Entrepeneurial Management (EM 02) - entrepreneurship development

Management
02 – Entrepreneurship Development
Suhas Dutta

Some basics about this course
• 3 track program
• Scoring done byYOU and I
• 30 hours in all
• Business plan development from the start
• Google group will form the basis of our communication beyond
the classroom
• 75% attendance mandatory

Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.3
Sir Richard Branson
on Entrepreneurship, and Business Plans

Syllabus coverage
• Entrepreneurship Development and Program
• Need for Entrepreneurship Development
• Problems
• National and State Level Institutions

Learning objectives
• At the end of this session, you will be able to describe:
oThe various approaches to entrepreneurial development
oEnumerate the parts of an appropriate curriculum
oThe various elements of an entrepreneurial environment
oThe process and constituents of entrepreneurial development
oThe objectives and methods of entrepreneurial training
oInstitutions which help entrepreneurs

Entrepreneurial
Environment

Approaches to Entrepreneurial Development
• Most governments in developing countries appreciate the need
for small and medium industries; playing a role in socio-
economic upliftment;Thus, there is a growing interest in EDPs.
• Most common approaches to EDPs revolve around training. The
major approaches are:
oCourse content arranged by analysing needs and outcomes
oBy choosing appropriate training methods
oConsidering subject area, nature of learning, demographic, trainers and
resources
oAchieve training objectives

Approaches to Entrepreneurial Development
Business
Education
Craft, Design
&Technology
Civics
Sports
Maths, Language,
Drama, Music etc
IT
Economics
Personal &
Social skills
Entrepreneurship
Pathways to
integrate
Entrepreneurship
Development into
curriculum

The entrepreneurial environment
• The entrepreneurial environment refers to various facets within
which and enterprise must operate
Economic
Political
Social
Legal
Technological
Cultural
Entrepreneurial
Environment
• Private Enterprise & Development
• Entrepreneurial Urge
• Significance of Entrepreneurial Environment
• Infrastructural Network
• Environmental Analysis
• Eco awareness
• Instrumental Synergy
• Training
• Craftsmen / Artisanal development

Private enterprise and development
• Economic uncertainty and related risk
• Ecological pressure
• Need for efficient usage of resources
• Need for eco system which is supportive
• In some cases failure protection for the
common cause and greater good
• Subsidies, and allowing inefficiencies (to
support social causes) have long term
adverse effects

Entrepreneurial urge
• Entrepreneurship may be lacking in areas of
poverty, illiteracy and ignorance.
• Motivation to strive out of backwardness is
important.
• Entrepreneurship grows where:
o People are able to provide a creative response to a need
or a problem.
o The environment provides encouragement to such
creative responses
o Clear visibility for economic benefits is present
o The eco-system provides a symbiotic relationship
among entrepreneurs

Significance of entrepreneurial environment
• An enterprise, finally has to
be planned and operated
under the limitations and
support provided by:
oGovernmental policies
oVarious regulations and
oThe political environment
Enterprise
Entrepreneurial
Plans
Political
environment
Regulations
Policies

Infrastructural network
• In traditional economies agriculture forms the base of the
economy and drives it.
• Modern economies are different
Traditional Economy
Economy Driver
Primary Sector
Agriculture
Secondary Sector
Manufacturing
Tertiary Sector
Services
Modern Economies
Any combination
•Agriculture not necessarily dominant
•Powerful manufacturing
•Leading services

Infrastructural network
• If agriculture does not drive the economy enough, nucleus
industries can be set up

Environmental analysis
• Entrepreneurial development can be done only by careful
planning taking into account
oTarget groups of beneficiaries
oTheir activities, needs
oPractical methods by which their needs and activities can linked to the
covering enterprise
• Area studies, unfortunately, often miss out specifics
oAnd often get out of sync with the required objectives

Ecological concerns
Three important Govt. of India
legislations were passed to
ensure the compliance of
pollution control standards:
• Water (prevention and control of
pollution) Act, 1974 and related
amendments.
• Air (prevention and control of
pollution) Act, 1981 and related
amendments.
• Environment (protection) Act, 1986

Instrumental synergy
• Comprehensive coverage of
dynamic needs can not be
ensured unless the
development strategy takes
into account
oSocial Needs
oPrivate needs of the entrepreneur
oAn integrated approach to rural
industrialization which deals with a
complex structure of differential
needs and calls for synergy
between institutions
Social Needs
Personal Needs
Integrated synergistic approach

Training
• This forms the backdrop for development of training in the
backward areas.
• The entrepreneurship development program must deal
with:
oEntrepreneurial activities identified and projects formulated on the
basis of action plans based on environmental analysis
oFor each activity, institutional linkages to be spelled out
oInter agency teams to be constituted on basis of institutional
linkages
oTraining programs should take entrepreneurs through multi-
disciplinary familiarization course
oNodal agency which organizes the training program to monitor
implementation of each trainee’s project

Craftsperson and artisanal development
• The integrated approach to rural industrialization needs
organized development of artisans.
• But, this development will be hindered with problems:
oGeographically scattered
oVaried economic / social problems
oVery low productivity
oGrade of products might not be acceptable
oInput supply system is undependable
oRestricted market
oMight not be able to attend training because of lack of affordability, and
stoppage of income

Craftsperson and artisanal development
• Thus needing a comprehensive support system to pull them into
entrepreneurship
• Strategy has to:
oEstablish cooperative societies / agencies to provide dependable input
raw materials
oProvide preferential marketing support
oRestrict competition from big companies (??)
oMake available technical and consultancy organizations

The process of
entrepreneurial
development

Meaning of EDP
• ED is important to achieve overall economic development
through higher levels of industrial activity.
• Effective EDPs are designed to help individuals strengthen and
fulfill their entrepreneurial motive by acquiring skills and
capabilities necessary for playing the entrepreneurial role
effectively.
Understanding
of motives
Understanding
motivation
patterns
Impact on
Behaviour
Impact on
entrepreneurial
value
What EDP isn’t
• Catch-all program to remove all
obstacles
• Only training
• Mechanism to satisfy long list of
objectives
• Success depends only on the trainer /
mentor

Objectives of EDP
Help entrepreneurs to:
• Develop and strengthen entrepreneurial motivation
• Analyse environment related to small businesses
• Select projects and products
• Formulate projects
• Understand the process and procedure of setting up small enterprise
• Know and influence the source of support needed for launching the
enterprise
• Acquire basic management skills
• Know and appreciate the pros and cons of being an entrepreneur
• Be aware of and appreciate the needed social responsibility
disciplines

Evolution of EDPs
• Initial programs in the 1960s tried to fill technology and know
how gaps
oMainly as support programs for existing and new entrepreneurs
• Realization that for an enterprise to work, it is important for
both:
oExternal facilities and
oQualities of the entrepreneur
Need to be present

Entrepreneurial development cycle
• Entrepreneurial education
• Planned publicity
• Scientific identification of potential
entrepreneurs
• Help and guidance in selecting products
and projects
• Provision of technical know how
• Evolving locally suitable new products
and processes
• Creating entrepreneurship forums
• Recognition of entrepreneurial skills
Support
Sustaining
Simulatory

Support
Sustaining
Simulatory
• Registration of unit
• Arranging finance
• Providing land, utilities
• Guidance and support for machinery
procurement
• Supply of scarce raw materials
• Procuring licenses
• Providing common facilities
• Granting tax relief and other subsidies
• Offering management consultancy
• Helping marketing product
• Providing information

• Help modernisation
• Help diversification, expansion
• Additional financing for capacity
utilisation
• Deferring repayment
• Diagnostic industrial extension
• Production units legislation /policy
change
• Product reservation
• Quality testing
• Need based common facilities centre
Support
Sustaining
Simulatory

Non-Indian EDPs
• Commonly agreed that EDPs
oProvide an alternative to traditional support structures
oTraining made positive contributions in the performance of entrepreneurs
• The basic features still are:
oIdentification and careful selection of entrepreneurs for training
oDeveloping the entrepreneurial capabilities of the trainee
oEquipping the trainee with basic managerial and strategic competencies
oHelping to secure financial, infrastructural and related assistance
oProviding subsidized training

Issues with EDPs
• The impact of EDPs has been inconsistent at best. The basic
issues to consider are:
oStructure and composition of EDPs
oAreas of operation
oFixing priorities
oLack of specialists support
oBesides many other operational issues including
‐ Inherent inability to identify the needs of the institution
‐ Lack of consistent strategy
‐ Low local support
‐ Inadequate research facilities
‐ Inconsistent program design
‐ Lack of clarity in approach

Development of women entrepreneurs
• IDBI has relaxed norms for financing / refinancing for women led
enterprises
• Training institutions have been advised to keep in mind
oPre-training conditions
oInclusion of women trainers
oExtension services to be tuned to needs of women entrepreneurs
oInclusion of demonstrations and field visits
oPost training hand holding till entrepreneurs reach break-even stage

Strategy for entrepreneurial development
• Public enterprises for areas where private enterprise is not attracted
• All effort towards an industrial culture
• Development of management education and industrial training
• Adequate measures for mobilizing and fostering entrepreneurial talent
• Programs for development of backward regions
• Effective administration to be made more effective so that objectives of economic
policies may be fully achieved
• Institutional framework to be aligned with major industrial or economic needs
• Greater emphasis on research relating to processes and enhancement of value of
indigenous techniques
• Financial institutions to provide adequate and timely financial assistance to SMBs
• Conducive working and entrepreneurial environment for new categories and types
of entrepreneurs

Entrepreneurial
development
training

Importance of training
• Ensures availability of skilled workers at all levels
• Increase potential, and improve performance of workers
• Enables workers to work more efficiently, faster and precisely to
maintain quality of products
• Minimizes scrap, and defective products
• Minimizes accidents, reduces fatigue
• Reduces employee turnover, improves engagement and team
spirit
• Improves chances of career progression

Principles and methods of training
• In proper atmosphere, systematically through duly qualified and
trained instructors
• Reasonably long to cover theory and practical skills -
comprehensive
• Training at all levels – induction, job, promotion, refresher
IndividualTraining GroupTraining Lectures Demonstrations
Written Instructions Conference Meetings / Workshops

Selection scheme
Selecting
Area and
Survey
Introduction
of EDP to
community
Revision of
curriculum
Marketing the
EDP course
Symposium
Participant
Selection
EDPTraining
Follow up
Post-training
assistance
Pull from
participants
Selected
participants
Entrepreneurs

Course content and curriculum
• 25 day course
• Daily program of 2 sessions per day
• Motivational training – three day
residential program
Motivation
Training
Management
Essentials
Feasibility
Study
Fundamentals
Introduction
to
Entreprene-
urship
PlantVisit

Non-Indian approaches to training
• In Germany, the common features of re-structuring are:
oBroad-based training followed by specialization
oDevelopment of multi-craft skills
oDevelopment of unique training modules and units
oIndustry’s lead and initiative
oChange in complexion of workforce – towards skilled workers
oRetraining programs, for skill upgradation
oOverall personality development of workforce
• In contrast training in Japan takes into account
oOn the job training
oGaining of individual knowledge

Action oriented training
Promotion
Selection
On the job
training onTech.
subjects
On the job
training on
business subjects
Group training
on technical
subjects
Group training
on managerial
subjects
Follow-up visits

EDP pre-requisites
• Entrepreneurs need variety of assistance at the beginning and
EDPs should recognize the specific needs
• Survey of opportunities
• Entrepreneur selection
• Inputs for entrepreneurship development training

Support system – Government and non-government
Directorate of
Industries
State &
Cooperative
Banks
District Industrial
Centres
Small Scale
Industries Board
Ministry of
Commerce &
Industry
Extension Centres
Regional
Branches
Prototype Centres
Central
Local
Voluntary
Agencies
Linkage Agencies Banks
Non Government

Institutions for
entrepreneurs

Focus of EDPs
• Entrepreneurs can’t be created like degree holders
• Only those individuals who possess the basic capabilities for
entering into business ventures
• Vary training inputs depending on region, sector and individuals
• Train the individuals to also run the enterprise successfully
• Focus on the person rather than on the project

Institutions
Management Development Institute
(MDI)
• Was set up for developing and
improving the quality of day to day
management
• Involved in research and consultancy as
well
• Some programs run in Karnataka
National Institute for Entrepreneurship
and Small Business Development
(NIESBUD)
• Apex body to co-ordinate the
training programs of various centres
and organizations.
• To train large number of trainers and
motivators
• To prepare model syllabuses of
training for various target groups

Institutions
Entrepreneurship Development
Institute of India (EDII)
• Principal agency with social
responsibility for entrepreneurship
development
• Developing relevant programs and
innovative training techniques for
trainers
• IDBI set up IEDs
• SIDBI
• STEPs
• The Centre for Entrepreneurship
Development
• The Entrepreneurship Motivation
Centre
• Xavier Institute of Social Service

Role of Banks
• Development Banks
oSpecial capital and seed capital schemes
• Commercial Banks
oSpecial and package schemes to develop entrepreneurship in small scale
industries sector
oVarious types of non-financial support

Further readings / viewings
• http://tnau.ac.in/eagri/eagri50/AECO341/lec02.pdf
• http://msme.gov.in/Web/Portal/New-Default.aspx
• http://www.dcmsme.gov.in/MSME-DO/sidonetwork.htm
• http://www.slideshare.net/arnav.dhankad/the-role-of-small-
scale-industries-in-india

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