Q1 ) Qualities Of Entreprenuers/Personality Of An Entrepreneur: Mental ability: intelligent person. Organising ability: good organisation.

d organisation. Hard work: ready to work for long hours. Discipline: highly disciplined- everything to be in order for them. Clear objectives: regarding nature of business & products to be produced. Need for high achievement- they have a strong desire for achieving something great. Optimistic: highly optimistic- not disturbed by present problems-hope favourable future. Risk taking: they like challenges. H.R. ability: maintain good relations with other people (employee, vendors, customers, bankers). Emotional stability: have considerable amount of self-control- business pressure can be handled. Communication ability: good communication. Self-confidence: tackle problems immediately with self-confidence. Adaptability: highly flexible- adapt themselves for any conditions. Positive attitude: always think positively, they do not leave hopes even under difficult conditions. They are also good managers, pro-active, realistic, have comprehensive awareness & conceptual ability.

Q2) Entreprenuers & Economic Development: i. Optimum utilisation of resources- resources are put to proper use by entrepreneurs. They combine various resources land, labour, capital, and organisation to produce goods ii. Improvement in standard of living of people- by providing quality goods & services. iii. Generation of employment- provides employment, reducing unemployment problem iv. Balanced regional development- government incentives encourage entrepreneurs to establish industry units in rural & backward areas- create employment opportunities in industrially backward areas v. New/ improved goods & services: for the benefit of customers- by regulating taking market research vi. Help agri sector- providing high yielding variety of seeds, fertiliser, pesticides, agricultural implements etc many entrepreneurs buy agricultural produce for further processing. vii. promote international trade- exporting goods mfg by them help govt to earn. viii. Help community at large- by providing welfare activities- adopting villages, schools, stating educational institutes, healthcare services, sports. ix. capital formation- pooling the savings of people by issuing shares/ debentures- offering more returns comparatively. x. distribution of income & wealth- by establishing in rural / backward areas, not only balance regional development but also redistribution of income & wealth. Q3) Intrapreneurship: There are people working in big org holding key positions. They are quite innovative & bring many changes in products & methods of production. They possess all qualities of an entrepreneur. Top managements in big organisations encourage people holding key positions to come out with new ideas so that they can bring some changes in products & services. They are also known as enter corporate entrepreneurs or intraprenuers. They serve as champions to others in the organisation. Q4) Enrtreprenuer vs Manager:
Entrepreneur Entrepreneur is employer Independent in operation Bears all the risk involved in enterprise. Exhibits higher need for achievement. Profit is the reward. May not have formal qualification. Do not have any boundary for operations. Manager Intraprener is employee Depends on the organization to implement his ideas. Does not bear all the risk. May not have high need achievement Attractive salary, promotion & incentives are the reward. Should have some professional or technical qualification. He has to operate within the organisational policies.

Q5) Classification Of Entreprenuers: Innovative entrepreneur: he is the one who introduces a new product or a new method of production or opens a new market or explore new source of supply of raw material or carry out a new type of organization. As per the schumpeter innovative entrepreneur are real entrepreneur. Imitative/ adoptive entrepreneur: are those who imitate the successful entrepreneurs in techniques innovated by others. Drone entrepreneur: drone entrepreneur are those who never allow any change in their production & style of functioning. They never explore anything. They are also called laggards. They are pushed out of market when product loses its marketability. Fabian entrepreneur: are always cautious. They neither introduce new changes nor adopt new methods invented by others. They are lazy. They follow old customs, old method of production, techniques. Q6) What is franchising? Types of franchising ? Why is franchising important to SMEs? Pitfalls/Be careful : Franchising is more than distributorship: Extends to an entire operation or method of business Greater assistance, control and longer duration Distributor merely re-sells products to retailers or customers 3 main types of franchise: 1) Product distribution franchise: A product distribution franchise model is very much like a supplier-dealer relationship. Typically, the franchisee merely sells the franchisors products. However, this type of franchise will also include some form of integration of the business activities. Eg : Coca COla 2) Business format franchise: In a business format franchise, the integration of the business is more complete. The franchisee not only distributes the franchisors products and services under the franchisors trade mark, but also implements the franchisors format and procedure of conducting the business. 3) Management franchise: A form of service agreement. The franchisee provides the management expertise, format and/or procedure for conducting the business. Why its Important to SMEs : Leveraging on a recognised brand name Enhancing business image Ensuring consistent quality Attaining higher productivity/better motivated staff Access to good locations Economies of scale Reducing risks of failure Why it is IMP : 1) Franchises offer important pre-opening support: Site selection Design and construction Financing (in some cases) Training Grand-opening program 2) Franchises offer ongoing support: Training National and regional advertising Operating procedures and operational assistance Supervision and management support Increased spending power, access to bulk purchasing and economies of scale

Be Careful : The franchisee is not completely independent. In addition to the initial franchise fee, franchisee must pay ongoing royalties and advertising fees. Franchisee must be able to balance restrictions and support provided by the franchisor with their own ability to manage the business

A damaged image or franchise system can result if other franchisees perform poorly or the franchisor has financial problems. The duration of a franchise is usually limited and the franchisee may have little or no say concerning termination Common Mistakes of Prospective Franchisees: Not reading, understanding and/or asking questions about the franchisee agreement and other legal documents Not understanding the responsibilities of a franchisee and the rights and obligations of a franchisor Not seeking sound legal and financial advice Not verifying oral representations of franchisor Not analyzing the local market in advance Not analyzing the competition Not making thorough due diligence of the franchisor Not choosing the right location

Q7) Micro , small and medium size enterprises:

Introduction: The abbreviation "SME" occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations, and the WTO. The term "small and medium businesses" or "SMBs" is predominantly used in the USA. The term "enterprise" has been defined in terms of investment in plant and machinery/ equipment (excluding land & building). Accordingly, the definition of micro, small and medium enterprise is:-

Investment in plant and machinery/ equipment (excluding land and building) Manufacturing Enterprises Micro Small Medium Up to Rs. 25 lakh More than Rs. 25 lakh and up to Rs. 5 crore More than Rs. 5 crore and up to Rs. 10 crore Service Enterprises Up to Rs. 10 lakh More than Rs. 10 lakh and up to Rs 2 crore More than Rs. 2 crore and up to Rs. 5 crore

Statistics:
This sector employs an estimated 59.7 million persons spread over 26.1 million enterprises. It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country.

Regulated by :
Ministry of Micro , Small and Medium Enterprises . The role of the M/o MSME is mainly to assist the States in their effort to promote growth and development of MSMEs, for enhancing the competitiveness of these enterprises in an increasingly market-led economy and for generating additional employment opportunities. In addition, the Ministry also attempts to address common concerns of these enterprises and also undertakes advocacy on behalf of this sector.

Based on products, SMEs in India can be broadly classified into the following groups:
Food products, Chemicals and chemical products, Basic metal industry, Electrical machinery and parts, Rubber and plastic products, Paper products and Printing, Transport equipment and parts, Leather and leather products, Miscellaneous manufacturing industries, Other services and products, Machinery and parts excluding electrical goods, Garments, Wood products, Nonmetallic mineral products, Beverages, tobacco / tobacco products, Repair services, Cotton textiles, Wool, silk and synthetic fibre textiles, Jute textiles, Other services.

Types of SSIs :
Manufacturing industries : Produce Complete articles for direct consumption Feeder industries : Certain products and services, casting, electro plating, welding etc. Service Industries: Repair, shops for mechanical equipment etc. Ancillary to large industries : Producing parts and components and rendering services Characteristics of SSIs : One man show others are sleeping partners. Owners are managers also. Lesser gestation period as compared to large units. Scope of operation is localized.

 Labor intensive. Use local resources LEADING TO BALANCED REGIONAL DEVELOPMENT Change susceptible and highly reactive Relationship between small and large units: Competitive: SSIs cant compete large enterprises when there is a technical know how required. Eg: food processing. Supplementary: SSIs can fill up the gaps between the large scale production and standard outputs caused by large scale units. Complementary: Small spare parts being produced by small scale units . Initiative: Attracted by high profits of large units small units can also take an initiative to produce that product. Eg: electronic industry in India Servicing: SSIs set up repairing/ servicing units produced by large scale industries. Discuss the entire stages of setting up a small scale enterprise? 1)Gathering Ideas 2) Investigating Ideas 3)Product Service Identification 4) Product Service & feasibility study 5)Environmental scanning What are the detailed steps involved in setting up of a small scale industry? The detailed steps of doing so are: 1. Selecting the most feasible business opportunity. 2. Arranging for the following resources: i. Human Resources (Men) ii. Physical resources (Material, machinery,etc.) iii. Financial resources (Money to hire men and material ) 3. Preparation of project report 4. Provisional registration of the enterprise 5. Apply for loan, allotment of land ,power supply etc. Which institutions the Government has set up for supporting small sale industries? (pg 143- 151) Khanka: The institutions are: a. SIDBI (Small Scale Industries Development Bank of India) b. NCEUS(National Commission for Enterprises in Unorganised Sector) c. DIC (District Industrial Centres) d. National Institution for Entrepreneurship and Small Business Development. e. State Finance Corporation

Q8) Ancilliarization and acquisitioning:

Small Industry as an integral part of our national economy has its own place in industrial development. This sector employs an estimated 59.7 million persons spread over 26.1 million enterprises. It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country. National resources can best be put to optimum use only through the mechanism of a balanced distribution of capital and resources between small and large scale industrial sectors The concept of ancillary development has emerged out of fundamental principle of division of labour and optimal utilization of resources between the large and small units. This is particularly true of the machine building industry where a large number of relatively small firms can specialize in a very limited range of manufacture to economize on resources, siding industrialization. This has a multiplier effect on the pace of industrial development. Thus the idea of this mutual inter dependence is vested in the concept of ancillary industries. The large scale unit has a key role to play in the growth of small units by way of offering assistance (technical, financial and commercial). In this context, functioning as an ancillary to a large unit provides the small unit an assured market for its products When an industrial establishment manufactures and supplies more than 50 percent of its production to any one or more parent units or units, the former unit is termed as an ancillary provided its investment in plant and machinery does not exceed Rs.45 lakhs and it is not a subsidiary to or is controlled by any large scale units. Eg- Companies like GE (ancillary) produce engines for the aircraft industry.

Ancillary Industries in India Auto Ancillary Industry, Trucking, Surveying, Testing laboratories, Environmental consulting, About 250 ancillary industries such as cement, steel, brick, timber, building materials etc. are dependent on the real estate industry, Defense sector, Leather chemicals, Shipping.

Ancillary Categories (i) small units producing finished goods for catering consumer needs and directly marketing such goods through their distribution channels; (ii) small units producing parts and components for catering to the input needs and requirements of other industries. (i) Monotype: The production capacity of such types of units is normally tied to the needs of one unit and producing units normally cater to the requirements of the parent unit only. (ii) Poly type: such unit normally caters to the needs of a number of parent units procure their inputs from the ancillaries falling under this type. (iii) Indirect operation: conducting supplies through the organization, often operating as commission agents or dealers. Eg : Servicing. Advantages : a) It results in spread of entrepreneurial base. b) It promotes industrial development. c) For the prime or parent company, regular supply of right quality items is assured. d) The components procured from ancillary industries cost the parent company much lesser as compared to their own inhouse manufacturing cost. e) As it is a tiny unit less capital is required to start. Disadvantages: a) Ancillary units are best fit when the parent company continues with the existing products. If the primary company embarks on a major modification of the existing product (s), ancillary units probably will not be able to meet the requirements of new products. b) the benefits, the parent company, otherwise would gain by buying from outside an outside supplier, in the form of sharing his superior quality and vast experience is lost (to the parent company). c) Providing technical and managerial guidance and offering other facilities for the development of ancillaries, add to the operational problem of the parent company. d) In case of modification the ancillary unit has to face losses. The ancillary unit is totally dependent on the parent business. e) The ancillary units are directly effected by the health of the parent company or industry. f) For instance, in the case of small ancillary units, the major problems include delayed payments, uncertainty of getting orders from the parent units and frequent changes in production processes. Acquisitioning: Acquisition in general sense is acquiring the ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controlling interest in the share capital of another existing company. A takeover is acquisition and both the terms are used interchangeably. Difference Between Mergers And Acquisitions: Mergers The case when two companies (often of same size) decide to move forward as a single new company instead of operating business separately. The stocks of both the companies are surrendered, while new stocks are issued afresh. For example, Glaxo Wellcome and SmithKline Beehcam ceased to exist and merged to become a new company, known as Glaxo SmithKline Acquisitions The case when one company takes over another and establishes itself as the new owner of the business. The buyer company swallows the business of the target company, which ceases to exist Dr. Reddy's Labs acquired Betapharm through an agreement amounting $597 million.

a. b.

Types of takeover arrangements: From legal perspective, takeover is of three types: Friendly takeover : The acquisition of a target company that is willing to be taken over. Usually, the target will accommodate overtures and provide access to confidential information to facilitate the scoping and due diligence processes. Pharmaceutical and health care giant Johnson & Johnson announced Tuesday the successful completion of a friendly takeover of Dutch vaccine maker Crucell, for about 1.75 billion euros ($2.37 billion). Hostile Acquisition Is an acquisition where one company unilaterally pursues the acquisition of shares of another company without being into the knowledge of that other company. The most dominant purpose which has forced most of the companies to resort to this kind of takeover is increase in market share. The hostile acquisition takes place as per the provisions of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

c. Bail out Takeover Takeover of a financially sick company by a financially rich company as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 to bail out the former from losses. Classifications Mergers: 1. Horizontal A merger in which two firms in the same industry combine. Often in an attempt to achieve economies of scale and/or scope. 2. Vertical A merger in which one firm acquires a supplier or another firm that is closer to its existing customers. Often in an attempt to control supply or distribution channels. 3. Conglomerate A merger in which two firms in unrelated businesses combine. Purpose is often to diversify the company by combining uncorrelated assets and income streams 4. Cross-border (International) M&As A merger or acquisition involving an Indian and a foreign firm, either the acquiring or target company. Critical Analysis: Goodwill often paid in excess for the acquisition. Reduced competition and choice for consumers in oligopoly markets. (Bad for consumers, although this is good for the companies involved in the takeover) Likelihood of job cuts. Cultural integration/conflict with new management Hidden liabilities of target entity. The monetary cost to the company. Lack of motivation for employees in the company being bought up. Laws Applicable: At present the following enactments regulate through various prescribed provisions made therein the takeover of corporate enterprises: Companies Act, 1956. Industries (Development &Regulation) Act, 1951. Monopolies &Restrictive Trade Practice Act, 1969. Competition Act, 2002. Foreign exchange Management Act, 1999. Income Tax Act, 1961. Securities and Exchange Board of India Act, 1992. SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 Q10) Exit Stratergy : Planning behind terminating ones ownership of a company. Reasons for exiting:
Lack of profits, Loss of interest, Future prospects, Dissolved partnership, Disinclined to take further risks, Other opportunities, Personal reasons, Favorable economic conditions.

Means of Exiting: 1) Sale: A sale typically results in the seller of the company receiving cash in exchange for the company. Long Term Preparation : Focus, Large customer base, Diversified customer base, Regulatory compliances, Land documents, Contracts, Management. Short Term Preparation : Valuation, Update books, Supporting documents, Take tax advice, Get team in place, Continue business as usual, First impressions. 2) Merger: A merger is when two companies get together, establish a value on each company, and then combine the two to form one bigger company. In most mergers, the company shareholders receive stock in the bigger company which is presumably worth more than the stock held in each independent company. 3) Liquidation: If you don't have any debts, you can also achieve liquidity by shutting down your business and selling the assets that you have. Of course, you'll need to find buyers who feel that your assets have value, and you'll have to negotiate a fair price for those assets that are not clearly identified in terms of a price point. With this kind of exit strategy, you are usually getting the smallest amount of money because you're just selling the raw assets and aligning your buyers with a price they're willing to pay

o o

Pros It's easy and it's natural. Everything comes to an end. There's no negotiations involved. There's no worrying about transfer of control. Cons Get real; it's a waste! At most, you get the market value of your company's assets. Things like client lists, your reputation, and your business relationships may be very valuable, and liquidation just destroys them without an opportunity to recover their value.

4) Acquisition : In an acquisition, you negotiate price. This is good. Public markets value you relative to your industry. Who wants that? In an acquisition, the sky's the limit on your perceived value. You see, the person making the acquisition decision is rarely the owner of the acquiring company, so they don't feel the pain of acquisition cost. Convince them you're worth a thousand crores and they'll gladly break out their employer's checkbook. o cons If you organize your company around a specific be-acquired target, that may prevent you from becoming attractive to other acquirers. Acquisitions are messy and often difficult when cultures and systems clash in the merged company. o Pros If you have strategic value to an acquirer, they may pay far more than you're worth to anyone else. If you get multiple acquirers involved in a bidding war, you can get a great amount. 5) IPO:
Large cap company Minimum issue size of 10 cr and Mrkt capitalization of > 25 cr Min post issue paid up shall be 3 cr. Min issue size must be 10 cr. Minimum mcap must be 25 cr. Small cap company Company other than large cap. Min post issue paid up shall be 3 cr. Min issue size must be 3 cr. Minimum mcap must be 5 cr.

Smera rating: Sme rating agency of india limited (smera) is a joint initiative by sidbi (www.sidbi.com), dun & bradstreet information services india private limited (d&b) (www.dnb.co.in) and several leading banks in the country. Smera is the country's first rating agency that focuses primarily on the indian msme segment. Smera's primary objective is to provide ratings that are comprehensive, transparent and reliable. This would facilitate greater and easier flow of credit from the banking sector to msmes.