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Entrepreneurship Policy is defined as one that is aimed at the pre-start, the start-up and early post-
start-up phases of the entrepreneurial process; designed and delivered to address the areas of
Motivation, Opportunity and Skills; with the primary objective of encouraging more people in the
population to consider entrepreneurship as an option, move into the nascent stage of taking actions
to start a business and proceed into the entry and early stages of the business. Entrepreneurship
policy when designed and implemented will need to eventually increase motivation amongst
individuals to attempt entrepreneurship, create a conducive environment where motivated
individuals will find potential opportunities for exploitation and/or exploration, and they will have
the required support in terms of education, skill development, resources, and support services to
create and capture value from these opportunities.
Aiming to increase the opportunity for entrepreneurs, while enhancing their skill levels, Reducing
Barriers to entry and exit intends to reduce the time and cost of starting a new business, while also
improving opportunity for startups to grow and access resources. It also tries to reduce the stigma
attached with failed ventures, and remove disincentives of working as an employee vis-à-vis
becoming an entrepreneur. This last element is a critical item, which pushes entrepreneurial
individuals to take up jobs, which in turn gets reflected in the entrepreneurial ecosystem in the
country. Governments implement this through policy levers like facilitating single-window
registration system; rationalizing the labor and taxation regulations; reviewing competition law,
company law, bankruptcy law, intellectual property law, and regulation governing the transfer of
business ownership; review and relax administrative burden on startups; and implement ‘better
regulation’ of businesses within India.
Startup and seed capital financing tries to enhance the opportunity for the entrepreneur by
addressing the lack of access to financing, which would impede the venture’s existence, stability,
expansion, modernization, and growth. The government assists the entrepreneurs with funding to
address the market failures and gaps in accessing finances for new and early stage firms and to
reduce information asymmetries within the entrepreneurial ecosystem. This is achieved through
policy measures like facilitating micro-loans, pre-venture and starter funds for new entrepreneurs;
guaranteeing the loans by new ventures; partnering with banks and other financial institutions for
providing easy and no-hassle loans for startups and nascent ventures; incentivizing angel and
venture capital firms to invest in new and nascent firms by making necessary changes in the
taxation system; and facilitating access to information about sources and types of financing
available to entrepreneurs.
2. What are the new avenues for start-up ventures in India. Explain in brief
Never before in the history of India, so many influential forces have congregated to promote
startups and enable them to flourish globally. In the past few years, the Indian startup ecosystem
has witnessed an immense growth, despite several roadblocks, adoption of play-to-win approach
by the young and enthusiastic entrepreneurs was all time high.
However, the direct involvement of government in empowering startups will certainly give a real
boost.
India is all set to break away the traditional career paths as a lot of talent is tending towards working
with the Indian startup space. Challenging assignments, huge funding that brings huge
compensation packages and an associated cool quotient are making startups a very lucrative place
and attractive value proposition.
Increasingly, a trend is being noticed where several mid-level officials are also quitting their jobs
at big firms in order to work for startups. Besides, a survey conducted by Economic Times also
confirmed that the number of students joining startups and e-commerce companies has grown
considerably.
Even to attract the best talent in the world, many startup firms have been taking bold moves by
offering high remuneration packages.
In 2015, India saw almost 300+ active angels and VC/ PE players, who carried out more than 300
deals. Various VC/PE investments happened in the expansion stage. Moreover, according to a
data, Indian startups raised around $6.5-billion (Rs 42,300 crore) billion from investors in the last
year.
New York-based Tiger Global Management (TGM) is currently the top foreign investor in India,
followed by the Russian company- DST Global, Japanese telecom giant Softbank, Kalaari Capital,
Sequoia Capital and Accel Partners.
Funding by the GOI has been the biggest backbone for the young entrepreneurs in India. By
launching several plans, Indian government has assisted the start-up firms a lot to perform and
sustain both in domestic and global market. There are numerous government and semi-
governmental initiatives to assist startups.
Launched by the honorable Prime Minister of India, Mr. Narendra Modi, Start-Up India initiative
is a great relief for start-up firms that will give them a final break from the conventional License
Raj of India. The program includes three-year tax and compliance breaks intended for cutting
arduous government regulations and red tapism.
“Make in India” has not only encouraged the manufacturer, but also the Indian buyer to trust and
invest in the in the domestic brands.
MUDRA Yojna
Many small entrepreneurs find difficulty in getting loans or finance to start or run their businesses.
Through this scheme, they will easily get loans from the banks to set up, grow and stabilize their
businesses. Generally, while applying for loans, these small firms are asked for large collaterals
by the banks, which made their business unsustainable.
Atal Innovation Mission (AIM): This is an innovation promotion platform launched by the Mr.
Arun Jaitley, the finance minister of India during the budget 2015 that involving academics,
entrepreneurs and researchers.
SETU Fund
To facilitate the growth of startup firms, SETU (Self-Employment and Talent Utilization) fund
had been set up by the government. Under this program, Rs 1,000 crore has been allotted by the
government in order to create opportunities for self-employment and new jobs mainly in
technology-driven domains.
E-biz portal
To bring down the complexities and obstructions in setting up a business, Government launched
e-biz portal that integrates 14 regulatory permissions and licenses at one source. The widespread
usage of this portal will enable faster clearances and improve the ease of doing business in India.
Royalty Tax
In a bid to make the cost of technology more accessible and affordable, Finance Minister Arun
Jaitley has reduced the royalty tax paid by businesses and startup firms from 25 to 10 per cent.
The entrepreneurial profiles of these business/industry men are found quite fascinating. They are
a study in sharp contrasts. How? Some are highly educated; others are high school / college
dropouts. Some are inheritors, others are self-made. Some topped their chosen field in their thirties;
others did not approach the starting line until their fifties. Thus, there is no typical entrepreneur as
such.
Then, the question arises is: What makes an entrepreneur successful? Whether they had anything
in common? The scanning of their personalities shows that there are certain commonalities called
characteristics found in them.
1. Hard Work:
Willingness to work hard distinguishes a successful entrepreneur from unsuccessful one. Most of
the successful entrepreneurs work hard endlessly, especially in the beginning and the same
becomes their habit for their whole life.
While delivering the Convocation Speech at the Entrepreneurship Development Institute of India,
Ahmedabad on Saturday, 17th September, 2005, the well-known entrepreneur Shri Hari Shankar
Singhania exhorted the budding entrepreneurs that “I have always followed the dictum that success
comes only with 10% inspiration and 90% perspiration. There is no substitute for hard work. One
must have a focus to achieve his /her Vision. Nobody gets a clean slate to write on and has to start
with the dirty slate he gets. If one waits for ideal situation, the time will never come.”
The entrepreneurs have a strong desire to achieve high goals in business. This high achievement
motive strengthens them to surmount the obstacles, suppress anxieties, repair misfortunes, and
devise expedients and set up and run a successful business (McClelland 1961). Sunil Mittal of
Bharati Telecom presents an excellent example of need for high achievement.
(a) Sunil Mittal, the son of Sat Paul Mittal, a Member of Parliament (MP), belongs to non-business
background. It was young Sunil, having high need for achievement in life, started with the business
of making cycle parts in Ludhiana way back in 1976 at the age of 18 with borrowed capital of just
? 20,000. But things did not work properly.
So, he set up Bharati Healthcare in 1983-84 making capsules. It also did not work well because of
the Government’s import-export policy. Then, Sunil Mittal started to manufacture push-button
telephones. Since then there was no looking back.
It was Sunil’s high need and urge for achievement; he bagged many first to his credit:
(b) The first push-button telephone set
His entry into mobile sector with Airtel brand in 1995 has made him really hit the spot light in the
mobile technology in the country. His mantra is: “One achieves in proportion to what one sets and
negotiates.”
3. Highly Optimistic:
The successful entrepreneurs have a positive approach toward things. They do not get disturbed
by the present problems faced by them. They become optimistic for future that the situations will
become favourable to business in future. In 1914, Thomas A. Adison, at the age of 67, lost his
factory to fire. It had very little insurance. No longer a young man, Edison watched his lifetime
effort go up in smoke and said: “There is great value in disaster. All our mistakes are burnt up.
Thank God we can start anew.” In spite of such devastating disaster, three weeks after, he invented
the Phonograph. What an optimistic or positive attitude!
4. Independence:
One of the common qualities of the successful entrepreneurs has been that they do not like to be
guided by others and to follow their rules. They resist to be pigeonholed. They like to be
independent in the matters of their business.
5. Foresight:
The entrepreneurs have a good foresight to know about future business environment. In other
words, they well visualize the likely changes to take place in market, consumer attitude and taste,
technological developments, etc. and take necessary and timely actions accordingly.
6. Good Organiser:
Various resources required for production are owned by different owners. Then, it is the ability of
the entrepreneur who brings together all required resources for setting up an enterprise and then
produces goods.
7. Innovative:
Production is meant to meet the customers’ requirements. In view of the changing requirements of
the customers from time to time, the entrepreneurs initiate research and innovative activities to
produce goods to satisfy the customers’ changing requirements and demands for the products. The
research centers/ institutes established by Tata, Birla, Kirloskar, etc., are examples of the
innovative activities taken by the entrepreneurs in our country.
The Government policy was in support of small power-loom units, on the one hand, and against
the mill sector by imposing differential tax-structure, on the other. Expectedly, almost all small
power-loom entrepreneurs were criticizing the discriminatory policy of the Government and
demanding support from the Government to protect them in the market.
The entrepreneur (Dhirubhai Ambani) with his uncanny knack identified an opportunity even in
such un-favourable environment. He realized that the small power loom units could produce goods
with high quality, but were finding it difficult to market them.
Therefore, he decided to get high quality goods produced by these small power loom units as per
his specifications at a relatively low cost, got them duly processed and printed with exquisite
designs, and then sold them under his widely accepted brand in the market. He earned huge
margins of profits by doing so.
8. Perseverance:
One of the qualities of successful entrepreneurs is that they possess and exhibit tremendous
perseverance in their pursuits. They do not give up their effort even if they fail. They undergo lots
and lots of failures, but do not become disheartened.
Instead, they take failure as learning experience and make more dedicated and serious effort on
the next time. And, ultimately become successful. Example of Sunil Mittal, given earlier under
‘Desire for High Achievement’, is an example of entrepreneurial perseverance also.
They share collective accountability for the outcome of the team’s effort. Working in teams creates
synergy and achieves success in its endeavors. While appreciating the role of team spirit in success,
Henry Ford’s apt view seems worth citing: “Bringing people together is beginning, keeping people
together is progress, and working with people is success.”
4. What is incubation? Explain its role in entrepreneurial startups.
Incubation
A business incubator is an organization that accelerates and systematizes the process of creating
successful enterprises by providing them with a comprehensive and integrated range of support,
including: incubator space, business support services, and clustering and networking opportunities
and a successful business incubator will generate a steady flow of new businesses with above
average job and wealth creation potential.
Business incubation is a unique and highly flexible combination of business development
processes, infrastructure and people designed to nurture new and small businesses by helping them
to survive and grow through the difficult and vulnerable early stages of development.
Business incubation provides a nurturing, instructive and supportive environment for
entrepreneurs during the critical stages of starting up a new business.
The goal of incubators is to increase the chance that a start-up will succeed, and shorten the time
and reduce the cost of establishing and growing its business.
Role in entrepreneurial startups
Services Provided by Incubator
Shared Premises
Business Advice
Business Services
Networking
Mentoring
A Full Time Manager
Provide focused support to entrepreneurs through a supportive environment that helps them
establish their business ideas and develop their concepts into market ready products,
supports the acquisition of business knowledge,
facilitates the raising of necessary finance,
introduces the entrepreneurs to business networks all of which should substantially reduce
the level of failure.
Allow new entrepreneurs to start their business by reducing the related costs and risk
Increase their chances of survival and success by building capacity and networks
Promotion of new Business Sector, especially in Innovation and ICT
Part of major Industrial Restructuring
Introduction of Entrepreneurial Culture to Socially-excluded Groups
The major argument made in favour of writing business plan is reducing anxieties and tensions in
running business enterprise. Writing business plan is especially useful for the entrepreneurs who
require financial help from the outside sources like banks and financial institutions.
The reason is that the outside sources advance funds to entrepreneurs based on the soundness of
their enterprises as reflected in business plans. In nutshell, writing a business plan is not without
its costs and sacrifices, nonetheless the benefits of it outweigh its costs.
An objective without a plan is just a dream. Until committed to papers intentions are seeds without
soil, sails without winds or mere wishes which do not lead to execution and without execution
there is no payoff. The preparation of a business plan or project report is of great significance for
an entrepreneur.
The business plan serves the two essential functions: First and most important the business plan is
like a road map. It describes the direction the enterprise is going in, what its goals are, where it
wants to be, and how it is going to get there. It also enables an entrepreneur to know that he is
proceeding in the right direction. Some hold the view that without well spelled out goals and
operational methods/tactics, most businesses flounder on the rocks of hard times.
The second function of the business plan is to attract lenders and investors. Although, it is not
mandatory for the small enterprises to prepare business plans, yet it is useful and beneficial for
them to prepare the project reports for various reasons. The preparation of business plan is
beneficial for those small enterprises which apply for financial assistance from the financial
institutions and the commercial banks. It is on the basis of business plan or project report that the
financial institutions make appraisal if the enterprise requires financial assistance or not.
If yes, how much. Similarly, other organisations which provide various assistances such as work
shed, raw material, seed/margin money, etc. are also equally interested in knowing the economic
soundness of the proposal. In most cases, the quality of the firm’s business plan weighs heavily in
the decision to lend or invest funds.
Research evidence reveals that many firms, of course, start without business plans. Speaking
alternatively, their implementation stage starts with no plan, i.e. guide-map. But, most of these
firms realize eventually in the hard rocks, of business environment that they need to recreate their
beginnings and write their business plans at some point down the road.
The fact of the matter is that in todays highly uncertain and competitive business environment,
only the most reluctant entrepreneur with the simplest business concept avoids writing a business
plan. The very significance of business plan can be expressed as “if an entrepreneur fails to write
business plan, he plans to fail in his/her business.”
6. Describe ‘SIDBI, and what its functions towards small industrial development are?
Since its inception SIDBI has grown from being just a refinancing agency which assisted banks
and other local NBFCs indirectly to a lender which now provides loans and other forms of credit
directly to MSMEs. It plays a vital role by helping these budding businesses to expand their
operations.
Small Industries Development Bank of India refinances loans that are extended by the PLIs
to the small-scale industrial units and also offers resources assistance to them.
It discounts and rediscounts bills
It also helps in expanding marketing channels for the products of SSI (Small Scale
Industries) sector both in the domestic as well as international markets.
It offers services like factoring, leasing etc. to the industrial concerns in the small-scale
sector.
It promotes employment oriented industries particularly in semi-urban areas for creating
employment opportunities and thus checking relocation of people to the urban areas.
It also initiates steps for modernisation and technological up-gradation of current units.
It also enables timely flow of credit for working capital as well as term loans to Small Scale
Industries in cooperation with commercial banks.
It also co-promotes state level venture funds.
To initiate steps for technological up-gradation and modernisation of existing units.
To expand the channels for marketing the products of SSI sector in domestic and
international markets.
Project appraisal is the structured process of assessing the viability of a project or proposal. It
involves calculating the feasibility of the project before committing resources to it. It is a tool that
company’s use for choosing the best project that would help them to attain their goal. Project
appraisal often involves making comparison between various options and this done by making use
of any decision technique or economic appraisal technique.
Project appraisal is a tool which is also used by companies to review the projects completed by it.
This is done to know the effect of each project on the company. This means that the project
appraisal is done to know, how much the company has invested on the project and in return how
much it is gaining from it.
Sensitivity analysis
Sensitivity analysis is the process of establishing the outcomes of the cost benefit analysis which
is sensitive to the assumed values used in the analysis. This form of analysis should also be part
of the appraisal for large projects. If an option is very sensitive to variations in a particular variable
(e.g. passenger demand), then it should probably not be undertaken. If the relative merits of options
change with the assumed values of variables, those values should be examined to see whether they
can be made more reliable. It can be useful to attach probabilities to a range of values to help pick
the best option.
Sensitivity analysis requires a degree of exploratory analysis to ascertain the most sensitive
variables and should lead to a risk management strategy involving risk mitigation measures to
ensure the most pessimistic values for key variables do not materialise or can be managed
appropriately if they do materialise. It is important to take into account the level of disaggregation
of project inputs and benefits – sensitivity analysis based on a mix of highly aggregated and
disaggregated variables may be misleading.
Scenario analysis
The scenario analysis technique is related to sensitivity analysis. Whereas the sensitivity analysis
is based on a variable by variable approach, scenario analysis recognises that the various factors
impacting upon the stream of costs and benefits are inter-independent. In other words, this
approach assumes that that altering individual variables whilst holding the remainder constant is
unrealistic (i.e. for a tourism project, it is unlikely that ticket sales and café-souvenir sales are
independent). Rather, scenario analysis uses a range of scenarios (or variations on the option under
examination) where all of the various factors can be reviewed and adjusted within a consistent
framework.
Distributional Analysis The calculation of NPV’s makes no allowance for the distribution of
costs and benefits among members of society. This is an important drawback if the intended
objectives of a programme/project aimed at specific income groups. Differential impact may arise
because of income, gender, ethnicity, age, geographical location or disability and any distributional
effects should be explicit and quantified where appropriate. A common approach to take account
of distributional issues is to divide the relevant population into different income groups and analyse
the impact of the programme/project on these groups. Weights can be attached to the different
groups to reflect Government policy. Carrying out a distributional analysis can be a difficult task
because costs and benefits are redistributed in unintended ways.
CBA
In cost-benefit analysis all of the relevant costs and benefits, including indirect costs and benefits,
are taken into account. Cash values, based on market prices (or shadow prices, where no
appropriate market price exists) are placed on all costs and benefits and the time at which these
costs/benefits occur is identified. The analytic techniques outlined above (i.e. NPV method, IRR
method, etc.) are applied using the TDR. The general principle of cost-benefit analysis is that a
project is desirable if the economic and social benefits are greater than economic and social costs.
It is vital that cost-benefit analysis is objective. Its conclusions should not be prejudged. It should
not be used as a device to justify a case already favoured for or against a proposal. Factors of
questionable or dubious relevance to a project should not be introduced into an analysis in order
to affect the result in a preferred direction.
8. What are problems and hurdles facing by Indian women entrepreneurs? Discuss
Some of the problems faced by women entrepreneurs are as follows:
1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women
entrepreneurs suffer from shortage of finance on two counts.
Firstly, women do not generally have property on their names to use them as collateral for
obtaining funds from external sources. Thus, their access to the external sources of funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage women borrowers on
the belief that they can at any time leave their business. Given such situation, women entrepreneurs
are bound to rely on their own savings, if any and loans from friends and relatives who are
expectedly meager and negligible. Thus, women enterprises fail due to the shortage of finance.
3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for canvassing
and advertisement. Thus, they have to face a stiff competition for marketing their products with
both organized sector and their male counterparts. Such a competition ultimately results in the
liquidation of women enterprises.
4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A single woman
asking for room is still looked upon suspicion. Cumbersome exercise involved in starting an
enterprise coupled with the officials humiliating attitude towards women compels them to give up
idea of starting an enterprise.
5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other members of the family.
Man plays a secondary role only. In case of married women, she has to strike a fine balance
between her business and family. Her total involvement in family leaves little or no energy and
time to devote for business.
Support and approval of husbands seem necessary condition for women’s entry into business.
Accordingly, the educational level and family background of husbands positively influence
women’s entry into business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-
economic problems. Due to the lack of education and that too qualitative education, women are
not aware of business, technology and market knowledge. Also, lack of education causes low
achievement motivation among women. Thus, lack of education creates one type or other problems
for women in the setting up and running of business enterprises.
7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality
between sexes. But, in practice, women are looked upon as abla, i.e. weak in all respects. Women
suffer from male reservations about a women’s role, ability and capacity and are treated
accordingly. In nutshell, in the male-dominated Indian society, women are not treated equal to
men. This, in turn, serves as a barrier to women entry into business.
In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost of
production, social attitude, low need for achievement and socioeconomic constraints also hold the
women back from entering into business.
9. What are the two vital aspects of marketing strategy and the purpose for starting a new
business.
If you want your business to be successful, the service or the product you are offering must be
known so that you will have potential buyers. If your business is unknown to the community and
you don’t have any kind of communication with your customers you need to use marketing
strategies to create awareness for your service or product.
Not having proper marketing may cause that potential customers are not aware of any offers your
business has to make, and your company can lose the opportunity to expand and become
successful. So, if you use marketing to promote your company, it will give you a chance to be
discovered by many potential customers.
As they spread their word more and more, your sales will slowly increase. So, if you haven’t used
marketing strategies, this would have never happened and, without sales, your business will not be
successful.
The company’s reputation is one big factor which decides whether your business will be successful
or not. Having good marketing helps you build your brand name.
When you set high expectations for your company in the public eye, then your company will stand
on a firmer ground. So, when your reputation grows, it will increase your sales and expand your
business.
To build a good reputation for your company, you have to actively participate in community
programs, have effective communication both internally and externally and offer quality services
and products to support your marketing and make your efforts worthwhile.
Marketing makes room in the marketplace for a little healthy competition. When you present your
prices via marketing, it reaches the potential customers but it also reaches other businesses who
are selling in the same industry.
Like there are monopoly companies that put the prices they want on certain services and products,
there is marketing which generates competition between businesses who are trying to win over
customers before their competing company does.
If there wasn’t for this healthy competition, monopoly companies would sell their products and
other companies wouldn’t stand a chance in the marketplace. So, marketing enables both small
and new business to grow and enter the marketplace.
Even though marketing is very important for every business to be successful, have in mind that it
can be very expensive. It may happen that a business can spend almost half of its revenue on
marketing in the very first year.
After that, your marketing budget will approximately be 30% and maybe sometimes more. In order
for your company to have the best chance of succeeding, the best form of marketing will be to use
mixed and different forms of marketing, like website development, print and the broadcast form
of advertising, as well as public relations, designing and printing materials and maybe some special
events, like trade shows.
3. The joint family system, once the bedrock of the Indian social structure in India, started
experiencing severe strains and threats and, in turn, increasingly loosing, its place in the social
structure. For such a sorry state of situation, thanks to inter alia growing urbanization and ever
increasing westernization in the country.
4. The right of possession of private property and its inheritance has been one of the major factors
in encouraging family business in India.