to minimize this list in the
future. Here are a few examples:
1. Currently in a poor financial position (large debts, etc)
2. Un-Skilled workforce (training required)
3. Company name not recognized on a
National/Regional/Local level

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨
48
Performing SWOT
Weaknesses
4. Machinery not up to date (Inefficient)
5. Rented premises (Adding to costs)
6. Poor location for business needs (Lack of transport links etc)
7. Stock problems (currently holding too much/too little)
8. Too much waste

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨ Performing SWOT
49
Opportunities
¨ Keeping in mind what you have listed as your Company

Strengths, SWOT Analysis can now influence the Opportunities

for the business. These can be seen as targets to achieve and
exploit in the future for example:
1. Good financial position creating a good reputation for
future bank loans and borrowings
2. Skilled workforce means that they can be moved and
trained into other areas of the business

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨ Performing SWOT
50
Opportunities
3. Competitor going bankrupt (Takeover opportunity?)
4. Broadband technology has been installed in the area
(useful for Internet users)
5. Increased spending power in the Local/National
economy
6. Moving a product into a new market sector

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨ Performing SWOT
51
Threats
¨ The final part of the analysis will also be seen as the most
feared- the Threats. It has to be done and therefore
taking into account what you have listed as your
weaknesses, the threats will now all seem too clear.
Examples
1. Large and increasing competition
2. Rising cost of Wages (Basic wage, etc)
3. Possible relocation costs due to poor location currently
held
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Project Selection cont.,
¨ Performing SWOT
52
Threats
4. Local authority refusing plans for future building
expansion
5. Increasing interest rates (increases borrowing
repayments, etc)
6. End of season approaching (if you depend on hot
weather, etc)
7. Existing product becoming unfashionable or unpopular

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Selection cont.,
¨ Performing SWOT
53
¨ Using the Analysis
¨ Once the SWOT analysis is complete, it will then be time to
put it all together and look closely to form a strategy. This
will involve how you can exploit the Opportunities and how
to eliminate or deal with the Threats. This may well
depend on your company‟s original objectives and goals
but the whole process will certainly give an overall look at
the current position of your business.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Appraisal
54

¨ It means the assessment of a project. Project appraisal is made

both proposed and executed projects.
Methods of Project Appraisal
1. Economic Analysis. ( requirement of raw material, level of
capacity, utilization, anticipated sales, anticipated expenses
and the probable profits)
2. Financial Analysis. (working capital, fixed capital, fixed asset
and current asset)
3. Market Analysis.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Project Appraisal cont.,
Market Analysis cont.,
55

i) Opinion Polling Method

¤ Complete Enumeration Survey
¤ Sample Survey
¤ Sales Experience Method
¤ Vicarious Method
ii) Life Cycle Segmentation Analysis
¤ Introduction
¤ Growth
¤ Maturity
¤ Saturation
¤ Decline
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Project Appraisal cont.,
56

4. Technical Feasibility
¤ Availability of land and site
¤ Availability of other inputs like water, power, communication
facility.
¤ Copying-with anti-pollution law
5. Managerial Competence

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Pre-feasibility Studies
57

¨ Pre-feasibility studies are well researched yet generic due

diligence reports that facilitate potential entrepreneurs in
project identification for investment
¨ The main objective of the pre-feasibility studies prepared
by SMEDA is to provide information about investment
opportunities to the small & medium enterprises (SME‟s).

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Pre-feasibility Studies cont.,
58

A typical pre-feasibility study provides:

1. Comprehensive information for investment opportunity in a
business.
2. Specific information regarding different business areas like,
marketing, technical, industrial information etc. for the existing
entrepreneurs to improve their exiting setup.
3. Project investment information and financial projections to
support viability of the business.

ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015

 Environmental clearance for SME
59

¨ Clearance process Start

Site Selection

Conduct EIA Environment Impact Assessment

Apply NOC No Objection Certificate

State Pollution
SPCB arranges public hearing
Control Board

Project proponent apply for environment clearance

Review by appraisal Committee

Reject Accept
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015
 Summary
60

¨ Small Scale Enterprise

¨ Classification of Small Enterprises
¨ Characteristics of a Small-Scale Enterprises
¨ Scope of Micro & Small Enterprises
¨ Objectives of Micro Enterprises
¨ Problems faced by SSI
¨ Ownership Structure
¨ Formulation of Business Plan / Project Report
¤ Network Analysis
¨ Steps involved in Starting small business
¨ Project Identification
¨ Project Selection
¨ Project Appraisal
ED: UNIT-3 Business Source: Khanka & Poornima 12/4/2015