Development of Entrepreneurship

Skills: Challenges and Opportunities

Entrepreneur as an Innovator
One who perceives a need and then brings together manpower,
material and capital required to meet that need.
The entrepreneur in an advanced economy is an individual who
introduce something new in the economy- a method of production
not yet tested by experience in the branch of manufacturing, a
product with which consumers are not yet familiar, a new source of
raw material or of new markets and the like (Schumpeter)
Entrepreneurship has been considered as the propensity of mind
to take calculated risk with confidence to achieve predetermined
business objectives.

Issues in Entrepreneurship
Development
Human agent at the Centre Stage of the Economic Development,
Entrepreneur as an Innovator(Schumpeter)
Development of Entrepreneurship in Terms of Human
Motivation(McClelland)
Traditional business attitude of secrecy and self sufficiency
Lack of open Environment and opportunities for Entrepreneurship
Role of Small Scale Industries: Entrepreneurship Development
Employment Generation
Foreign Exchange Earnings
Balanced Regional Development
Laying the base for Industrial Development

Behavioural Issues in
Entrepreneurship
In entrepreneurship, there is agreement that an
entrepreneurs behavior has the following characteristics

(1)initiative taking,
(2)the organizing or reorganizing managerial functions
to turn resources for the useful enterprise, and
(3)the acceptance of risk of failure.

Individual Factors affecting

Entrepreneurship
1 Need for achievement
2. Locus of control
3. Risk taking
4. Job satisfaction
5. Previous work experience
6. Entrepreneurial parents
7. Age
8. Education

The Environmental factors

1. Venture capital availability
2. Presence of experienced entrepreneurs
3. Technically skilled labor force
4. Accessibility of suppliers
5. Accessibility of customers or new markets
6. Governmental influence
7. Proximity of universities/ Institutions
8. Availability of land or facilities
9. Accessibility of transportation
10. Attitude of the area population
11. Availability of supporting services

The Organization factors

1. Type of firm
2. Regulatory Framework
3. Entrepreneurial environment
4. Strategic variables
Cost
Product Differentiation
Scheduling

5. Corporate Restructuring: M&A and Takeovers

The process factors

1. Location factors
2. Accumulating resources
3. Marketing products and services
4. Producing the products
5. Government Regulations
5. Corporate Social Responsibility

Industrial Policy in the Recent Era

Change in Economic Policy Regime: Trade, Industry and
Financial Reforms
Disinvestment Regime, Privatisation and Foreign
Investment Focus
Encouraging the existing Small Scale Industrial units to
undertake modernisation and / or technology up
gradation
Development of Entrepreneurial Skills: Role of EDI and
ED Centres
Emphasis on the Development of Industry- Agriculture
linkages

Institutional Framework
Role of Banks and AIFIs: Nationalized and Private Sector
Banks, NABARD and SIDBI etc.
Role of Promotional Institutions: SIDCs
Role of SFCs
District Industry Centre
Role of Venture capital Financing

Role of Financial Services in

Entrepreneurship Development
Merchant Banking
Leasing
Portfolio Management
Venture Capital
Corporate Counselling
Corporate Restructuring
Factoring

Objectives of Industrial Policy at the

State Level
To create a conducive investment climate through
infrastructure creation, reduced regulations and general
facilitation.
To rejuvenate and make the existing industry more
competitive, through improved technology, product
quality and modern marketing.
To create a special thrust in the areas where the states
have an edge in terms of cost and quality.

Incentives Regime
Entrepreneurship as a function of right type of Industrial
Climate
Government Incentives like Industrial sheds, Provision of
Electricity and Tax Exemptions etc.
Investment Incentives like Fixed Capital Investment to
the Small, Medium and Large Scale units
Single Window Scheme of SIDCs
Perceptions of Entrepreneurs as to Government Policy
and Support System for SSI units

Thrust areas
Agro based and food processing industry.
Electronics, Information Technology &
Telecommunications.
Automobiles , automotive components and light &
medium engineering.
Handloom, hosiery , textiles & garment manufacturing
Export oriented units
SEZs

Problem areas in Entrepreneurship

Development
Many SSI turn sick due to lack of competence on the
part of entrepreneurs.
Surveys into the reasons for these failures invariably
discovered that personnel related problems constituted
the main reason for failure, other being lack of
managerial experience, marketing fluctuations, financial
problems, the growing demand for quality products and
so on.
Many small business people are not good at handling
employee problems for a variety of reasons. Human
factor which is so essential for running the organization
and putting the industry on the right track is completely
ignored.

Role of Human Resource

Management in SSIs
In the context of small scale industries, HR factor is ignored and these
industries dont have human resource departments in their
organizations.
In most of the units human resource function is being performed by
line management without assistance of specialized Human Resource
department.
Lack of right attitude towards change management
In small scale industry HR function is not considered vital for the
accomplishment of organizational goals
Contract labour
Lack of Social security and Labour welfare

Marketing Management in SSI

units
Lack of Customer Relationship Management
Distribution and Promotion Problems
Pricing and Product Development Problems
Lack of Focus on Marketing Research by SSI
Sales Through State Government Agencies: STC and
MMTC etc.
Quality Mark(ISI and ISO )

Financial Management in SSI units

Sources of Finance: Contribution by Self, Relatives and
Friends
Short Term Financing by Banks
Medium and Long Term Financing by State Level
Financial Corporation
Lack of Access to the Capital Market
Venture Capital Financing by Venture Funds
Financing by Sector Specific Institutions: Cooperative
Banks, Agriculture development Banks and Industrial
Development Corporations
Lack of Focus on Optimal Capital Mix

Production Management in SSI

Lack of Expansion and Modernization
Lack of Diversification by SSI units
Lack of R & D Focus
Low Productivity
Poor Quality
Increasing cost of Inputs

Other Problems in Entrepreneurship

Development
Lack of collaboration between universities and companies
Lack of sharing knowledge, experience and the networking skills
with the next generation entrepreneurs
Problem of revival of SSI units: Small and Medium Enterprises
Renewal Fund for Technological Up gradation and Capacity
Building
Lack of Professional Management Approach
Lack of Adequate Delegation of Authority
Lack of Adequate Motivational Incentives to Staff
Lack of result oriented approach

How to Accelerate Entrepreneurship

Development?
Technology Development and the high risk financing
Open flow of people and the information between the universities,
industry and the financial community
Strategic Management Approach: Clarity as to financial goals (revenue
and profitability) and non-financial goals market share, number and type
of customers, choice of market etc.)
Development of Financial Infrastructure: Role of SFCs and AIFIs
Entrepreneurship Development through District Industry Centres and
Entrepreneurship Development Centres
Well trained people and have Human Resources Development through
Technical Institutions
Simplification of Procedure and Rationalization of Tax Regime
Identifying the Thrust Products and the Markets

Entrepreneurial Success: Replicating

Silicon Valley Phenomenon
Why are the entrepreneurs at SV so successful? How do
they build great companies?
What
makes
Silicon
entrepreneurship?

valley

center

for

Is it hard work, timing, education, dedication or is it just

a plain luck? How do the ideas germinate? Where does
the money come from? What are the pathways to
success and the roadblocks they encounter?

Contributing factors at Silicon Valley

Open Environment and Experiments by Skilled
Professionals with new technology, new products, new
markets and new applications
Role of Venture Capital
Movement of Professionals between companies and
Sectors: from university to Industry, from semi
conductor to telecommunication and from industry to
finance leading to cross fertilization of ideas and know
how
Open
Environment
and
the
opportunities
for
Entrepreneurship
Knowledge in Technology, products and markets: Strong
Thrust

Challenges and Opportunities

There is a Shift in focus from Agriculture to Industry
Need to Develop Agriculture-Industry Linkages
Focus Towards Promotion of Electronic and IT Industry
SSI Unable to Face Cut Throat Competition from Large
and Medium Industry
Lack of Marketing Culture in SSI units
Low Productivity and Various operational Problems
Lack of adoption of sound Financial Management
Practices

Challenges and Opportunities

Lack of attention to the Quality and Cost Factors
Red tape and Bureaucratic hurdles
Lack of Strategic Management Approach
Need to cope with the Industrial Sickness in SSI sector
Need to pay attention to the Corporate governance

Be a Job Creator than Job Seeker

Thanks
Best Read Book on East Meets West:
Entrepreneurial Connection by Gurmeet
Narula, age Publications.
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mail to:
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