ASSIGNMENT

PROGRAM BBA
SEMESTER 6
SUBJECT CODE & NAME BB0028 ENTREPRENEURSHIP DEVELOPMENT

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Q. No 1 Write a note on types of Entrepreneurs as classified by Danhof.

ANSWER: 1. Innovative Entrepreneur:
In the early phases of economic development, entrepreneurs have initiative to start new ventures and find
innovative ways to start an enterprise. Thus, innovative entrepreneurs are those who introduces new
products, new method of production techniques, or discovers a new market or a new service or
reorganises the enterprise. It is the innovative entrepreneurs who built the modern capitalism. They are
commonly found in developed countries. They are aggressive in nature who exhibit cleverness in putting
attractive possibilities into practice.
2. Imitative Entrepreneur:
There is a second group of entrepreneurs generally referred as imitative entrepreneurs. They usually copy
or adopt suitable innovations made by innovative entrepreneurs. They are adoptive and more flexible.
They are organisers of factors of production rather than creator. The imitative entrepreneurs are also
revolutionary and important. They' contribute to the development of underdeveloped economies.

3. Fabian Entrepreneurs:
The third type of entrepreneur is Fabian Entrepreneurs. Such type of entrepreneurs are very shy and lazy
by nature. They are very cautious people. They do not venture to take risks. They are rigid and
fundamental in their approach. Usually, they are second generation entrepreneurs in a family business
enterprise. They follow the footsteps of their successors. They imitate only when they are very clear that
failure to do so would result in a loss of the relative position in the enterprise.
4. Drone Entrepreneurs:
The fourth type of entrepreneur is Drone entrepreneurs who refuse to copy or use opportunities that come
on their way. They are conventional in their approach. They are not ready to make changes in their
existing production methods even if they suffer losses. They resist changes. They may be termed as
laggards.
The above types of entrepreneurs is not comprehensive for it aims at highlighting the broad range of
entrepreneurs found in business and profession. Following are some more types of entrepreneurs listed
according to the type of business, use of technology, motivation, growth and stages of development.

2 What is SIDO? Explain its functions.

ANSWER: Small industries are back bone of any nation. Development of SSI means bringing all way
prosperous and growth of the nation. This is so as it directly or indirectly generate wealth, improves the
economic condition of people by generate employment, contributes to GDP and so on.
Thus realizing the importance of this sector, government has come forward with extending many a
facilities and supports for the development of SSI in the country. SIDO is one amongst them.
International Perspective Planning Team in 1955 made its recommendations and the Government of India
set up following institutions for the development of village and small industries.

Central Small Industry Organisation (CSIO)

National Small Industry Corporation (NSIC)

Small Industry Extension Training Institute (SIETI)

Khadi and Village Industry Commission (KVIC)

At the heart of all agencies dealing with the development of small industry is the CSIOnow renamed as
Small Industries Development Organisation (SIDO), SIDO has grown into vast organization with:

Network of more than 33 SISIs;

Branch Service Institutions (37);

Extension Centres (37)

Regional Testing Centres

Process-cum-product Development Centres

Training centers

Production Centres

Field Testing Stations

SIDO is as apex body and nodal agency for formulating, policy-making, coordinating and monitoring
agency for the development of small scale entrepreneurs.
It is headed by Additional Secretary and the Development Commissioner, small Scale Industry; who
maintains a close liaison with government, financial institutions and other agencies which are involved in
the promotion and development of small scale units.
SIDO is the nodal agency that advises the Ministry of Industry (and other Ministries) in formulating
policies and programmers for the development of SSIs.
It also overseas the package of services rendered by the SISIs at field level and provides comprehensive
range of consultancy services and technical, managerial and marketing assistance to SSI units over the
years, it has sun its role evolve into an agency for advocacy, hand holding and facilitation for the small
industries sector.
It has over 60 offices and 21 autonomous bodies under its management. SIDO provides a wide spectrum
of services to the small industries sector like testing, training for entrepreneurs preparation of projects
and product profiles, technical and managerial consultancy, export assistance, etc.
SIDO provides economic information services and advises to the government in policy formulation for
the promotion and development of SSIs.

Functions of SIDO

To formulate policies regarding the promotion and development of SSI at national level.

The implement those plans, programmers and policies of the government in respect of industrial
development of the country.

To coordinate the activities of all departments, institutions and agencies involved in promoting
the SSI.

To render all way support and encourage the entrepreneurs to set up and sort out the hurdles.

To conduct regular and ad hoc training courses through SISIs, Branch SISIs and
extension/production centers;

To organize EDPs, motivational campaigns etc. for rural artisans, educated unemployed, women
entrepreneurs, and physically handicapped persons;

To secure reservations of certain products to be manufactured only by SSIs.

To assist and encourage entrepreneurs to set up industrial units in rural and industrially backward
areas and industrially backward areas;

To estimate the requirements of raw materials of SSI units and to arrange their supplies.
Other than this, SIDO conducts the following types of management courses.

Training in Technical grades

Training in Management Disciplines.

Training of SIDO Officers.

SIDO keeps its officers abreast of the latest developments in their respective fields of specialization.
Global trends and national developments have accentuated SIDOs role as a catalyst of growth of small
enterprises in the country.

3 Discuss MODVAT in detail

Answer:
MODVATmodified value added tax is a concept in central excise law introduced with effect from 1-386 and has gained momentum with more and more industries beginning to avail this facility.

Even though the term MODVAT is not defined in central exercise act 1944 or rules made there under. It
can be describe in following words:
MODVAT i.e. modified value added tax is a unique scheme under central excises which enables a
manufacture to avail credit of duty paid on notified eligible and duty paid inputs used in or in relation to
the manufacturer of the notified dutiable final products directly or indirectly and whether or not contained
in final product and utilizes such credits towards payment of duty on any final products whether or not
such inputs have been actually used in the manufacture of such other final product.
MODVAT is nothing but MONEY and therefore every manufacturer of excisable goods is keen to avail
this facility which reduces the liability of duty on the final products to the extend of duty already paid on
notified eligible inputs used in or in relation to the manufacture of excisable goods referred as final
products.
The purpose of MODVAT scheme is to avoid double taxation i.e. tax on inputs as well as tax on final
products. MODAVT is therefore to avoid cascading effect of taxes paid on inputs which are used in the
manufacture of final products which again attracts excise levy.
MODVAT

is not an altogether new concept but was existing under different schemes such as proforma

credit under rule 56A/chapter X Procedure etc. MODVAT comes in existences as a result of report
submitted by Technical Study Group appointed by government to study VAT prevailing in European
countries and to suggest adopting of VAT in India and to mitigate the cascading effect of indirect taxes.
As is common with any new concept, MODVAT also faced many teaching troubles when implementing
and even though certain loopholes are plugged and certain practical difficulties removed. Still there are
some grey areas which need to be tackled.
Like the self removal procedure (SRP) permits an assessee to carry on with manufacturing, storing and
removing excisable goods subject to following prescribed procedure and documentation, MODVAT
scheme also operates with full freedom to manufacturers to opt for the same after complying with the
prescribe procedure and documentation. It can also be perhaps termed as SRP i.e. self receiving procedure
since the entire scheme deals with receiving of notified and eligible inputs, with proper duty paying
documents and utilizing the same in or in relation to the manufacture of final products and utilization of
credit towards discharge of duty when such final products are removed.
In short MODVAT is unique concession granted to manufacture of excisable goods and in view of its
simple rules for compliance, the concept has come to stay as a recognized part of excise law and it is not

an exaggeration to state that knowledge of central excise law is incomplete without knowledge of
MODVAT.
How it operates
Any new scheme will be unsuccessful if improper and unambiguous procedure is not spelt out to put the
scheme into action. If there are contradictory provisions in implementing a new concept it will lead to
premature end. MODVAT scheme is not affected by normal flows and hence it operates in a very smooth
way.
The concept start no sooner an assessee decides to avail the benefit and the department enter the scheme
on receipt of a prescribed declaration showing details of inputs. The schemes continue to operate as long
as the manufacturer desires and as long as final product manufactured attracts duty.
To ensure smooth operation of scheme a new set of rules 57A to 57J have been introduce besides
clarification on various related matters by Ministry of Finance. Notification is also issued to list out the
chapters of inputs and chapters of final products eligible under the scheme.
The operation of the scheme since 1986 has also resulted in litigation between the assessee and the
department and designs by various authority are cited while arguing on behalf of the assessee. This is so
because of too narrow a view being taken by the department without taking into account the practical
difficulties faced by the industry.
The spirit of MODVAT scheme and need to implement it as intended by legislation is well explained by
Madras high court in the judgment of SRG Ltd. V. central Board of excise and customs (1993-66-ELT145- MAD). That benefit of MODVAT scheme can not be nullified or short circulated by means of
clarification issued by revenue department in the form of circular.
4 Explain New Small Enterprise Policy, 1991.
Answer:
Explanation of what New Small Enterprise Policy, 1991 is all about: A major shift in the industrial policy
was made by the Congress (I) Government led by Mr. P.B. Narasimha Rao on July 24, 1991.
The main aim of this policy was to unshackle the country's industrial economy from the cobwebs of
unnecessary bureaucratic control, introduce liberalisation with a view to integrate the Indian economy

with the world economy, to remove restrictions on direct foreign investment and also to free the domestic
entrepreneur from the restrictions of MRTP Act. Besides, the policy aims to shed the load of the public
enterprises which have shown a very low rate of return or are incurring losses over the years. The salient
features of this policy are as follows:
1. Except some specified industries (security and strategic concerns, social reasons, environmental issues,
hazardous projects and articles of elitist consumption) industrial licensing would be abolished.
2. Foreign investment would be encouraged in high priority areas up to a limit of 51 per cent equity.
3. Government will encourage foreign trading companies to assist Indian exporters in export activities.
4. With a view to injecting the desired level of technological dynamism in Indian industry, the government will provide automatic approval for technology agreements related to high priority industries.
5. Relaxation of MRTP Act (Monopolies and Restrictive Practices Act) which has almost been rendered
non-functional.
6. Dilution of foreign exchange regulation act (FERA) making rupee fully convertible on trade account.
7. Disinvestment of Public Sector Units' shares.
8. Closing of such public sector units which are incurring heavy losses.
9. Abolition of C.C.I, and wealth tax on shares.
10. General reduction in customs duties.
11. Provide strength to those public sector enterprises which fall in reserved areas of operation or in high
priority areas.
12. Constitution of special boards to negotiate with foreign firms for large investments in the development
of industries and import of technologyCritique of the New Industrial Policy
The keynote of the new industrial policy includes liberalisation and globalisation of the economy.
Liberalisation means deregularisation of the industrial sector by cutting down to the minimum

administrative interference in its operation so as to allow free competition between market forces. Similarly globalisation means making the Indian economy an integral part of the world economy by breaking
down to the maximum feasible the barriers to movement of goods, services, capital and technology
between India and the rest of the world.
The new Industrial Policy fulfils a long-felt demand of the industry to remove licensing for all industries
except 18 industries (coal, petroleum, sugar, motor cars, cigarettes, hazardous chemicals, pharmaceuticals
and luxury items).
It proposes to remove the limit of assets fixed for MRTP Companies and dominant undertakings. Hence
business houses intending to float new companies or undertake expansion will not be required to seek
clearance from the MRTP Commission. This step will enable MRTP Companies to establish new
undertakings, and effect plans of expansions, mergers, amalgamations and takeovers without prior government approval. They shall have the right to appointment of directors.
The new Industrial Policy goes all out to woo foreign capital. It provides 51% foreign equity in high
priority industries and may raise the limit to 100% in case the entire output is exported.
This runs counter to the Nehruvian Model. Experts fear that this over-enthusiasm to welcome foreign
capital and to give free hand to multinationals will be detrimental for indigenous industries more so
house-hold and small scale industries. This may lead to economic and political crisis in future. It is also
alleged that the Policy has been framed at the instance of the IMF and is going to protect the interests of
developed Western countries at the cost of national interests. Critics also argue that once foreign capital is
permitted free entry the distinction between high and low priority industries will disappear and all lines of
production will have to be opened to facilitate foreign investment. This may create Brazil or Mexico like
economic crisis.
By opening the gates of the Indian economy wide to the multinationals, the self reliance aspect has been
completely ignored. These multinationals with slightest of inconvenience may shift their operations
elsewhere leaving the economy in the lurch.
Since multinational and private entrepreneurs would prefer most favourable locations for their industries
it would further intensify spatial disparity in economic development. This fact has been well collaborated
by the letters of intent so far approved.

While selling out public sector shares and companies to private investors the Government is not only
ignoring the interests of the employees but is transferring the assets at throw away prices. These public
sector companies could have been handed over to the working class or autonomous organisations to
manage their affairs independently.
In the absence of MRTP safeguard private companies may develop monopolistic outlook and may indulge
in unfair trade practices.
There is also a risk of growing consumerism rather than strengthening the sinews of the economy. Foreign
investors may prefer to invest in low priority consumer sector instead of going for high priority sector.
With the state yielding to the private enterprise the social objectives of equity with growth and protecting
the interests of the down trodden and semi-skilled labourers would be thrown to the winds. This will be
against the cherished goals of our Constitution and may create socio-economic disparity and tension.

Salient features of this new small enterprise policy:

The salient features of the Act are: The earlier concept of Industries has been changed to Enterprises.
Enterprises have been classified broadly into: (1) Enterprises engaged in the manufacture/production of
goods pertaining to any industry; and (2) Enterprises engaged in providing/rendering of services.
Manufacturing Enterprises have been defined in terms of investment in plant and machinery (excluding
land & buildings) and further classified into: (a) Micro Enterprises investment up to Rs.25 lakh; (b)
Small Enterprises investment above Rs.25 lakh & up to Rs. 5 crore; (c) Medium Enterprises
investment above Rs.5 crore & up to Rs. 10 crore. The Service enterprises have been defined in terms of
their investment in equipment (excluding land & buildings) and further classified into: (a) Micro
Enterprises investment up to Rs. 10 lakh; (b) Small Enterprises investment above Rs. 10 lakh & up to
Rs. 2 crore; (c) Medium Enterprises investment above Rs.2 crore & up to Rs. 5 crore.It defines
Medium Enterprises to facilitate achievement of economies of scale. It provides statutory basis to
Purchase Preference Policy for goods and services provided by micro and small enterprises. It also
strengthens the legal provisions to check delayed payments to micro & small enterprises. The Act
provides statutory basis to the National Board for Micro, Small & Medium Enterprises. The cumbersome
two-stage registration process of SSI has been substituted with an optional filing of memorandum by
Micro, Small & Medium Enterprises.

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5 Elaborate the TQM Process in Small Scale Enterprises.

Answer:
Total Quality Management (TQM) is an approach that small business owners or managers hold in
running their company. They focus on quality and price to gain and hold customers, striving to view the
business through their customers' eyes. Instead of focusing solely on profits, managers
identify their core customer base in order to build and maintain market share through continuous
improvement of products and services. Small businesses can benefit from implementing the principles of
TQM into their business environment.
Customer Focus
In a TQM approach, small businesses must understand who their current customers are (and are not),
noting their key needs and requirements and keep these expectations at the forefront of their strategy and
processes. This principle should extend to internal clients, as well, treating coworkers as customers and
satisfying their demands.
Leadership
Leaders create the environment in which their business operates. They set policy, plan strategy and launch
tactics for staff to execute. Small businesses can take advantage of the necessity for participative
management, as they are more likely to be intimately aware of all facets of their business and how they
interconnect. Managers and owners can educate staff on business operations, industry developments and
market trends, giving them a broader perspective on what it takes to make the company successful.

Staff Involvement
As leaders set and communicate customer-focused strategy, they become smarter in acquiring and
keeping quality staff. Selecting, training and motivating staff to work together, particularly in crossfunctional teams, enables faster problem identification and resolution, process execution and overall
productivity. In applying TQM, well-trained and motivated employees also have more control over their
work and a greater sense of ownership in the company.
Process Approach
In TQM, a well-informed staff, with a keener sense of what the customer expects, can help develop a
proactive process that builds quality into each stage as they design and deliver products, rather than trying
to catch flaws during post-production inspection, which wastes resources on potentially defective
products.
Statistical Quality Control (SQC)
Small business owners can employ Statistical Process Control (SQC) to help make decisions. As the
organization better understands customer demands, these requirements set features for the product line.
Staff and management refine measurements for these features, even developing an product. The team can
then continually monitor quality by assessing output against the parameters, halting fabrication in order to
fix the problem when the goods being produced fall outside the acceptable limits.
Supplier Relationships
Businesses can apply these TQM philosophies to suppliers. This will help them understand their attitudes,
values and capabilities, as well as the minimum and maximum variations in the goods they deliver to the
company, to monitor quality and create value across the supply chain.
Continuous Improvement
Continuous improvement is fundamental in TQM. Essentially, in this practice, the business executes the
first six principles continuously. The whole organization, from top leadership to front-line employee, must
commit to the time and effort necessary in making modest gains in the operations. Rather than launching
a revolution in how a company runs, step-by-step changes initiated by everyone in the organization
ultimately convert the business and ingrain the TQM philosophy into the corporate culture.

6 Digital is a leading laptop manufacturing company. It decides to add some more new products to
the existing product line like digital cameras and MP4 players.

Help them to understand the basics for internal growth of business and discuss the advantages and
disadvantages as well.
Answer:
Meaning of Internal growth strategy:
Internal growth is the highest measure of growth that is attainable by a business without having to look
for external sources of finance. The rate of internal growth can be calculated by the company's retained
earnings and then dividing them by the company's assets.
Explanation of expansion as one of the forms of internal growth of business: Expansion:
Market Penetration
In this strategy, it would mean that the firm aims to sell more of its existing products in the markets that
they are already in. This would translate into allocating more resources and efforts to build up sales and
marketing activities to attain revenue growth. Indirectly, the firm is also trying to increase its market
share. Generally, this may seem less risky to a certain extent because the firm is already dealing in the
same markets and products, however there may be limitations as to how much growth one can derive in
this strategy.
Market Development
For this strategy existing products/new markets, this happens when a firm decides to sell its existing
products into new geographical markets or new market segments (another defined target market). For
example, it could mean selling an existing computer model to a new market overseas or alternatively,
selling it to a new market segment (e.g. second-hand market). The firm would also need to spend on sales
and marketing to persuade consumers in new markets to purchase the product/services.
Product Development
This strategy on the other hand, necessitates developing new products to be sold in existing markets. This
can be seen as a quite common process because for a company to sustain its presence and growth, it
cannot rely on a single product range. For instance, in the retail industry of product consumables like
shampoo, cosmetics and even apparels, companies are competitively refreshing their product lines to keep
in touch with consumers as well as to keep up with certain trends, market needs/tastes and etc. One would
need some good grasp of market knowledge and skills to come with new product introductions that suits
consumer's needs.

Advantages and disadvantages

Rapid and unexpected growth can lead to a host of problems for businesses. Probably the most common
problem is the effect that the growth has on the company's finances - specifically upon the liquidity and
gearing of the company.
Extra expenses and increased long-term liabilities (such as loans and mortgages) may reduce the liquidity
and increase the gearing levels of the company and leave it dangerously close to insolvency.
It may simply be the case that the managers cannot cope with the extra responsibilities and workloads that
they are faced with - this could lead to a rapidly expanding workforce, with the problems of recruitment,
training and lengthy communication channels that this will inevitably lead to.
It is also possible that the company may become inefficient and it may experience diseconomies of scale
(rising average costs). This could lead to a significant fall in profits, which in turn could persuade
shareholders to sell their shares - this would result in a falling share price.
A major problem that a PLC can experience as it grows is the divorce of ownership and control. This
refers to the fact that the owners of a PLC (shareholders) are usually interested in maximising the
company's profits and, therefore, their own dividend payments. However, the control of the company is in
the hands of the management and the Directors. They too want the company to be profitable, but would
also like some of the company's resources and money to be invested into new products and new markets.
This, clearly, reduces the short-term profits of the company and, therefore, also reduces the dividend
payments to shareholders.