entrepreneurship

Entrepreneurship Development

Unit 2

S.Vinoth, RVSIMSR, ED - Unit 2

Unit - II

• Entrepreneurial Motivation Theories• Entrepreneurial Competencies – Developing Competencies – Role of

Entrepreneur• Development Programs • Assistance Programme for Small Scale Units – Institutional Framework • Role of SSI Sector in the Economy • SSI Units – Failure, Causes and Preventive Measures – Turnaround

Strategies


Entrepreneurial Motivation Theories

• The term motivation has been derived from the word motive . Motive may be defined as an inner state of our mind that moves or activates or energies and directs our behaviour towards our goals.

• Motivation may be defined as the process that motivates a person into action and induces him to continue the course of action for the achievement of goals. It is an ongoing process because human needs/goals are never completely satisfied.

• Motivation refers to the way in which urges, drives, desires, striving, aspirations, or needs direct, control or explain the behaviour of human beings – Dalton E. McFarland



• Maslow’s Need Hierarchy Theory

• McClelland Acquired Need Theory

• Elements of Motivation• Motives• Behaviour• Goals



• Maslow’s Need Hierarchy Theory



• Maslow’s Need Hierarchy Theory:

• Physiological - oxygen, food, shelter, and sleep

• Safety - shelter or housing, physical ability to defend one’s self, the

need to have limits or law (or a conscience), and a regular routine that

an individual is comfortable with

• Social - friendship and companionship

• Esteem – Social relationship, status

• Self-actualization -personal growth, problem solving, life

appreciation, and peak experiences for oneself



• McClelland Acquired Needs Theory



• McClelland’s Acquired Needs Theory:• (i) Need for Affiliation – These refer to needs to establish and maintain

friendly and warm relations with other.• (ii) Need for Power – These mean the one’s desire to dominate and

influence others by using physical objects and actions.• (iii). Need for Achievement – This refers to one’s desire to accomplish

something with own efforts. The implies one’s will to excel in his/her efforts.



• McClelland's Needs• Successful Entrepreneur- High nACH• Sets moderate, realistic and attainable goals for them• Prefers situations in which they can find solutions for solving personal

responsibility• Needs concrete feedback on how well they are doing• Has need for achievement for personal accomplishments• Looks for challenging tasks



• Motivating factors for entrepreneurs:• Internal factors

– Desire to do something new– Educational background– Experience

• External factors– Government assistance and support– Availability of labour and raw materials– Encouragement from other business houses– Advices of friends, networks– Promising demand for the products


Entrepreneurial Competencies

• A Competence is an underlying characteristic of a person which leads to his/her effective or superior performance in an Job.

• Every career draws on the competencies of an individual• Competencies refer to abilities and skills• Competencies may be general and some peculiar to the chosen career• Competencies are teachable and learnable behaviour• Components of Entrepreneurial Competencies are Knowledge, Skill

and Motive.



• Entrepreneurial Competencies Identified By The EDI:(Entrepreneurship Development Institute of India, Ahmedabad)

• Initiative- acting out of choice rather than compulsion, taking the lead rather than waiting for others to start.

• Sees and Acts on Opportunities- A mindset where one is trained to look for business opportunities from everyday experiences

• Persistence- A ‘never say die’ attitude, not giving up easily, striving Information seeking continuously until success is achieved.

• Initiative- acting out of choice rather than compulsion, taking the lead rather than waiting for others to start.

• Sees and Acts on Opportunities- A mindset where one is trained to look for business opportunities from everyday experiences

• Persistence- A ‘never say die’ attitude, not giving up easily, striving Information seeking continuously until success is achieved.



• Entrepreneurial Competencies Identified By The EDI:(Entrepreneurship Development Institute of India, Ahmedabad)

• Systematic Planning- Breaking up the complex whole into parts, close examination of the parts and inferring about the whole; e.g. simultaneously attending to production, marketing and financial aspects (parts) of the overall business strategy (the whole).

• Problem solving-Observing the symptoms, diagnosing and curing.• Self-confidence- Not being afraid of the risks associated with business and relying on

one’s capabilities to successfully manage these.• Assertiveness- Conveying emphatically one’s vision and convincing others of its value.• Persuasion- Eliciting support of others in the venture.• Use of Influence Strategies- Providing leadership.• Monitoring- Ensuring the progress of the venture as planned.• Concern for Employee Welfare- Believing in employee well being as the key to

competitiveness and success and initiating programmes of employee welfare



• Competencies of successful entrepreneurs• Proactivity

– Initiative– Assertiveness

• Achievement Orientation– Sees and acts on opportunities– Efficiency orientation– Concern for high quality– Systematic planning– Monitoring

• Commitment to others– Commitment to work/contracts– Recognizing the importance of business relationships


Entrepreneurship Development Programmes

• Need for Entrepreneurship Development Programme:• Entrepreneurship-

– backbone of economic development– can be created and nurtured through appropriate interventions in the form

of EDPs• Entrepreneurship development and training - one of the key elements for

development of micro and small enterprises (MSEs), particularly, the first generation entrepreneurs .



• Objectives of EDPs:• Develop and strengthen entrepreneurship qualities (Motivation & Need for

achievement)• Analyze environment surrounding SSIs• Formulating projects• Understand the process and procedure for setting up small enterprise• Understand the sources of help and support for starting a small enterprise• Acquire the necessary managerial skills required to run a small enterprise• Understand the pros and cons of being an entrepreneur• Appreciate the needed entrepreneurial discipline



• Objectives of EDPs:• Help entrepreneurs to

– Set/reset objectives for their business– Prepare to face uncertainties– Enable to take decisions– Enable to communicate clearly and effectively– Develop broad vision for the business– Learn the compliance of law– Develop passion for integrity and honesty



• Course Contents and Curriculum of EDPs:• General introduction of entrepreneurship• Motivation training• Management skills• Support system and procedures• Fundamentals of project feasibility study• Plant visits



• Methods of Training:• Individual instruction• Group instruction• Lecture method• Demonstration method• Written instruction method• Conference• Meetings



• Phases of EDPs:• (i). Pre-training phase • (ii). Training phase• (iii). Post-training phase



• Phases of EDPs:

(i). Pre-training phase :• Selection of entrepreneurs• Arrangement of infrastructure• Tie up of faculty for training purpose• Arrangement for its inauguration• Formation of selection committee for selecting potential candidates• Development of application form/syllabus• Pre-potential survey of opportunities existing in the environment



• Phases of EDPs:

(ii). Training phase:• To bring out desirable changes in the behaviour of trainees• Create need for achievement ( motivation) among trainees• Focus on – entrepreneurial traits and competency development• Introduction to entrepreneurship• Motivation training• Essentials of management• Fundamentals of project feasibility study• Organizing the business• Plant visit



• Phases of EDPs:

(iii). Post-training phase:• Follow up• Review



• Steps involved in conducting EDPs:• Select area from existing government policy guidelines/socio-economic

reports• Techno-economic survey of the selected area; feasibility study• Identify potential and existing entrepreneurs interested in starting new

business/ expansion/ diversification• Training• Follow up and consultancy services



• National-level Entrepreneurship Development Institutes (EDIs):• National Institute for Micro, Small and Medium Enterprises (NI-MSME),

Hyderabad • Entrepreneurship Development Institute of India (EDII), Gujarat• Indian Institute of Entrepreneurship (IIE), Guwahati • Technical Consultancy Organizations (TCOs)s• National Institute for Entrepreneurship and Small Business Development

(NIESBUD), Noida • Small Industries Service Institute (SISI)• Small Industries Development Organisation (SIDO)• National Small Industries Corporation(NSIC)• National Alliance of Young Entrepreneurs (NAYE)



• Problems faced by EDPs:• Lack of skilled/motivated trainers• Lack of commitment on the part of organizations involved in conducting EDPs• Non- conducive environment• Selection of wrong trainees• Antithetic attitude of supporting agencies


Small Scale Industries - An Overview

• An Undertaking having an investment in Plant and Machinery of not more than Rs.1.5 Crore was known as SSI.

• However, to facilitate technology up gradation and enhance competitiveness, the investment limit has been raised to Rs. 5 crore in respect of 71 high tech export oriented items in drugs, pharmaceuticals, hand – tools and knitwear sectors, etc.

• Role:• Employment generation • Rural industrialization• Less capital intensive • High labour absorption nature• Defined in terms of investment limits in plant and machinery (original value),

up to a prescribed value.



• Features/ Characteristics:• Ownership• Management and Control• Area of Operation• Technology• Resources• Dispersal of Units• Flexibility• Autonomy• Government Support and Privileges



• Mobilization of resources and entrepreneurial skill• Equitable distribution of income• Regional dispersal of industries• Provides opportunities for development of technology• Indigenization• Promotes exports• Supports the growth of large industries• Better industrial relations


Institutional Support Structure for MSMEs in India


Small Scale Industries

• Problems of SSI’s• Finance• Shortage/Availability of Raw Material• Technical Updates• Idle Capacity• Infrastructure• Marketing• Under utilization of Capacity and Resource• Lack of skilled man power• Poor Project planning and Estimation• Managerial Inefficiency



• Effects:• Huge Financial Losses • Less Employment Opportunities• Emerge of Industrial Unrest• Adverse Effect on Prospective Investors & Entrepreneurs• Wastages of Scare resources• Loss of revenue to the Government



• Corrective Measurers:• Identification and detection at the early Stage• Merger of a Large number of sick units to avoid closure• Integration of unit-management, financial institutions and labour• Separate division for sickness units in Board for Industrial & Reconstruction

(BIFR)• Provide managerial efficiency, marketability of products, adequate availability

of power and raw material along with financial resources in the rehabilitation package

• To provide adequate additional working capital to meet losses• Periodical reviews of accounts by their banks and financial institutions at the

early stage• Increase/Impart necessary knowledge to the entrepreneurs through

Entrepreneurship Development Programme (EDP).


entrepreneurship

Documents

ed unit

needs theory s

hierarchy theory s

mcfarland s

products s

challenging tasks s

hierarchy theory mcclelland

achievement of goals