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Theory and Practice of Entrepreneurship: Challenges Ahead

BY Prof.C.Ramalingam M.Com, M.B.A., M.Phil, (Ph D) Department of Management Studies Rajalakshmi Engineering College Thandalam 602 105, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu

& Prof. Dr.R.Gayatri, H.O.D of Management Studies, St.Peters Engineering College, Avadi, Chennai

E mail ID: ramalingamgi@yahoo.com Telephone: 044-28440086 College: 044-27156750/51/52/53 Mob: 9865635967

Submitted To The

International Conference on Synchronizing Management Theories and Business Practices: Challenges Ahead

On July 27 -29, 2012

Organized by Annamalai University, Department of Business administration (Distance Education and On-Campus) Annamalai University 608 002

In association with PUTRA INTELEK, International College, Malaysia

Theory and Practice of Entrepreneurship: Challenges Ahead

BY ** Dr.R.Gayatri & Abstract: * Prof.C.Ramalingam

The Theory of entrepreneurship dwells on developing personality characteristics and on family tradition of business. It dwells on achievement motive, risk taking abilities and the belief in ones own capability to identify an opportunity and trying to impl ement the same. In practice, the entrepreneurs have been in the field of business for long time, the necessity and sheer interest in solving the business problems lead to success in their entrepreneurial career. Acquiring governmental assistance, following ethical practices in business and belief in success stories of entrepreneurs has given confidence to start a venture of their own to utilize their full potential.

** Prof. Dr.R.Gayatri H.O.D of Management Studies St.Peters Engineering College, Avadi, Chennai

* Prof. C.Ramalingam, Rajalakshmi Engineering College. Department of Management Studies, Chennai 602 105 Affiliated to Anna University, Chennai; Research Scholar at Bharathiar University- Coimbatore.

Theory and Practice of Entrepreneurship: Challenges Ahead BY ** Dr.R.Gayatri & * Prof.C.Ramalingam Introduction:
In India, entrepreneurs have been found for decades; the entrepreneurial spirit actually runs in their blood. Indian entrepreneurs are not produced like any other graduates. Due to the family entrepreneurial spirit, people take up entrepreneurial career. This entrepreneurial spirit has to fly new heights after the opening up of the economy.

Belief in Entrepreneurial spirit

In a function of slow economy, the company may not be doing well or the sector in which the entrepreneur is concentrating may not be doing well and may be going through a lean period and the entrepreneur need to take a cautious approach. Meeting of customers and suppliers and getting their feed back would help to reassessment of the goods supplied to customers. Identify the reasons why the desired sales were not achieved in the business is to be studied and measures to get the desired profit has to be planned .The need to be prepared to rectify the changes in the performance of the company by doing proper action plans. In a liberalized economy, there are enormous opportunities for an entrepreneur around the world and one has to identify the sector in which he or she has interest to dwell upon. The sectors like IT, Telecom, Pharmaceuticals, Auto Industry, Educational Institutions and the construction industries.

Continuous enhancement of the skill sets:

Making a conscious effort to develop skills in the areas; where the entrepreneur is lacking has to be identified. For example: To improve in the information technology skills, training program need to be attended. The entrepreneurs must learn to build global businesses. The products and services offered must be globally competitive. The quality of goods and services offered must be of high ethical standards. This sort of real life situations would bring the Indian entrepreneurs in par with their global counter parts.

Avoid the hasty decisions:

Often the best answers for various problems are the educated guesses, which come from informal discussions with peer groups and ones own experiences coupled with new information and insight. Dont put too much of faith in information analysis alone. Remember to check answers with the gut feelings of entrepreneur before taking any action. Bad financial management is the main reason for failure in business. As much as possible, entrepreneurs need to run a lean start up. Making investments when necessary and when total cash is not available, he or she has to raise more money and cut costs. If all fails, shut the shop and probably look for an employment. The entrepreneurs need to work on a full time basis on the enterprise building activities and not to take too many different businesses in their fold. The data

collected from National knowledge commission describes several number of entrepreneurs are increasing over a period of time with innovative business plans.

Scope for Entrepreneurship

India offers unique incubation environment for most of the entrepreneurs. Young technocrats are looking out for opportunities to exploit their full potential by setting up their own ventures, thus becoming job generators than job seekers. They are generating job opportunities for the mass unemployed people. Capable persons with dynamic confidence and vision usually launch small business instead of going for employment; since it offers an independent way of life for young persons who want to be masters of their own destiny. In spite of 50% of Indian population being 35 years old, it is apparent that India has large working class and there is a vast scope to produce more entrepreneurs such as Narayana Murthy, Dhirubhai Ambani, Lakshmi Mittal and our country needs more entrepreneurs like the above successful entrepreneurs (Chandra.A) The Role of education in generating innovative ideas for entrepreneurship students need to be modified and they have to choose their own subject of interest and design their own curriculum, which would lead to high level of interest , passion and curiosity. The flexible system has been put into practice in USA and that proved to be a blessing in disguise.

Government has to invest more and be entrepreneur friendly:

In order to exploit the full potential of young Indian population, government need to give a plethora of incentives to new risk takers by way of more tax benefits, land allocations, supply of water, un interrupted electricity supply etc. Novice risk takers should be provided with mentors on behalf of government, so as to choose the entrepreneurial career. Banks and other financial institutions should provide liberal credit facilities to new entrepreneurs to stimulate the business through good quality products and services, besides government also need to regulate the new entrepreneurs so that they abide by the highest standards of business ethics. (Goswami and Dalmia, 2008)

Emerging Sectors in Entrepreneurship:

The emerging sectors include, Information technology, Finance, Insurance, Business services, construction, community, social, personal & Home services, supply chain management, transport, storage and communication services. The emerging knowledge intensive entrepreneurs were found as 10,000 during 1991 1992; whereas it has risen to 30,000 in the year 2005-2006, indicates that entrepreneurs take opportunities to find newer and newer methods of doing business by offering innovative products and services to customers. This provides opportunities to create wealth and make the best of the economic environment. Allowing only the qualified competent family members to assume leadership roles in the firm increases the value of enterprise who have an ownership interest in it. Recent survey of Goldman

Sachs and Price water house Cooper estimated that India has the potential of to be among the worlds leading economies by 2050. In this situation, India enjoys enormous potential for creation of wealth through knowledge. Entrepreneurship and innovation are the key drivers for generating wealth from knowledge, supported principally by availability of skilled human
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resources, access to finance and ability of state to create an enabling environment (Punnathara, 2009) Practices of innovative entrepreneurs in India: A critical eye on the power of ideas that is innovation and bringing ideas into life is done through entrepreneurship together can be considered as innovative entrepreneurship. The conditions favoring successful leadership succession are found in profitable business, stable and healthy family relationships. Now, Entrepreneurs need to have more passion and self-respect to their
entrepreneurial career.

Here an analysis of few practices of innovative ideas and their success in business field are explained further. Bharat Matrimony.com An idea of starting a Tamil portal, which later shifted its focus on matrimony, became a world class business. The innovative ideas include photo protection idea came from customers about privacy. Horoscope matching was another important need which created value for customers. Then their customers became their marketers when reference system was put into use. For payment options, they created local associates who came to doorstep of the customers and collected the same by way of cheque or by way of cash. Also they used mobile services to communicate certain vital information. All these innovative ideas are the challenges ahead to serve the customers to maximum extent possible for successful conduct of business.
Mukesh Ambani was born on April 19, Year 1957. He studied at Abaay Morischa School in Mumbai. He completed his chemical engineering from University of Mumbai. He went to Stanford University in the US for his Masters in Business Administration (MBA), but did not complete the course as he had to come back to join the family business. In the year 1981 Mukesh Ambani joined Reliance. He was the key man at the time of the companys backward integration from textiles into polyester fibers, and then into petrochemicals. He established a number of world class manufacturing facilities to take the companys petrochemical manufacturing capabilities to a new level. Mukesh Ambani conceptualized and created the largest grassroots petroleum refinery in the world at Jamnagar, Gujarat, India. The refinery has a capacity of 33 million tonnes per year.

Subhash Chandra is Indias media tycoon and a source of inspiration for aspiring entrepreneurs. He is the man behind Zee TV, one of the most popular Satellite TV networks in India. He is a self made billionaire and According to Forbes (2009), he has a net worth of $ 1.1 billion. Subhash Chandra did not go to college, but always had the entrepreneurial skills to set up profitable ventures. Subhash Chandra has been a man with great foresight, he had the ability to
look into the future and identify new business opportunities. He did not have much knowledge about the 6

satellite TV business, it was his self belief, courage and determination that made Zee a huge success. Subhash Chandra was born on November 30th 1950, in Hisar, Haryana. He dropped out of school in class 12. At just age 19, he started a vegetable oil unit and after some time he began exporting food grains. Subhash Chandra entered into the packaging business of in 1981, with Essel Packaging Limited. In 1988, he set up the amusement park known as Essel world. Water Kingdom came up in 1998 which was designed by Architect Jean Michel Rouls from France. He was sure of the fact that, in the times to come, the satellite television industry in India will witness tremendous growth and that is why he decided to start Zee in 1992.

Azim Premji is the man behind Wipro, one of the top IT Companies in India. The Forbes list (2009) of the worlds billionaires has him on the 83rd position with a net worth of $ 5.7 billion. Premji was also, According to Forbes, the richest man in India from 1999 to 2005. He has always been known for being modest. Despite the fact that he is a billionaire, he flies by the economy class. He likes to stay in budget hotels or company guest houses rather than 5 or 7 star hotels. He drove a Ford Escort for around 8 years before upgrading to a Toyota Corolla. Paper plates were used at the wedding of his Son. Azim Premji was born on July 24, 1945 in Mumbai, India .He did his schooling from St. Marys School, Mumbai and went to Stanford University in the US for his electrical engineering. In 1966, Azim Premjis Father passed away. Azim Premji left Stanford and came back to India to take control of the family business company named Western Indian Vegetable Products Limited (Now Wipro) used to manufacture cooking oil. Azim Premji was only 21 years of age when he inherited the $ 2 million cooking oil company. He had to face many challenges in the beginning, but his courage and determination made him overcome all difficulties. Since that time he has diversified and turned the business into a multi billion dollar technology enterprise. IBM left India in 1980 and this gave Indian companies a golden opportunity to enter into computer business. Azim Premji acted fast and hired the best engineers to develop computers. Later, Wipro also started to make computer software. Wipro got listed on New York Stock Exchange (NYSE) in 2000.Wipro was the first company in India to adopt the six sigma concept. Today, Wipro is one of the leading IT companies in India and its businesses include Software. Tips for aspiring entrepreneurs for facing challenges ahead: There is no substitute for honest and ethical practices. People are the prime assets while running a business and they need to focus on sustainability. Entrepreneurs should learn to treat their people with respect and fairness and weave in just people norms into their business practices. The only constant in business is the change. The global business environment is constantly changing and evolving and Indian 7 R & D, Outsourcing , Consulting and

entrepreneurs need to be in synchronization with these changes. The information and communication technology is a great tool to improve the productivity of entrepreneurs and that leverage tool kid must be used the maximum possible extent to make the business processes more transparent. Many researchers found that lack of entrepreneurship is one of the causes of slow growth of Indian economy although; we have abundance of natural resources and manpower. This factor has been duly recognized by government of India Hence the industrial policies and five year plans have to give more thrust to encourage entrepreneurs to increase the tempo of industrialization Recommendations & Conclusion: India has more entrepreneurs, who have the ability to make a difference and they need to be nurtured by creating positive attitude in their minds to achieve the potential. This sort of attitude building among young engineering graduates towards entrepreneurship is as good as any paid employment service is very important. This will boost the Indian Economy. India needs entrepreneurs for two reasons first to create employment and wealth and second, to get the most out of the existing opportunities The educational institutions should also work as regional information centers by having the records of databases of the research work done (Srinivasan, 2007). Practical knowledge based education system should be thought in colleges which would create more interest in the students. Government should also take the initiatives by not only providing adequate support in financial terms but also by rendering training facilities to the entrepreneurs as and when the need arises. Government should make efforts to have a concrete website containing all the information for current and aspiring entrepreneurs and they have to be updated on regular basis. There is also a need to significantly increase the incubation centers for entrepreneurship by comprehensively exploring the policy options to improve access to financing. There is also a need to provide the market data helping in preparing the business models, recruiting the skilled employees, etc. The best practices for family enterprises could be promoting a learning culture, solicit input form relevant leaders, establishing the constructive communication channels, promoting family members according to their skill level. To attract and retain the excellent non -family members according to their skill levels and establishing a leadership succession plan. Family members must also discuss the values, policies and directions for the future development. Many financial institutions assistance and governmental assistance all lead to the sustained efforts to develop entrepreneurship in the country. It also started yielding results. The results are more prominent in the post liberalization period (1990). Mr. N.R. Narayana Murthy of Infosys technologies and Mr.Shiv Nadar of HCL Technologies are the best examples. However, a vast majority of entrepreneurs are engaged in tiny and small scale units. The usual problems faced by such business establishments include shortage of material, capital and power, lack of training facilities, lack of quality control and lack of inadequate marketing facilities and so on. The Government alone can address all these problems permanently, so that entrepreneurship in India could reach new heights.

References: Chandra A (2009), India: Country replete with phenomenal innovation and entrepreneurship potential. http://www.knolwedge portalin / contents / node/445. Devarajan RTP, Ramanarayan S (2003). Entrepreneurial Leadership and thriving innovation activity, proceedings of 7th international conference on global business and economic development, Bangkok. Drucker PF (1985). The practice of innovation, Innovation and entrepreneurship practice and principles, Harper and Row, New York, pp. 19-33 Drucker PF (2007). Entrepreneurial strategies, Innovation and entrepreneurship practice and principles, Harper and Row, New York, pp 207-243. Corporate entrepreneurship, effective executive, The ICFAI University Press, April, 2007. Goswami.A, Dalmia.N Pradhan M. (2008), Report of Knowledge Commission India, 2008 Entrepreneurship in India. Maqbool HE (2006). Nurturing innovation and creating a suitable climate foe entrepreneurship, world summit on innovation and entrepreneurship, Muscat, 3rd April, 2006 http://www.ameinfo.com/82080.html. Punnathara C J (2009).Shrimp Exporters Turn Innovative. The Hindu Business Line, January, 17 Srinivasan T N (2007). Create a Framework that helps Entrepreneurs, Interview to The Hindu, Business Line, April 23, 2007. X---------------------------------------X