Entrepreneurship Development Set 1 Q. 1) Elaborate the TQM Process in Small Scale Enterprises. Ans) The purpose of TQM (Total Quality Management) is to meet the requirements of customers consistently by continuous improvement in the quality of work of all employees. For this, TQM involves the following process: 1. Customer Satisfaction: Customer is one who buys others’ goods and services. Today, customer dictates production or market. The long-term success of any business, therefore, depends on customer satisfaction. This is especially true for small businesses where the impact of losing even a single customer can be serious.
The first step in planning for customer satisfaction is to understand what customers expect from the product or service. For any business, there can be two types of customers: internal and external. 2. Processes: Process can be defined as a series of inter-dependent tasks that produce results. This requires transformation of inputs into outputs. Processes exist in every part of an organization. People mistakenly think of only production or manufacturing operations. In fact, the word ‘process’ is all embracing one. As every part of an organization performs work, all these should be systematically defined to include them in the process.
Administration, billing, sales, maintenance, recruitment and training are the examples of different parts of organization in which process exists. 3. Continuous Improvement: The third step involved in TQM is making efforts for continuous improvement in performance/process. The first step in improving process is to eliminate the waste associated with the process. But, the question is how to eliminate the waste? The various techniques like value-added assessment, minimize checks and inspections, and minimize administrative tasks help reduce/eliminate waste in process. Simplification means reducing the complexity of a process.
Further, simplification can lead to fewer activities and fewer things go wrong. Experience suggests that the simpler a process is, the easier it is to learn and perform consistently. Reducing cycle time is yet another technique to improve process. Cycle time is the time required to deliver a product or service to customer. 4. Team Work: The fourth element involved in TQM process is team work. A team is a group of individuals who work together on one or more common processes. These individuals may all be from the same department, represent several departments, or involve an external supplier or customer.
Effective teamwork has its foundations on consensus. Consensus is a general agreement by everyone involved. Consensus is arrived when all members of a team understand a decision, accept and support it. 5. Personal Initiative: TQM process completes with encouraging personal initiative in organizational functioning. Empowerment breeds personal initiative. Q. 2) Explain the different phases in entrepreneurial development programme. Ans) Entrepreneurial Programmes have to follow certain phases. * Initial Phase or Pre-training Phase: During this period necessary preparations for implementing the training programme are being made.
The important activities during the phase are listed below: 1. Creation of the infrastructural facilities required by the programme. 2. Preparation of the syllabus for the training. 3. Preparation of the guest facilities for the trainees. 4. Inauguration of the training programme. 5. Formulation of the techniques for the selection of trainees. 6. Formation of the selection committee. 7. Advertising propaganda of the training programme. 8. Preparation of the application form for the trainees. 9. Review of the training facilities. * Training Phase or Development Phase: This is the phase of the real training.
During this phase efforts are made to increase the entrepreneurial capabilities of the trainees. The main aims of this phase also include the creation of the willingness and motivation in the minds of the trainees and bringing about the changes in the trainees – changes which are favourable to their entrepreneurial trait. This is a phase in which the trainers should critically examine the progress of the training programme. N. P. Singh says that the trainers should ascertain that the following changes have already been brought about in the behaviour of the trainees: 1.
A trainee’s aptitude coincides with his project idea. 2. A trainee has the motivation for undertaking entrepreneurial adventure and risk expected of an entrepreneur. 3. There are no inverse changes in the entrepreneurial outlook and skills of the trainee. 4. There is no lack of any entrepreneurial behaviour in the trainee. 5. The trainee has already obtained from the training the technical know-how and human resources required by an average entrepreneur. 6. The trainee has already acquired the skill to take prompt and creative decisions. Q. 3) What are the main problems faced by women entrepreneurs?
Ans) The main problems faced by the women entrepreneurs are listed below: 1. Shortage of Funds: In many developing countries like India, women entrepreneurs suffer from inadequate capital. They lack access to external funds due to their inability to provide tangible security. Very few women have property in their names. Male members in the family do not like to take risk by investing capital in ventures run by women. Similarly, banks have also taken negative attitudes while providing finance for women entrepreneurs. All these lead women entrepreneurs to rely on personal savings or loans from family and friends.
But there is a limit for the same. 2. Inefficient Arrangement for Marketing and Sales: The women entrepreneurs are most often dependent on intermediaries who pocket a major part of the profits. Although the middlemen exploit the women entrepreneurs, the elimination of middlemen is difficult because it involves a lot of running about which may be difficult for them. Further, women entrepreneurs find it difficult to capture the market and make their products popular. 3. Shortage of Raw Materials: Women entrepreneurs find it difficult to procure raw materials and other necessary inputs.
On one hand the prices of raw materials are very high and on the other they are able to get these raw materials at the minimum of trade discounts. 4. Stiff Competition: Many of the women enterprises have imperfect organizational set up. They have to face severe competition from organized industries and male entrepreneurs. 5. High Cost of Production: Another problem which undermines the efficiency and restricts the development of women enterprises is the high cost of production. Government assistance in the form of grants and subsidies to some extent enables them to tide over this difficulty. . Low Mobility: One of the main handicaps for women entrepreneurs is mobility or travelling from place to place. Women find it difficult to get accommodation in smaller towns. A single woman asking for a room is still looked upon with suspicion. 7. Family Responsibilities: In countries like India, it is mainly a woman’s duty to look after the children and other members of the family. Here involvement in family leaves little energy and time for business. Married women entrepreneurs have to make a fine balance between business and home. 8.
Social Attitudes: Despite constitutional equality there is discrimination against women. In a traditional society, women suffer from male reservations about a woman’s role and capacity. In rural areas, women face resistance not only from males but also from elderly females who have accepted inequality. 9. Low Ability to Bear Risk: Women have comparatively a low ability to bear economic and other risks because they have led a protected life. The impact of losses is more severe on women since they lack sufficient social support. 10. Lack of Education: In India literacy among women is very low.
Due to lack of education, majority of women are unaware of technological developments, marketing knowledge, etc. 11. Low Need for Achievement: Need for achievement, independence and autonomy are the prerequisites for success in entrepreneurship. But in India the common Indian woman is happy to bask in the glory of her parents, husbands and children. They have preconceived notions about their role in life and this inhibits achievement and independence. Q. 4) What are the sources from which an entrepreneur can obtain business ideas? Ans) The sources from which an entrepreneur can obtain business ideas are listed below: 1.
Market Characteristics: The supply and demand conditions of various products will give an idea about unfulfilled demand. Demand for new products should also be analysed. The success of “Maggi” noodles is an example of unsatisfied demand for fast foods. “Surf” catered to the upper segment of the market. Later “Nirma” entered to satisfy the lower strata of the market. 2. Product Profile: An analytical study of the end products and by products can throw light on new project ideas. For example mini steel plants have been started using steel scrap which was discarded as waste.
Again small firms can supply components or parts to large firms. 3. Imports and Exports: The Government of India is now encouraging exports. There is now great scope for import substitution and export of various items. 4. Emerging Technologies: Commercial exploitation of indigenous or imported technologies is another source of project idea. One best example is Xerox. Till Xerox Corporation adopted the idea in 1960, it remained as an unexploited invention. 5. Social and Economic Trends: Social and Economic status of people are always subject to change and offer vast opportunities.
An entrepreneur should observe these changes. For example, there is now a shift towards ready-made garments, possessing consumer durables on hire-purchase basis, etc. 6. Changes in Consumption Pattern: Changes in consumption pattern of the people in the home country and foreign countries also require the entrepreneur’s attention. Nescafe introduced granulated coffee in India as consumers abroad preferred granulated coffee to powdered coffee. 7. Revival of Sick Units: A sick unit gives ample investment opportunities in the hands of a dynamic entrepreneur.
He can revitalise and turn a sick unit into a profitable one. 8. Chance Factors: An entrepreneur may come across a sheer chance which may turn out to be a good project idea. 9. Trade Fairs: Trade fairs are often organized under the auspices of the Industries Department of the Central and State Governments and Trade Organizations. International and National trade fairs and exhibitions are held at Pragathi Maidan in New Delhi. Machinery and tools for the small scale units and ancillary products required by the major industries are displayed at the national, state and district level fairs.
An inquisitive and dynamic entrepreneur can get lots of ideas by visiting these fairs. 10. Trade and Professional Journals: Trade and professional journals/magazines are also sources of ideas. These journals/magazines give information relating to products manufactured and spares/components required by various industrial units belonging to a particular trade. Q. 5) Write a note on marketing strategy. Ans) Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary by company, by industry, and by nation, however, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive.
They are partially planned and partially unplanned. See strategy dynamics. Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company’s overarching mission statement.
Besides SWOT analysis, portfolio analyses such as the GE/McKinsey matrix or COPE analysis can be performed to determine the strategic focus. Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan. Q. 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. Ans) Set 2 Q. 1) Write a note on types of Entrepreneurs as classified by Danhof. Ans) In the initial stages of economic development the motivation of the entrepreneurs to take initiative was comparatively less. As development started gathering momentum the innovative urge and enthusiasm of entrepreneurs also began to rise up. Business environments began to speed up the emergence of enterprises.
During a study programme about the agricultural sector of America, Danhof classified entrepreneurs as follows: 1. Innovative Entrepreneurs: Adventurous entrepreneurs who attempt to put attractive possibilities in to practice are included under this type. They utilise a chance to introduce a new technique or a new product. They mobilise sufficient capital to start an enterprise befitting to this possibility. They also gather various production factors and select appropriate managers who are capable to run the enterprise forward. The type of entrepreneurs defined by Schumpter can be included in this category.
This type of entrepreneurs introduces new products and new production techniques and find out new markets for their products. The lack of this type of entrepreneurs, which is commonly found in developed countries, is the main reason for the economic backwardness of the developing countries. The backwardness of the industrial tradition of the developing countries paves way to the scarcity of innovative entrepreneurs. 2. Initiative Entrepreneurs: This type of entrepreneurs attempt to imitate innovative entrepreneurs. They imitate the techniques and the activities of others. The entrepreneurs of the developing countries belong to this type.
The imitating trend of this type of entrepreneurs becomes suitable to taste and aptitude of the consumers because they (the consumers) prefer foreign goods. 3. Fabian Entrepreneurs: Entrepreneurs who attribute preference to customs, religions, tradition and past habits, come under this category. Being shy and lazy these entrepreneurs are very cautious to accept changes and they view changes with suspicion. Being reluctant to face risk, they continuously follow the footsteps of their predecessors. 4. Drone Entrepreneurs: These entrepreneurs are unwilling to make any change in the production system, even if the system causes losses repeatedly.
They do not dare to derive from traditional lines. They never try to rise in accordance with the opportunities or to accept the warnings given by time. Even if their products have lost marketability and activities of the enterprise have been proved to be uneconomical and the enterprise has been thrown out of the market, these type of entrepreneurs do not dare to react. Q. 2) What is SIDO? Explain its functions. Ans) Small Industries Development Organisation (SIDO) is a subordinate office of the Department of SSI.
It is an apex body and nodal agency for formulating, co-ordinating and monitoring the policies and programmes for promotion and development of small scale industries. Development Commissioner is the head of SIDO. He is assisted by various directors and advisers in evolving and implementing various programmes of training and management consultancy, industrial investigation, possibilities for development of different types of small scale industries, development of industrial estates, etc. The main functions of SIDO are classified into (i) co-ordination, (ii) industrial development, and (iii) extension.
These functions are performed through a national network of institutions and associated agencies created for specific functions at present. The SIDO functions through 27 offices, 31 Small Industries Service Institutes (SISI), 37 Extension Centres, 3 Product-cum-Process Development Centres and 4 Production Centres. Functions Relating to Co-ordination: * To evolve a national policy for the development of Small Scale Industries. * To co-ordinate the policies and programmes of various State Governments. * To maintain a proper liaison with the related Central Ministers, Planning Commission, State Governments, Financial Institutions, etc. To co-ordinate the programmes for the development of industrial estates. Functions Relating to Industrial Development: * To reserve items for production by small-scale industries. * To collect data on consumer items imported and then, encourage the setting of industrial units to produce these items by giving coordinated assistance * To render required support for the development of ancillary units * To encourage small scale industries to actively participate in Government Stores Purchase Programme by giving them necessary guidance, market advice and assistance.
Functions Relating to Extension: * To make provision of technical services for improving technical process, production planning, selecting appropriate machinery, preparing factory lay-out and design * To provide consultancy and training services to strengthen the competitive ability of small scale industries. * To render marketing assistance to small scale industries to effectively sell their products * To provide assistance in economic investigation and information to small scale industries. Q. 3) Discuss MODVAT in detail.
Ans) The vexatious question of the taxation of inputs and its cascading effect ultimately on the value of the final product was a matter of much debate and concern for quite some time. The solution to the question was ultimately envisaged in extending the present on-going system of proforma credit to all excisable commodities barring a few ones. This new scheme is known as Modified Value Added Tax (MODVAT). The MODVAT scheme intends to gently and gradually expand its horizons so as to set-off excise and other countervailing duties paid on various inputs of final product.
This aims at coming closer to generalised get-off excise taxation on inputs. For this, the basic approach to be followed is to move towards the extension of on-going system of proforma credit to all excisable commodities. A few sector/products like textile products, petroleum and tobacco have been left for this purpose. This programme is to be implemented in a phased manner over a period of years mainly considering its implications on revenue account. It is important to mention that neither the MODVAT programme intends to raise maximum revenue or to give substantial relief on excise.
Any loss of duty on inputs will be recouped through higher excise taxation on final products. Thus, the shifting of burden of excise taxation away from inputs on to their final products is the core of the MODVAT scheme. Such shifting of tax burden also implies that the richer will have to bear more tax burden then the poor. It is good to reduce difference in income levels between the rich and the poor. Q. 4) Ms Latha G. wants to set up her own garment manufacturing unit. She needs to submit a report about the project in order to get the loan. What all essential details she should mention in the project report.
Ans) The project report should contain all the following essential details: * General Information: Bio-data of promoters, Industry/Product profile, Organisational Structure and Product details. * Land: Location – Locational advantages, lease or free hold – actual requirements – value – type of soil hard or loose or marshy. * Building: Area, type of construction, cost of construction – separate for administrative blocks and factory – detailed plan and estimate along with plant layout. * Plant and Machinery: List of machinery with full description and source of supply and cost.
A layout plan of the machinery according to the process – cost of miscellaneous asset. * Manufacturing process and technical know-how. * Effluent disposal. * Utilities: Power-source, availability, requirements and cost estimates of electrification and contribution to Electricity Board. Water-source, availability, requirements and cost of arranging the same. * Transport: Mode of transport and cost of internal roads. * Communication: Telecommunication, feasibility of getting – cost. * Raw Materials: List of raw materials, quantity requirements, sources of supply, controlled or scarce suppliers – arrangements made for a continuous supply. Manpower requirements with annual wage bill. * Products: Product mix and estimated annual sales – local, through agency – distribution system – competitors and their capacities. * Working Capital: Requirements, arrangement made with commercial banks, requirement of margin, whether there is need for collateral security. * Cost of production and profitability. * Break-even analysis. * Projected balance sheet and cash flow for ten years. * Schedule of implementation of the project. * Repayment schedule. Q. 5)Explain expansion with advantages and disadvantages. Ans) Expansion is one of the forms of internal growth of business.
It means enlargement or increase in the same line of activity. Expansion is a natural growth of business enterprise taking place in course of time. In case of expansion, the enterprise grows its own without joining hands with any other enterprise. There are three common forms of business expansion. These are: 1. Expansion through Market Penetration: It means the enterprise increases the sales of its existing product by enlarging the existing market. In other words, market penetration means making deeper in roads in the existing market. Various schemes are launched to penetrate into an existing market.
The scheme of exchanging an old scooter for new one introduced by LML, for example, is a form of market penetration. 2. Expansion through Market Development: It implies exploring new markets for the existing product. In order to increase the sale of existing product, the enterprise makes searches for new customers. 3. Expansion through Product Development and/or Modification: It implies developing or modifying the existing product to meet the requirements of the customers. Introduction of plastic bottles for selling refined oil in addition to its loose sales is an example of product development/modification.
Advantages: * Growth through expansion is natural and gradual. * Enterprise grows with making major changes in its organisational structure. * Expansion makes possible the effective utilization of existing resources of an enterprise. * Gradual growth of enterprise becomes easily manageable by the enterprise. * Expansion results in economies of large scale operations. Disadvantages: * Growth being gradual is time consuming. * Expansion in the same line of product delimits enterprise growth making enterprise unable to take advantages from new business opportunities. The use of modern technology is limited due to the limited resources at the disposal of enterprise. It weakens the competitive strength of the enterprise. Q. 6) Write a short note on types of entrepreneurs. Ans) 1. Innovative Entrepreneurs: Adventurous entrepreneurs who attempt to put attractive possibilities in to practice are included under this type. They utilise a chance to introduce a new technique or a new product. They mobilise sufficient capital to start an enterprise befitting to this possibility. They also gather various production factors and select appropriate managers who are capable to run the enterprise forward.
The type of entrepreneurs defined by Schumpter can be included in this category. This type of entrepreneurs introduces new products and new production techniques and find out new markets for their products. The lack of this type of entrepreneurs, which is commonly found in developed countries, is the main reason for the economic backwardness of the developing countries. The backwardness of the industrial tradition of the developing countries paves way to the scarcity of innovative entrepreneurs. 2. Initiative Entrepreneurs: This type of entrepreneurs attempt to imitate innovative entrepreneurs.
They imitate the techniques and the activities of others. The entrepreneurs of the developing countries belong to this type. The imitating trend of this type of entrepreneurs becomes suitable to taste and aptitude of the consumers because they (the consumers) prefer foreign goods. 3. Fabian Entrepreneurs: Entrepreneurs who attribute preference to customs, religions, tradition and past habits, come under this category. Being shy and lazy these entrepreneurs are very cautious to accept changes and they view changes with suspicion.
Being reluctant to face risk, they continuously follow the footsteps of their predecessors. 4. Drone Entrepreneurs: These entrepreneurs are unwilling to make any change in the production system, even if the system causes losses repeatedly. They do not dare to derive from traditional lines. They never try to rise in accordance with the opportunities or to accept the warnings given by time. Even if their products have lost marketability and activities of the enterprise have been proved to be uneconomical and the enterprise has been thrown out of the market, these types of entrepreneurs do not dare to react.