Entrepreneurship Development

and
Business Communication
 INDEX
SN Topics Page No.
1 Entrepreneur & Entrepreneurship Entrepreneur- Concept, 01-08
meaning, definition, entrepreneurial characteristic, myths
Difference between entrepreneur and manager, role ofentrepreneurs in economic
growth
Types of entrepreneur (according to Clarence Danhof) Entrepreneurship-
Concept, meaning, definition, factorsresponsible for entreprene urship,
Difference between entrepreneur & entrepreneurship

2 Intrapreneur and Agri- entrepreneurship 09-14

Intrapreneur- Definition, difference between entrepreneurand intrapreneur
Agri-entrepreneurship definition, importance of agri -
preneurship development

3 Impact of economic reforms on agribusiness/ agri - 15-19

enterprises

4 Entrepreneurship Development 20-23

Phases of entrepreneurial venture
Entrepreneurial development cycle (Simulation, Support
and Sustain)

5 Entrepreneurship Development Programme (EDP) 24-28

Meaning, features, objectives and phases

6 Organizations/ institutions for entrepreneurshipdevelopment 29-35

(i) National Institute for Entrepreneurship and Small Business
Development (NIESBUD)
(ii) Entrepreneurship Development Institute of India(EDII)
(iii) Indian Institute of Entrepreneurship (IIE)
(iv) Small Industries Development Organisations(SIDO)
(v) National Institute for Micro, Small and MediumEnterprises
(NIMSME)
(vi) Small Industries Development Bank of India(SIDBI)
(vii) National Entrepreneurship Development Board(NEDB)
7 Government schemes and incentives for promotion ofentrepreneurship 36-41
development Government policy for entrepreneurship development
(i) Prime Minister’s Employment Generation Programme (PMEGP)
(ii) Market Development Assistance Scheme for Micro/ Small Manufacturing
Enterprises/ Small & Micro Exporters
(iii) Rajiv Gandhi Udyami Mitra Yojana - A Scheme of“Promotion and
Handholding of Micro and Small Enterprises”
(iv) Credit Link Capital Subsidy Scheme for Technology
Upgradation
(v) Credit Guarantee Fund Scheme for Micro and SmallEnterprises
(vi) Schemes for Women Entrepreneurs
a) Mahila Udyami Yojana (MUY)
b) SBI Stree Sakthi Package
c) Priya Darshini Yojana

8. Government policy on small and medium enterprise 42-44

(i) IPR 1948
(ii) IPR 1956
(iii) IPR 1977
(iv) IPR 1980
(v) IPR1990
(vi) New Small Enterprise Policy (NSEP), 1991
(vii) Micro Small and Medium Enterprises Development(MSMED) Act, 2006
(viii) EXIM

9. SWOT analysis and its usefulness 45-53

10. Motivation & achievement motivation 54-60

Concept and Definition
Theories of motivation: Maslow’s need hierarchy theory,
McClelland need theory
11. Developing organizational skill 61-67
12. Business leadership skills 68-75
13. Developing managerial skills 76-80
Conceptual, technical, human relations skills, Managerial
skills possessed by an entrepreneur
14. Creativity and Problem solving 81-86
Definition
Problem solving : Definition , types and steps, problem
solving skills possessed by an entrepreneur
15. Total Quality Management (TQM) 87-92
Definition, need and process in small scale enterprises
16. Supply Chain Management 93-97
Definition, Stages, advantages and scope
17. Project planning formulationReport preparation 97-107
 1 ENTREPRENEUR AND ENTREPRENEURSHIP
Concept and Meaning
An entrepreneur is a person who creates a new business, bearing risks and
enjoying most of the rewards. The word 'entrepreneur' has been derived from the French
word 'entreprendre' means 'to undertake'. Before 18th century there were many aspects
of entrepreneur but after 18th century it has been in economic aspect. There are various
views which come under this, some of them are risk bearing, organizer, innovative,
leadership skills and capacity for high achievement.
 ‘Risk Bearing’ Concept- This is the premier and most popular concept. It was
propounded by Richard Cantillon, the French economist. According to him,
“entrepreneurship is a function of taking unlimited risks. This reveals that the
entrepreneur has to bear various types of risks for establishing the new enterprise
and operating it. These risks are related to time changes and fluctuations in
prices. He also describes entrepreneur as an agent who buys the factor of
production at certain prices in order to combine them into a product with a view
to selling it at uncertain prices.
Knight also describes an entrepreneur to be a specialised group of persons who
bear uncertainty. Uncertainty is defined as a risk which cannot be insured against
and which is incalculable.
 ‘Innovator’ Concept- The concept of innovator includes all the combinations of
factors of production which is new or changes in the composition. The innovative
factor includes
1. Introduction of new product in the market
2. Change in the form of the product which already exists
3. The opening of new market in to which the specific product has not entered
previously
4. The Discovery of new source of supply of raw material.
 ‘Entrepreneur as an Organiser’ concept- According to Jean-Baptiste an
Entrepreneur is one who combines the land of one, the labour of another, capital
of yet another and thus produces the product. By selling the product in the
market, he pays interest on capital, rent on land and wages to labourers and what
remains is his/her profit.

1
Definition of an Entrepreneur
 According to Richard Cantillon- An entrepreneur as an agent who buys factors
of production at certain prices in order to combine them in to a product with a
view to selling it at uncertain prices in future.
 According to Knight- An entrepreneur is to be a specialised group of persons
who bear uncertainty. Uncertainty is defined as a risk which cannot be insured
against and which is incalculable.
An entrepreneur combines capital, land, and labour to manufacture goods or to
provide services through the formation of a firm for selling and getting profit or in other
words an entrepreneur is an individual who creates a new business, bearing most of the
risks and enjoying most of the rewards.
Characteristics of an Entrepreneur
1. Hard work- A successful entrepreneur must work hard. This characteristic
makes him distinguish from an unsuccessful entrepreneur. It means a successful
entrepreneur works hard endless especially from the beginning till the end.
2. Independence- One of the common characteristics of the successful
entrepreneur is that they are independent they do not live to be guided by other
and to follow their routine. They liked to be independent in their business matter.
3. Desire for high Achievement- The entrepreneur has a strong desire to achieve
goals in business. This characteristic to get high achievement makes an
entrepreneur successful, remove the obstacles, suppress anxieties, increasing
their risk bearing abilities.
4. Innovative- Production is done to meet the requirement of the customer. It is not
only to change the product but also in the form of the product, packing size,
change in to the ingredient and so many other factors involved to satisfy the need
of the customer. So, this is essential that entrepreneur must conduct research to
know the changing demands for the product and make innovation to satisfied the
same
5. Self-confidence– An entrepreneur must have confidence and believe in them to
achieve desired objective. They strongly believe that they can beat anyone in the
field. They do not believe in status rather they believe that the event in their life
are self-determined and have little believe in faith.
6. Initiative –The entrepreneur must have initiative seeking personal,
responsibility for decision and use the available resources for their objectives.
They take free credit for the success and failure of an enterprise.
7. Flexibility- Entrepreneur should be flexible, they should not be very rigid in
decision making process.

2
 8. Leadership- An entrepreneur must possess good leadership quality to become a
successful entrepreneur because leadership is the important aspect of
entrepreneurship. The entrepreneur must have ability to lead so that he can gain
confidence of people to work together.
9. Moderate risk Taker- Entrepreneur must be a moderate risk taker and learn
from failure. The successful entrepreneur is neither a high risk taker nor a
gambler. They take moderate challenging risk to attain moderate return which
influence these abilities and desire within.
Myths of Entrepreneur
1. Entrepreneurs are high risk takers- It is a myth that entrepreneurs are high risk
takers but they are not high risk taker or gambler. Entrepreneurs are neither high
nor low risk takers. They prefer situations in which they can influence the
outcome, and they like challenges if they believe the odds are in their favour.
2. Entrepreneurs are born- Many people believe that entrepreneurs possess
innate, genetic talents. However, scientists generally believe that most of the
entrepreneurs were not born; they learn to become entrepreneurs. The recent
proliferation of college and university courses on the subject supports this point.
3. Entrepreneurs are mainly motivated to get rich- This is a myth that
entrepreneurs are mainly activated to get rich, starting a business is not a get-
rich-quick alternative. New business usually takes from one to three years to turn
a profit. In the meantime, you're considered to be doing well if you break even.
During the business start-up stage, entrepreneurs do not buy anything extra
ordinary. Their focus is on creating a company with a strong financial base for
future expansion.
4. Entrepreneurs give little attention to their personal life- All successful
entrepreneurs do not ignore their personal life. It is a myth that because of long
working hours, they cut time of their personal life. However, long working hours
are not unique to entrepreneurs. Many corporate managers and executives work
well beyond the average 40-hour workweek. The primary difference between the
entrepreneur and his or her corporate counterpart is schedule control.
Entrepreneur can adjust their time to the working hours but similar is not possible
in job.
5. Entrepreneurs have limited dedication- Rye says it is a myth that
entrepreneurs are not dedicated to any one thing. But he adds that dedication is an
attribute that all successful entrepreneurs exhibit. They are dedicated to
becoming their own boss.

3
Differences between Entrepreneur and Manager :-
S.N. Points Entrepreneur Manager
1. Motive Main Motive is to setting Enterprise To manage the enterprise
2. Innovation Generate new ideas Execute the plan
3. Risk bearing Assume all the risk and uncertainty Less Risk related to Enterprise
involved in to the run of the business
4. Rewards In terms of profit In term of salary
5. Status Owner of the Enterprise Servant of the Enterprise
6. Qualification There is no professional qualification They are generally
required professionals/ qualified persons
7. Experience As owner of the business there is no As manager he has e xperience
previous experiences of the of working as executive in same
Enterprise field
8. Freedom More freedom as owner to run the Having no or less of freedom to
enterprise run the business enterprise
9. Brain drawn Less of brain drawn More brain drawn

Importance of Entrepreneur in Economic Development

1. Wealth Creation and Sharing: By establishing the business entity,
entrepreneurs invest their own resources and attract capital (in the form of debt,
equity, etc.) from investors, lenders and the public. This mobilizes public wealth
and allow people to benefit from the success of entrepreneurs and growing
businesses.
2. Create Jobs: Entrepreneurs by nature and definition are job creators, as opposed
to job seekers. This kind of job creation by new and existing businesses is again is
one of the basic goals of economic development. Therefore the Govt. of India has
launched initiatives such as Start up India to promote and support new start ups.
3. GDP and Per Capita Income: It helps to increas GDP even more resources like
land, labour and capital to develop products and services that add to the national
income, national product and per capita income of the country. This growth in
GDP and per capita income is again one of the essential goals of economic
development.
4. Living standard: Increase in the standard of living of people in a community is
yet another key goal of economic development. Entrepreneurs again play a key
role in increasing the standard of living in a community. They do this not just by
creating jobs, but also by developing and adopting innovations that lead to
improvements in the quality of life of their employees, customers, and other
stakeholders in the community.
5. Exports: Any growing business will eventually want to get started with exports
to expand their business to foreign markets. This is an important ingredient of
economic development GDP, exports, standard of living, skills development and
community development.
4
Types of Entrepreneurs
According to Clarence Danhof :
1. Innovative entrepreneur- These entrepreneur is one who introduce new goods,
inaugurate new methods of production, discover new market and reorganize the
enterprise. It is important to note that such entrepreneur can work only when a
certain level of development is already achieved and people look forward to
change and improvement.
2. Imitative Entrepreneur-These are characterized by readiness to adopt
successful innovation inaugurated by innovative entrepreneur. These
entrepreneurs do not innovate the change themselves, they only imitate
techniques and technologies innovated by others.
3. Fabian Entrepreneur –These entrepreneurs are characterized by very great
caution and skepticism in experimenting any change in their enterprise. They
imitate only when it became perfectly clear that failure to do so would result in a
loss of relative position in the enterprise.
4. Drone Entrepreneur-These entrepreneurs are conservative or orthodox in
outlook. They never like to get rid of their traditional business and traditional
machinery or systems of the business. They always feel comfortable with their
old fashioned technology of production even though the environment as well as
the society have undergone considerable changes. Thus, drone entrepreneurs
refuse to adopt the changes. They are laggards as they continue to operate in their
traditional way and resist changes.
Concept and Meaning of Entrepreneurship
 Risk Bearing Concept- This is the premier and most popular concept. It was
propounded by Richard Cantillon, the French economist. According to him,
“entrepreneurship is a function of taking unlimited risks. This has revealed that
the entrepreneur has to bear various types of risks for establishing the new
enterprise and operating it. These risks are related to time changes and
fluctuations in prices.
When we start a new business it always includes so many risks because we try
something new and different. We can also earn profit or losses because of various
factors like change in the liking or input availability. Therefore entrepreneurs,
need to be bold enough to assume risk, he is not to risk avoider but risk taker. This
risk bearing ability makes them enable if he fails once or even one venture to
persist on and on which ultimately help him to succeed.
 High Achievement Capacity Concept- McClelland is among the important
Scholars to accept this theory. He is of the view that “entrepreneurship is high
achievement capacity concept, for which capacity of making innovations and

5
 taking the decision during risks is essential.” Under the assumption, he has
mentioned two characteristics of entrepreneurship:
1. Ability to perform work with the latest method
2. Ability to take decisions during uncertainties
Besides, he has also assumed that inspiration for high-level achievements makes
a man an entrepreneur.
 Creative and Leadership Concept- J. Schumpeter has regarded
entrepreneurship as a creative activity. According to Richman and Copen,
“entrepreneurship is the function of progressive leadership.” An entrepreneur
must be creator and leader who can lead all the related members of their business.
 Innovation- Innovation is essential for an entrepreneurship process because this
is changing in the method of production or processing. An entrepreneur always
looks out to do something new or different to meet the changing requirement of
the customer. They may not be inventor of new product or process but they
possess the ability to force the possibility to make use of invention for the
enterprises. Eg., now a days ready to eat sprouts are available for the customer
who wants to eat sprouts but is lack of time.
Definition of Entrepreneurship
 According to A.H. Cole:- "Entrepreneurship is the purposeful activity of an
individual or a group of associated individuals, undertaken to initiate, maintain
or aggrandize profit by production or distribution of economic goods and
services."
 According to Joseph A. Schumpeter:- “Entrepreneurship is based upon
purposeful and systematic innovation. It not only includes the independent
businessman but also includes company director and manager, who actually
carried out innovation function.”
In short, we can understand that entrepreneurship as a process which includes
designing, launching and running all the activity to running the business successfully.
Factor affecting Entrepreneurship Growth
Entrepreneurship is influenced by four distinct factors: economic development,
culture, technological development and education.
1. Economic factor: it is the most basic factor of production which includes
capital, availability and cost of the labour, availability of raw material for
preparation of finished goods, infrastructure facility which include all the
communication and transport facility as well as market facilities for selling of the
finished product include all these factors together affect enterprise
2. Cultural factor: The cultural factor includes caste system. It affects working

6
 pattern in several years of our society. Some specific works are done only by
some specific group of people. Family background also works as experience for
any business, when we discuss about cultural factor.
3. Education: It affects to develop their knowledge and skill and changes the
attitude. This is the basic of the success of any business. Positive attitude always
increases their confidence for taking risk.
4. Development of technology: Technology plays a crucial role in the
development of any enterprise. When an entrepreneur adopts day by day
changing technology in the market and makes a new product according to time
and changing preference of the customer help to make an entrepreneur
successful.
Difference between an Entrepreneur and Entrepreneurship

Entrepreneur Entrepreneurship

An entrepreneur is a person Entrepreneurship is a process

Entrepreneurship is a risky activity of

An entrepreneur is an individual or a team
commencing a business usually a start up
thereof, having an innovative idea, and
company, offering distinct products and services
takes every step to turn the idea into
to the targeted customers, which may or may not
reality, while bearing the risks.
get success.

An entrepreneur is an innovator and

A procedure through which an innovation is
struggles till the end for fulfilment of their
done.
dream

He/ she is the one who sets up the

It is the activity, which an entrepreneur
business venture, to turn a concept into
undertakes to set up the business venture.
reality.

References:
1. Khanka, S. S. (1999). Entrepreneurship development. Ram Nagar, New Delhi, S.
Chand & company limited.
2. Mondal, S., Ray, G.L. (2009). Textbook of Entrepreneurship Rural Development
New Delhi, India, Kalyani Publishers.
3. Weihrich, H., Cannice, M.V., Knotz, H. (2008). Management: A Global and
Entrepreneurial Perspective [Twelfth Edition]. New Delhi, Tata McGraw-Hill
Publishing Company limited.
4. Factors Affecting Entrepreneurship Development (November4, 2018).

7
 retrievedfrom [Link] 2012/12/26/factors-
affecting-entrepreneurship-development/
5. Google Sir, Concept of Entrepreneurship April 18, 2019 retrieved from
[Link]
6. M y t h s a b o u t E n t r e p r e n e u r s r e t r i e v e d f r o m h t t p s : / /
[Link]/articles/10-myths-about-entrepreneurs/
7. MSG, The Role of Entrepreneurs in the Economies of Nations retrieved from
[Link]
[Link]
8. Roles of entrepreneurship in economic development retrieved from
[Link] centre/7-roles-of-entrepreneurship-in-economic-
development-of-a-country/
9. Surbhi, S. (June 13, 2019). Difference between Entrepreneur and
Entrepreneurship retrieved from [Link] difference-
[Link]

8
 2 INTRAPRENEUR AND AGRI-ENTREPRENEURSHIP

According to Cambridge Dictionary meaning of intrapreneur is “an employee

within a large company who takes direct responsibility for turning an idea into a
profitable new product, service, business, etc., often instead of leaving to start their own
company”.
An intrapreneur is also known as corporate entrepreneurship or an inside
entrepreneur. This word was coined in 1980's by management consultant Gifford
Pinchot. Being an employee of a large organization an intrapreneur applies all his skills
to develop or build an innovative project, but skips smartly financial insecurity and other
risks associated with it. He builds a career path within the secured structure of existing
organization, utilizing entrepreneurial thinking and skills. In other words-
Intrapreneur = Entrepreneur - entrepreneurial risks
Successful intrapreneurs are visionary, creative, encouraging teamwork, build a
group of supporters and have persistence. They are capable to create new ventures and
innovates products/services and processes for better efficiency, productivity, and quality.
They are proactive with risk taking ability and competitively aggressive.
It is very important for an organization to retain and motivate intrapreneur. It does not
only help in increasing value of the company but also attracts other talented persons to
join hands in the progress of company through innovative ideas. It proves beneficial to
both i.e. for organization as well as for intrapreneur. Google is the best example among
such organizations that promotes intrapreneur and converting tremendous ideas into
profit. These are the employees who are capable of out of box thinking and turn ideas into
actions.
Comparison between an entrepreneur and an intrapreneur
SN Characteristics Entrepreneur Intrapreneur
Differences
1. Independence An entrepreneur is independent An intrapreneur usually reports
to take any decision for his to the owner and other top
company. He may or may not official and is usually dependent
consult anyone before taking any on them.
decision.
2. Risk An entrepreneur is always at a The risks of new products
risk to lose everything he has developed by intrapreneurs are
invested in the company usually borne by the company.

9
 3. Funds Fund generation is a big issue Funding is provided by
with entrepreneur and company/ organization after
sometimes the startup closes approval.
abruptly because entrepreneur
fails to generate enough funds.
4. Relationship The entrepreneur and his/her The intrapreneurs may/may not
with the startup cannot be separated. lack this relationship with the
business During early life of a startup, the company they work with.
entrepreneur and the business act
as one.
5. Authority Entrepreneur has complete Partial authority is hold by an
authority over his start up. intrapreneur.
6. Decision Start up decisions belong to an Decisions belong to board of
entrepreneur company.
Similarities
1. Innovation Like an entrepreneur, innovations are integral part of intrapreneur’s
life.
2. Leadership An intrapreneur exhibits many leadership qualities like an
entrepreneur. These include guiding, leading, mentoring and
problem solving skills.
3. Vision Intrapreneur possesses clear vision of objectives and goals of the
project.
4. Optimism An intrapreneur is also optimistic who tries to learn from his/her
mistakes and sees good in everything.
5. Motivator To keep the team motivated for long time an intrapreneur as well as
entrepreneur works as motivator.

Importance of an Intrapreneur
Since innovations are keys for success of business, an intrapreneur is important
for any organization irrespective of its size. Existing organizations face challenges from
growing organizations as well as from the various entrepreneurs (new organizations).
This forces to change the mind set of big companies for the sake of sustainability.
Therefore, big organizations are focusing on intrapreneur and innovations.
Intrapreneurship offers the following advantages:
I. Recognition: Lack of resources and the risk involved in the entrepreneurship
keeps many brilliant entrepreneurial minds to choose jobs/services over startups.
Intrapreneurship programmes run by big organizations recognize and make the
use of their skills to the fullest. It's an affair of mutual benefit and common
interest.
II. Enforces Equity: Equity theory is based on an idea that the employees feel
motivated if an organization uses fair methods to recognize and reward their
efforts. This not only makes them content but also motivates them to give their
fullest to the organization. Intrapreneurship not only recognizes entrepreneurial

10
 candidates but also rewards them monetarily and non-monetarily.
III. Organizational Benefits: The organization gets to make use of entrepreneurial
spirit in the development of new products, programmes and strategies in order to
make profit and speed up growth.
The best example of intrapreneur in India in Agriculture happened to be in ITC.
The idea of e-choupal, an ITC division germinated when Sivakumar a manager in the
ITC Group's agribusiness unit, approached ITC's chairman, with a request of Rs 50 lakh
to test an idea. He wanted to procure farm produce from soya farmers in Madhya
Pradesh, thereby eliminating middlemen. Today, e-Choupal, reaches out to over 4
million farmers growing a range of crops in over 40,000 villages across 10 states.
Intrapreneurs can be classified as Employee Intrapreneur, the Creator
Intrapreneur, Doers Intrapreneurs and Implementer Intrapreneurs

AGRI – ENTREPRENEURSHIP
Agriculture is the main livelihood of India and fragmentation of land holding
forces farmers to practice traditional agriculture hence there are enormous problems
which need solution. This scenario provides a lot of opportunities to the agri-
entrepreneurs or agripreneurs.
As the name suggests, “Agri- entrepreneurship is a set of different ventures
related to agriculture's primary and secondary products.” It may be related to forward
marketing of agricultural products or backward linkage to inputs required for the
agricultural production. Agri-entrepreneur or agripreneur is the new breed of
entrepreneurs, who use his skills to promote the traditional practice of farming to a more
business-oriented vocation. Indian economy is agrarian in nature hence scope for
agripreneur in our country is limitless. The Agripreneurs aim to provide innovative and
technology-driven solutions to current challenges faced by the agriculture sector at
lower cost. Infusion of the skills and mindset of an entrepreneur, along with the
understanding of agriculture enhances the success rate of agribusiness including dairy,
horticulture, forestry etc. Increasing demand of organic food, Production and marketing
of required agricultural inputs and produce enhances the prospect for entrepreneur.
Many national and multinational companies invite Agripreneurs to team up with their
ventures to create a win- win situation to both.
Agripreneurship: It is defined as generally sustainable, community oriented, directly
marketed agriculture. Sustainable agriculture denotes a holistic, systems oriented
approach to farming that focuses on the interrelationships of social, economic and
environmental process.
Easy access to technology, emergence of micro financing, liberalized
government rules, awareness and training programmes on agri and allied sectors and
finally changing mindset of the highly qualified people to go for self employment in the

11
field of agriculture have contributed significantly in enhancing the potentiality for
agripreneuership in India (Bairwa et al., 2014). According to him “Agripreneurship is the
profitable marriage of agriculture and entrepreneurship. Agripreneurship turns your
farm into an agribusiness. The term Agripreneurship is synonym with entrepreneurship
in agriculture and refers to agribusiness establishment in agriculture and allied sector”.
Agripreneur : An agripreneur is someone who is proactive, curious, determined,
persistence, visionary, hard working, honest, has integrity with strong management and
organizational skills to undertake a variety of activities in agriculture sector in order to be an
entrepreneur (Bairwa et al).
Types of Agriventures:
Basically agripreneurs are randomly classified by different authors but they can
be classified according to the sectors they are working in-
1. Agricultural input-output sector
2. Agricultural service-providing sector-agriclinics,
3. Agricultural knowledge management sector
4. Agricultural processing sector
1. Agricultural input-output sector: This sector covers mainly inputs like seeds,
fertilizers, bio-agents, insecticides, pesticides, animal feeds, vaccines, poly
structures, irrigation tools and equipments, farm machineries etc in one hand
and cereal, pulses, oilseeds, fruits, vegetables, flowers, spices, medicinal and
aromatic products, fibre, dairy products, meat, honey etc on other hand. A vast
range of items comes under this sector. Increasing awareness and demand of
organic and quality/nutritious food both in India and abroad is creating avenues
for agripreneurs.
2. Agricultural service-providing Sector: In general, service industry is a type of
business that provides services to customers rather than producing a product.
Providing services to farmers is also a lucrative employment for many.
Transportation, banks, market, retailers, cold storage, insurance, farm
mechanics, agri-clinics, warehousing, custom hiring centre etc are service
industries for agriculture. They serve as backbone of the agriculture and offer
smooth functioning without any obstacle. Globalization helped the
entrepreneurs to improve this sector with minimized risk. Organic products,
home delivery, ready to cook food and vegetables, ready to serve meal, home
cook on demand, meals on wheels. Community cooking, chef at your door etc are
some examples of new and upcoming service sectors which are being explored
by entrepreneurs.
3. Agricultural knowledge management sector: Knowledge and information
helps to grow in right direction at a faster pace. Flow of information used to be

12
 slow and sluggish previously. Increasing awareness among farmers to improve
agriculture and popularization of user friendly gazettes has unveiled potential for
agripreneurs regarding volume and profit maximization. Digital as well as
traditional platforms are now capable of providing information at a faster rate
with customized preferences. These platforms are designed to provide expert
advice and to transfer knowledge to farmers on technology, cropping practices,
pests and disease management, cost minimization, market trends, prices of
various crops in the national & international markets, animal health which help
in improving productivity of crops/animals and increased income to farming
community.
4. Agricultural processing sector: This is the fastest growing sector, generally
termed as secondary agriculture where agricultural produce/output serves as raw
material for processing, milling, ginning, oil, sugar, jaggery etc. Small houses,
flat system, working women force, taste preferences, changing consumers'
behaviour and globalization are pushing the consumers to buy processed
products. Semi processed and processed category is opening profitable avenues
for new ventures. Generally Agro product processing units (mills for dal, rice,
ginning, decortications etc) and agro product manufacturing units (Sugar, oil,
straw board making, confectionaries, bakeries) have been the traditional units
but now big companies are focusing on product development. Private sector is
targeting agribusiness at all levels of operation. Bio fuels and alternate energy
sources are new areas tapped by agripreneurs.
Importance of Agripreneurship:
Agripreneurship plays vital role in the growth and development of national
economy through employment development, increases the income level and job
opportunities in both on and off farm activities, for skilled and unskilled and for poor and
rich. It skillfully addresses the need of the farmers and demand of the consumers. It helps
in joining all stakeholders and induces productivity gains. It also integrates the farmers
into local, national and international markets and forms commodity groups for better
negotiation. For a broad chunk of population it helps in availability of nutritious food at
reduced costs, decreases supply uncertainties for the rural and urban poor in the country.
It also creates a mutual dependency between product/by-product utilization units.
Conclusion:
According to statistics, for every new business venture started, approximately
three jobs open up. Agripreneurship has a potential to contribute a major percentage into
income and employment generation in on farm as well as off farm ventures. The skill gap
can be bridged by introducing formal courses in syllabus and trainings. Due to increasing
population agripreneurship is not only an opportunity but also its urgent to improve the
production and profitability in agriculture and allied sector. Government is being very
supportive and motivating agripreneurs through various schemes like Atal Incubation

13
Centre. Financial assistance is also being granted for sound proposals. There are high
potentials for agripreneurs in India because of diversified culture and differential needs.
References :
1. Bairwa, S.L., Kerobim, L., Kushwaha, S., Meena, L. K. and Kumar, P. (2014).
Agripreneurship Development as a Tool to Up-liftment of Agriculture, Intern.
Jour. of Scientific and Research Publications, Volume 4, Issue 3.
h t t p : / / w w w. i j s r p . o r g / r e s e a r c h - p a p e r - 0 3 1 4 / i j s r p - p 2 7 7 0 . p d f .
[Link]
2. [Link] intrapreneur/21015
3. [Link]
4. “Service industry.” The [Link] Dictionary, Merriam-Webster
Inc., [Link] dictionary/service%20industry.
Accessed 4 January 2020.

14
 IMPACT OF ECONOMIC REFORMS ON
3 AGRIBUSINESS/ AGRI-ENTERPRISES

“In the midst of every crisis, lies a great opportunity” – once Albert Einstein said.
This quote most aptly describes the genesis of 1991 economic reforms in India that has
changed the country forever. Also referred to as New Economic Policy (NEP, 1991) or
new industrial policy, it was a major shift from a socialist, conservative protectionist
economy to market oriented, liberalized and globalized economy. This historical shift,
which essentially resulted from a serious economic crisis due to huge balance of
payments during 1980s, was forced upon the country by International funding agencies
as a condition for a World Bank loan for bailout plan. There was no choice but to accept
and implement the economic reforms to get the bailout loan in order to avoid the
bankruptcy. Now, decades later, with an all-round impact of new economic policy on
development, one can be sure to describe it as blessing in disguise. This new idea of
economic reforms, presented by Dr Man Mohan Singh, the then Finance Minister in his
budget on 24th July, 1991 with an emphatic declaration in the parliament quoting Victor
Hugo “no power on earth can stop an idea whose time has come”. He continued “I
suggest to this august House that the emergence of India as a major economic power in
the world happens to be one such idea. Let the world hear it loud and clear. India is now
wide awake. We shall prevail. We shall overcome”. With this bold declaration, decades
of Nehruvian socialist economic policy came to an end and a new era of economic
liberalization begun in the Indian economy. As a result, an economy characterized by
'Hindu Rate of Economic growth' subsequently became one of the fastest growing
economies in the world. Only three decades after that emphatic declaration of economic
awakening, now that country is targeting for a five trillion economy, it is indeed a
testimony to that visionary idea which changed the Indian economic scenario beyond
recognition.
Main Features of Economic Reforms:
The primary objective of economic reform was to improve the economic health
and overall wellbeing of the people by accelerating the growth of economy through
greater market competition and capacity enhancement for higher economic efficiency
and productivity. In order to achieve these objectives, wide ranging economic reforms in
macro (e.g. fiscal policy, monetary and trade policy)and micro (industrial deregulation,
infrastructural reforms and agriculture) economic policies were introduced. The three
major components of economic reforms were liberalization, privatization and
globalization. Liberalization was aimed at reducing the government control or the end of
license raj, whereas privatization was aimed at encouraging private investment and

15
competitiveness in various sectors and globalization was to open the Indian market and
Indian businesses, for global participation. In order to benefit from global markets
particularly for agricultural trade, India is also committed to World Trade Organization
(WTO) agreements in 1995 and this was a major step forward in terms of globalization of
Indian agriculture sector. In the Post-WTO era, Indian agricultural global trade and
private investment got a major boost although it has been a mixed bag due to limited
competitive capacity, reduced public investment and poor agri infra-structure
development (Hirashima, 2000; Rao, 2001).Globalization opened the Indian market to
other countries and it has become increasingly competitive where India can be in
disadvantage. WTO has failed to provide a level playing field to the Indian agri export
where it has to compete with highly subsidized produce from Europe and USA. Cheap
imports from other countries have certainly put Indian farmers on the losing side.
Therefore, with such past experiences, Indian farmers are now opposed to International
trade agreements. Recently, farmers and affiliated organization have opposed the signing
of Regional Comprehensive Economic Partnership (RCEP) with ASEAN countries
fearing the cheap agricultural imports from countries like China, Australia and New
Zealand.
It is widely recognized, the economic reforms have not benefitted the agriculture
sector to the extent it has benefitted other sectors. Major reforms are needed to stimulate
growth, to make it market oriented and competitive and also to minimize the
vulnerability of Indian farmers from the globalized market (Thamarajakshi, 1999; Datt
and Ravallion, 2002; Mahadevan, 2003). Rising and wide spread signs of agrarian
crisisis all too evident with no signs of any sustainable solution. Although it can be
attributed to a variety of economic and ecological factors however, for this vital sector
which supports more than 50% of the population, new policies need to address the issues
of social equity, gainful employment for rural youth and capacity enhancement. Creating
an enabling economic and structural environment for promoting agri-enterprises for
rural youth is seen as a potential area for creating a sustainable growth in this sector.
Globalized Market and Agribusiness in India:
Indian agriculture, historically, has been a major global player in international
agri-commodity trade. The spice trade dates as far back as 7000 years ago when India
was the main trader for spices across Europe, Mediterranean and East Asia.
Globalization has created an environment for greater economic dependence among
nations and opens opportunities for trans-boundary businesses. However, it can be a
threat to Indian businesses as they cannot compete with big multi-national companies
unless they innovate and collaborate. Moreover, it can particularly put our farmers to
disadvantage unless they have adequately government protection and thus it can further
marginalize the resource-poor small farmers which constitute majority of Indian
farmers.
In globalized modern trade exports from agriculture sector continues to be a
major export area. Post-WTO regime agriculture exports have got a major boost,

16
although often it has to compete with unfavorable market and duty regimes with the
highly subsidized agriculture from Europe and USA. Recently, Government of India has
approved the Agriculture Export Policy, 2018 in December 2018 which aims to increase
India's agricultural exports to US$ 60 billion by 2022 and US$ 100 billion in the next few
years with a stable trade policy regime.
However, in order to take advantage of huge domestic market, now the focus has
to shift to promoting the agri-businesses/entrepreneurship with private investment and
innovations. It will not only help create employment opportunities in agriculture sector
but also it will be a major boost to farm income in commensurate with government
objective to double the farm income in next three years. Agri-business is essentially a
shift from merely a farm producer and be dependent on market demand to owning a
business and to be a product maker or a processor or service provider with innovative
ideas with financial support from private investors. Government policies are framed to
support agri-business in India and have taken several initiatives to promote agri startups
with financial and technological support. For example, The Government of India has
recently allowed 100 per cent foreign direct investment in marketing of food products
and in food product e-commerce under the automatic route. In order to promote the food
processing capacity, The Government of India has committed Rs 6000 crores to create
mega food parks in the country to triple the capacity of food processing sector in India
from the current 10 per cent of agriculture produce. In order to promote startups in
agriculture sector government of India has launched a major project called AGRI-
UDAAN to train and mentor the young entrepreneurs in identified priority areas.
AGRI UDAAN - Food & Agribusiness Accelerator: Government of India has
launched this programme to boost Agri-entrepreneurship and innovation in agriculture.
It is a six-month-programme run by Indian Council of Agriculture Research (ICAR) in
collaboration with ICAR's National Academy of Agricultural Research Management
(NAARM) and Indian Institute of Management (IIM), Ahmedabad in which shortlisted
agri-startups with innovative business models will be mentored and guided to scale up
their operations in identified focus areas. Some of the main focus areas include
sustainable inputs, precision or smart agriculture, farm machinery, supply chain
technology, farm fresh retail, post-harvest technology, Agri Biotech, Animal husbandry
and fisheries among others. The startups will get mentors to guide them and they will be
given exposure in various aspects of business for fund raising, technology
commercialization, product validation, business plan preparation, risk analysis and other
aspects of business management. Recently AGRI UDAAN- Food and Agribusiness
Accelerator 3.0 was launched at the ICAR-National Academy of Agricultural Research
Management, Hyderabad on 31st August 2019 with an objective to scale up successful
agri startups.
Opportunities and Obstacles: Currently, country has most benign environment for
agri- entrepreneurship and for any fresh startup for following factors;
1. Right eco-system: India is at the cusp of becoming an innovation and startup hub

17
 because of right investment and technological environment. For agri startup also
this is the right time because of Government policies, Improved Infrastructure,
Technological support, Private Investment, Innovations and Change in Farmers
Mindset.
2. Vast domestic market: Today, India is one of the most attractive consumer
markets in the world where every business wants its presence. The growing
purchase power of masses and aspiring millennials has created huge demand for
food products.
3. Untapped Potential: So far agri startup has not been a focus area for
entrepreneurs and investors. However, now with the growing opportunities in
areas like post-harvest processing, Agri-biotechnology, supply chain
management, dairying and fisheries private investors find it attractive to invest in
these areas. For example, startups in Agrifood received funding of US$ 1.66
billion between 2013-17 in more than 500 business deals.
4. Growing demand for Healthy and Quality products: With growing health
awareness and affordability, consumers in India are willing to spend extra for
health & quality products. For example, according to Assocham-EY joint study
Indian organic food market is projected to register a growth rate of over 23% by
2023. Area under organic cultivation has been steadily increasing in the country
due to favorable government policies and better profitability to the farmers. This
is a potential niche area for India where country has particular advantage over
developed countries.
5. Diverse Agro-climatic Conditions: Besides cultural diversity, India is blessed
with one of the most diverse agro-climatic conditions. Thus, enabling to grow a
range of diverse crops, fruits and vegetables as per market demand. This unique
advantage can be tapped for specialty products with unique market advantage.
6. Adequate human resource: India has unique advantage in terms of availability
of trained human resource not only in agriculture but in supporting technology
and management.
Obstacles:
1. Quality and certification: quality control and certification facilities for
producers are lacking which becomes a major disadvantage particularly in the
international market. Country needs quality assurance mechanisms such as Total
Quality Management and good manufacturing practices to be created and
inculcated at the grass root level.
2. Logistic support: despite having improved road connectivity the adequate
logistic support is lacking particularly in rural India.
3. Lack of entrepreneurial training in course curriculum: ICAR's fifth Dean's
committee has pointed out this lacuna in our education system and has

18
 introduced management lessons to prepare our graduate with business mindset.
It remains a major bottleneck in promoting entrepreneurship in agriculture.
4. Limited participation of farmers: For effective backward and forward
integration of any agri-business model, farmers' participation is important.
Common farmers are not yet very forthcoming and have a risk averse attitude.
Many successful startups coming to horizon in recent past attracting handsome
private investment is an encouraging sign that agri startup will become as successful as in
IT or financial sectors. However, at the moment it is at the nascent stage and certainly
needs to be nurtured and adequately supported from government. As stated earlier, the
agriculture sector has not benefitted as much from economic reforms and globalization.
However, now, not withstanding the limitations in the sector, the emerging agri-
entrepreneurship trends clearly suggest that agriculture sector is getting ready to take
advantage of economic reforms with access to global market and pouring-in of private
investment. With the right eco-system, it is certain that India will become a major hub for
agri entrepreneurship very soon.
References:
1. Datt, G and Ravallion, M. 2002. Is India's Economic Growth Leaving the Poor
Behind?. Journal of Economic Perspectives. 16 (3): 89–108.
2. Rao, Hanumantha, CH. 2001. WTO and viability of Indian Agriculture.
Economic and Political Weekly. 36(36):3453-3457.
3. Hirashima, S. 2000. Issues in Agricultural Reforms: Public Investment and Land
Market Development. Economic and Political Weekly. 35 (43/44): 3879–3884.
4. Mahadevan, R. 2003. Productivity growth in Indian Agriculture: The role of
globalization and economic reforms. Asia-Pacific Development Journal. 10 (2):
57-72.
5. Thamarajakshi, R. 1999. Agriculture and Economic Reforms. Economic and
Political Weekly. 34 (33): 2293–2295.

19
 4 ENTREPRENEURSHIP DEVELOPMENT
Entrepreneurship development is a key to achieve overall economic
development through higher level of industrial activity. It is a process in which persons
are injected with motivational drives of achievement and insight to tackle uncertain and
risky situation especially in business undertakings. The process of entrepreneurial
development focuses on training, education, reorientation and creation of conducive and
healthy environment for the growth of enterprise.

INCOME SELF
GENERATION EMPLOYMENT ENTREPRENEURSHIP

Stages of Entrepreneurship Development

1. Income generation: Initial stage in the entrepreneurial process in which one
tries to generate surplus or profit. They are often taken on part-time or casual
basis to supplement income. eg. a man with some surplus money might put his
money in a fixed deposit account in a bank or a chit-fund to earn some interest.
2. Self-employment: Second stage in the entrepreneurial process and refers to an
individual's fulltime involvement in his own occupation.
3. Entrepreneurship: Terminal stage of the entrepreneurial process wherein after
setting up a venture one looks for diversification and growth. An entrepreneur is
always in search of new challenges. An entrepreneur is not a routine
businessman, he might not have resources but he will have ideas. He is
innovative and creative. He can convert a threat into an opportunity. Small
business might shut-down or change his business if he anticipates losses but an
entrepreneur will try again after analyzing the situation. On the other hand an
entrepreneur can leave a perfectly running business to start another venture if he
so desires.
Phases of Entrepreneurial Venture
Framework for entrepreneurial venture has been developed in line with
Ramachandran and Ray (1998). Entrepreneurial activities originate from individuals:
the framework of entrepreneurial ventures is described as under:

20
 I. Identification of an enterprise by an entrepreneur
II. Initiation/ creation of enterprise
III. Nurturing of enterprise
IV. Concluding/ transition phase
According to Ray and Mondal, the phases of entrepreneurial ventures are:
I. Preparation: Preparation deals with a conscious search for the solutions,
seeking information about the problems which arise during the entrepreneurial
process.
II. Incubation: It is the stage of subconscious assimilation of information, where it
is allowed to ferment. The process of mental fermentation allows the
entrepreneur to collect and assimilate further relevant information and develop
clarity of thinking.
III. Idea generation: Various ideas and solutions are generated at this stage. The
approaches to problem solving relating to the new venture are tested in real life
situation, using the individual's researches, previous experiences, insights and
risks.
This phase also stimulates the decision making process, and helps the
entrepreneur to identify a solution relevant to his or her situation.
IV. Identification of enterprise: This may come from unsatisfied need of an
entrepreneur, as well as unsatisfied personal needs. This is reflected by the
alertness of the entrepreneur to identify the business opportunity.
The most important task in this phase is to identify a solution which is likely to be
successful and profitable in the long run.
V. Initiation/ creation of enterprise: The entrepreneur needs to create an
organisation for transforming the concept into marketable product in utilising
and combining physical and other resources. The entrepreneur interacts with the
environment to transform ideas into reality.
VI. Nurturing of enterprise: Organisation translates the business concept into
marketable products or services, and offers it to the customer. The entrepreneur
gets feedback or market response in terms of sales, profitability etc. The
feedback is measured in terms of efficiency, competitiveness, effectiveness,
innovativeness, flexibility etc.
VII. Concluding/ transition phase: Entrepreneurial process does not end with
achieving stability and success. The organisation shall require different
managerial style as the environment charges and competition gradually builds up
more and more.

21
Entrepreneurial Development Cycle

Entrepreneurship development is a process comprising essentially three phases-

Simulatory, Support and Sustenance.
1. Stimulatory/ Simultaory: Entrepreneurship refers to enterprising or achieving
attitude. The questions arises how this is enterprising or “need for achievement”
attitude to be developed and fostered. Motivation through stimulation and
training psychologically prepares an individual to take to entrepreneurship. The
stimulatory phase requires a well designed training programme based on
experiential learning. On the part of the trainer also it is very important that
he/she should have deep knowledge about psychology and interested genuinely
in the people.
Entrepreneurship development centres have sprung all over country in recent
years since initial effort during 1971. Universities have also started introducing
entrepreneurial development as a subject in their syllabi at the graduate and post-
graduate level assuming that it is possible to stimulate the entrepreneurial
attitude and competencies in the persons who have potential through specific
training and teaching programmes.

22
 2. Support: The support activities provide infrastructure facilities, resources,
abilities and skills to entrepreneurs for enterprise launching and management.
These activities provide nurturance and helps the already stimulated
entrepreneur to move ahead to reach his goal. This includes all such activities that
help entrepreneurs in establishing and running their enterprises.
3. Sustenance: Sustaining activities refer to all such efforts that facilitate growth
and continuity through expansion, modernisation, diversification and
technology up-gradation of on-going enterprises and rehabilitation of sick units.
Activities in this phase that help the entrepreneur are continuous, efficient and
profitable for an enterprise.
References :
1. Mondal, S. and Ray, G.L. 2016. Textbook on Rural Development
Entrepreneurship and Communication Skills. Kalyani Publishers, New Delhi.
2. Shukla, M.B. 2016. Entrepreneurship and Small Business Management. Kitab
Mahal.

23
 ENTREPRENEURSHIP DEVELOPMENT
5 PROGRAMMES (EDPs)

Entrepreneurship Development Programme (EDP) is meant to develop

entrepreneurial abilities among individuals. In other words, it refers to inculcation,
development and polishing of entrepreneurial skills into a person who wants to establish
and run his / her enterprise. Thus, the concept of entrepreneurship development
programme is to equipping a person with the required skills and knowledge needed for
starting and running the enterprise.
National Institute of Small Industry Extension Training (NISIET), Hyderabad
defined EDP as “An attempt to develop a person as entrepreneur through structural
training”.
According to N. P. Singh (1985), “Entrepreneurship Development Programme is
designed to help an individual in strengthening his entrepreneurial motive and in
acquiring skills and capabilities necessary for playing his entrepreneurial role
effectively. It is necessary to promote this understanding of motives and their impact on
entrepreneurial values and behaviour.”
Now, we can easily define EDP as a planned effort to identify, inculcate, develop,
and polish the capabilities and skills as the prerequisites of a person to become and
behave as an entrepreneur.
The entrepreneurs possess certain competencies or traits. These competencies or
traits are the underlying characteristics of the entrepreneurs which result in superior
performance and which distinguish successful entrepreneurs from the unsuccessful
ones.
Then, the important question arises is; where do these traits come from? Or,
whether these traits are inborn in the entrepreneurs or can be induced and developed? In
other words, whether the entrepreneurs are born or made?
A well-known behavioural scientist David C. McClelland (1961) at Harvard
University made an interesting investigation-cum-experiment into why certain societies
displayed great creative powers at particular periods of their history? What was the cause
of these creative bursts of energy? He found that 'the need for achievement was the
answer to this question. It was the need for achievement that motivates people to work
hard. According to him, money- making was incidental. It was only a measure of
achievement, not its motivation.

24
 In order to answer the next question whether this need for achievement could be
induced, he conducted a five-year experimental study in Kakinada, i.e. one of the
prosperous districts of Andhra Pradesh in India in collaboration with Small Industries
Extension and Training Institute (SIET), Hyderabad. This experiment is popularly
known as 'Kakinada Experiment'. Under this experiment, young persons were selected
and put through a three-month training programme and motivated to see fresh goals. One
of the significant conclusions of the experiment was that the achievement motivation had
a positive impact on the performance of entrepreneurs.
In fact, the 'Kakinada Experiment' could be treated as a precursor to the present
day EDP inputs on behavioural aspects. In a sense, 'Kakinada Experiment' is considered
as the seed for the Entrepreneurship Development Programmes (EDPs) in India.
The fact remains that it was the 'Kakinada Experiment' that made people
appreciate the need for and importance of the entrepreneurial training, now popularly
known as 'EDPs', to induce motivation and competence among the young prospective
entrepreneurs.
Based on this, it was the Gujarat Industrial Investment Corporation (GIIC)
which, for the first time, started a three-month training programmes on entrepreneurship
development. Impressed by the results of GIIC's this training programme, the
Government of India embarked, in 1971, on a massive programme on entrepreneurship
development. Since then, there is no looking back in this front. By now, there are some
686 all-India and State level institutions engaged in conducting EDPs in hundreds
imparting training to the candidates in thousands.
Till now, 12 State Governments have established state-level Centre for
Entrepreneurship Development (CED) or Institute of Entrepreneurship Development
(lED) to develop entrepreneurship by conducting EDPs. Today, the EDP in India has
proliferated to such a magnitude that it has emerged as a national movement. It is worth
mentioning that India operates the oldest and largest programmes for entrepreneurship
development in any developing country.
The impact of India's EDPmovement is borne by the fact that the Indian model of
entrepreneurship development is being adopted by some of the developing countries of
Asia and Africa. Programmes similar to India's EDPs are conducted in other countries
also, for example, 'Junior Achievement Programme' based on the principle of 'catch them
young' in USAand 'Young Enterprises' in the U. K.
Features:
The Entrepreneurship Development Programme (EDP) is designed to promote
small enterprise by tapping the latent talents of potential entrepreneurs through training.
The main purpose of this programme is to widen the base of entrepreneurship by
development achievement motivation and entrepreneurial skills among the less
privileged sections of the society. EDP is a specially prepared curriculum that aims at

25
training and grooming people with entrepreneurial aspiration; thereby equipping them
with the required skill set to put their ideas into action. Entrepreneurship Development
Programme helps budding entrepreneurs to learn the ropes of running a business
organization in the most efficient manner. It emphasizes more on operational aspects
rather than academic training to meet the specific need of participants. The EDP trains
the participants to set up an enterprise and tailors its techniques and strategies depending
on the environment in which he operates the business.
The Entrepreneurship development Institute of India (EDII) and National
Institute of Entrepreneurship and small Business Development (NIESBD) play an
important role in training the prospective entrepreneurs.
Objectives of Entrepreneurship Development Programmes :
The major objectives of the Entrepreneurship Development Programmes (EDPs)
are to:
1. To let the entrepreneur set or reset the objectives of his business and work
individually and along with his group.
2. To analyze active investment of finance.
3. To help in assessing industrial development of rural and less developed areas
where local entrepreneurship is not readily available and to which entrepreneurs
from nearby cities and town are not easily attached.
4. To understand rules, process, procedure and regulations for running the
enterprise.
5. To enhance managerial capacities of the entrepreneurs.
6. To develop feeling of social responsibility on entrepreneurs.
7. To develop industries in rural and backward areas.
8. To help in balanced regional development.
Phases of EDPs:
1. Pre-training phase
2. Training phase
3. Post training/Follow-up phase

26
1. Pre-training phase: Pre-training phase consists of all activities and preparation
to launch training programme. Pre-training phase of EDP consists of the
following activities :
a) Selection of entrepreneurs for the training protgramme.
b) Arrangements of infrastructure are for the programme like selection of place
of training.
c) Deciding guest faculty for the programme from education industry and
banks.
d) Taking necessary steps for inauguration of programme.
e) Formation of selection committee to select trainees from the programme.
f) Making provision with regard to publicity and campaigning for the
programme.
2. Training Phase: The primary objective of training programme is to develop
motivation and skill or competency amongst the potential entrepreneurs. Care
should be taken to impart both theoretical and practical knowledge to various
trainees. The training phase of EDP will be so designed that it will answer the
following questions:
a) Whether the attitude of the entrepreneur has been tuned towards the proposed
project or no.
b) Whether the trainee has been motivated to accept entrepreneurship as a career.

27
 c) How the trainee behaves like an entrepreneur.
d) Whether the trainee has sufficient knowledge on resources and technology or
not.
e) What kind of entrepreneurial traits he lacks and what steps should be taken to
set it.
3. Post training/ Follow-up Phase: Follow up phase of EDP has been termed as
post-training phase. The ultimate objective is to develop competent
entrepreneurs so that they can start their project. Post-training phase is a review
phase of training programme. It consists of reviewing of work in the following
manner:
a) Review of pre-training work.
b) Review of actual training programme.
c) Review of post training programme so that cost effectiveness of the present
programme can be evaluated.
References :
1. Khanka, S. S. (2012). Entrepreneurial Development. New Delhi, S. Chand &
Company Ltd. pp36-50
2. Rai, K. (2015 Apr. 5). PPT on Entrepreneurship Development.
[Link]
presentation-46650148
3. Sharma, S. (2016). Entrepreneurship Development. New Delhi, PHI Learning
Pvt. Ltd. pp 102-126
4. Sinha, D. K. (2019 Nov. 2). Entrepreneurship Development Programmes:
M e a n i n g , N e e d a n d O b j e c t i v e s o f E D P. R e t r i e v e d f r o m
[Link] entrepreneurship-
development-programmes-meaning-need-and-objectives-of-edp/40707

28
 ORGANIZATIONS/ INSTITUTES FOR
6 ENTREPRENEURSHIP DEVELOPMENT
At present various national and state agencies are engaged in organizing EDPs
for first generation entrepreneurs. Some of these are as follows:
1. National Institute for Entrepreneurship and Small Business Development
(NIESBUD), Noida, U.P.
The National Institute for Entrepreneurship and Small Business Development
was set up on 6th July, [Link] National Institute for Entrepreneurship and
Small Business Development is a premier organization of the Ministry of Skill
Development and Entrepreneurship, engaged in training, consultancy, research,
etc. in order to promote entrepreneurship and Skill Development. The major
activities of the Institute include Training of Trainers, Management
Development Programmes, Entrepreneurship-cum-Skill Development
Programmes, Entrepreneurship Development Programmes and Cluster
[Link] basic objectives of the institute are promotion and development
of micro, small and medium enterprises including enhancement of their
competitiveness through different activities.
Objectives:
 To accelerate the process of entrepreneurship development.
 To help and support agencies in carrying out activities relating to
entrepreneurship development with greater success.
 To evolve standardized process of selection, training, support and sustenance
to potential entrepreneurs.
 To provide functional forums for interaction and exchange of experience.
The institute is envisaged to serve as apex national resource institute for holistic
development of entrepreneurial activities throughout the country. The major
activities of the institute include:
i. Evolving model syllabi for training various target groups
ii. Providing effective training strategies, methodology, manuals and tools
iii. Facilitating and supporting central/ state governments and other agencies in
executing programmes of entrepreneurship and small business development

29
 iv. Conducting programmes for motivators, trainers and entrepreneurs who are
commonly not undertaken by other agencies and organizing activities which
help in developing an entrepreneurial culture in the society.
The major areas of intervention of the institute are conducting of training
programmes, research/ review/ evaluation activities, publications and training
aids, cluster development activities, virtual cluster, garment incubation-cum-
training centre, intellectual property facilitation centre, employment generation/
assistance, hand-holding assistance for enterprise creation, consultancy services
(national and international) etc. The institute also has a regional centre at
Dehradun engaged in organizing training and research activities besides
extending hand-holding support for enterprise creation and wage employment.
2. Entrepreneurship Development Institute of India (EDII)
Entrepreneurship Development Institute of India (EDII), an autonomous and
not-for-profit institute, set up in 1983, is sponsored by apex financial institutions
- the IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India
(SBI).
In order to broaden the frontiers of Entrepreneurship Research, EDII has
established a Centre for Research in Entrepreneurship Education and
Development (CREED), to investigate into a range of issues surrounding small
and medium enterprise sector, and establish a network of researchers and trainers
by conducting a biennial seminar on entrepreneurship education and research.
Objectives of EDII:
i) Augment the supply of trained entrepreneurs through training
ii) Generate a multiplier effect on opportunities for self-employment
iii) Improve managerial capabilities of small scale industries
iv) Contribute to the dispersal of business ownership and thus, expand the social
base of Indian entrepreneurial class
v) Contribute to the creation and dissemination of new knowledge and insight
into entrepreneurial theory and practice through research
vi) Augment the supply of trainer-motivators for entrepreneurial development.
vii) Participate in institution-building efforts
viii) Sensitize the support environment to facilitate potential as well as existing
entrepreneurs to establish and manage their enterprises
ix) Promote micro enterprises at rural level
x) Inculcate the spirit of entrepreneurship amongst youth
xi) Collaborate with similar organisations in India and other developing
countries to accomplish the above objectives

30
 EDP Initiative:
EDII has been trying to provide EDP facilities in different dimensions. These
dimensions are:
a. Entrepreneurship in education
b. Microfinance and micro enterprise development
c. Performance and growth of existing entrepreneurs
d. Performance improvement of ED institutions and ED programmes.
It has also designed and implemented several national and international training
programmes and workshops for the academic community and for entrepreneurs.
3. Indian Institute of Entrepreneurship (IIE), Guwahati
Indian Institute of Entrepreneurship (IIE) is an autonomous organization under
the Ministry of Skill Development & Entrepreneurship. The main aim of the
Institute is to provide training, research and consultancy activities in Small and
Micro Enterprises (SME), with special focus on entrepreneurship development.
The Indian Institute of Entrepreneurship (IIE) registered under the Societies
Registration Act,1860 was established in the year 1993 in Guwahati by the
erstwhile Ministry of Industry (now the Ministry of Micro, Small and Medium
Enterprises), Government of India. The Institute began operating from April
1994 with the North East Council (NEC), Governments of Assam, Arunachal
Pradesh and Nagaland and SIDBI as its other stakeholders.
IIE has been transferred to the Ministry of Skill Development&
Entrepreneurship on 22nd May 2015.
Functions:
 Promoting micro enterprises at rural areas.
 Participating in institutional building efforts.
 Inculcating spirit of 'Entrepreneurship' in youth.
 Developing new knowledge and insights on entrepreneurship theory.
 Improving managerial capabilities.
 Collaborating with other organizations.
The institute has expanded its activities to a great extent covering all facets of
MSME activities. The institute has obtained ISO-9001-2000 certification. The
promotion of new entrepreneurs has been the major focus of training activities
organized by the institute. In order to promote new entrepreneurs, the institute
organizes rural, general and women EDPs, crash course on self-employment and
sector specific EDPs.

31
4. Small Industries Development Organisations (SIDO)
SIDO was established in October 1973 now under Ministry of Trade, Industry
and Marketing. SIDO is an apex body at Central level for formulating policy for
the development of Small Scale Industries in the country, headed by the
Additional Secretary & Development Commissioner (Small Scale
Industries)under Ministry of Small Scale Industries Govt. of India.
Functions:
 Formulating policy for the development of Small Scale Industries in the
country.
 Provides extended support through Comprehensive plan for promotion of
rural entrepreneurship Institutions set up by Central Government.
Recognizing the need for training in improving and upgrading the skill of
workers and management personnel, the SIDO has formulated programmes for
various types of training. It offers following courses:
(i) Application course in industrial management
(ii) Specialized courses in such areas as production management, marketing
management, financial management, export management and materials
management etc.
(iii) Adhoc incentive courses on subjects like inspection and quality control,
work study, salesmanship etc.
SIDO has specialized institutes responsible for training, research and
development of product design and processes. Besides, it has designed EDPs to
identify persons with entrepreneurial abilities and to train them to set up new
small/ tiny industries. These EDPs are meant for separate target groups. These
groups include: Educated unemployed, Women, Weaker sections, Rural artisans,
Physically handicapped, Students, Defense personnel, Technocrats,
Entrepreneurs under self-employment scheme.
5. National Institute for Micro, Small and Medium Enterprises (NIMSME),
Hyderabad
NI-MSME was originally set up as Central Industrial Extension Training
Institute (CIETI) in New Delhi in 1960 as a Department under the Ministry of
Industry and Commerce, Government of India. It was decided to keep it free
from the tardy and impeding administrative controls and procedures, so that the
Institute can play a pivotal role in the promotion of small enterprise. Therefore
the Institute was shifted to Hyderabad in 1962, and was renamed as Small
Industry Extension Training (SIET) Institute.
The institute is constantly evolving in accordance with the changing times,
modifying its focus with the emerging needs of MSMEs and providing solutions
32
 in the form of consultancy, training, research and education. NI-MSME's
programmes are designed to have universal relevance for successfully training
the entrepreneurs to face challenges and emerging competition in the era of
globalization. Over the years, the institute has gained immense experience and
expertise in the areas of entrepreneurship development, technology,
management and information services. NI-MSME's inherent capacity to
innovate, together with its modern infrastructure, has enabled the institute to
excel in its endeavour of MSME promotion.
NI-MSME has always been conceiving specialized need-based programmes,
workshops and seminars in tune with the changing policy and economic
scenario. The primary aim of these activities has been to enable the enterprises
and the supporting systems to deal effectively with aspects that directly or
indirectly affect the success of enterprises.
In line with the national objective of economic development through
industrialization and based on the expertise that is available; the institute has
identified some thrust areas that need emphasis and exploration. These are:
Entrepreneurship Research, Women Entrepreneurship, Technology Up-
gradation and Transfer, Policy Issues, NGO Networking, Environment
Concerns, Cluster Development, Management Consultancy, Quality
Management Services, Financial Services and Information Services.

Enterprise promotion and entrepreneurship development being the central focus

of Ni-MSME's functions, the institute's competencies coverage on the following
aspects:
 Enabling enterprise creation
 Capacity building for enterprise growth and sustainability
 Creation, development and dissemination of enterprise knowledge
 Diagnostic and development studies for policy formulations, and
 Empowering the under-privileged through enterprises.
6. Small Industries Development Bank of India (SIDBI)
It was established in April 1990 and earlier it was a wholly owned subsidiary of
IDBI. Now, it is an independent company and was separated from IDBI in 1997.
The aim of SIDBI's EDP is to build and nurture a reservoir of entrepreneurs
through training motivation and guidance. The Bank's strategy for
entrepreneurship development involves support to NGOs and specialized
agencies for conducting specially designed progammes covering various target
groups ultimately aimed at the promotion of rural enterprises.

33
 The EDPs are normally of a 6 weeks duration coupled with proper practical
training inputs. Agencies specialized in conducting EDPs like Entrepreneurship
Development Institute of India, Institutes of Entrepreneurship Development
(CEDs), Technical Consultancy Organisations (TCOs) and NGOs have been
supported for conducting the EDPs for specific target groups.
The SIDBI is constantly endeavouring to address the problems related with
management deficiency and a low level skill and technology by specially
designed two programmes like Small Industries Management Assistance
Programmes (SIMAP) and Skill-cum-Technology Up-gradation Programme
(STUP). The objective of SIMAP is to develop a cadre of industrial managers
specifically trained to assist the SSI entrepreneurs in their multiple
responsibilities. The STUP is structured to improve the performance of the
existing SSI units by developing/ strengthening managerial skills and the
technical competence of the entrepreneurs and senior executive of the small
enterprises.
Afew specialized technical institutes like Central Institute of Plastic Engineering
and Technology (CIPET), Rural Technology Institute (RTI) and Up Electronics
Corporation have also been extended assistance for conduct of product specific
EDPs.
7. National Entrepreneurship Development Board (NEDB)
The National Entrepreneurship Development Board (NEDB) is the apex body
for entrepreneurship development in the country. It devises and recommends to
the Government, schemes for promotion of entrepreneurship for encouraging
self-employment in small scale industries and small business. The board also
recommends suitable facilities and incentives for entrepreneurship training. The
board may appoint committees for specific purposes and also invite persons to
the meeting of the board, as and when necessary.
Objectives
The main objective of the National Entrepreneurship Development Board
(NEDB) scheme is promotion of entrepreneurship for encouraging self-
employment in small scale industries and small business. The scheme covers the
following activities:
(i) To identify and remove entry barriers for potential entrepreneurs (first
generation and new entrepreneurs) including study on entrepreneurship
development.
(ii) To focus on existing entrepreneurs in micro, tiny and small sector and
identify and remove constraints to survivals, growth and continuously
improve performance.

34
(iii) To facilitate the consolidation, growth and diversification of existing
entrepreneurial venture in all possible ways.
(iv) To support skill up-gradation and renewal of learning processes among
practicing entrepreneurs and managers of micro, tiny, small and medium
enterprises.
(v) To sensitize to support agencies in the area of entrepreneurship about the
current requirement of growth.
(vi) To act as catalyst to institutionalize entrepreneurship development by
supporting and strengthening state level institutions for entrepreneurship
development as most entrepreneurship related activities take place at all the
grass root level and removing various constraints to their effective
functioning.
(vii) Setting up of incubators by entrepreneurship development institutions and
other organizations devoted to the promotion of entrepreneurship
development.

35
 GOVERNMENT SCHEMES AND INCENTIVES
7 FOR PROMOTION OF ENTREPRENEURSHIP
AND GOVERNMENT POLICY ON
SMALL AND MEDIUM ENTERPRISES
Government schemes and incentives for promotion of entrepreneurship
World over, micro and small enterprises (MSEs) are recognized as an important
constituent of the national economies, contributing significantly to employment
expansion and poverty alleviation. Recognizing the importance of micro and small
enterprises, which constitute an important segment of Indian economy in terms of their
contribution to country's industrial production, exports, employment and creation of
entrepreneurial base, the Central and State Governments have been implementing
several schemes and programmes for promotion and development of these enterprises.
1. PRIME MINISTER'S EMPLOYMENT GENERATION PROGRAMME
(PMEGP)
Government of India has approved the introduction of a new credit linked subsidy
programme called Prime Minister's Employment Generation Programme (PMEGP)
by merging the two schemes that were in operation till 31.03.2008 namely Prime
Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme
(REGP) for generation of employment opportunities through establishment of micro
enterprises in rural as well as urban areas. PMEGP is a central sector scheme
administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME).
The Scheme is implemented by Khadi and Village Industries Commission (KVIC), a
statutory organization under the administrative control of the Ministry of MSME as
the single nodal agency at the National level. At the State level, the Scheme is
implemented through State KVIC Directorates, State Khadi and Village Industries
Boards (KVIBs) and District Industries Centres (DICs) and banks. The Government
subsidy under the Scheme is routed by KVIC through the identified Banks for
eventual distribution to the beneficiaries / entrepreneurs in their Bank accounts.
Objectives:
(i) To generate employment opportunities in rural as well as urban areas of the
country through setting up of new self-employment ventures/projects/micro-
enterprises.
(ii) To bring together widely dispersed traditional artisans/ rural and urban

36
 unemployed youth and give them self-employment opportunities to the extent
possible, at their place.
(iii) To provide continuous and sustainable employment to a large segment of
traditional and prospective artisans and rural and urban unemployed youth in the
country, so as to help arrest migration of rural youth to urban areas.
(iv) To increase the wage earning capacity of artisans and contribute to increase in
the growth rate of rural and urban employment.
Eligibility Conditions of Beneficiaries:
(i) Any individual, above 18 years of age
(ii) There will be no income ceiling for assistance for setting up projects under
PMEGP.
(iii) For setting up of project costing above Rs.10 lakh in the manufacturing
sector and above Rs. 5 lakh in the business /service sector, the beneficiaries
should possess at least VIII standard pass educational qualification.
(iv) Assistance under the Scheme is available only for new projects sanctioned
specifically under the PMEGP.
(v) Self Help Groups (including those belonging to BPL provided that they have not
availed benefits under any other Scheme) are also eligible for assistance under
PMEGP.
(vi) Institutions registered under Societies Registration Act,1860;
(vii) Production Co-operative Societies, and
(viii) Charitable Trusts.
(ix) Existing Units (under PMRY, REGP or any other scheme of Government of
India or State Government) and the units that have already availed
Government Subsidy under any other scheme of Government of India or State
Government are not eligible.
2. MARKET DEVELOPMENT ASSISTANCE SCHEME FOR MICRO/
SMALL MANUFACTURING ENTERPRISES/ SMALL & MICRO
EXPORTERS
The scheme offers funding for:
(i) Participation by manufacturing Small & Micro Enterprises in International
Trade Fairs/ Exhibitions under MSME India stall.
(ii) Sector specific market studies by Industry Associations/ Export Promotion
Councils/ Federation of Indian Export Organisation.
(iii) Initiating/ contesting anti-dumping cases by SSIAssociations and

37
 (iv) Reimbursement of 75% of one time registration fee (w.e.f. 1st January 2002) and
75% of annual fees (recurring) (w.e.f. 1st June 2007) paid to GSI (Formerly EAN
India) by Small & Micro units for the first three years for bar code.
Objectives:
(i) To encourage Small & Micro exporters in their efforts at tapping and developing
overseas markets.
(ii) To increase participation of representatives of small/ micro manufacturing
Enterprises under MSME India stall at International Trade Fairs/ Exhibitions.
(iii) To enhance export from the small/ micro manufacturing enterprises
(iv) To popularize the adoption of Bar Coding on a large scale.

3. RAJIV GANDHI UDYAMI MITRA YOJANA- A Scheme of “Promotion and

Handholding of Micro and Small Enterprises”
There are still wide spread variations in the success rate, in terms of actual setting up
and successful running of enterprises, by the EDP/SDP/ESDP trained entrepreneurs.
It has been observed that new entrepreneurs generally face difficulties in – availing
full benefits under available schemes of the Governments / financial institutions,
completing and complying with various formalities and legal requirements under
various laws/regulations, in selection of appropriate technology, tie-up with buyers
and sellers etc. In order to bridge the gap between the aspirations of the potential
entrepreneurs and the ground realties, there is a need to support and nurture the
potential first generation entrepreneurs by giving them handholding support during
the initial stages of setting up and managing their enterprises.
Objectives:
The objectives of Rajiv Gandhi Udyami MitraYojana (RGUMY) are to provide
handholding support and assistance to the potential first generation entrepreneurs,
who have already successfully completed EDP/SDP/ESDP or vocational training
from ITIs, through the selected lead agencies i.e. 'Udyami Mitras', in the
establishment and management of the new enterprise, in dealing with various
procedural and legal hurdles and in completion of various formalities required for
setting up and running of the enterprise. Under RGUMY, financial assistance would
be provided to the selected lead agencies i.e. Udyami Mitras for rendering assistance
and handholding support to the potential first generation entrepreneurs.
Role and Responsibilities of Udyami Mitras
The selected lead agencies i.e. Udyami Mitras would be expected to render
following services:
(i) Networking, coordinating and follow up with various Government

38
 departments/agencies/ organizations and regulatory agencies on the one hand
and with support agencies like Banks/financial institutions, District Industries
Centers (DICs), technology providers, infrastructure providers on the other
hand, to help the first generation entrepreneurs in setting up their enterprise.
Udyami Mitras are expected to help the first generation entrepreneurs in:
a. Identification of suitable project/product/enterprise and preparation of
bankable project report for the same;
b. Creation of the proprietorship firm/ partnership firm/ Company/ Society/
SHG etc.;
c. Filing of Memorandum (as prescribed under MSMEDAct 2006);
d. Accessing bank loans, admissible capital subsidy/ assistance under various
schemes of the Central /State Government and other agencies/
organizations/financial institutions/ Banks etc. by networking with
respective agencies
e. Assistance and support in establishment of work shed/office;
f. Sanction of Power load/connection;
g. Selection of appropriate technology and installation of plant and
machinery/office equipment etc.;
h. obtaining various registrations/ licenses/ clearances / No Objection
Certificates(NOCs) etc. from the concerned regulatory agencies/
Government departments/local bodies/ Municipal authorities etc.;
i. Allotment of Income Tax Permanent Account Number (PAN) and Service
Tax/Sales Tax/ VAT registration etc.;
j. Sanction of working capital loan from the banks;
k. Arranging tie up with raw material suppliers;
l. Preparation and implementation of marketing strategy for the product/
service and market development; and
m. Establishing linkage with a mentor for providing guidance in future
n. Creation of web page and email identity;
(ii) Once the enterprise has been successfully set up, the Udyami Mitras would also
monitor and follow up on the functioning of the enterprise for a further period of
minimum 6 months and provide help in overcoming various managerial,
financial and operational problems.
The organizations of Ministry of MSME engaged in the task of entrepreneurship
development i.e. the three national-level EDIs, (i.e. NIESBUD Noida, IIE Guwahati
and NIMSME Hyderabad) MSMEDIs/ Branch MSMEDIs, KVIC and NSIC

39
 (hereinafter referred as Category-I Udyami Mitras) are deemed to have been
empanelled as Udyami Mitras under the scheme. Udyami Mitras would enrol the
potential entrepreneurs for providing them handholding support. Only those
beneficiaries would be enrolled who have already undergone EDP/SDP/ESDP of at
least two weeks or who have successfully completed the vocational training in ITIs.
4. CREDIT LINK CAPITAL SUBSIDY SCHEME FOR TECHNOLOGY
UPGRADATION
The Scheme was launched in October, 2000 and revised w.e.f. 29.09.2005. The
revised scheme aims at facilitating Technology Up-gradation of Micro and Small
Enterprises by providing 15% capital subsidy (12% prior to 2005) on institutional
finance availed by them for induction of well-established and improved technology
in approved sub-sectors/products. The admissible capital subsidy under the revised
scheme is calculated with reference to purchase price of Plant and Machinery.
Maximum limit of eligible loan for calculation of subsidy under the revised scheme
is also been raised Rs. 40 lakhs to Rs. 100 lakh w.e.f. 29-09.2005.
5. CREDIT GUARANTEE FUND SCHEME FOR MICRO AND SMALL
ENTERPRISES
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was
launched by the Government of India to make available collateral-free credit to the
micro and small enterprise sector. Both the existing and the new enterprises are
eligible to be covered under the scheme. The Ministry of Micro, Small and Medium
Enterprises and Small Industries Development Bank of India (SIDBI), established a
Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises
(CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small
Enterprises. The scheme was formally launched on August 30, 2000 and is
operational with effect from 1st January 2000. The corpus of CGTMSE is being
contributed by the Government and SIDBI in the ratio of 4:1 respectively and has
contributed Rs.1754.05 crore to the corpus of the Trust up to March 31, 2009.
6. SCHEMES FOR WOMEN ENTREPRENEURS:
A. Mahila Udyami Yojana (MUY): IDBI has set up special fund under this scheme
with corpus fund of Rs.5Crore to provide seed capital assistance to the women
entrepreneurs intending to start projects in SSI sector. This scheme is
implemented by SIDBI. 51% of equity should be managed by women.
 Seed capital is provided as soft loan- 15% of fixed cost without insisting
security.
 Promoter should contribute atleast10% of fixed cost.
 Repayment is for 10 years with moratorium period of 5 yrs.
 Debt equity ratio should be 3:1

40
B. SBI Stree Sakthi Package: Under this EDPS are exclusively designed and
conducted for women entrepreneurs. Rs.25000/- is provided without collateral
security.
C. Priya Darshini Yojana: It is implemented by Bank of India. Financial assistance
is provided to women entrepreneurs who take up small business, retail traders,
transport (auto rickshaws), professional and self-employed, and who take up
allied agricultural activities.
 Max. loan is up to 2 lakhs for term loan and 1 lakh for working capital.
 Assets acquired with finance are hypothecated as security.
 Repayment period is 3-5 years.
 Margin money is 20% depending on type of activity.
Besides these programmes other schemes like PMRY, SEPUP (Self Employment
Programme for Urban Poor), SGSY, IRDP and Rashtriya Mahila Kosh help women
entrepreneurs in providing financial assistance.

41
 GOVERNMENT POLICIES FOR
8 ENTREPRENEURSHIP DEVELOPMENT
Since the announcement of first Industrial Policy Resolution (IPR) step by step
approach was followed & various policies were implemented during past 5 decades.
a. The Industrial Policy Resolution (IPR), 1948: aimed at Post independent
national reconstruction through industrialization. Envisaged the importance of
cottage & small enterprises for employment creation and utilization of local
resources and skills. The main thrust in small scale sector was centred round
Protection.
b. The Industrial Policy Statement (IPR), 1956: The policy recognised the role of
SSIs in providing employment opportunities, mobilising local skills and capital
resources and integration with the large sector. The policy provided a clear emphatic
policy and incentive support to small scale & cottage industries. It aimed at Protection
plus Developmentofsmallindustrialsector.
c. The Industrial Policy Statement (IPR), 1977: Establishment of DICs focusing
on regional growth of industries & utilization of local resources and skill. IDBI &
KVIB are established & small scale sector was given priority. This policy focused
on promotion. Thus Protection, Development plus promotion became its focus.
d. The Industrial Policy Statement (IPR), 1980: Thrust areas were Industrial
infrastructure, higher productivity promotion of agro based industries, consumer
protection & quality control. For generation of wage employment &
development of entrepreneurial spirit among people small scale sector was again
treated most important.
e. The Industrial Policy Statement (IPR), 1990: Policy of economic
liberalization & Introduce simple procedures, formalities, rules & regulations.
More emphasis to women & youth was given under entrepreneurship. SIDBI
was established to assist entrepreneurs in the small scale sector.
f. New Small Enterprise Policy (NSEP), 1991: This was made to provide
adequate support to tiny and micro enterprises. Thrust areas are
(1) Inclusion of industry- Business & service related enterprises irrespective
their location as small scale industries
(2) Widen scope of National Equity Fund, enlarge Single window scheme and
associate commercial banks with provision of composite loan scheme

42
 (3) Financial support to entrepreneurs by allowing equity participation up to 24%
of share
(4) Setting up of technology development cell in SIDO
(5) Setting up of Export development centre in SIDO
(6) Liberalization by limited partnership act
(7) Integrated infrastructure development system
(8) Technology development and equitable distribution of local & imported raw
material on a priority to small & tiny sector
(9) Improvement in incentive delivery system.
(10) Marketing, market promotion and export support modernization.
g. Micro Small and Medium Enterprises Development (MSMED) Act, 2006:
With a view to boost the development of small enterprises in the country, the
Government of India has enacted “Micro Small and Medium Enterprises
Development (MSMED) Act, 2006 and also set up a separate Ministry of Micro
Small and Medium Enterprises. As per the Micro Small and Medium Enterprises
Act 2006, the MSMEs are defined as follows:
Manufacturing enterprises
 Micro enterprises Investment up to Rs 25 lakh.
 Small enterprises Investment above Rs 25 lakh & up to Rs 5 Crore.
 Medium enterprises Investment above Rs 5 Crore & up to Rs 10 Crore.
Service enterprises
 Micro enterprises Investment upto Rs 10 lakh.
 Small enterprises Investment above Rs 10 lakh & up to Rs 2 Crore.
 Medium enterprises Investment above Rs 2 Crore & up to Rs 5 Crore.
h. EXIM policy: EXIM policy is the export import policy of the government that is
announced every five years. It is also known as the Foreign Trade Policy. This
policy consists of general provisions regarding exports and imports, promotional
measures, duty exemption schemes, export promotion schemes, special
economic zone programs and other details for different sectors. Every year the
government announces a supplement to this policy. EXIM Bank of India set up
for promoting India's foreign trade has the following functions, segmented into
three operation groups.
(1) Overseas Investment Finance, which handles a variety of financing
programmes for Export Oriented Units (EOUs), importers and overseas
investment by Indian companies.
(2) Project Finance / Trade Finance handles the entire range of export credit
services such as supplier's credit, pre-shipment credit, buyer's credit, finance

43
 for export of projects and consultancy services, guarantees etc.
(3) Export Service Group offers a variety of advisory and value added
information services aimed at investment promotion.
References:
1. De, D. and Jirli, B. (2012). Entrepreneurship Development and Communication
Skills. Reading Manual of Department of Extension Education, IAS, BHU,
Varanasi.
2. Mondal, S. and Ray, G.L. (2016). Textbook on Rural Development
Entrepreneurship and Communication Skills. Kalyani Publishers, New Delh
3. Pawan, N. National Entrepreneurship Development Board. Retrieved from
[Link] ional-Entrepreneurship-
Development-Board
4. Poongothai, K. (2006). Organisations for entrepreneurship development.
Retrieved from
[Link]
df
5. Shukla, M.B. (2016.) Entrepreneurship and Small Business Management. Kitab
Mahal.
6. Upadhyay, D.K. (2015). National Entrepreneurship Development Board
(NEDB). Retrieved from
[Link]
[Link].
7. Retrieved from [Link] › bitstream

44
 9 SWOT ANALYSIS AND TIME MANAGEMENT
Introduction and Meaning
SWOT is the acronym of Strength, Weakness, Opportunities and Threats
SWOT analysis is the process of carefully inspecting the business and its
environment through the various dimensions of Strength, Weakness, Opportunities and
Threats.
To innovate, an entrepreneur has to make a diagnosis of the current situation. The
diagnosis of the current situation is done by conducting an internal analysis and external
analysis.
 Strengths are within the control of the entrepreneur, they occur at present.
Strength is the basic asset of the organization that would provide competitive
advantage for its growth and development.
 Weakness is within the control of the entrepreneur, it occur at present. It is the
liability of an organization that can create a state of time and situation specific
disadvantage for its growth and development .They are like “lack of……”
“Missing……” or weak points. As far as possible, weakness should be
eliminated!
 Opportunities are mostly beyond the control of the entrepreneur. It is the ability
of the organization to grow and achieve its specific objectives in the given
situation. They are different from strength in the sense that strength is positive
internal factors of the business.
 Threats are also beyond the control of the entrepreneur. It is the situation that
blocks the abilities of the organization to grow and develop for meeting its
ultimate goals. They adversely affect the business, if not eliminated or overcome.
SWOTAnalysis is a tool, often used by organizations in planning its future. This
tool can be explained in a simplified manner as follows:

S –Strengths
W- Weakness } of the organization

O- Opportunities
T– Threats } of the environment

45
 The exercise also known as “micro screening” may help you to select a right kind
of product through SWOT analysis from in identified basket of ideas.
Strength and Weakness
Every business needs to evaluate its strengths and weaknesses periodically. The
management or an outside consultant reviews the business's marketing, financial,
manufacturing and organizational competencies. In examining its strengths and
weaknesses clearly, the business does not have to correct all of its weaknesses nor gloat
about all of its strengths. They have to slowly overcome their weakness and convert it
into its strength.
Some of the strengths of an organization are:
 Availability of necessary infrastructure
 Adequate production capacity
 Skilled manpower
 Good manufacturing practices, quality assurance and quality control
 Low cost of manufacture
 Technical expertise
 Good network with customers
 Managerial experience
 Good location
 Wide distribution network
 Comparatively cheap price
 superior technology
Ifanorganizationlacksanyofthese, itwillobviouslyresultintoitsweakness.
Let us now look at some of the weaknesses of an organization:
 Poor design of product
 Limited product life.
 Low level of motivation of staff
 Non-availability of raw material
 Scarcity of capital
 Weak selling effort
 Comparatively high price
 Outdated technology

46
  Inadequate infrastructure
 Shortage of trained technicians.
 Lack of promotion experience
 Lack of effective co-ordination
Opportunity and Threat
An entrepreneur has to know the parts of the environment to monitor, if the
business is to achieve its goals. A business has to monitor key macro environmental
forces like demographic, economic, technological, political, legal, social and cultural
factors, also significant micro environmental forces like customers, competitors,
distribution channels, suppliers, etc. that will affect its ability to earn profits. An
opportunity is an area of need in which a company can perform profitably.
Some of the opportunities of an organization are:
 Few and weak competitors
 Growing demand
 No such product in the market
 Favourable government policies
 Easy availability of money
 Availability of appropriate technology
 Low interest on loans
 Availability of different task environment like market information, distribution
outlets and media.
 Presence of favourable cultural environment.
Threats are current or future condition in the outside environment that may harm
the company and might include population shift, changes in purchasing preferences, new
technology etc. The purpose of analyzing threats is to avoid them by making
counterbalancing actions.
Some of the threats of an organization are:
 Rising cost of raw material
 Shortage of power, water, fuel
 Rejection by the market
 Recession
 Tough competition
 Natural disaster

47
  Piracy of skilled labour
 Political instability
 Climatic changes
 Changing customer tastes and preferences
 Smuggling
On completion of a SWOT Analysis, an organization can know 'where it stands'.
Therefore, it can proceed to develop specific objectives and goals for the future.
Usefulness of SWOT Analysis in Innovation/Creative Process
An organization before going in for innovation has to conduct a SWOT
Analysis to know its own strength and the opportunities available, to know its own
weakness and threats, so as to face them. The advantages for conducting a SWOT
Analysis for innovating are :-
(1) An entrepreneur can know in which field, there is demand, and, can venture into
the respective field, keeping their strengths in mind.
(2) It helps in the development of new technology.
(3) An entrepreneur can make an analysis as to develop a completely new product, or
to just change the existing product.
(4) There can be improvements brought about in the process of production.
(5) On the basis of information collected through SWOT analysis, the goals which
the firm wants to achieve in future can be decided.
(6) Short term mission and long term mission of the organizations can be framed.
(7) Alternatives can be selected and decided to exploit opportunities and to face
threats in the environment.
(8) Priorities can be given to different goals and the courses of action to achieve the
goals can be timed.
(9) Plans can be formalized for effective communication and implementation of
plans.
(10) Major functions and sub-functions can be determined in achieving the
objectives of the firm.
(11) Expansion of the range of services and benefits.
(12) The social, political, legal, economic, technological factors can be analyzed.
An analysis of the competitors' strategies can be made and their policies can
be known.

48
Time Management
Time management refers to a range of skills, tools, and techniques used to
manage time when accomplishing specific tasks, projects and goals. Time management
is about getting more value out of your time and using it to improve the quality of your
life. Great time management means being effective as well as efficient.
Time is money but different in that, if once lost cannot be got back. It is a limited
resource and unique in that it is provided equally to every person in this universe without
discrimination by the almighty. Efficient time management decides the growth and
success of an enterprise. Emphasizing the importance of time management and avoiding
the time wasters will reduce the stress on an entrepreneur. Successful people recognize
the value of time and get best out of it by managing it better. Thus time management is
about setting clear priorities and making sure that they are achieved.
Factors that waste time:
o Poor planning, lack of contingency plan
o Lack of self-confidence about how to accomplish task at hand
o Socializing on the job
o Cluttered work space
o Telephone interruption; too much time on telephone
o Absence from, or being late to the work place
o Postponing jobs or assignments
o Extended lunches or breaks
o Procrastination ( Thief of Time )
o Poor organization
o Difficulty with task prioritization - not knowing which tasks to focus on in what
order
o Not setting /sticking to priorities
o Inefficient delegation, or failure to delegate duties to others
Time Savers
 Identify and plan daily activities that need to be done
 Identify and list out activities before the start of the day i.e., a “to-do” list of tasks
 Set priorities: Priorities what needs to be done – this is especially important.
Without it , you may work very hard, but you won't achieve the results you desire
because what you are working on is not of strategic importance. So how do you
work on To Do list tasks- top down, bottom up, easiest to hardest?

49
  Begin with the most important and most urgent tasks
 Be self-motivated
 Complete tasks you have planned with commitment and dedication
 Be result-oriented in doing business
 Set Goals
 In order to move forward on a set of tasks in an efficient manner, you must have a
goal in mind. With a goal, you can then figure out what exactly need to be done, in
what order. Without proper goal-setting, it is possible to get off- track in the
confusion of conflicting priorities.
 Plan the time in terms of in time and resources required to accomplish the task
 Do not be afraid to use the phone
 Often we rely on email alone for communications; this can be very efficient for
certain communications, but for others it is more efficient to schedule a phone
call and have a conversation
 Phone calls can often help us to get the information faster we need
 Take notes during meetings, calls, etc
 Studies have shown that people are much more likely to accomplish their goals if
they have written them down. As someone once said, “A short pencil is better
than a long memory.”
 Taking notes during important meetings to record business information,
customers' and suppliers' names and addresses, action items to complete prior to
the next meeting, etc
 Demonstrate flexibility in terms of work hours.
 Accomplish very important tasks during the time of day when you work best.
For example: if you are a “morning person” try to work on the tasks that require the most
thought in the morning. Save routine tasks for the end of the day, when you are starting to
feel less energized
o Identify time-wasters and work to minimize them
o Learn from the experiences of others, including those of other entrepreneurs
Distinguish between those tasks that we should do ourselves and those that
should be delegated, and then delegate appropriately

Time Matrix
Managing time effectively, and achieving the things that you want to achieve,

50
means spending your time on things that are important and not just urgent. To do this, you
need to distinguish clearly between what is urgent and what is important:
 Important: These are activities that lead to the achieving of your goals and have
the greatest impact on your life.
 Urgent: These activities demand immediate attention, but are often associated
with someone else's goals rather than our own.
 Urgent and Important: Activities in this area relate to dealing with critical
issues as they arise and meet significant commitments. Perform these duties now.

 Important, But Not Urgent: These success-oriented tasks are critical to

achieving goals. Plan to do these tasks next.
 Urgent, But Not Important: These chores do not move you forward toward
your own goals. Manage by delaying them, cutting them short and rejecting
requests from others. Postpone these chores.
 Not Urgent and Not Important: These trivial interruptions are just a
distraction, and should be avoided if possible. However, be careful not to
mislabel things like time with family and recreational activities as not important.
Avoid these distractions altogether

51
 The 80/20 Rule

The 80/20 rule, also known as Pareto's Principle, states that 80% of your results
come from only 20% of your actions. Across the board, you will find that the 80/20
principle is pretty much right on with most things in your life. For most people, it really
comes down to analyzing what you are spending your time on. Are you focusing on the
20% of activities that produce 80% of the results in your life?
Tips for preparing Daily to do List
 Be realistic: Do not try to accomplish more than what you can do within in your
capacities.
 Be flexible: Make allowances for change and do not get upset about it.
 Evaluate your performance: Constantly evaluate improvements in productivity
due to use of daily schedule. Look out for reasons for poor performance and ways to
overcome them.
Prepare a master list: Since most of us handle a large number of tasks it will be
useful to prepare a master list of tasks to be performed
Benefits of time management:
 Improves efficiency
 Saves time so that a person can allocate adequate time for family, recreation and
social obligations
 Improves relationships both on and off the job
References:
1. Asika, N. M. (2004). Business Organization & Management, Lagos: Mukugamu
& Brothers Enterprises.
2. Kumar, P. and Nain, M.S. (2013). Agriculture in India: A SWOT analysis. Indian
Journal of Applied Research.

52
3. Singh, N. (2010). Swot Analysis – A Useful Tool for Community Vision A
concept paper of central Himalayan village. Researcher 2010;2(9)
4. Tripathi, M. J. and Armorikar, P. S. (2010). Promoting agri-preneurship to
supplement extension delivery mechanism. Agricultural Extension Review.
XXII (4), 3(7):4-6
5. Zoller, C. and Bruynis, C. (2007). Conducting a SWOT Analysis of Your
Agricultural Business. The Ohio State University

53
10 MOTIVATION

Concept:
The concept of motivation is derived from the latin word 'movere' which means
“to move.” (Huber, 2006)
Motivation is the process of initiating a conscious and purposeful action Motive
means an urge (drive or force) or combination of urges, to induce conscious or
purposeful action. Motivation is a goal directed and need satisfying behaviour. It
explains why people do the things they do. It influences a person to do a thing in a certain
way. Motive is something (a need or desire) that causes a person to act.
Definitions
 Motivation can be broadly defined as the forces acting on or within a person that
cause the arousal, direction, and persistence of goal-directed, voluntary effort.
 Motivation may be defined as goal seeking or goal directed behaviour or activity.
 Motivation is an urge that directs an individual towards need satisfying
behaviour.
 Motivation is an internal state that arouses us to action, pushes us in particular
direction and keeps us engaged in certain activities. (Ormrod,2008)
 Motivation is the process whereby goal‐directed activity is instigated and
sustained" (Schunk, 1996)
 Motivation is also defined as a stage of the organism in which bodily energy is
mobilized and selectively directed towards parts of the environment.
This definition breaks in to two parts:
1. Mobilization of bodily energy or drive and
2. Direction
All above definitions principally concerned with factors or events that excite,
channel, and prolong human behaviour for a considerable period of time.
Factors for the motivation or motivated behaviour are:
1. Environmental conditions

54
 2. Internal urge
3. Incentive, awards
Theories of Motivation
In spite of the magnitude of the effort that has been committed to the study of
motivation, there is no single theory of motivation that is universally accepted. The lack
of a unified theory of motivation reflects both the difficulty of the construct and the
diverse backgrounds and aims of those who study it. To explain these crucial points, it is
illuminating to consider the development of motivation and motivation theory as the
objects of scientific inquiry. Motivation theory is thus concerned with the processes that
explain why and how human behaviour is activated.
Motivation Process
The process of motivation progresses through a series of steps. Needs/motives
are the starting point of motivation. An unsatisfied need creates tension that stimulates
drives within the individual. These drives generate search behaviour to achieve
particular goals that will satisfy the need and lead to a reduction of tension. The action
taken by the individual will lead to the reward/goal which satisfies the need and reduces
tension.
Note:- The process is always similar for every theory of motivation.
The motivation process is presented in the following diagram;

Five Steps of Motivation Process:

1. Identify Unsatisfied Needs and Motives.
2. Tension.
3. Action to satisfy needs and motives.
4. Goal accomplishment.
5. Feedback
Steps of motivation process are explained below:
1. Identify unsatisfied needs and motives: The first process of motivation
involves unsatisfied needs and motives. Unsatisfied needs activated by internal
stimuli such as hunger and thirst. They can also be activated by external stimuli
such as award, incentive.

55
 2. Tension: Unsatisfied needs to create tension in the individual. Such tension can
be physical, psychological, and sociological. In this situation, people try to
develop objects that will satisfy their needs.
3. Action to satisfy needs and motives: Such tension creates a strong internal
stimulus that calls for action. The individual engages in activities to satisfy needs
and motives for reduction of tension.
4. Goal accomplishment: Action to satisfy needs and motives accomplishes goals.
It can be achieved through reward and punishment. When actions are carried out
as per the tensions, then people are rewarded others are punished. Ultimately
goals are accomplished.
5. Feedback: Feedback provides information for revision or improvement or
modification of needs as needed. Depending on how well the goal is
accomplished their needs and motives are modified.
Drastic changes in environment necessitate the revision and modification of
needs.
Historical Development
Early explanations of motivation based on instincts. Psychologists in the late
nineteenth and early twentieth century's suggested that human beings were basically
programmed to behave in certain ways, depending upon the behavioural cues to which
they were exposed. The very good example is of Sigmund Freud, who focused that the
most powerful determinants of individual behaviour were those of which the individual
was not consciously aware.
According to Steers, Porter, and Bigley (1996), in the early twentieth century
researchers began to examine other possible explanations for differences in individual
motivation. Some researchers focused on internal drives as an explanation for motivated
behaviour. Others studied the effect of learning and how individuals base current
behaviour on the consequences of past behaviour. Still others examined the influence of
individuals' cognitive processes, such as the beliefs they have about future events. Over
time, these major theoretical streams of research in motivation were classified into two
major schools: the content theories of motivation and the process theories of motivation.
Major Content Theories
Content (or need) theories of motivation focus on factors internal to the
individual that energize and direct behaviour. In general, such theories regard motivation
as the product of internal drives that compel an individual to act or move toward the
satisfaction of individual needs. Major content theories of motivation are Maslow's
hierarchy of needs, Alderfer's ERG theory, Herzberg's motivator-hygiene theory, and
McClelland's learned needs or three-need theory.

56
Major Process Theories
Process (or cognitive) theories of motivation focus on conscious human decision
processes as an explanation of motivation. The process theories are concerned with
determining how individual behaviour is energized, directed, and maintained in the
specifically willed and self-directed human cognitive processes. Process theories of
motivation are based on early cognitive theories, which posit that behaviour is the result
of conscious decision-making processes. The major process theories of motivation are
expectancy theory, equity theory, goal-setting theory, and reinforcement theory.
(A) Maslow's Hierarchy of Needs:
Abraham Maslow developed the hierarchy of needs, which suggests that
individual needs exist in a hierarchy consisting of physiological needs, security needs,
belongingness needs, esteem needs, and self-actualization needs. The needs are satisfied
on the basis of urgency and importance to individuals i.e. the fulfilment of needs starts
from the first order and if first order needs are fulfilled the individual thinks of second
order and so on as given below. Hence lower-level needs such as the physiological and
security needs must be met before upper-level needs such as belongingness, esteem, and
self-actualization can be motivational.
1. Physiological needs: These are called first order needs. These needs are
necessary for survival of the individual e.g. food, clothing, shelter etc. these are
most important, if these needs are fulfilled then only the individual steps in to
second order needs.
2. Safety needs: These are second order needs. These needs are for the security of
the individual from physical, physiological, economic and social viewpoints e.g.
protection from danger, threatening etc.
3. Social/Belongingness needs: These are third order needs. Man is a social animal
and has an inherent desire to be with others in some form e.g. friendship,
company etc. These are also called response needs.
4. Esteem needs: These are fourth order needs. The individual likes to get
appreciation and recognition from others in the society e.g. power, status,
prestige etc.
5. Self-actualization: These are called last order or fifth order or highest order
needs. Self-actualization needs are those corresponding to the achievement of
one's own potential, to the exercising and testing of one's creative capacities, and,
in general, becoming the best person one can possibly be. It is self-realization and
knowing self are the ultimate purpose of human being. What is human being,
how he should live, what is his purpose of living etc.

57
(B) McClelland's Learned Needs Theory:

McClelland's theory suggests that individuals learn needs from their culture.
Three of the primary needs in this theory are the need for affiliation (n Aff), the need for
power (n Power), and the need for achievement (n Ach). The need for affiliation is a
desire to establish social relationships with others. The need for power reflects a desire to
control one's environment and influence others. The need for achievement is a desire to
take responsibility, set challenging goals, and obtain performance feedback.
The main point of the learned needs theory is that when one of these needs is
strong in a person, it has the potential to motivate behaviour that leads to its satisfaction.
Thus, managers should attempt to develop an understanding of whether and to what
degree their employees have one or more of these needs, and the extent to which their
jobs can be structured to satisfy them.

58
Characteristics of People with High Achievement Motivation
Characteristics Achievement Affiliation Power
Concern for
Concern with having
Concern to do better, to establishing,
General impact, reputation
improve performance maintaining, repairing
and influence
friendly relation
Arousing A moderately challenging Opportunity to be Hierarchical or
Situation task with friends influence situation
Chooses and performs Makes more local
better at challenging tasks, phone calls, visits,
Accumulates
prefers personal seeks approval,
Related ‘Prestige Supplies’
responsibility, seeks and dislikes disagreeing
Activities often tries to
utilizes feedback on with strangers, better
convince others
performance quality, grades from a warm
innovates to improve teacher
The theory of achievement motivation is a miniature system applied to a specific
context, the domain of achievement-oriented activities, which is characterized by the
fact that the individual is responsible for the outcome (success or failure), he anticipates
unambiguous knowledge of results, and there is some degree of uncertainty or risk
(McClelland, 1961).
Achievement motivation can, therefore, be defined as the striving to increase or
to keep as high as possible, one's own capabilities in all activities in which a standard of
excellence is thought to apply and where the execution of such activities can, therefore
either succeed or fail. (Heckhausen, 1967)
(C) Expectancy Theory
Expectancy Theory is based on three elements:
1. Expectancy : the belief that your effort will result in your desired goal. This is
based on your past experience, your self confidence and how difficult you think
the goal is to achieve.
2. Instrumentality :the belief that you will receive a reward if you meet performance
expectations.
3. Valence : the value you place on the reward.
Therefore, according to Expectancy Theory, people are most motivated if they
believe that they will receive a desired reward(outcome) if they hit an achievable target.
They are least motivated if they don't want the reward or they don't believe that their
efforts will result in the reward.
(D) Equity Theory
Adam's equity theory of motivation proposes that high levels of employee
motivation in the workplace can only be achieved when each employee perceives their

59
treatment to be fair relative to others.
(E) Goal-setting Theory
It states that specific and challenging goals along with appropriate feedback
contribute to higher and better task performance. In simple words, goals indicate and
give direction to an employee about what needs to be done and how much efforts are
required to be put in.
(F) Reinforcement Theory
Reinforcement Theory tries to explain what motivates good and bad behaviour in
the workplace. Reinforcement refers to rewards that are used to encourage good
behaviour and punishments are used to reduce bad behaviour.
Conclusion: Motivation theories attempt to explain human behaviour to help us
understand it better. They help in the explanation of the different forces that push us to
work and how certain factors influence our decisions on work and careers. Each theory
has its own explanation and data to support it. An individual should recognise several
aspects that can be applied into situation in each theory. How to combine them into a
practical framework for more motivation
References:
1. Heckhausen, H. (1967). The Anatomy of Achievement Motivation. New York:
Academic Press. 4-5.
2. Huber, D.L. (2006). Leadership and Nursing care Management (3rd ed.).
Philadelphia:Saunders Elsvier.P-481
3. McClelland. (1961). Business Drive and National Achievement. Harvard
Business Review, July-August 99–112.
4. McClelland, D. C., Atkinson, J. W., Clark, R. A., & Lowell, E. L. (1953). The
Achievement Motive. New York: Appleton Century-Crofts.
5. Ormrod, J.E. (2008). Human learning (5th ed).Upper Saddle River: Person
Prentice Hall. p.452.
6. Singh, A.K., Singh L. and Burman R.R. (2006). Dimension of Agricultural
Extension. Aman Publishing House Meerut.
7. Schunk, D.H. (1996). Motivation in education: Theory, research and
applications (2nd ed.). Englewood Cliffs, NJ: Merrill Company.
8. Steers, Richard M., Lyman W. Porter, and Gregory A(1996). Bigley. Motivation
and Leadership at Work. 6th ed. New York: McGraw-Hill
9. [Link]
productivity/

60
11 DEVELOPING ORGANIZATIONAL SKILL

Organizing can be defined as “identifying and grouping different activities in the

organization and bringing together the physical, financial and human resources to
establish most productive relations for the achievement of specific goal of organization”.
Organizing is the establishing of effective authority relationships among selected
works, persons and work places in order for the group to work together efficiently.
([Link])
In general words organizing refer to arranging everything in orderly form and
making most efficient use of resources. When the managers are performing organizing
function it result in creation of an organizational structure which shapes the systems of
working.
Organizational process
The process of organizing consists of the following steps
1. Identification and division of work: The organizing function begins with the
division of total work into smaller units, Each unit of total work is called a job.
And an individual in the organization is assigned one job only. The division of
work into smaller jobs leads to specialization because jobs are assigned to
individual according to their qualifications and capabilities. The division of work
leads to systematic working. For example, in a bank every individual is assigned
a job. One cashier accept cash, one cashier makes payment, one person issues
cheque books, one person receives cheques etc; .With division of work into jobs
the banks work very smoothly and systematically.
2. Grouping the jobs and departmentalization: After dividing the work in
smaller jobs, related and similar jobs are grouped together and put under one
department. The Departmentalization or grouping of jobs can be done by the
organization in different ways. But the most common two ways are:
(a) Functional departmentalization: Under this method jobs related to common
function are ground under one department. For example; all the jobs related
to production are grouped under production department, jobs related to sales
are grouped under sales department and so on.
(b) Divisional departmentalization: When an organization is producing more
than one type of products then they prefer divisional departmentalization.

61
 Under this, jobs related to one product are grouped under one department.
For example if an organization is producing cosmetics, textile and medicines
then jobs related to production, sale and marketing of cosmetics are grouped
under one department, jobs related to textile under one and so on.
3. Assignment of duties: After dividing the organization into specialized
department each individual working in different departments is assigned a duty
matching to his skill and qualifications. The work is assigned according to the
ability of individual. Employees are assigned duties by giving them a document
called job description. This document clearly defines the contents and
responsibilities related to the job.
4. Establishing Reporting Relationship: After grouping the activities in different
departments the employees have to perform the job and to perform he job every
individual needs some authority. So in the fourth step of organizing process all
the individuals are assigned some authority matching to the job they have to
perform.
The assignment of the authority results in creation of superior-subordinate
relationship the question of who reports to whom is clarified. The individual of higher
authority becomes the subordinate. With the establishment of authority, managerial
hierarchy gets establishment of authority also helps in creation of managerial level. The
managers with maximum authority are considered as top level managers with minimum
authority become part of middle level management and managers with minimum
authority are grouped in lower level management. So with establishment of the authority
the individual can perform their jobs and everyone knows who will report to whom.
Developing good organizational skills is a key ingredient for success in school
and in life. Although some people by nature are more organized than others, anyone can
put routines and systems in place to help a child become more organized. The
Coordinated Campaign for Learning Disabilities has compiled a list of strategies that
parents can use to help their child develop good organizational skills.
Use checklists
Help your child get into the habit of using a "to-do" list. Checklists can be used to
list assignments and household chores and to remind children to bring appropriate
materials to class. It is recommended that children keep a small pad or notebook
dedicated to listing homework assignments. Crossing completed items off the list will
help children feel a sense of accomplishment.
Organize homework assignments
Before beginning a homework session, encourage your child to number
assignments in the order in which they are to be done. Children should start with one
that's not too long or difficult but avoid saving the longest or hardest assignments for last.

62
Set a designated study space
Children should study in the same place every night where supplies and materials
are close at hand. This space doesn't have to be a bedroom, but it should be a quiet place
with few distractions. Young children may want their study space near a parent. This
should be encouraged, as parents can then have the opportunity to monitor progress and
encourage good study habits.
Set a designated study time
Children should know that a certain time every day is reserved for studying and
doing homework. The best time is usually not right after school, as most children benefit
from time to unwind first. Parents should include their child in making this decision.
Even if your child does not have homework, the reserved time should be used to review
the day's lessons, read for pleasure or work on an upcoming project.
Keep organized notebooks
Help your child keep track of papers by organizing them in a binder or notebook.
The purpose of a notebook is to help keep track of and remember the material for each
day's classes and to organize the material later to prepare for tests and quizzes. Use
dividers to separate class notes, or color-code notebooks. Having separate "to do" and
"done" folders helps organize worksheets, notices and items to be signed by parents as
well as provide a central place to store completed assignments.
Conduct a weekly clean-up
Children should be encouraged to go through and sort out book bags and
notebooks on a weekly basis. Old tests and papers should be organized and kept in a
separate file at home.
Create a household schedule
Try to establish and stick to a regular dinnertime and a regular bedtime. This will
help your child fall into a pattern when at home. Children with a regular bedtime go to
school well rested. Try to limit television watching and computer play to specific
amounts of time during the day.
Keep a master calendar
Keep a large wall-sized calendar for the household that lists the family's
commitments, schedules for extracurricular activities, days off from school and major
events at home and at school. Note dates when your children have big exams or due dates
for projects. This will help family members keep track of each other's activities and avoid
scheduling conflicts.
Prepare for the day ahead
Before your child goes to bed he/she should pack schoolwork and books in a book bag.
Clothes should be ironed and laid out with shoes, socks and accessories. This will cut

63
down on morning confusion and allow your child to prepare for the day ahead.
Provide necessary support while your child is learning to become more organized
Help your child develop organizational skills by photocopying checklists and schedules
and taping them to the refrigerator. Give children gentle reminders about filling in
calendar dates and keeping papers and materials organized. Most important, set a good
example.
What are Organizational Skills?
Organization skills are those related to creating structure and order, boosting
productivity, and prioritizing tasks that must be completed immediately, versus those
that can be postponed, delegated to another person, or eliminated altogether.
Maintaining strong organizational skills can reduce the chance of developing poor work
habits such as procrastination, clutter, miscommunication, and inefficiency.
Managers look for employees who can not only keep their work and their desk organized,
but for those who can also adjust quickly to the organization structure of a company.
Develop these skills and emphasize them in job applications, resumes, cover letters, and
interviews. Showing that you have the skills a company is seeking will help you get hired
and promoted.
Internal and External Organization Skills
Internal Organization Skills: Organizational skills encompass more than simply keeping
a clutter-free desk. While maintaining a clear space to work is important, neatness is only
one of several key organizational skills. Employees with excellent organizational skills
are also able to keep themselves calm and prepared with systematic planning and
scheduling.
External Organization Skills: Work projects are typically centered around a rigid
timeline, and organizing a job into smaller projects and goals can be an effective way to
complete them. Employers look for workers who can schedule and delegate these
smaller tasks to themselves and other employees in order to stay on track with deadlines
while sustaining a healthy work-life balance.
Controlling:
Controlling means comparison between actual output and planned output to find
out the reasons for deviations and taking corrective measures to stop such deviations in
future.
Importance of controlling:
1. Helps in achieving organizational goal.
2. Judging accuracy of standards
3. Making efficient use of resources

64
 4. Improving employee's motivation
5. Ensures order and discipline
6. Facilitates coordination
7. Helps in improving performance of employees
(a) Self appraisal report.
(b) Performance appraisal report
8. Controlling helps in minimizing the error.
Limitations of Controlling:
1. Difficulty in setting quantitative standards.
2. No control on external factors.
3. Resistance from employees.
4. Costly affair.
Relation between planning and controlling:
1. Meaning of planning and controlling.
2. Planning and controlling are interdependent and interlinked.
3. Planning and controlling are forward looking as well as backward looking.
Controlling Process Steps:
1. Setting up of (Targets) standards.
2. Measurement of performance.
3. Comparison of performance and standard.
4. Analyzing deviation
5. To take corrective measures
6. Feedback process.
Supervision
It is difficult to formulate an overall definition that takes into account all the
different organizational context and types of work for which supervision is required . In
the development professional terms such as assessment, monitoring and appraisal add to
the confusion, since supervision can encompass much of these. Literally, to supervise
means to oversee the actions or work of (a person).
Vision is derived from the latin “videre” meaning to see. One helpful definition
might be that supervision encompasses several functions which concern with
monitoring, developing, and supporting individuals.

65
 Good supervision impacts organizational results and the overall work
environment. A strong supervisory team that contributes to a positive work environment
and enables employees to be (and feel) successful can provide your organization with a
competitive advantage in attracting and retaining talented employees - which is critical
in a sector that faces challenges in recruiting and retaining top employees. Good
supervision is based on clearly defining the role of supervisors in your organization, and
ensuring supervisors have the requisite competencies to carry out their role electively.
Supervision is a management function. Therefore, the delivery of supervision should be
a key part of an organization's safety management system.
Supervision is a managerial activity to influence supervisees so that they become
more positively motivated and contribute fully towards the achievement of the
objectives of the organization.
Supervision is a process or course of activities through which the supervisor
administers and controls the subordinates so that they manage their tasks efficiently in
order to achieve desired programme or goal.
What Is Problem Solving?
Problems are at the centre of what many people do at work every day. Whether
you are solving a problem for a client (internal or external), supporting those who are
solving problems, or discovering new problems to solve, the problems you face can be
large or small, simple or complex, and easy or difficult. A fundamental part of every
manager's role is finding ways to solve them. So, being a confident problem solver is
really important to your success. Much of that confidence comes from having a good
process to use when approaching a problem. With one, you can solve problems quickly
and effectively. Without one, your solutions may be ineffective, or you will get stuck and
do nothing, with sometimes painful consequences.
There are four basic steps in solving a problem: Defining the problem,
Generating alternatives, Evaluating and selecting an alternative, and Implementing
solutions.
Monitoring and Evaluation are the two management tools that help in keeping a
control on the business activities as well as raising the level of performance. Monitoring
refers to an organized process of overseeing and checking the activities undertaken in a
project, to ascertain whether it is capable of achieving the planned results or not.
Conversely, evaluation is a scientific process that gauges the success of the project or
program in meeting the objectives.
The primary difference between monitoring and evaluation is that while
monitoring is a continuous activity, performed at the functional level of management,
evaluation is a periodic activity, performed at the business level. To get some more
differences on these two, check out the article presented below.

66
Definition of Monitoring
Monitoring is the systematic process of observing and recording on a regular
basis, the activities carried out in a project, to ensure that the activities are in line with the
objectives of the enterprise. Monitoring takes into account optimum utilization of
resources, to assist the managers in rational decision making. It keeps a track on the
progress and checks the quality of the project or program against set criteria and checks
adherence to established standards.
The information collected in monitoring process helps analyse each aspect of the
project, to gauge the efficiency and adjust inputs wherever essential.
Definition of Evaluation
Evaluation is defined as an objective and rigorous analysis of a continuing or
completed project, to determine its significance, effectiveness, impact and sustainability
by comparing the result with the set of standards. It is the process of passing value
judgment concerning the Performance level or attainment of defined objectives. In short,
evaluation is a process that critically assesses tests and measures the design,
implementation and results of the project or program, in the light of objectives. It can be
conducted both qualitatively and quantitatively, to determine the difference between
actual and desired outcome.
Conclusion
In the development of projects, monitoring and evaluation play diverse roles, in
the sense that monitoring is an ongoing process, whereas evaluation is performed
periodically. Further, the focus of the assessment also differentiates the two, i.e.
monitoring is all about what is happening; evaluation is concerned with how well it
happened.
References:
1. Hiremath, S. (2017). Organizational Skills and Development (New Syllabus):
Nirali Prakashan :ISBN 978-93-83-73-59-7.
2. Patil, A.R.G. (2013). Community Organization and Development An Indian
Perspective; PHLLearning Private Limited; Delhi.
3. Taylor, A. G. (2018). The organization of information, Second Edition, Library
and information science: ABC-CLIO: ISBN 9781563089695,9781563089695.
4. Barman, K. M. (2018). Personality Development and Soft Skills (Second
Edition); Oxford Higher Education.

67
12 BUSINESS LEADERSHIP SKILLS

Concepts of Leadership
Leadership entrepreneurship qualities by business managers is not enough for
success of enterprises. Managers need to have both leadership and entrepreneurship
qualities in order to be successful. At this point, the concept of entrepreneurial leadership
emerges. Entrepreneurial leadership is a new and modern type of leadership that is a
combination of leadership qualities and spirit of entrepreneurship. In addition,
entrepreneurial leadership is creating new products, new processes and expansion
opportunities in existing businesses, working in social institutions and dealing with
ignored social issues, participating in social and political movements, contributing to the
change of current services and policies implemented by civil society organizations and
governments. In recent times, entrepreneurial leadership has become a new phenomenon
in business management that needs to be discussed. In this regard, in this study, the
importance of entrepreneurial leadership is emphasized by examining the concept of
entrepreneurial leadership within a theoretical framework..
Definition of Leadership:
According to Stogdill (1948), there are nearly as many definitions given to
leadership as there have been researchers who have written about the concept.
Conger (1992:p.18) defines leadership as "individuals who establish direction
for a working group of individuals who gain commitment from this group of members to
this direction and Leadership is a process by which a person influences others to
accomplish an objective and directs the organization in a way that makes it more
cohesive and coherent.
This definition is similar to Northouse's (2007, p3) definition Leadership is a
process whereby an individual influences a group of individuals to achieve a common
goal. Leaders carry out this process by applying their leadership knowledge and skills.
This is called Leadership (Jago, 1982). However, we know that we have traits that can
influence our actions. This is called Trait Leadership (Jago, 1982), in that it was once
common to believe that leaders were born rather than made.
While leadership is learned, the skills and knowledge processed by the leader can
be influenced by his or hers attributes or traits; such as beliefs, values, ethics, and
character. Knowledge and skills contribute directly to the process of leadership.

68
Principles of Leadership:
To help you be, know, and do, follow these eleven principles of leadership (U.S.
Army, 1983). The later chapters in this Leadership guide expand on these principles and
provide tools for implementing them:
1. Know yourself and seek self-improvement - In order to know yourself, you have
to understand your be, know, and do, attributes. Seeking self-improvement
means continually strengthening your attributes. This can be accomplished
through self-study, formal classes, reflection, and interacting with others.
2. Be technically proficient - As a leader, you must know your job and have a solid
familiarity with your employees' tasks.
3. Seek responsibility and take responsibility for your actions - Search for ways to
guide your organization to new heights. And when things go wrong, as they often
tend to do sooner or later — do not blame others. Analyze the situation, take
corrective action, and move on to the next challenge.
4. Make sound and timely decisions - Use good problem solving, decision making,
and planning tools.
5. Set the example - Be a good role model for your employees. They must not only
hear what they are expected to do, but also see. We must become the change we
want to see - Mahatma Gandhi
6. Know your people and look out for their well-being - Know human nature and the
importance of sincerely caring for your workers.
7. Keep your workers informed - Know how to communicate with not only them,
but also seniors and other key people.
8. Develop a sense of responsibility in your workers - Help to develop good
character traits that will help them carry out their professional responsibilities.
9. Ensure that tasks are understood, supervised, and accomplished -
Communication is the key to this responsibility.
Styles of Leadership
A leadership style is the manner and approach of providing direction for a team,
implementing plans and motivating people to complete a task. There are several different
leadership styles, each with advantages and disadvantages. The terminology style is
roughly equivalent to the leader's behaviour. It is the way in which the leader influences
the followers (Luthans, 1977). There are many ways to lead and every leader has own
style. Some of the more common styles include autocratic, bureaucratic, leadership and
laissez-faire. In the past several decades, management experts have undergone a
revolution in how they define leadership and what their attitudes are toward it. They have
gone from a very classical autocratic approach to a very creative, participative approach.

69
Somewhere along the line, it was determined that not everything old was bad and not
everything new was good. Rather, different styles were needed for different situations
and each leader needed to know when to exhibit a particular approach.
Autocratic Style of Leadership
This is often considered the classical approach. It is one in which the manager
retains as much power and decision-making authority as possible. The manager does not
consult employees, nor are they allowed to give any input. Employees are expected to
obey orders without receiving any explanations. The motivation environment is
produced by creating a structured set of rewards and punishments.
Generally, the autocratic leadership style is not considered to be the most suitable
way to get the best response from a team, but it has distinct advantages in situations
where there is great urgency and pressure to achieve, such as the armed forces.
Autocratic leaders tend to be the sole decision makers for their group (Van Vugta et al.,
2004).
Authoritarian Style of Leadership
Authoritarian leaders, also known as autocratic leaders, provide clear
expectations for what needs to be done, when it should be done, and how it should be
done. There is also a clear division between the leader and the followers. Authoritarian
leaders make decisions independently with little or no input from the rest of the group.
Researchers found that decision-making was less creative under authoritarian
leadership. Lewin also found that it is more difficult to move from an authoritarian style
to a democratic style than vice versa. Abuse of this style is usually viewed as controlling,
bossy, and dictatorial.
Democratic Style of Leadership
The term democratic leadership' has been replaced by 'participative leadership'
(Yukl, 2000). Participative leadership is the degree to which a leader shares the influence
on decision making with his followers in a workgroup (Somech, 2003). Democratic
leaders make the final decisions, but they include team members in the decision-making
process. They encourage creativity, and people are often highly engaged in projects and
decisions. This is not always an effective style to use, though, when you need to make a
quick decision.
The democratic leadership style is also called the participative style as it
encourages employees to be a part of the decision making. The democratic manager
keeps his or her employees informed about everything that affects their work and shares
decision making and problem solving responsibilities. This style requires the leader to be
a coach who has the final say, but gathers information from staff members before making
a decision.
Participative /Democratic Style of Leadership
Lewin's study found that participative leadership, also known as democratic
70
leadership, is generally the most effective leadership style. Democratic leaders offer
guidance to group members, but they also participate in the group and allow input from
other group members. In Lewin's study, children in this group were less productive than
the members of the authoritarian group, but their contributions were of a much higher
quality.
Participative leaders encourage group members to participate, but retain the final
say over the decision making process. Group members feel engaged in the process and
are more motivated and creative.
Laissez-Faire style of Leadership
First described by Lewin, Lippitt and White in 1938, the laissez faire leadership
style is sometimes described as a 'hands off' leadership style because the leader provides
little or no direction to their followers. This style allows complete freedom to the group to
make decisions without the leader's participation. Thus, subordinates are free to do what
they like. (Iccolo et al., (2012) note that laissez-faire is the avoidance or absence of
leadership, indicating leaders who avoid making decisions hesitate in taking action, and
are absent when needed.
The laissez-faire leadership style is also known as the "hands-off ¨style. It is one
in which the manager provides little or no direction and gives employees as much
freedom as possible. All authority or power is given to the employees and they must
determine goals, make decisions, and resolve problems on their own.
Delegative (Laissez-Faire) Leadership
Researchers found that children under delegated leadership, also known as
laissez-fair leadership, were the least productive of all three groups. The children in this
group also made more demands on the leader, showed little cooperation and were unable
to work independently.
Bureaucratic Style of Leadership
Bureaucratic leadership is where the manager manages “by the book¨ Everything
must be done according to procedure or policy. If it isn't covered by the book, the
manager refers to the next level above him or her. This manager is really more of a police
officer than a leader. He or she enforces the rules.
Business Leadership skills
Effective leadership skills are necessary in any business in order to succeed.
Whether you own the business, manage it, or employees are looking to make his or her way
up the corporate ladder, the right leadership style is essential in order to reach your business
goals. Listed below are six business leadership skills that every great leader should possess.
1. Adaptability:
Adaptability means reacting in an effective manner to changing circumstances.
Everyone experiences challenge when trying to adapt to the new and unfamiliar, but true
71
leaders are able to resolve those challenges with a solid plan of action. If there is one trait
that every good business leader should possess in today's workforce, it is adaptability.
People Skills although it might seem obvious that business leaders should have
good people skills, many leaders lack this important trait. People skills consist of several
other traits, including the ability to observe people, the ability to communicate
effectively, the ability to motivate, and adaptability.
Developing better people skills helps leaders attain business objectives faster and
be more productive. People skills involve genuinely connecting with employees and co-
workers. When you have the ability to connect with others, you develop a trusting,
productive work environment that benefits everyone.
2. Self-awareness:
Leaders who are aware of how they are perceived by others and how they impact
the behaviour of others are more likely to succeed than those who are not self-aware.
Most leaders are guilty of believing they are better leaders than they really are because of
intention, however, managing a group of people based on intention and assuming others
can read your mind often leads to disaster. To be an effective business leader, try not to
assume that the people you work with instinctively understand the reasoning behind your
actions. When we assume others know the reason for our behaviour it leads to
miscommunication and misunderstandings. It is important to practice self-awareness in
order to establish a positive working relationship with employees and co-workers.
Identify your weaknesses and determine what you need to do to overcome them, whether
it is explaining things more clearly, being more willing to compromise or developing
better team-building skills. Remember, even if you aren't aware of your flaws, those
around you are. If you are self-aware, people you work with will recognize that you are
making an effort to overcome your faults – a very important trait of a great leader.
3. ASense of Purpose:
Every business needs the vision to set its direction and successful leaders are able
to tap into that vision to achieve success. Good business leaders have a strong sense of
purpose and the ability to convey this purposefulness to the people they work with.
Leaders who understand the true purpose behind the vision inspire others and motivate
them to work towards achieving the company's vision.
4. Decisiveness:
Decisiveness involves making good judgments in a timely manner and is one of
the most effective leadership skills to have. Even the most decisive leader has some fear
of being held responsible for an incorrect decision because the decisions they make have
a direct impact on how they are accepted as a leader. Although some leaders are reluctant
to make quick decisions, the consequences of being indecisive are much greater than the
consequences of occasionally making the wrong decision. The chances of facing tragic
consequences down the line are much higher for those leaders who have a difficult time

72
being decisive – and these types of leaders are also remembered much longer for their
inability to make a solid decision.
5. Collaborative Skills:
Successful leaders understand that they don't have to come up with all of the ideas
on their own – they nurture growth in others and encourage employees to contribute.
Today's business environment benefits greatly from a culture of collaboration, both
internally and externally. Technology has created new methods for communicating and
collaborating in today's workforce, and the Internet makes collaborating with others easy
to do at a low cost. If you can create an environment where everyone can contribute ideas
or help increase sales, the collaboration will quickly add to your bottom line.
If you want to learn how to be a good leader, enrol in Fremont College's Business
Leadership degree program. Earn a bachelor's degree in Business Leadership in just over
two years and attain the skills needed to effectively manage a group of people. The
Business Leadership degree prepares you for all types of leadership jobs, including
Marketing Manager, Production Manager, and Sales Manager.
6. Business Communication Skills:
Communication is a key in every aspect of life, but it's especially crucial in the
workplace. Whether you're just starting out in business or are further along in your career
curve, there are specific business communication skills necessary for success. What
business communication skills and “soft skills” will help you work smarter? Here are 9
communication skills every professional should master.
a. Active listening skills: The ability to listen to and incorporate others' views in
your communication. Listening shows you value opinions outside of your own
and are open to new concepts. As a result, your audience views you as an equal
partner and you can come to a solution that benefits the greater good. An active
listener will allow pauses for interjections, repeat other people's words and ask
questions to affirm his or her engagement in a conversation.
b. Writing skills: Using specific data and examples in written communication to
make a solid case, and communicating proposed action items. Written
communication for business should be brief but informative, and helps an
audience focus on only the most important points. Good written communication
also includes adequate follow-up, which closes the communication loop and
shows proactive activity towards goals
c. Verbal skills: The ability to communicate information (ideas, thoughts, opinions
and updates) in a clear manner verbally. Like good written communication, good
verbal communication in the workplace is also concise and specific (researchers
have found that today's attention span amounts to only 8.25 seconds). Verbal
communication allows employees to engage with one another in-person and
come to a mutually agreeable consensus.

73
 d. Interpersonal communication skills: Building trust and strong relationships
with key stakeholders in a business. Another “soft skill,” successful
interpersonal communication allows employees to find common ground, display
empathy and build bonds with one another. Interpersonal communication means
connecting on more than business level, but a personal level as well.
e. Teamwork skills: Effectively communicating with others who may have
different opinions and skill sets. In a business setting, this means putting aside
personal differences and working toward a common goal. For teamwork to be
successful, all parties must recognize that combined efforts are worth more than
individual contributions.
f. Presentation skills: Presenting information and ideas to an audience in a way
that is engaging, motivating, and effective. This method of business
communication allows one individual, or a group of individuals, to share
evidence to support an idea or argument. A good presenter is also a good
storyteller, using data, stories and examples to influence an audience to act
toward a desired outcome.
g. Selling skills: Persuading stakeholders to pursue an idea, decision, action,
product or service. Selling skills extends beyond just those whose jobs fall under
the sales department. Employees with selling skills can use these skills to
influence other employees to buy into a project, team members to choose a side,
or executives to offer new products or services.
h. Negotiation skills: Reaching a mutually beneficial solution by understanding
and leveraging the other side's motivations. A mutually beneficial or “win-win”
solution is one that both sides finds favourable, and maintains positive
relationships for future interactions. In order to achieve this outcome, you'll need
to discover what factors would be most influential and agreeable for the other
side.
i. Networking skills: Displaying business value and encouraging others to enter
into your business network. In order to network successfully, you'll need to be
interesting enough that others desire to partner with you in some way. A large
business network can also be a safety net, and means you have more people to
rely on when you require help, information or services.
7. Direction and Motivation:
Motivation may be defined as the complex of forces inspiring a person at work to
intensify his willingness to use his maximum capabilities for the achievement of certain
objectives. Motivation is something that motivates a person into action and induces him
to continue in the course of action enthusiastically. It determines the behaviour of a
person at work.

74
References:
1. Bryman, A. (1986). Leadership and Organizations. Routledge and Kegan Paul
(London)
2. Cartright, D., & Zander, A. (1960). Group Dynamics. Third Edition. Harper and
Row (New York).
3. George, J. M., & Jones, G. R. (1996). Organizational Behavior. Addison Wesley
publishing company(USA).
4. Gray, J. (1996). Organizational Behavior. Harper Collins collage publishers
5. Hampton, D. R., Summar, C. E., & Webber, R. A. (1973). Organizational
Behavior and the practice ofManagement (Revised). Scott, Foresman and
Company (England).
6. Mondal, S. and Ray, G.L. - Textbook on Rural Development Enterpreneurship
and Communication Skills, Kalyani Publisher
7. Agrawal, R.C., Laxmi Narayan Agrawal, - Fundamental of Enterpreneurship,
Agra (U.P.)
8. Harris, M. C. (1998). Value Leadership. Asoke K. Ghosh (New Delhi).

75
 13 ENTREPRENEUR AND ENTREPRENEURSHIP
Managerial skills are the knowledge and ability of the individual in a managerial
position to fulfil some specific management activities or tasks. This knowledge and
ability can be learned and practiced. However, they also can be acquiring through
practical implementation of required activities and tasks.
A manager's job is complex and multidimensional. It requires a range of skill to
perform the duties and activities associated with it. Regardless of the level of
management, managers must possess and seek to further develop many critical skills. A
skill is an ability or proficiency in performing a particular task. Management skills are
learned and developed.
An effective manager must possess the following skills to perform his job well:
1. Technical Skill: Technical skill is the ability to use the procedures, techniques,
and knowledge of a specialized field. Engineers, accountants, doctors, and
musicians all have technical skills in their respective fields. Technical skill also
includes analytical ability and the competent use of tools and work equipments to
solve problems in that specific discipline. Technical skills are especially
important for first-line managers. These skills become less important than
human and conceptual skills as managers move up the hierarchy.
2. Human or Psychological Skill: Human skill is the ability to work with people
by getting along with them. It is the ability to motivate, lead and to communicate
effectively with others. It is also known as 'people', 'interpersonal' or 'behavioral'
skill. This skill is important as the managers spend considerable time interacting
with people both inside and outside the firm. Managers require such skill for the
following specific reasons:
 To get the best out of their people.
 To communicate, motivate, lead and inspire enthusiasm and trust.
 To get the job done.
 To coordinate and resolve conflicts.
 To allow subordinates to express themselves.
 To take care of the human side of the organization.
 To facet eh challenges of globalization, workforce diversity and competition.

76
  To keep people busy.
 To retain good workers in the firm.
 To improve overall organizational performance.
Human skills are equally important at all levels of management. A related aspect
of human skill is political skill which is a distinct type of social skill that is important for
managerial success.
3. Conceptual Skill: Conceptual skills are most important at the top management
levels. More specifically, conceptual skills refer to the ability:
 To organize information and to judge relationships within a complex whole.
 To think and to conceptualize about complex situations.
 To see organization as a whole.
 To understand the relationships among various sub-units.
 To visualize how organization fits into its broader environment.
 To recognize significant elements in a situation and to understand the
relationships among the elements.
 To understand how a change in one unit will impact the other units.
 To coordinate and integrated the entire organization's interests and activities.
 To think in the abstract.
Conceptual skill is often called the ability to see the 'big picture'. It means the
ability to 'think strategically'- to take the broad, long-term view. The importance
of conceptual skills increases as the manager is promoted higher in the
organization.
4. Diagnostic Skill: This is the skill that enables a manager to visualize the most
appropriate response to a situation. A manager can diagnose and analyze a
problem in the organization by studying its symptoms and then developing a
solution. It is the ability to define the problem, recognize its possible causes,
focus on the most direct problem, and then solve it.
It is the ability to determine, by analysis and examination, the nature and
circumstances of a particular condition. It is not only ability to specify why
something occurred, but also the ability to develop certain speculations in 'what
if' situation. It can be noted that managers generally use different combinations of
skills at different levels of an organization. For example, top managers rely
heavily on conceptual and diagnostic skills and first-line managers put more
emphasis on technical and interpersonal skills.
Many experts have suggested few more additional skills for managers to perform
their roles successfully. They are as follows:
77
5. Design Skill: Design skill is the ability to solve problems in ways that benefit the
enterprise. Managers must be able to do more than see a problem. If they become
'problem watchers', they will fail. They must be able to design a 'workable
solution; to the problem in the light of the realities they face.
6. Analytical Skill: These skills involve using scientific approaches or techniques
to solve management problems. In essence, analytical skills are the abilities to
identify key factors and understand how they interrelate. These skills include the
ability to diagnose and evaluate. These are needed to understand problems and to
develop plans of action for their solution. It is ability to think about how multiple
complex variables interact.
7. Decision Making Skill: All managers must make decisions and the quality of
these decisions determines their degree of effectiveness. Manager's decisions
making skill in selecting a course of action is greatly influenced by his analytical
skill. All managers must have decision making skills. Research indicates that half
of managers' decisions fail because managers employ 'failure-prone tactics'.
8. Digital Skill: Managers must know how to use digital technology to perform
many aspects of their jobs. This skill increases a manager's productivity. This
skill involves a concept ual understanding of comput ers and
telecommunications. Through computers, managers can perform in minute's
tasks in financial analysis, human resources planning and other areas that
otherwise take hour to complete.
9. Interpersonal Skill: Effective communication is vital for effective managerial
performance. This skill is crucial to managers who must achieve results through
the efforts of others. It is the ability to exchange ideas and information's in ways
that other people understand the message. It also involves feedback from
employees to ensure that one is understood. If managers are to succeed in the
workplace, they must strengthen their communication skills.
10. Planning and Administration Skill: This skill involves deciding what tasks
need to be done, determining how they can be done. Allocation resources to
enable then to be done, and them monitoring process to ensure that they are done.
Included in this competency are:
 Information gathering, analysis, and problem solving;
 Planning and organizing projects;
 Time management; and
 Budgeting and financial management
11. Teamwork Skill: It is the skill to: (i) design teams properly, (ii) create a
supportive team environment; and (iii) manage team dynamics appropriately.
Because more and more organizations are relying on team to improve quality and
productivity, it becomes important for managers to develop their teamwork skill.

78
 12. Strategic Action Skill: Strategic action skill involves understanding the overall
mission and values of the organization and taking strategic actions. Today,
managers at all levels and in all functional areas are being challenged to think
strategically in order to perform their jobs better;
13. Global Awareness Skill: Today, most of the companies are serving global
markets. Many organizations need to set up operations in other countries. Hence,
it has become necessary for managers to develop global awareness competency.
This skill is reflected in (i) cultural knowledge and understanding, and (ii)
cultural openness and sensitivity.
14. Self-Management Skill: The dynamic work environment calls for self-
awareness and development. Effective managers have to develop self-
employment skill which includes:
 Integrity and ethical conduct,
 Personal drive and resilience,
 Balancing work and life demands,
 Self-awareness and development, and
 Learning about you.
Managerial skills possessed by an entrepreneur:
It is scientifically proven that the necessary skills required to become an
entrepreneur, can be picked up along the way. But what are these skills? There are many,
but the most important skill an entrepreneur must have in their arsenal, is management.
So let's take a look at some of the most important managerial skills an entrepreneur must
be equipped with, to make its venture go.
Time management: Time is money, and sometimes this proverbial master class is
actually quite true. Time is a resource that is the most important of them all. People and
monetary funds come and go, but time never stops for anybody. And that is the reason
why a good entrepreneur must understand the true value of time, and must know how to
manage it to get the most out of everything. It is imperative for an entrepreneur to manage
well between professional and personal life, and short and long term planning, and all
this involve the crucial element of TIME.
Employee Management: Entrepreneur must have a keen sense of managing the
employees working for them. What does that mean? It means, a keen eye is require on the
part of an entrepreneur to hire the best possible candidate for the role he can produce the
best result at, putting them under relevant training to improve their performance, even
going so far as to employing an absence management software to gauge the efficiency
and productivity of these people.
Business Planning: As a budding businessman, planning your process, your business
approach, and your strategies is one of the most critical aspects of the game. A good
entrepreneur needs to be good at planning all these things and then making sure that the
organization sticks to the plan. These plans may include hiring employees, accounting

79
development and growth of the firm, and even overseeing day-to-day business functions
or multi-year business strategies.
Financial Management: Finance is probably the most important aspect of your
business. Any organization that has ever been created in the history of this universe, has
been done so to earn money, and if that is how important it is, a good quality entrepreneur
needs to have exceptional command on the finances and needs to know how to earn,
regulate, invest, and even save money.
Customers Management: Customers are your bread and butter as an entrepreneur,
everything you ever hope of doing, revolves around how well you do with your
customers. So it makes sense that a good entrepreneur needs to know his way around his
customers. Finding the customers, making them happy, and then retaining them for years
to come to develop a good loyal partnership with them is of paramount important when
you are an entrepreneur trying to make a name for your business.
Sales management: Your entire comes down to this, the success of your ventures is
gauged by the quality and quantity of your sales. Poor sales results in poor business, good
sales results in promotion and success, so is it even a question why an entrepreneur needs
to be sales team does not necessarily mean that it would translate to good sales, peoples
invest in YOU, as the owner of your company, almost as much as they spend your
product.
References:
 [Link]
 Timmons, J.A., Smollen, L.E., and Dingie, A.L.M. Jr., (1977). New Venture
Creation: A Guide to Small Business Development, Richard D. Irwin,
Homewood, Illinois.

80
14 CREATIVITY AND PROBLEM SOLVING SKILL

Creativity:
In simple term it is the ability of imagination of an individual. It leads someone
to reach unexplored areas. Creativity refers to the tendency or ability to generate and
recognize new ideas, alternatives or possibilities that may be useful in solving existing
problem. Creativity is also referred as creation of fresh idea or plan.
Importance of creativity:
1. Creation of new ideas for competitive advantage
2. It helps in developing new ways and approach for improvement in existing
product or service
3. It helps in optimizing a business enterprise.
4. It enables entrepreneurs to find some of the path breaking discoveries.
5. It fosters innovation
Components of Creativity:
1. Functionality
2. Originality
Types of Creativity:
1. Deliberate and cognitive
2. Deliberate and emotional
3. Spontaneous and cognitive
4. Cognitive and emotional
Meaning of problem solving:
Problem solving refers to ability to solve problems in an effective, efficient and
timely manner without any impediments. Problem-solving is a basic coping strategy.
Problem-solving is a structured approach to address a problem and can lead the way of
the best solution to a problem. It is the application of ideas, skills or factual information
to find the solution to a problem or to achieve a targeted result. It involves different
sequential phases like being able to identify and define the problem, generating
alternative solutions, evaluating and selecting the best alternative, and implementing the

81
selected solution. Obtaining a feedback and responding to it appropriately is also
considered as an essential aspect of problem solving skills.
Problem solving steps:
Effective problem solving involves working through a number of stages or steps
.There are six problem solving steps which provide a shared, collaborative and
systematic approach to problem solving.
1. Identify the problem: The first step in problem solving is recognition of the
problem. This might sound like common sense. It often requires more thought
and analysis. This stage involves detecting and recognizing a problem,
identifying the nature of the problem and defining the problem. One should try to
describe the problem as objectively as possible. The following points should be
taken into considerations in this step:-
 Selection of the problem to be analyzed
 Clearly define the problem and establish a precise problem statement
 Set a measurable goal for the problem solving effort
 Establish a process for coordinating with and gaining approval of leadership
The following questions should be considered while identifying the problem:-
What is the problem? How often does the problem occur? When does it occur?
When doesn't it occur? Where does it occur most often? Who tends to be
involved with the problem most often?
2. Analyzing or structuring the problem: This stage involves a period of careful
observation, intensive inspection, fact-finding and developing a clear or well
defined picture of the problem. It is all about gaining more and detailed facts and
information pertaining to the problem and its clear understanding. This stage also
indicates fact finding & analysis and formation of a more comprehensive picture
of both the goal(s) and the barrier(s). This stage is essential for problems of more
complex nature. The following components are included in this step:-
 Identifying the processes that impact the problem and select one
 Listing of the steps in the process as it currently exists
 Map the Process
 Validation the map of the process
 Identify potential cause of the problem
 Collection and analysis of data related to the problem
 Verify or revise the original problem statement
 Identify root causes of the problem

82
  Collection of additional data if needed to cross check the root causes
3. Generating potential solutions/options: From the information and data
gathered in the first two phases of the problem solving framework possible
solutions are assessed critically to address the identified problem During this
stage a range of possible courses of action, but with little attempt to evaluate them
are generated. In a group situation this stage is often carried out as a brain-
storming session, in which each person in the group is allowed to express their
views on possible solutions (or part solutions). In organizations different people
with different background possess expertise in different areas and it is therefore
worthwhile to record the views of each concerned person. Different options or
solutions are listed. This process of generating solutions can help to examine the
problem from multiple perspectives. It may be impossible to address all areas of
a problem. In such case, the problem is break down and one should generate
solutions by writing them down or speaking in a group.
4. Decision making on the best solution: This stage involves detailed analysis of
the different available possible courses of action or solutions and selecting the
best solution or alternative for implementation. This is the most complex
component of the problem solving process. On the basis of the previous step each
potential solution is carefully assessed and analyzed in light of the existing
conditions. Some solutions may not be feasible due to other problems like time
constraints, limited budget or any other. Short- and long-term pros and cons of
each solution are critically assessed. The following points should be considered
in selection of best solution or option:-
1. Establishing criteria for selecting a solution
2. Evaluating the potential solutions against criteria.
Once solutions have been selected, it should be examined that “What could
possibly go wrong if we do this?” If there is no way to counter serious obstacles,
the team may need to think of other more appropriate solutions. It is generally a
good idea to select a solution that is associated with low risk and that is
compatible with priorities and future goals.
5. Implementation on best solution: This stage involves accepting and carrying
out the chosen course of action. Implementation means acting on the chosen
solution or course of action. During implementation more problems may arise
especially if identification or structuring of the original problem was not carried
out properly A detailed and specific plan should be developed for effective
implementation of various activities in relation to course of action. It involves the
three basic stages.
1. Planning and preparation for step by step process or action for solution.
2. Implementation and monitoring of the activities.

83
 3. Review and evaluation of the progress.
It may be preferential to implement on a pilot basis or small scale at first-
6. Monitoring/Seeking feedback: The last stage of problem solving is reviewing
the outcomes of problem solving over a period of time, including seeking
feedback as outcomes of the chosen solution. The final stage of problem solving
is concerned with checking the progress or success of chosen course of action.
This can be achieved by monitoring and gaining feedback from people involved
in the process. Feedback may be obtained in following ways.
1. Monitoring
2. Questionnaires
3. Follow-up phone calls
It is important to keep a record of outcomes and any additional problems that
occurred during the entire process of problem solving.
Types of problem solving:
There are various types of problem solving strategies. It may be applied in line
with the situations, intensity of problem, availability of time &resources and capabilities
of the organization. The major problem solving strategies or skill are listed as under-
1. Trial and error method: It is a way of solving problems through repeated
attempts. It is a method of trying something different every time till achievement
of desired result. This approach can be a good option when limited number of
options are available. Although this approach sounds random, problem solving
through trial and error is efficient only when one can base his attempts on some
prior knowledge and information.
2. Difference Reduction: In difference reduction method a large task is divided
into smaller steps. The first thing you do is ask oneself what step will take you
from where you are to as close as possible to the final goal. You take that step and
repeat the process until you reach the goal. Sometimes difference reduction is not
the quickest way to get to our goal – sometimes one has to take one step
backwards to take a step forwards.
3. Means-Ends Analysis: In means-ends analysis current situation is compared
with the situation desired. The most significant difference between those two
situations is assessed and sub-goal is created to remove that difference.
4. Algorithm: Algorithms are step-by-step strategies or processes to solve a
problem or achieve a goal. It is a procedure for solving a problem based on
conducting a sequence of specified actions. Algorithm is most commonly used in
the field of mathematics and computer science. While an algorithm provides an
accurate answer, it is not always the best approach to problem-solving. This

84
 strategy is not practical for many situations because it can be so time consuming
5. Heuristics: Heuristics are general strategies used to make quick, short-cut
solutions to problems that sometimes lead to solutions but sometimes lead to
errors. Heuristics are sometimes referred to as mental short-cuts, and we often
form them based on past experiences. A heuristic is a mental rule-of-thumb
strategy that may or may not work in certain situations. Unlike algorithms,
heuristics do not always guarantee a correct solution. However, using this
problem-solving strategy does allow people to simplify complex problems and
reduce the total number of possible solutions to a more manageable set.
6. Graphic representations: Graphic representations are visual-based
illustrations of a problem that might lead to clarification of a problem or creative
solutions. Examples of graphic representations are flow charts, diagrams,
outlines or mind maps. With any of these options, you can draw the problem out,
and this might help you see the problem in a new way.
Problem solving skills possessed by an entrepreneur:
An Entrepreneur is one who bears risk and takes to make a profit. He works an
innovator and designer of new ideas. Management skills and strong team building
abilities are perceived as essential leadership attributes for successful entrepreneurs.
There are certain problem-solving skills that an Entrepreneur should possess to
run an enterprise successfully.
1. Critical Thinking Skills: Critical thinking is the ultimate key to problem-
solving and is the most important problem-solving skill an entrepreneur should
possess. Critical thinking is the process of devoting our time to digest the issue at
hand logically before taking a final decision. Using this skill, entrepreneurs may
properly analyze all the factors that are related to their problems and come up
with a appropriate and satisfactory conclusion. This skill enables entrepreneurs
to identify problems and covert such problems into opportunities. Business
challenges and problems cannot be resolved without critical thinking.
2. Decision Making Skills: Another skill that every entrepreneur must possess is
decision making. After analyzing several possible alternatives and solutions in
relation to a problem an entrepreneur must be able to arrive at a decision quickly..
The faster the decision is made, the quicker can execution process begins.
3. Communication Skills: Entrepreneurs having good communication skills
inspire others to be more confident in expressing their views & opinions and
encourage them to report feedback, which can obviously speed up the process of
finding solutions. Good communication skills can build up confidence level and
through which one is able to gain a better perspective and receive valuable
insights.

85
 3. Creativity/ Lateral Thinking: Lateral thinking is the ability to think outside the
box when solving problems. Creativity helps entrepreneurs in creation of new
ideas and developing new ways and approaches for solution of a problem. It
enables entrepreneurs to connect dissimilar and unrelated subject.
4. Initiative: Having initiative is essential to becoming a successful entrepreneur.
Successful entrepreneurs are always in search of new ways to do things, to
communicate with their staff and to improve their product or service. The
initiative of an entrepreneur is developed over time and it shows that you are
passionate about your product and determined to succeed; qualities that investors
love to see.
5. Persistency
6. Understanding of the business
7. Self-Discipline
8. Flexibility/Adaptability
References:
1. [Link]
Problem-Solving-Process
2. [Link]
3. [Link]

86
15 TOTAL QUALITY MANAGEMENT
Meaning of Quality
The concept of quality is an evolutionary, not a revolutionary one. It has traversed
a long path over the period from operator's inspection to the Total Quality Management
(TQM).
Table 1 summarizes the evolution and development of the quality concept over
the period.
Table 1: Historical Development of the Quality Concept
Quality Imperatives Period
Operator Inspection 1870-1890
Foreman Inspection 1890-1920
Quality Circle (QC)Departments 1920-1940
Statistical Quality Control (SQC) 1940-1960
Quality Assurance (QA) Departments 1960-1990
Total Quality Management (TQM) and Statistical Process Control (SPC) 1990 onwards

Quality is a customer's determination, not the manufactures' determination.

Quality is viewed as a continuous improvement in performance to satisfy the customer's
needs and expectations. A number of definitions have been propounded by experts over
the period. Some of these are presented here.
According to Joseph M. Juran: “Quality is fitness for use or purpose”
Philib B. Crosby opines: “Quality is conformance to requirement”
ISO has defined quality as follows: “The totality of features and characteristics of a
product or service that bear on its ability to satisfy stated or implied needs of customers”
Having gone through above definition, now quality can safety be defined as
continuously meeting agreed customer needs or what it takes to satisfy the customer, or
simply fitness for purpose.
Quality has become so essential in today's competitive environment that
ignoring the quality issue is tantamount to corporate suicide. Of late, concept of quality
has expanded to Total Quality Management (TQM). TQM has become the buzzword of
the day. The subsequent discussion, therefore, unfolds all about TQM.

87
Meaning of Total Quality Management (TQM):
TQM is known by various names, such as total quality improvement (TQI) or
total quality control (TQC), or simply as total quality or as Strategic Quality
Management (SQM), and so on. Notwithstanding, all these nomenclatures mean the
same, i.e., continuous improvement in all parts of an organisation with a view to satisfy
customer needs as much as possible.
According to V. Daniel Hunt, “Total quality management is both a comprehensive
managerial philosophy and a tool kit for its implementation.”
British Quality Association defined TQM as “management philosophy and company
practices that aim to harness the human and material resources of an organisation in the
most effective way to achieve the objectives of the organisation”.
Confederation of Indian Industry (CII) defined TQM as follows:
“Meeting the requirements of the internal and external customers consistently by
continuous improvement in the quality of work of all employees.”
TQM can be conceptualized into the following three processes:
1. Quality Process: It is for understanding who are the customers, what are their
needs and taking steps to completely satisfy the needs of these customers.
2. Management Process for Continuous Improvement: The term management
refers to managing continuous improvement and does not address any specific
organisational level. The process comprises the PDCA cycle and its
continuously evolving policies, objectives and methods to achieve goals,
education and training, implementation, checking causes, checking effects,
taking appropriate actions, and preventing recurrence. Management process
addresses continuous improvement to keep pace with the:
(i). Changing requirements
(ii). Competitive environments, and
(iii). Technological advances.
3. People Process: It is initiating and maintaining the TQM. It is carried out
through involvement of all employees on the basis of all the three values, namely,
intellectual honesty, self-control, and respect for others. Now that we have
understood the meaning of TQM given by different experts, now we can
profitably define TQM as long-term effort to transform all parts of the
organisation in order to produce the best product and service possible to meet
customer needs.
Need for Total Quality Management (TQM) in small enterprises
Having gone through the meaning of TQM, now two questions come in the mind:
(i). Why is TQM needed in small-scale enterprises? (ii). Can it really be applied and work

88
in small-scale enterprises? The first two questions are addressed in this section. The next
section of the chapter is devoted to answering the “how” question.
It is easy to start small enterprises but difficult to make them survive. It is more so
in the context of ever increasing competition in business brought by liberalisation,
privatisation and globalization (LPG) of the Indian economy. Only those enterprises can
survive who possess strength to face the stiff and complex competition. Further, small
enterprises find it more difficult to face competition due to their small size in all respects
be these finance, technology, managerial competencies, etc. Then, the question arises is
how to develop competitive strength among small enterprises to meet competition
effectively. The answer to this question is 'quality'. As mentioned earlier, quality is in
conformance to requirements. According to David Kearns, the former CEO Xerox,
quality has assumed so importance that it has become the battlefield of nineties; only the
fittest will survive beyond 2000.
Quality serves as competitive advantage and enables small enterprises to
withstand the onslaughts of competitive environment. As competition always keeps
changing to more and more complex, so is required continuous improvement in quality
to face such ever complex competition effectively. It is TQM that ushers in continuous
improvement in organisational performance. TQM, thus, strengthens the competitive
strength of small-scale enterprises to conform to the changing requirements of business.
The same underlines the need for TQM in small-scale enterprises.
In aggregate, TQM offers the following advantages to small-scale enterprises:
 Increases efficiency in processes.
 Provides more time for innovation and creativity.
 Higher morale of employees.
 Improvement in the quality of products and services.
 Increases customer satisfaction.
 Larger market share for the product.
 Higher productivity.
· Higher profits.
Having appreciated the need for TQM in small enterprises, Let us now applied in
small-scale enterprises.

TQM process in small-scale enterprises

The purpose of TQM is to meet the requirements of customers consistently by
continuous improvement in the quality of work of all employees. For this, TQM involves
the following process:

89
 1. Customer Satisfaction
2. Processes
3. Continuous improvement
4. Team work
5. Personal initiative
A brief description of these follows:
1. Customer Satisfaction: Customer is one who buys others' goods and services.
Today, customer dictates production or market. The long-term success of any
business, therefore, depends on customer satisfaction. This is especially true for
small businesses where the impact of losing even a single customer can be
serious. The first step in planning for customer satisfaction is to understand what
customers expect from the product or service is to be provided to them.
For any business, there can be two types of customers: internal and external.
Internal customers are those individuals within an organization to whom another
department provides their products and services. External customers are those
whom are the ultimate purchaser or end user of product or service.
The following steps can be followed to understand customer requirements.
1. Document the results of the work performed.
2. Identify everyone (customers) who receives the outputs.
3. Pinpoint the output characteristics the customers want, require, or expect.
4. Verify output requirements, determine requirement importance, and
understand current level of satisfaction.
2. Processes: Process can be defined as a series of inter-dependent tasks that
produce results. This requires transformation of inputs into outputs. Processes
exist in every part of an organization. People mistakenly think of only production
or manufacturing operations. In fact, the word 'process' is all embracing one. As
every part of an organisation performs work, all these should be systematically
defined to include them in the process. Administration, billing, sales,
maintenance, recruitment and training are the examples of different parts of
organisation in which process exists. It may be true that there may be some
processes in the organisation that are obvious, while others may not be so
obvious. Such processes need to be clearly defined.
The various steps that can help define the processes that any organisation
performs are listed in the following Figure.

90
 1. List team outputs
(to document the results of the work performed.)
2. Group similar outputs.
(to create an outline of the process.)
3. Name the process
(to allow it to be easily referenced.)
4. Define process boundaries
(to establish beginning and ending points.)
5. List process activities
(to provide examples of the tasks involved.)
6. Identify inputs
(to determine the resources required.)
3. Continuous Improvement: The third step involved in TQM is making efforts
for continuous improvement in performance/process. The first step in improving
a process is to eliminate the waste associated with the process. But, the question
is how to eliminate the waste? The various techniques like value-added
assessment, minimize checks and inspections, and minimize administrative
tasks help reduce/eliminate waste in process. Process simplification is the second
step involved in improving process. Simplification means reducing the
complexity of a process. Further, simplification can lead to fewer activities and
things to go wrong. Experience suggests that the simpler a process is, the easier it
is to learn and perform consistently. Reducing cycle time is yet another technique
to improve process. Cycle time is the time required to deliver a product or service
to customer. Cycle time includes delays, processing time, time required to check
and handover, and so on. Long cycle times not only prevent prompt deliveries to
customers. But also increase cost. Hence, there is need for reduction in cycle
time.
4. Team Work: The fourth element involved in TQM process is team work. Ateam
is a group of individuals who work together on one or more common processes.
These individuals may, all, be from the same department, represent several
departments, or involve an external supplier or customer. The five faculty members
in the Department of Business Administration in Assam Central University
responsible for teaching management programme is an example of team.
Effective team work has its foundations on consensus. Consensus is a general
agreement by everyone involved. Consensus is arrived when all members of a
team understand a decision, and, even if they do not completely agree with the
decision, accept and support it.

91
 5. Personal Initiative: TQM process completers with encouraging personal
initiative in organisational functioning. Empowerment breeds personal
initiative. According to Stephen R. Covey, “An empowered organization is one
in which individuals have the knowledge, skill, desire, and opportunity to
personally succeed in a way that leads, to collective organisational success”
Now, the question is how to create an empowered organisation to make the
employees personal initiative in the organisational processes? The key to
preparing employees to take appropriate personal initiative is to train them in the
concepts and techniques of TQM process. Such a training help employees
manage the processes they are responsible for performing.
Reference:
 Khanka, S.S. (2012). Entrepreneurial Development. New Delhi, S. Chand &
Company Ltd.

92
16 SUPPLY CHAIN MANAGEMENT
Definitions of Supply Chain Management:
According to the Council of Supply Chain Management Professional (2011): The
planning and management of all activities involved in sourcing and procurement,
conversion and all logistics management activities. More important, it also includes
coordination and collaboration with channel partners. In essence, supply chain
management integrates supply and demand management within and across companies.
Gartner (2013): It refers to the processes of creating and fulfilling demands for goods
and services. It encompasses a trading partner community engaged in the common goal
of satisfying end customers.

Supply Chain Management is a methodology of improving the business

processes, making them more resilient, more agile and as a result, more competitive. The
main function of SCM is to improve the product or services competitiveness
(Machowiak, W. (2012).
Supply Chain Management is basically the flow of goods and services. It
includes the whole process of good's movement, storage of raw materials, in-process
inventory and good's consumption from the beginning to end. The ultimate goal of
efficient supply chain management is to reduce the inventory costs for an organization
and keeps product's availability when required.
Supply Chain Management in Agriculture: Definition
Supply Chain Management in agriculture is defined as “The management of
movement of agricultural commodities from the farm through the rural and urban
markets to reach the door steps of end consumers both household and industrial
consumers.” (Mondal S, 2018)

93
 Agricultural Supply Chain Management consists of many players, starting from:
I. Agricultural producers
II. The middleman
III. Commission agents and traders
IV. The bulk purchaser or procurers, millers or intermediary processors
V. Warehousing agents or cold storage space providers
VI. Transporters
VII. Retail distributers etc
Evolution and History of Supply Chain Management
The term, “Supply Chain Management” was first coined by Keith Oliver in 1982.
Before the 1950s, logistics was thought of in military terms. It had to do with
procurement, maintenance and transportation of military facilities, materials personnel.
The emergence and evolution of supply chain management may be depicted as a time
line following (Habib and Jungthira Panich, 2008).
1950 Initiated logistic concept
1970 Matured logistic concept
1970-1980 Logistics in SCM
1980 Initiated the SCM concept
1985 SCM in Manufacturing Industry
1995 Initiated SCM in the Service Industry
2007 Educational SCM
The scope and definition of supply chain management has been ever changing. It
is continuously evolving and broadening its scope. To identify the trend in the evolution
of SCM reviewing papers in chronological orders. Reviewing papers in chronological
order will show the trend in evolution of definition of SCM.

References Definitions
Chang et al. (2013) Supply chain management now has a new strategic dimension
to it which is e-procurement.
Dubey and Ali (2013) Supply Chain Management may be defined as the management
of upstream and downstream associations with vendors and
customers to provide better customer value at least cost to the
supply chain.
Machowiak (2012) SCM is a methodology of improving the business processes,
making them more resilient, more agile and as a result, more
competitive. The main function of SCM is to improve the
product or service competitiveness.

94
Randall and Mello (2012) Supply Chain Management incorporates supply and demand
management inside and across companies.
Dubey et al. (2012) Supply Chain Management as a concept manages the flow of
material, information and funds end to end i.e. from upstream
to downstream members. It also deals with the disposal of
material after consumption as per the environmental norms.
SCM tries to achieve this at the lowest cost with maximum
efficiency.
Melnyk et al. (2009) The definition that “SCM is primarily responsible for
managing the buying as well as managing the flow of orders
and information” is no longer valid. Today all the related
aspects such as improving customer service, mitigating supply
chain risk, reducing wastes, improving new product design
process and enhancing product service quality are treated as an
integral part of supply chain management.
Parkan and Dubey (2009) In India, supply chain cost can be divided in two main
categories: a) Distribution cost: which is generally logistics
cost b) Inventory value and inventory holding costs: which
mainly consist of cost of inventory and cost of keeping
inventory in storage location
Wadhwa et al. (2008) The challenge of SCM is to identify and implement strategies
that minimize cost while maximizing flexibility in an
increasingly competitive and complex market.
Vachon and Klassen Supply chain management is increasing its dimensions. Being
(2007) efficient is not enough; Companies are now looking for
sustainable and environmental friendly supply chain.
Sachan and Datta (2005) SCM should not be studied alone and its interest should not be
only industrial development. Concepts such as market
orientation, relationship marketing should be studied with
SCM. There is a need of new boundaries of SCM which can
incorporate all these concepts into SCM.
Chen and Paulraj (2004) Supply chain management is not only limited to logistics
activities and planning and control of materials and
information flow internally within the company or externally
between companies. It also deals with the strategic decisions
such as inter-organizational issues, alternative organizational
form to vertical integration. It is also the management of
relationship between suppliers and customers.
McCormack and Kasper Supply Chain Management involves processes which help a
(2002) firm to improve its competencies by synchronising operations
to include source, make and deliver processes in collaboration
with channel partners and suppliers.
Skojett-Larsen (1999) SCM can be seen from many perspectives such as system
engineering, economics, sociology and management.

95
 Walton and Gupta (1999) Supply chain management is the integration of various
concepts such as extended enterprise, the virtual organization,
the virtual value chain and green supply chain. These aspects
are important from the perspective of strategy and operations
for an industry.
Spekman et al. (1998) Supply Chain Management attempts to ensure that the
expertise of any member of supply chain shared throughout the
supply chain. By sharing the expertise, a firm will be able to
improve on customer value as well as gain competitive
advantage in the market.
Harland (1996) Supply chain management integrates two business functions, it
manages immediate relationships with suppliers, and it also
integrates chain of supplier's suppliers and a customer's
customers and so on. It is the management of interconnected
business involved in the ultimate provision of products and
service packages required by end users.
Lee and Billington (1993) A supply chain is a network of facilities that performs the
function of procurement of material to intermediate and
finished products, and distribution of finished products to
customers.
Source: Parkhi S, et al, 2015, AIMS International Journal of Management.

Levels of Supply Chain Management

There are three levels of Supply Chain Management
Strategic SCM: It deals with future planning than in looking at market evaluation,
capacity issues, new products, and technology changes. This planning is addressing
issues that may be factors several years out. This is accomplished at the executive
management level.
Tactical SCM: It involves a shorter planning cycle. It is more concerned demand
planning, inventory planning and supply planning. This is determined at a less senior
level than Strategic SCM.
Operational SCM: It is current planning activities measured in at most weeks.
Operational SCM involves the majority of the operations. It includes demand fulfilment,
scheduling, production, transport and monitoring.
Advantages of Supply Chain Management:
1. Improves productivity and business functions.
2. Develops better customer relationship and service.
3. Better information system about goods, market etc.
4. Attracting and retaining employees.
5. Creates new market opportunities.
96
 6. Improves quality of the product.
7. Increase the level of profit in business.
8. Enhanced supply chain management
9. Minimizes cost.
References:
1. Chopra, S. and Meindl, P. (2016) Supply Chain Management, sixth edition,
Prentice Hall of India.
2. Machowiak, W. (2012). Risk management-unappreciated instrument of supply
chain management strategy. LogForum, 8(4), pp. 277-285.
3. Mondal, S. (2018). Communication Skills and Personality Development,
Entrepreneurship Development and Business Communication. Kalyani
publishers, New Delhi.
4. Parkhi, S., Joshi, S., Gupta, S. and Sharma, M. (2015). A Study of Evolution and
Future of Supply Chain Management, AIMS International Journal of
Management 9(2) 95-106.
5. Levels of Supply Chain Management. (2010-11) Retrieved from
[Link]
[Link]

97
 PROJECT PLANNING FORMULATION AND
17 REPORT PREPARATION

Project
A project comprises of a series of activities for achieving predetermined
objective or set of objectives. The objectives may be social, economic or a combination
of both and they can be defined as General objectives and operational objectives.
Project includes all activities which are aimed at
(a) Production of goods/services
(b) Increasing the capacity of the existing projects and
(c) Increasing the productivity of the existing means of production.
A project is a specific activity on which money is spent in the expectation of
returns.
Therefore, there is a specific starting point and definitely specific end point and it
is intended to achieve a specific objectives. In addition, a project has a specific
geographic location and serves a group of population.
Formulation of project plan
Project formulation is the systematic development of a project idea for arriving at
an investment decision. It has the built-in mechanism of ringing the danger bell at the
earliest possible stage of resource utilization.
Project formulation is a process involving the joint efforts of a team of experts.
Each member of the team should be familiar with the broad strategy, objectives & other
ingredients of the project. Besides being an expert in his area of specialization, he should
be able to play his role in the overall scheme of things. It aims at a systematic analysis of
project potential with the ultimate objective of arriving at an investment decision. In this
process it makes an objective assessment from all possible angles starting from project
identification up to its appraisal stage. Thus, project formulation is the process of
examining technical, economic, financial & commercial aspects of a project. It refers to a
preliminary project analysis covering all aspects such as technical, financial,
commercial, economic & managerial to find out whether it is worthwhile to take project
for detailed investigation & evaluation.

98
Stages of project formulation
The process of project development has been categorized in the following stages:
1. Feasibility Analysis
2. Techno-Economic Analysis
3. Project Design and Network Analysis
4. Input Analysis
5. Financial Analysis
6. Social Cost-Benefit Analysis
7. Pre-Investment Analysis
Thus, project formulation takes into consideration the above seven important
aspects of a project.
1. Feasibility Analysis:
The first stage of project formulation is feasibility analysis, in which the
project idea is examined to see whether to go in for a detailed investment
proposal or not. As project idea is examined in the context of internal and
external constraints three alternative could be considered:
(a) The project idea seems to be feasible
(b) The project idea is not a feasible one
(c) Unable to arrive at a conclusion for want of adequate data
If it is feasible, we abandon the idea and if sufficient data are not available, we
make more efforts to collect the required data and development of design.
2. Techno-Economic Analysis :
One of the most important activities during the development phase of new
products or services is the evaluation of their economic feasibility/viability -
a process known as "techno-economic analysis" (TEA). The analysis looks at
the market that the service or product is entering, anticipated selling price and
cost of production (input costs). This information is used to predict future
cash flows and the likely return on investment. Techno-economic analysis
provides the project a unique individuality and sets the stage for detailed
design development.
3. Project Design and Network Analysis:
It is very important stage of project formulation and also known as the heart of the
project entity. It defines the sequence of events of the [Link] work plan
of the project is prepared and time is allocated for each activity. It helps to identify
projectinputs, financeneededandcost-benefitprofileoftheproject.

99
4. Input Analysis:
This stage assesses the requirement of inputs during the construction as well
as the implementation of a project. It is very important to appraise the input
requirement for each activity and total input requirement is calculated by sum
up. It also considers the recurring and non recurring resource requirement
and evaluates the feasibility of the project from the point of view of the
availability of necessary resources i.e. material, human resources etc. This
aids in assessing the project cost, though financial analysis or cost-benefit
analysis.
5. Financial Analysis :
This is very important step which involves the estimation of project cost,
operating cost and fund requirement. This analysis is useful for decision
makers for comparison of various project proposals on a common scale.
Analytical tools used are discounted cash flow, cost-volume-profit
relationship and ratio analysis.
6. Cost-benefit Analysis:
The overall worth of the project is considered in this step. Definitely the
project design forms the basis of evaluation it considers costs that all entities
have to bear and the benefit connected to it.
7. Pre-investment Analysis: This is the stage, where the results obtained in
previous stages are consolidated to arrive at clear conclusions. It helps the
project-sponsoring body, the project implementing body and the external
consulting agencies to accept/reject the proposal.

100
 Sequential Stages of Project Formulation

Report preparation:
Report is a concise copy of detailed analysis done for the project. An
entrepreneur prepares the report before the investment in project is done, which assesses
the demand for proposed product/service, works out cost of investment and profitability
on this investment. It acts as an instrument to convince investors to invest in the project.
Aproject report gives information on the following:
 Economic aspects – In this part the information of present market, scope for
growth, justification for investment is considered.
 Technical aspects – The requirement of technology, machinery, and equipment
are covered in this part.
 Financial aspects – This part of the report gives the information on total
investment needed, entrepreneur's contribution, cost of capital and return on
capital.
 Production aspects – Product details, justification for the choice of product,
export worthiness etc are the important elements of this section.
 Managerial aspects – This feature covers the qualifications, experience of people
needed for managerial posts.
101
Contents of a project report
It is detailed plan of action and particulars about the proposed project.
 Objectives and scope of the report.
 Product characteristics- It includes product design, specifications, quality
standards, uses and applications etc.
 Market position and trends- Covers current capacity for production, potential
demand, export prospects, trends in import-export, price structure etc.
 Raw materials- Requirement of raw material for production, types, quality,
sources, price.
 Manufacturing- Product manufacturing process, production schedule, technique
used is clearly mentioned in this part.
 Plant and machinery (types, infrastructure support, cost).
 Land and building (Requirement, building construction schedule, choice of
location, cost).
 Financial implications (Capital structure, fixed and working capital investment,
project cost, profitability).
 Marketing channels (Trade practices, marketing and advertising strategy).
 Personnel (Requirement of staff, skilled-unskilled labour, salary and wage
payment, qualifications, experience)
The project report is submitted to financial institutions for grant of land and other
financial concessions. Organizations like Small Industries Service Institute (SISI) and
Small Industries Development Organisation (SIDO) help entrepreneurs to prepare
project report. The financial institutions ascertain from the report, whether the project
can generate enough funds to repay the borrowings in stipulated time frame
Financial Planning
Financial Planning is the process of estimating the capital required and
determining it's competition. It is the process of framing financial policies in relation to
procurement, investment and administration of funds of an enterprise.
Financial planning is the task of determining how a business will afford to
achieve its strategic goals and objectives. It describes each of the activities, resources,
equipment and materials that are needed to achieve these objectives, as well as the
timeframes involved.
The Financial Planning activity involves the following tasks:
 Evaluate the business environment
 Confirm the business idea and objectives

102
  Identify the types of resources needed to achieve these objectives
 Quantify the amount of resource (labour, equipment, materials)
 Calculate the total cost of each type of resource
 Summarize the costs to create a budget
 Identify any risks and issues with the budget set.
Objectives of Financial Planning
a. Determining capital requirements- It depend upon factors like cost of current and
fixed assets, promotional expenses and long- range planning. Capital
requirements have to be looked with both aspects: short- term and long- term
requirements.
b. Determining capital structure- The capital structure is the composition of capital,
i.e., the relative kind and proportion of capital required in the business. This
includes decisions of debt- equity ratio- both short-term and long- term.
c. Framing financial policies with regards to cash control, lending, borrowings, etc.
d. A finance manager ensures that the scarce financial resources are maximally
utilized in the best possible manner at least cost in order to get maximum returns
on investment.
Importance of Financial Planning
Financial Planning is necessary to ensure effective and adequate financial and
investment policies. It is a process of framing objectives, policies, procedures,
programmes and budgets regarding the financial activities of a concern. The importance
of financial planning is as follows:
1. Adequate funds have to be ensured.
2. Stability is maintained with reasonable balance between outflow and inflow of
funds.
3. Financial Planning ensures that the suppliers of funds are easily investing in
companies which exercise financial planning.
4. It helps in making growth and expansion programmes which helps in long-run
survival of the company.
5. Financial Planning reduces uncertainties with regards to changing market trends
which can be faced easily through enough funds.
6. Financial Planning helps in reducing the uncertainties which can be a hindrance
to growth of the company. This helps in ensuring stability an d profitability in
concern.
Financing of Enterprise
Finance is one of the important prerequisites to start an enterprise. Financing an
103
enterprise – whether large or small-is a critical element for success in business. The
decisions taken by the entrepreneur well in advance regarding the future financial
aspects of his /her enterprise is called financial planning. In short, “financial planning is a
financial forecast made for the enterprise in beginning itself.” Therefore, every
enterprise should clearly chalk out its future financial requirements in its very beginning
itself.
In financial planning, the entrepreneur should clearly answer the following three
questions:
 How much money is needed?
 Where will money come from?
 Where does the money need to be available?
While estimating the money needed, the entrepreneur should take the following
three things into consideration:
1. There should be adequate money to pay the purchase considerations.
2. There should be sufficient capital at his /her disposal to support the business
operations up to the three initial months of the enterprise.
3. Enough provision should be made to meet unexpected / unplanned business
expense.
Thus, the total of these three amounts will constitute the total money needed to
start the enterprise.

1. Fixed Capital:- The money invested in some fixed assets or durable assets like
land, building, machinery, equipment, furniture etc. is known as fixed capital
.These assets are required for permanent use, that is, for a long period of time

104
 2. Working Capital:-The money invested in current assets like raw material,
finished goods etc. is known as working capital. In other words, money required
for day-to- day operations of business/ enterprise is called 'working capital'.
3. Long-term Capital: -This is such money whose repayment is arranged for more
than five years in future. The sources of long–term finance could be owner's
equity, term –loans from financial institutions, credit facilities from the
commercial banks, hire –purchase facilities from specific organization etc.
4. Short-term Capital: -This is a borrowed capital/ money that is to be repaid
without one year. The sources of short-term finance include bank borrowings for
working capital, deposits or borrowing from friends and relatives etc.
In every business/enterprise, capital is arranged from two sources:
Internal sources: In this source, funds are raised from the enterprise itself. These are
 Owner's capital known as equity, deposits and loans given by the owner, the
partner, the directors to the enterprise.
 Personal loans taken by entrepreneurs on LIC, Provident Fund, buildings,
investments.
 Retention of profits, or conversion of some assets into funds, in case of running
enterprise.
External Sources: In this source, funds raised from other than internal sources. These
 Deposits or borrowings from relatives and friends and others.
 Borrowings from the banks for working capital purposes.
 Credit facilities from the commercial banks.
 Term –loans from financial institutions.
 Hire purchase or leasing facility from the National Small Corporation (NSIC)
 Seed /Margin money, subsidies from the Government and the financial
institutions.
Rural Entrepreneurship
Rural Entrepreneurship can be defined as entrepreneurship emerging at village
level which can take place in a variety of fields of endeavour such as business, industry,
agriculture and acts as a potent factor for economic development.
Problems faced by the rural entrepreneurs:
Financial Problems
(a) Lack of funds, lack of tangible security and credit in the market.
(b) Risk bearing Capacity: low risk bearing ability due to lack of financial resources

105
 and external support.
(c) Poor infrastructure facilities: lack of proper transport power supply
Marketing Problems
(a) Limited scale and scope of local market opportunities
(b) Lack of market information due to poor communication facility
(c) Competition: Rural entrepreneurs are facing tough competition
(d) Middlemen: exploitative middlemen together with low awareness
(e) Low quality products
Management Problems
(a) Lack of IT knowledge and Technical Skills
(b) Non availability of skilled labours
(c) Low awareness over Legal Formalities
(d) Less availability of Raw materials
Opportunities of Rural Entrepreneurship
1. Support & Motivation to local people: Rural entrepreneurs have a lot of
support from the rural people. Rural village people always encourage and give
the motivation to the entrepreneurs.
2. Low establishment cost: When compared to the urban areas, rural
entrepreneurs' business establishment cost is very low. There is no need to
construct or facilities huge infrastructure and buildings.
3. Competitive advantages / Availability of labour: In India seventy percent of
the people are living in the village. Majority of the rural people are depending on
the agriculture. The agriculture work is not available throughout the year. That is
the reason why rural entrepreneurs have the competitive advantage in easily
acquiring unskilled and semiskilled labor.
4. Government policies and subsidies: The government of India is continuously
monitoring and introducing the new policies for encouraging the rural
entrepreneurship. These policies are very flexible, innovative, liberalized and giving
continues support to rural entrepreneurs. At the same time government has also
announcedhugesubsidiesforpromotingtheruralentrepreneurship.
5. Availability of raw materials: Most of the times the rural entrepreneurs are
depending upon the farm based products as raw materials, which are available
through-out the year. These raw materials are available in the rural area that is the
reason there is no transportation cost and flotation cost.
6. Cost of production: Rural entrepreneurs cost of production is very low when

106
 compared to the urban industries. The factors of production are available with
low cost; automatically the cost of production is also low. Because of this rural
entrepreneurs can sell their goods and services with cheaper cost.
7. Optimum utilization of produces: Optimum utilization of farm produces is
only possible through the rural entrepreneurship only. Most of the rural
entrepreneurs depend upon the farm produces as raw materials.
8. Employment generation for rural youth: Rural entrepreneurs are providing
hundred percent jobs for rural youth. If the rural entrepreneurs are succeeding in
this activity the migration of the people to urban from rural will be immediately
stopped to a maximum extent.
9. Promotion cost: There is no promotion cost for rural entrepreneurs; in fact the
competition is very less. Particularly there is no need for advertising and other
promotional activities for their products.
10. Potential customer: In this twenty-first century rural villagers are economically
strong and also heavily populated. This heavy population can be converted as
potential customers. That is the reason all the MNC's are concentrated in rural
villages for their potentiality.
11. Building the goodwill: Rural entrepreneurs have a lot of scope building the
goodwill. Most of the rural entrepreneurs have ethical values and also these
people do not work for pure profits.
References:
1. Essays, UK. (November 2018). Opportunities And Challenges For Rural
Ent repreneurship In India Economics Essay. Retrieved from
[Link] opportunities-and-challenges-
[Link]?vref=1
2. Vasant Desai (2007). Dynamics of Entrepreneurial Development and
Management. Mumbai, Maharashtra: Himalaya Publishing House.
3. S.S. Khanka (2012). Entrepreneurial Development. New Delhi, S. Chand &
Company Ltd.