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Definitions : Entrepreneur Entreprende to undertake An entrepreneur is a person who is responsible for setting up an enterprise.

. He is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new reenfield pro!ects that actually creates wealth, opens up employment opportunities and fosters other sectors. "he entrepreneur is a critical factor in the socio# economic change. He is the key man who envisages new opportunities, new techni$ues, new line of production, new products and co#ordinates all other activities. %. &. '. (ay An entrepreneur is the economic agent who unites all means of production, the labour force of the one and the capital or land of others and who finds in the value of the products which results from their employment, the reconstitution of the entire capital that he utilises and the value of the wages, the interest and the rent which he pays as well as profit belonging to himself. ). "he *ew Encyclopaedia defines an Entrepreneur as An individual who bears the risk of operating a business in the face of uncertainty about the future conditions. +. &oseph A. (chumpeter

"he entrepreneur in an advanced economy is an individual who introduces something new in the economy a method of production not yet tested by e,perience in the branch of manufacture concerned, a product with which consumers are not yet familiar, new source of raw material or of new markets and the like. "he function of an entrepreneur is to reform or revolutionise the pattern of production by e,ploiting an invention or more generally an untried technological possibility for producing a new commodity. -. .eter Drucker defines An entrepreneur as one who always searches for change, responds to it, and e,ploits it as an opportunity. Entrepreneurs innovate. Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practised. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation. /(ystematic innovation consists in the purposeful and organised search for changes and in the systematic analysis of the opportunities such changes might offer scope for economic and social innovation.0

1. 2rancis walker "he true entrepreneur is one who is endowed with more than a average capacities in the task of organising and coordinating the various other factors of production. He should be a pioneer, a captain of industry. 3. A good entrepreneur is one who is capable of inspiring confidence in people, and has the ability to motivate them to work with him in fulfilling the economic goals set by him.

*ew 4oncept of Entrepreneur : "he term 5entrepreneur6 has been defined as one who detects and evaluates a new situation in his environment and directs the making of such ad!ustments in the economic systems, as he deems necessary. He conceives of an industrial enterprise for the purpose, displays considerable initiative, grit and determination in bringing his pro!ect to fruition, and in this process, performs one or more of the following: a. .erceives opportunities for profitable investments, b. E,plores the prospects of starting such a manufacturing enterprise, c. 7btains necessary industrial licenses, d. Arranges initial capital, e. .rovides personal guarantees to the financial institutions, f. .romises to meet the shortfalls in the capital, and g. (upplies technical know#how. *ot entrepreneur in strict sense: 4opy 8mitation *ot entrepreneur Drug peddler 'ootlegger 'lack marketer 'rothel keeper

Definition Entrepreneurship 8t refers to a process of action an entrepreneur undertakes to establish his9her enterprise. 8t is a creative and innovative response to the environment. Difference : Entrepreneur :efers to a person: ;isualiser 4reator 7rganiser 8nnovator "echnician 8nitiator Decision#maker .lanner <eader =otivator .rogrammer :isk#taker 4ommunicator Administrator Entrepreneurship :efers to a process: ;ision 4reation 7rgani>ation 8nnovation "echnology 8nitiative Decision .lanning <eadership =otivation Action :isk#taking 4ommunication Administration

Entrepreneur v9s .rofessional =anager According to the (achar 4ommittee on 4ompany <aw A !rofessional "anager is an individual who a. #elongs to the profession of law, accountancy, medicine, engineering or architecture, or b. Is a member of a recognised professional body or institutional body or institution exercising supervisory $urisdiction over its members, or c. Is a holder of a degree or diploma in management from any recognised university and possesses not less than five years experience in an executive capacity in a company, corporation or a body corporate or in the government, or possess minimum of ten years experience in an executive capacity in a company, corporation or a body corporate or in the government. .rofessional =anager
A .rofessional =anager is one who specialises in the work of planning, organising, leading and controlling the efforts of others. He does so through systematic use of classified knowledge and principles. He subscribes to the standards of practice and code of ethics established by a recognised body.

An entrepreneur has great motivation to manage his business successfully. He is keenly devoted to develop business through innovation and is satisfied when his efforts give him positive results. He is the investor, risk#bearer, manager and controller. "he entrepreneur may appoint a manager and delegate some of his functions. "he entrepreneur lays down broad policy for business, assumes risk and makes the business a going concern.

"he entrepreneur may be a manager but a paid manager cannot ac$uire the position of an entrepreneur.

Entrepreneurial Environment a. b. c. d. e. f. .olitical Economic (ocial "echnological <egal 4ultural .olitical Atmosphere ?uality of <eadership Economic .olicies <abour "rade "ariffs 8ncentives (ubsidies 4onsumer <abour Attitudes 7pinions =otives

a. .olitical i. ii. b. Economic i. ii. iii. iv. v. vi. c. (ocial i. ii. iii. iv. v.

d. "echnological i. 4ompetition @ :isk ii. Efficiency iii. .roductivity iv. .rofitability e. <egal i. :ules @ :egulations f. 4ultural i. (tructure ii. Aspirations @ ;alues

Environment for Entrepreneurship Entrepreneurs appear to have been motivated by a combination and interaction of the following factors of environment: %. ). +. -. 1. 3. A. B. C. (ocio#economic environment 2amily background (tandard of education and technical knowledge 2inancial (tability .olitical stability and government6s policy 4aste and religious affiliation Availability of supporting facilities Achievement motivation, and .ersonality and personal skill

"he environmental factors may be summarised as follows: %. ). +. -. 1. Entrepreneurship is not influenced by a single factor but is the outcome of the interaction and combination of various environmental factors. 'y changing the environment, society can be recreated. 8t is the 5desire to make money6 that drives one to start an industry rather than the amount one owns. Encouraging government policy and social recognition influence a person to become an entrepreneur. =odify the educational system so as to produce more !ob#creators rather than !ob#seekers.

4lassification of 8ndustries 8ndicators 4apital 8nvested 7utput ;olume *o. of Employees employed :aw =aterial 4onsumption .roduction 4apacity Home 8ndustries (mall (cale 8ndustries 4ottage 8ndustries "iny 8ndustries

=edium (cale 8ndustries 4ottage 8ndustry:

<arge (cale 8ndustries

=anufacturing activity is carried out by the owner himself along with his family members @ relatives or at the most with a ma,imum of C employees.

%mall %cale Industry <ow 4apital <ow financial resources (mall (cale operations "raditionally managed (ole proprietorship9.artnership <imited local coverage <abour intensive Autocratic leadership <ess <egal formalities 2le,ible structure High overnment assistance <ow output volume <ow managerial skills Advantages: %mall %cale Industry

&arge %cale Industry High 4apital High financial resources <arge (cale operations .rofessionally managed 4ompany form Dide area coverage 4apital intensive .articipative leadership 4omple, <egal formalities :igid structure *ormal overnment assistance High output volume High managerial skills

&arge %cale Industry

.rovide employment High bargaining power, opportunities low ordering cost, High Discount, bulk purchase .romoting local talent, E,pertise knowledge resources and local self back up sufficiency :emoves regional Dide distribution discrepancies channels 8ntegration with large 8ntegration with sector "echnical, financial, marketing and managerial economies

4lassification of 8ndustries a. Ese 'ased 4lassification : i. 'asic 8ndustries

Dhich provide essential input for the development of the other industries and the economy. E.g. iron @ steel industry forms a basis for the development of the engineering industry. 2ertili>er for agriculture, coal, oil @ electricity, cement etc.

ii. 4apital oods 8ndustries

Dhich produce machinery, e$uipment or tools. A capital good is one which is instrumental in producing other goods @ services. 4apital goods do not directly serve any consumption re$uirement. "hey are used to produce consumer goods and service. e.g. Hand tools and machine tools (peciali>ed e$uipments Electric =otors Heavy ;ehicles etc.

iii. 8ntermediate oods 8ndustries

"hose which manufacture goods that have already undergone manufacturing process but which form input for other industries as material for further processing, part or component. e.g. 4otton (pinning "yers @ "ubes =anmade fibers 'olts, nuts, screws, spring =etal etc

iv. 4onsumer oods 8ndustries

"he output of which serve the final consumption re$uirement. a. Consumer Durable #(erve the consumer over a relatively long periods. b. Consumer Non-durable # oods which are used up at once or within a relatively short periods.

b. 'ased on 7wnership i. ii. iii. iv. v. vi. 4entral overnment (tate overnment (tatutory 4orporations overnment Departments .rivate (ector &oint (ector

c. (i>e of 8ndustries i. ii. iii. iv. v. "iny (mall =edium <arge ;ery <arge # 1 lakh # 1#%FF lakh # %FF 1FF lakh # 1 %FF 4rore # 7ver %FF 4rore

d. 8nput 'ased 4lassification i. Agro#based

#Dhich uses agricultural product as the ma!or input, like sugar, !ute te,tiles etc.,

ii. 2orest#based
# Dhich use forest products as their ma!or inputs, like plywood, paper industry

iii. =arine#based
# Dhich depend mostly on marine products like fish etc.,

iv. =etal#based
# Dhich are based on metals like, engineering industries

v. 4hemical#base
# 8ndustries like fertili>ers, pesticides, paints and varnishes, drugs @ medicines etc. as chemicals are their ma!or or basic inputs.

4ottage 8ndustries : o "hose industries and crafts which are carried on, in the home of the artisan. o Assisted by family members. o *o power is used. o "ools and instruments used are simple. o E.g. hand#spinning, handloom#weaving, toy#making, rope#making, wood#work etc.

(mall (cale 8ndustries : o 2actory#type industries having investment in plant @ =achinery does not e,ceed :s. %FF lakh. o =ostly use power and small machines o Employ small number of workers. o 8nclude Ancillary 8ndustries having investment in plant @ machinery does not e,ceed :s. A1 lakh. o =anufactures parts, components, intermediate products, render services like repairs etc. o Also includes "iny 8ndustries in which investment in plant and machinery is worth below :s. 1 lakh regardless of the location. "raditional (mall 8ndustries: Ghadi and other village industries, Handloom industry (ericulture Handicrafts etc. =odern small 8ndustries : Esing power and employing labour and with investment in plant @ machinery not e,ceeding :s. 3F lakhs. ;illage 8ndustries Any industry with a capital investment up to :s. %1FFF per artisan and located in a village with a population below %FFFF and produces any goods or renders any services with or without the use of power and in which the fi,ed capital investment in plant @

machinery, land and building per artisan or worker does not e,ceed :s. %1,FFF. 8nvestment <imits : "he definitions of small scale industries has undergone changes over the years in terms of investment limits in the following manner: Hear %C1F 8nvestment limit /:s.0 Ep to :s. 1 lakh in fi,ed assets Additional conditions I1F persons with power I%FF without power Ep to :s. 1 lakh in *o condition plant @ machinery A.1 J %F J )F J +1 J 3F J %FF J )FF#(ervice 1FF#=anufacturing

%C3F %C33 %CA1 %CBF %CB1 %CC% %CCA )FF3

.ro!ect: A .ro!ect is a specific activity on which money is spent in e,pectation of returns. (pecific starting point (pecific end point (pecific 7b!ectives A pro!ect has a specific geographic location and would serve a group of population. Every pro!ect has three basic attributes. %. "he 8nput: Dhat pro!ect will consume. :aw =aterials, Energy, =anpower, 2inancial :esources, 7rganisational (et#up ). "he 7ut put: Dhat pro!ect will generate. .roduction of oods, (ervices, 2inancial 7utput +. "he (ocial 4ost 'enefit 4haracteristics. "he sacrifice, which the society will be called upon to make and the benefits, which will accrue to the society.

(couting for .ro!ect 8deas: %. Analyse the .erformance of E,isting 8ndustries ). E,amine the 8nputs @ 7utputs of ;arious 8ndustries +. :eview 8mports @ E,ports -. (tudy .lan 7utlays and overnment uidelines 1. uidelines to 8ndustries and Developmental Agencies A. 8nvestigate <ocal =aterials @ :esources B. Analyse Economic and (ocial "rends C. (tudy *ew "echnological Developments %F.Draw 4lues from 4onsumption Abroad %%.E,plore the .ossibility of :eviving (ick Enits %).8dentify Enfulfilled .sychological *eeds %+.Attend "rade 2airs %-.(timulate 4reativity for 8deas. enerating *ew .roduct 3. <ook at the (uggestions of 2inancial 8nstitutions

2acets of .ro!ect Analysis =arket Analysis "echnical Analysis 2inancial Analysis Economic Analysis Ecological Analysis

=arket Analysis: 8s concerned primarily with two $uestions: Dhat would be the aggregate demand of the proposed product9service in futureK Dhat would be the market share the pro!ect under appraisalK "he kind of information re$uired are : 4onsumption trends in the past and the present consumption level .ast and present supply position .roduction possibilities and constraints 8mports and e,ports (tructure of competition 4ost structure Elasticity of demand 4onsumer behaviour, intentions, motivations, attitudes, preferences, and re$uirements Distribution channels and marketing policies in use Administrative, technical, and legal constraints

"echnical Analysis: "he $uestions raised in technical analysis are: Dhether the preliminary tests and studies have been done or provided forK Dhether the availability of raw materials, power and other inputs has been establishedK Dhether the selected scale of operation is optimalK Dhether the production process chosen is suitableK Dhether the e$uipment and machines chosen are appropriateK Dhether the au,iliary e$uipments and supplementary engineering works have been proved forK Dhether provision has been made for the treatment of effluentsK Dhether the proposed layout of the site, buildings, and plant is soundK Dhether work schedule have been realistically drawn upK Dhether the technology proposed to be employed is appropriate from the social point of viewK 2inancial Analysis: "he aspects, which have to be looked into, are: 8nvestment outlay and cost of pro!ect 4ost of capital .ro!ected profitability 'reak#even point 4ash flows of the pro!ect 8nvestment worthwhile ness !udged in terms of various criteria of merit .ro!ected financial position <evel of risk

Economic Analysis: Also referred to as social cost benefit analysis, is concerned with !udging a pro!ect from the larger social point of view. "he $uestions sought to be answered are: Dhat are the direct economic benefits and costs of the pro!ect measured in terms of shadow /efficiency0 prices and not in terms of market pricesK Dhat would be the impact f the pro!ect on the distribution of income in the societyK Dhat would be the impact of the pro!ect on the level of savings and investment in the societyK Dhat would be the contribution of the pro!ect towards the fulfilment of certain merit wants like self#sufficiency, employment, and social orderK Ecological Analysis: Ecological analysis should be done particularly for ma!or pro!ects, which have significant ecological implications like power plants and irrigation schemes, and environmental polluting industries /like bulk drugs, chemicals, and leather processing0. "he key $uestions raised in ecological analysis are : Dhat is the likely damage caused by the pro!ect to the environmentK Dhat is the cost of restoration measures re$uired to ensure that the damage to the environment is contained within acceptable limitsK

=arket @ Demand Analysis Gey (teps: %. (ituational Analysis and (pecification ob!ectives ). 4ollection of (econdary information +. 4onduct of market survey -. 4haracterisation of the market 1. Demand 2orecasting 3. =arket .lanning %. (ituational ob!ectives Analysis and (pecification of


"o get a JfeelL for the relationship between the product and its market. ). 4ollection of (econdary information eneral (ources of (econdary 8nformation: a. 4ensus of 8ndia b. *ational sample survey reports c. .lan :eports d. (tatistical Abstract of the 8ndian Enion e. 8ndia Hear 'ook f. (tatistical Hear 'ook g. Economic (urvey h. Annual (urvey of 8ndustries i. uidelines to 8ndustries !. Annual :eports of the Development Ding, =inistry of 4ommerce and 8ndustry k. Annual 'ulletin of (tatistics of E,ports and 8mports l. "echno#Economic (urvey m. 8ndustry .otential (urveys n. "he (tock E,change Directory

o. =onthly (tudies of .roduction of (elected 8ndustries p. =onthly 'ulletin of :eserve 'ank of 8ndia $. .ublications of Advertising Agencies r. 7ther .ublications +. 4onduct of =arket (urvey "he information sought may relate to one or more of the following. "otal Demand and rate of growth of demand Demand in different segments of the market 8ncome and price elasticity of demand =otives for buying .urchasing plans and intentions (atisfaction with e,isting products Ensatisfied needs Attitudes toward various products Distributive trade practices @ preferences (ocio economic characteristics of buyers -. 4haracterisation of the =arket Effective demand in the past @ present 'reakdown of demand .rice =ethods of distribution and sales promotion 4onsumers (upply and 4ompetition overnment .olicy 1. Demand 2orecasting 3. =arket .lanning .ricing Distribution .romotion (ervice

"echnical Analysis "echnical Analysis is concerned primarily with: =aterial inputs and utilities =anufacturing process 9 technology .roduct =i, .lant 4apacity <ocation and site =achineries and e$uipments (tructures and civil works .ro!ect charts and layouts Dork schedule

%. =aterial inputs and Etilities =ay be classified into four broad categoriesM a. :aw =aterials 8. Agricultural products 88. =ineral .roducts 888. <ivestock and forest products 8;. =arine products b. .rocessed 8ndustrial =aterials and components 'ase metals, semi#processed materials, manufactured parts, components, sub#assemblies c. Au,iliary materials and factory supplies 4hemicals, additives, packaging materials, paints, varnishes, oils, grease, cleaning materials etc. d. Etilities .ower, water, steam, fuel etc.

). =anufacturing .rocess 9 "echnology a. 4hoice of "echnology .lant 4apacity .rincipal 8nputs 8nvestment outlay and production cost Ese by other units .roduct mi, <atest developments Ease of operation

b. Ac$uiring "echnology "echnology licensing 7utright purchase &oint venture arrangement c. Appropriateness of "echnology +. .roduct =i, -. .lant 4apacity "echnology re$uirement 8nput 4onstraints 8nvestment 4ost =arket 4onditions :esources of the firm overnment policy

1. <ocation and (ite .ro,imity to :aw materials and markets Availability of infrastructure overnment .olicy

7ther 2actors 3. =achineries and E$uipments a. b. c. d. e. f. g. .lant /.rocess0 E$uipments =echanical Electrical 8nstruments 4ontrols 8nternal "ransportation (ystem 7thers

4onstraints in selecting = 9 E .rocurement of .lant @ =achinery A. (tructures and 4ivil Dorks (ite .reparation and Development 'uildings and (tructures 7utdoor Dorks B. .ro!ect 4harts @ <ayouts a. b. c. d. e. f. g. h. eneral 2unctional <ayout =aterial 2low Diagram .roduction <ine Diagram "ransport <ayout Etility 4onsumption layout 4ommunication <ayout 7rganisational <ayout .lant <ayout

C. Dork (chedule :eflects the plan of work concerning installation as well as initial operation.

"o anticipate problems "o establish the phasing of investments "o develop a plan of operations 2inancial Analysis 4ost of .ro!ect =eans of 2inancing Estimates of sales @ production 4ost of production Dorking capital re$uirement and its financing Estimates of working results 'reak#even point .ro!ected cash flow statements .ro!ected balance sheets

%. 4ost of pro!ect <and and site development 'uilding and civil works .lant and machinery "echnical know#how and engineering fees E,penses on foreign technicians and training of 8ndian technicians abroad =iscellaneous fi,ed assets .reliminary and capital issue e,penses .re#operative e,penses .rovision for contingencies =argin money for working capital 8nitial cash losses

+. =eans of finance -. Estimates of (ales @ .roduction 1. 4ost of .roduction

=aterial 4ost Etilities 4ost <abour 4ost 2actory overhead cost

3. Dorking capital re$uirements @ its financing A. .rofitability .ro!ections a. 4ost of .roduction b. "otal administrative e,penses c. "otal sales e,penses d. :oyalty and know#how payable e. "otal cost of production /aNbNcNd0 f. E,pected sales g. ross profit before interest h. "otal financial e,penses i. Depreciation !. 7perating profit /g#h#i0 k. 7ther income l. .reliminary e,penses written off m. .rofit 9loss before ta,ation /!Nk#l0 n. .rovision for ta,ation o. .rofit after ta, /m#n0 <ess dividend on # .reference capital # E$uity capital p. :etained profit $. *et cash accrual /pNiNl0 B. 'reak even point C. .ro!ected cash flow statements!ected 'alance sheets

4heck <ist for 2easibility :eport %. E,amination of public policy with respect to the 8ndustry. ). 'road specifications of outputs and alternative techni$ues of production. +. <isting and description of alternative locations. -. .reliminary estimates of sales revenue, capital costs and operating costs of different alternatives. 1. .reliminary analysis of profitability for different alternatives. 3. =arketing analysis. A. (pecification of product pattern and product prices. B. :aw material investigation and specification of sources of raw material supply. C. Estimation of material energy, flow balance and input prices. %F.<isting of ma!or e$uipment by type, si>e and cost. %%.<isting of au,iliary e$uipment by type, si>e and cost. %).(pecification of sources of supply for e$uipment and process know#how.

%+.(pecification of site and completion of necessary investigation. %-.<isting of buildings, structures and yard facilities by type, si>e and cost. %1.(pecification of supply sources, connection costs and other costs for transportation services, water supply and power. %3..reparation of lay#out. %A.(pecification of skill#wise labour re$uirements and labour costs. %B.Estimation of working capital re$uirements. %C..hasing of activities and e,penditure during construction. )F.Analysis of profitability. )%.Determination of measures environmental problems. for combating

)).Analysis of the past performance of the enterprise responsible for implementing and running the pro!ect with respect to pro!ect completion, capacity utilisation and profitability. )+.(tate of preparedness to implement the pro!ect rapidly.

4ontents of a .ro!ect :eport. %. 7b!ective and scope of the report. ). .roduct characteristics / (pecifications, product uses and application, standards and $uality0 +. =arket position and trends /installed capacity, production and anticipated demand, e,port prospects and information on import and e,port, price structure and trends0. -. :aw materials /re$uirement of raw materials, prices, sources and properties of raw materials0. 1. =anufacture /.rocesses of manufacture, selection of process, production schedule and production techni$ue0. 3. .lant and machinery /E$uipment and machinery, instruments, laboratory e$uipments, electric load and water supply and the essential infrastructure0. A. <and and 'uilding /:e$uirement of land area, building, construction schedule0. B. 2inancial implications /2i,ed and working capital investment, pro!ect cost and profitability0. C. =arketing channels /"rading .ractices and marketing strategy0. %F..ersonnel /:e$uirement of staff, labour and e,penses on wage payments0.

a. .hanendra (ama

i. 8nspiring <eadership /Dill, ;ision, ;alues, (kill0 ii. 8nnovative (trategies iii. iv. v. Distinct 8dentity / .urpose, ;alue, 4ulture0 .rocess Driven 8mplementation Din#Din relationship with stake holders

b. Ashank Desai =astek i. :isk "aking ii. <ook at 7pportunities iii. 2ind :ight 'usiness for you iv. 'eing adaptive to 4hange yourself @ business v. 'uild business for scalability vi. ;alues and ;ision vii. Hou are accountable Enablers : %. Education ). ;alue +. :elationship responsible be

8nnovation : 7ne should be 2ast, (mart @ (imple "o innovate product 8nnovate .rocess 8nnovate people. "oday6s re$uirement %. .ortability ). 2le,ibility <everage "echnology /to understand 2uture0. 4. (umant Hatn 2oundation %. 4omprehension ). Analysis +. 4onceptualisation -. 8mplementation Emotional Attachment is must to make difference. =ano! (harma uni$ote$, 2inland %. :isk "aker from uncomfortable >one ). 'elieving in oneself +. *o Degree Dream -. 4ourage *ot to give up. 1. :eady for change 3. Don6t listen to *egativity comfort >one to

(uccess 4reating environment for success for others. =oney is !ust like (oldiers.