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Entrepeneurial Management (EM 02) - entrepreneurship development

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This is part of a course that I taught last Spring, at the Bangalore University - titled Entrepreneurial Management. This particular deck is around Entrepreneurship Development.

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Entrepeneurial Management (EM 02) - entrepreneurship development

  1. 1. Management 02 – Entrepreneurship Development Suhas Dutta
  2. 2. 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
  3. 3. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.3 Sir Richard Branson on Entrepreneurship, and Business Plans
  4. 4. Syllabus coverage • Entrepreneurship Development and Program • Need for Entrepreneurship Development • Problems • National and State Level Institutions Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.4
  5. 5. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.5
  6. 6. Entrepreneurial Environment Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.6
  7. 7. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.7
  8. 8. Approaches to Entrepreneurial Development Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.8 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
  9. 9. The entrepreneurial environment • The entrepreneurial environment refers to various facets within which and enterprise must operate Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.9 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
  10. 10. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.10
  11. 11. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.11
  12. 12. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.12 Enterprise Entrepreneurial Plans Political environment Regulations Policies
  13. 13. Infrastructural network • In traditional economies agriculture forms the base of the economy and drives it. • Modern economies are different Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.13 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
  14. 14. Infrastructural network • If agriculture does not drive the economy enough, nucleus industries can be set up Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.14
  15. 15. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.15
  16. 16. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.16
  17. 17. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.17 Social Needs Personal Needs Integrated synergistic approach
  18. 18. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.18
  19. 19. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.19
  20. 20. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.20
  21. 21. The process of entrepreneurial development Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.21
  22. 22. 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
  23. 23. Objectives of EDP Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.23 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
  24. 24. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.24
  25. 25. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.25 Support Sustaining Simulatory
  26. 26. Entrepreneurial development cycle 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.26
  27. 27. Entrepreneurial development cycle • 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.27 Support Sustaining Simulatory
  28. 28. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.28
  29. 29. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.29
  30. 30. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.30
  31. 31. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.31
  32. 32. Entrepreneurial development training
  33. 33. 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
  34. 34. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.34 IndividualTraining GroupTraining Lectures Demonstrations Written Instructions Conference Meetings / Workshops
  35. 35. Selection scheme Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.35 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
  36. 36. Course content and curriculum • 25 day course • Daily program of 2 sessions per day • Motivational training – three day residential program Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.36 Motivation Training Management Essentials Feasibility Study Fundamentals Introduction to Entreprene- urship PlantVisit
  37. 37. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.37
  38. 38. Action oriented training Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.38 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
  39. 39. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.39
  40. 40. Support system – Government and non-government Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.40 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
  41. 41. Institutions for entrepreneurs
  42. 42. 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
  43. 43. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.43
  44. 44. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.44
  45. 45. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.45
  46. 46. 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.46

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