Enterpreneurship

Development
Prof. Kitty Rana

MODULE 1
Basic Concepts of EDP
Entrepreneurship


It is a process of identifying and starting a
business venture, sourcing and organizing
the required resources and taking both the
risks and rewards associated with the
venture.
Who is an Entrepreneur
One who is willing to bear risk of a new
venture-if there is a significant chance for
profit

An innovator who markets his innovation

Develop and process those goods and
services that the markets demands and
are not currently supplied
Who is an Entrepreneur Contd
One who creates a new business in the
face of risk and uncertainty

for the purpose of achieving profit and
growth

By identifying opportunities and
assembling the necessary resources.
Entrepreneur

Entrepreneur is someone who actually
search for change, responds to it, and
exploits change as an opportunity.

Peter Drucker
Why Entrepreneurship
For stimulating economic growth

For generating employment opportunities.

Poverty reduction

Income growth



Culture and Entrepreneurship
A community that accords highest status
to those at the top of hierarchical
organizations or those with professional
expertise discourage the
entrepreneurship

A culture or policy that accords high status
to the self-made individual is more likely
to encourage entrepreneurship.
Qualities and Characteristics of
an Entrepreneur
Creativity
Dedication
Determination strong desire to achieve
success
Flexibility
Leadership
Passion
Self Confidence
Smarts


Build on your strengths and Reduce your Weaknesses
Why become an Entrepreneur
Entrepreneur are their own bosses

Entrepreneurship offers greater scope for
achieving significant financial rewards

It gives the chance to get involved in the
total operations of business

It offers prestige of being the person in
charge

Preliminary Screening
Does the individual truly want to be responsible for
a business?
What product or service should be the basis of the
business?
What is the market, and where should it be
located?
Is the potential of the business enough to provide
a living wage for its employees and the owner?
How can a person raise the capital to get started?
Should an individual work full or part time to start a
new business? Should the person start alone or
with partners?




Key factors to consider closely
Motivation- What is the motivator

Strategy- USP

Realistic Vision- Potential
Go it Alone or Team up
Advantages
Team members share decision making
and management responsibilities.
They give each other emotional support
reduce stress.
Lower risks.
Generate creativity.
Easy financing.
Different experts skills.
Go it Alone or Team up
Disadvantages
Ownership Sharing

Share control in decision making.

Teams eventually experiences Conflicts
Choosing a Product and a Market
(Ways to look for ideas)
Read a lot
Talk to people
Consider questions such as
What limitations exist in current product and
services?
Are there any other uses for new technology?
What would you like that is not available?
What are the innovative ways to use or provide
existing products?
Is society changing?
What groups have unfulfilled demands?
What about peoples perceptions?
Choosing a Product and a
Market
Business ideas usually fit into one of four
categories :


An existing good or service for an existing market.
A new good or service for a new market.
A new good or service for an existing market.
An existing good or service for a new market.
Entry Strategies for New
Venture
USP- Uniqueness in Idea.

Differentiation.

Niche Specification

Innovation
Selling Online
Internet provide access to a large and
growing market.
Access National and International Market.
Cost effective.

Web site promotion is crucial. Getting noticed is the first step
to making online sales.
Choosing a form of Business
Sole Proprietorship

Partnership

Corporations
Creating a Business Plan
Business Plan serves as a firms resume.
There are many reasons for writing a
business plan:
To convince oneself .
To assist management in goal setting and long range
planning.
To explain the business to other companies.
To attract investors and get financing.
To attract the employees.
Business Plan
Standard Business Plan
It is usually about 40
pages in length.

It should use visual
formatting.

Free of jargon

Easy to understand
Basic Elements
Title page
Table of Contents
Executive summary
Company description
Product/service
Market and competition
Marketing and selling
strategy
Operating plan
Financing
Supporting documents
Sources of Financing
Personal savings
Friends and family
Credit cards
Banks
Venture investors
Government programs
Problems of Entrepreneurship
Uncertainty of Income
Risk of losing invested capital
Long hours & hard work
Lower quality of life until the business is
established
High level of stress
Complete responsibility
Discouragement


Ten deadly mistakes of
Entrepreneurship
Management mistakes
Lack of experience
Poor financial control
Weak marketing efforts
Failure to develop a strategic plan
Uncontrolled growth
Poor location
Improper inventory control
Incorrect pricing
Inability to make entrepreneurial transition

Avoiding the pitfalls of small
business failure
Know your business in depth
Develop a solid business plan
Manage financial resources
Understands the financial statements
Learn to manage people effectively
Keep in tune with yourself.
Women Entrepreneurs
Today women entrepreneur account for a
quarter to a third of all businesses in the formal
economy worldwide.
Societal attitudes and social beliefs inhibits
some women from even considering starting a
business. This not only limits their ability to earn
an income but restricts their contribution to
socio-economic development and job creation.
World bank worlds development report 2011
suggests that productivity could increase by as
much as 25 % in some countries if
discriminatory barriers against womens are
removed.
Women Entrepreneurs

Removing barriers such as
Discriminatory property and inheritance laws
Cultural practices
Lack of access to financial institution
Time constraints

Will create greater opportunities for women,
gender equality, sustainable growth and jobs.
Women Entrepreneurs
MODULE 2
Project Appraisal
Project
A project necessarily involves allocation
and consumption of resources on the one
hand and generation of resources, goods
or services on the other.

Gittinger defines a project, "as the whole
complex activities involved in using
resources to gain benefits."
Project Classification

Quantifiable and non-quantifiable
projects.
Sectoral projects
Techno-Economic projects
Financial Institutions' projects.
Project Classification
Quantifiable projects are those, the
benefits of which can be assessed in
quantifiable terms. e.g. industrial
development, power generation etc.

Non-quantifiable project: those projects
where such a quantifiable assessment of
benefits is not possible. e.g. health,
education ,defence etc.
Project Classification
Sectoral projects- as to allocate the scarce
resources at macro levels.
(i) Agriculture and Allied Sector
(ii) Irrigation and power sector
(iii)Industry and Mining sector
(iv)Transport and Communication
Sector
(v)Social Service Sector
(vi)Miscellaneous Sector.
Project Classification

Projects can be classified on the basis of
techno-economic factors like the size of
investment, etc. It is very useful in
facilitating the process of feasibility
appraisal.

Project Classification
Profit-oriented projects:

New projects

Expansion projects

Modernization projects

Diversification projects
Service -oriented projects:

Welfare projects

Service projects

Research and
Development projects

Educational projects.

Financial Institutions projects:

Feasibility Analysis

Feasibility Analysis: "The process of
evaluating the future of a project idea
within the limitations of the project
implementation, body and the constraints
imposed on the project situation by the
environment".
Feasibility Study

It is an integrated process covering all
aspects of an investment project such as
possible alternative solutions for
production programmes, locations,
technology, organisational, etc. A
satisfactory feasibility study must analyze
all the basic components and implications
of an industrial project and any shortfall in
this regard will limit the utility of the study.
Feasibility Study
Techno economic analysis
Determination of demand potential
(Demand Forecasting)
Selection of viable project strategy
Project design and network analysis
Input analysis
Financial analysis
Social cost benefit analysis
Project report
Components of project report

Estimations Projections

Information Calculations

Documentation
Content of project report
General Information
Project Description
Market potential
Capital costs and sources of finance
Assessment of working capital
requirements
Financial consideration
Economic and social considerations
Project feasibility analysis
Feasibility study involves an examination of the
operations, financial, HR and marketing aspects of a
business on ex ante (Before the venture comes into
existence) basis.

Feasibility literally means whether some idea will work or
not. It knows before hand whether there exists a sizeable
market for the proposed product/service, what would be
the investment requirements and where to get the
funding from, whether and wherefrom the necessary
technical know-how to convert the idea into a tangible
product may be available, and so on.
Market Analysis
Consumption trends.

Past and present supply
position

Production possibilities and
constraints
Imports and Exports

Competition

Cost structure
Elasticity of demand

Consumer behavior,
intentions, motivations,
attitudes, preferences and
requirements

Distribution channels and
marketing policies in use

Administrative, technical and
legal constraints impinging on
the marketing of the product

Financial Analysis
Investment outlay and cost of project
Means of financing
Projected profitability
Break- even point
Cash flows of the project
Investment worthiness judged in terms of
various criteria of merit
Projected financial position
Technical analysis
Input analysis


Throughput Analysis


Output Analysis
Cost and benefit analysis

Commercial feasibility(whether enough
units are sold)

SCBA
Ecological analysis
What is the likely damage caused by the
project to the environment?


What is the cost of restoration measures
required to ensure that the damage to the
environment is contained within
acceptable limits?
Project Report


The findings of the feasibility analysis may
be compiled in a project report.
Module 4
Market & Material Management
Analysis
Vendor development
Vendor means a person (or company) who sells and
supplies his (or its) products.

An intelligent purchasing involves the rational selection
of sources from which materials can be obtained.

Considerable efforts are needed in identifying,
developing and evaluating the prospective suppliers. It is
also essential to continuously appraise the performance
of the current suppliers.
A few questions are to be answered
before attempting to develop vendors
How much quantity is required to be purchased?

How much time is available for making such purchases?

Will the material be required repeatedly or occasionally?

What is the volume of purchase of the required
materials?

Which is the industry producing the required materials?

What is commercial viability of the materials?
VENDOR DEVELOPMENT
INVOLVES FOUR STAGES
First Stage survey stage

Second Stage enquiry stage

Third Stage negotiation & selection stage

Fourth Stage experience & evaluation
stage
Survey stage
Survey involves collecting information on
different suppliers of the desired materials.

The following sources may be consulted:
Trade directories
Trade journals
Telephone directories
Suppliers catalogues
Salesman
Inquiry stage selection of
potential suppliers
After a list of possible suppliers is complied, the
next step is to inquire a few of them further.

It involves a detailed analysis of suppliers
activities.

Accreditation, FDA approval and certifications
namely ISO 9000, 9002 etc, facilitate the
selection.
Technological competition

Service competition

Price competition

Time based competition (TBC) i.e.
response time for delivery.
Internal facilities of vendors

Financial adequacy and stability

Reputation of vendor

Location of vendors factory

Industrial relations

Negotiation and selection stage
The vendors who are successful in the enquiry
stage may be called for negotiations in order to
discuss business possibilities.

During this stage, various terms namely credit,
quantity discount, quality specifications etc, can
be decided.

Finally, a list of approved vendors drawn.

Accordingly, purchase orders are placed with
the approved vendors.
Experience and evaluation
stage
At this stage, the buyer evaluates and appraises
the performance of the vendor.

The objective is to improve the performance of
vendors in which they are deficient.

The evaluation is done especially on two counts,
namely quality (judged by rejection of lot- size )
and delivery ( judged by delays on delivery).
Vendor selection process
1. Analyze the business requirement
2. Vendor search
3. RFP or RFQ
4. Proposal evaluation and vendor selection
5. Contract negotiation strategy

Factors to be considered before
vendor selection
Cost criteria

Price

Distribution cost

Technical capability

Quality assessment


Organizational profile

Service levels

Delivery

Lead time

Ease of communication
Pricing methods
TO DETERMINE PRICES OF GOODS OR SRVICES,
AND TO HELP YOU DECIDE WHAT TO CHARGE FOR
YOUR PRODUCT / SERVICE YOU MUST KNOW:

What are your costs to produce a service, or buy a product?
(Direct and indirect.)

What is the customer prepared to pay? (The urgency of
market
demand.)

What are your competitors charging? (Market research data)

Charge enough to make a profit. (How much do you want to
make?)

These factors must be balanced.

Formula based pricing
This method is widely used by consultants.
It is vital to research the competition and have
set guidelines
Do not undercharge
Invoice customers at the end of the month for
work in progress
Multiply salary by 3
If you want to earn $20 per hour, you charge $60
per hour. This figure covers salary, overhead
and profit.

Product pricing formula
Material Cost + Labour Costs + Overhead
Expenses / of items produced = Cost per
item.

Profit: Add an amount to the cost of each item. Check your
competition for what they are charging, and work accordingly.
(Profit margin)


Retailers usually double the wholesale price.


Add profit to the Cost per Item for the Total Price per Item.

Service pricing formula
Hourly Overhead Expense + Hourly Wage
+ Profit = Total Price per Hour.

Pricing Methods
1-65
Diversification
Market
Development
Market
Penetration
Product
Development
Existing
products
New
products
Existing
markets
New
markets
Product-Market Strategies
1-66
Introducing its existing offerings to markets other than
those that the organization is currently serving.
Reaching new markets requires:
Carefully considering competitor strengths
and weaknesses and competitor retaliation
potential
Modification of the basic offering
Different distribution outlets
Change in sales effort and advertising
Market Development
Strategy
Feasibility Study
A feasibility study looks at the viability of
an idea with an emphasis on identifying
potential problems and attempts to answer
one main question: Will the idea work and
should you proceed with it?
Types of feasibility study
Market Financial
Technical
Organizational
structure
Market feasibility report
Things to Include in a market feasibility
study include:

Description of the Industry
Current Market Analysis
Competition
Anticipated Future Market Potential
Potential Buyers and Sources of Revenues
Sales Projections
Process
Analyze the market
Develop market strategy
and concept
Identify the site
Feasibility analysis
Approve a preliminary
design
In-depth financial study
Analysis of cash flow
Technical feasibility of the
site
Design and develop
Services to be offered
Identify areas
Funding sources
Calculate fees
Development factors
Selecting alternative sites
Local zoning and building
site permits


Definition
It is concerned with planning, organizing and controlling the flow of
materials from their initial purchase through internal operations to the
service point through distribution.
OR

Material management is a scientific technique, concerned with
Planning, Organizing &Control of flow of materials, from their initial
purchase to destination.
Material management



Focus of material management
To procure right materials

In Right Quantity
Of Right Quality
At Right Time
From Right sources
At Right prices

5 Rs, principles of purchasing
PURPOSE OF MATERIAL MANAGEMENT


To gain economy in purchasing
To satisfy the demand during period of replenishment
To carry reserve stock to avoid stock out
To stabilize fluctuations in consumption
To provide reasonable level of client services





Primary
Right price
High turnover
Low procurement &
storage cost
Continuity of supply
Consistency in quality
Good supplier
relations
Development of
personnel
Good information
system
Objective of material management
Secondary
Forecasting
Inter-departmental
harmony
Product improvement
Standardization
Make or buy decision
New materials & products
Favorable reciprocal
relationships




MODULE 5
Project Management
What is project
Organizations perform work.
operations or
projects,
Both operations and projects share many
characteristics in common like:
People perform both the activities.
Both are constrained by limited resources.
Both are planned, executed, and controlled.
Project
A project is thus defined in terms of its
distinctive characteristicsa project is a
temporary endeavor undertaken to
create a unique product or service.
Project
Examples of projects could include:
Developing a new product or service.
Effecting a change in structure, staffing, or
style of an organization.
Developing a new or modified information
system.
Implementing a new business procedure
or process.

Project Management
Project management is the application of
knowledge, skills, tools, and techniques to
project activities to meet project requirements.
Project management is accomplished through
the use of the following 5 processes:
Initiation
Planning
Execution
Controlling and
Closure
Project Management
Steps for setting up a small
scale business
1 Write a business plan
2 Get the business assistance and training
3 Choose a business location
4 Finance your business
5 Determine the legal structure of your
business
6 Register a business name
Steps for setting up a small
scale business
7 Get a tax identification number

8 Register for state and local taxes

9 Obtain business Licenses and permits

10 Understand the employer responsibilities
Role of development banks
Providing finance
Promotional activities
Development of backward areas
Accelerating the industrialization
Employment generation
Planned development
Infrastructural activities
E-Commerce
WHAT IS COMMERCE:- According to
Dictionary.com
Commerce is a division of trade or production
which deals with the exchange of goods and
services from producer to final consumer. It
comprises the trading of something of economic
value such as goods, services, information, or
money between two or more entities.
E-Commerce
Commonly known as Electronic Marketing.

It consist of buying and selling goods and
services over an electronic systems Such as the
internet and other computer networks.

E-commerce is the purchasing, selling and
exchanging goods and services over computer
networks (internet) through which transaction or
terms of sale are performed Electronically.
Manf. Unit Distributor
Whole
seller
Retailer Customer
Advertisement
Customer
Company
TRADITIONAL BUSINESS
DIRECT SELLING
Why use E-Commerce?
LOW ENTRY COST

REDUCES TRANSACTION COSTS

ACCESS TO THE GLOBAL MARKET

SECURE MARKET SHARE
Process of E- Commerce
A consumer uses Web browser to connect to
the home page of a merchants Web site on the
Internet.

The consumer browses the catalog of products
featured on the site and selects items to
purchase. The selected items are placed in the
electronic equivalent of a shopping cart.

When the consumer is ready to complete the
purchase of selected items, she provides a bill-to
and ship-to address for purchase and delivery
Process of E- Commerce
A consumer uses Web browser to connect to
the home page of a merchants Web site on the
Internet.

The consumer browses the catalog of products
featured on the site and selects items to
purchase. The selected items are placed in the
electronic equivalent of a shopping cart.

When the consumer is ready to complete the
purchase of selected items, she provides a bill-to
and ship-to address for purchase and delivery
Process of E- Commerce

When the credit card number is validated and
the order is completed at the Commerce Server
site, the merchants site displays a receipt
confirming the customers purchase.


The Commerce Server site then forwards the
order to a Processing Network for payment
processing and fulfillment.
Types of E-Commerce
Business to Business (B2B)

Business to Consumer (B2C)

Business to employee (B2E)

Consumer to Consumer (C2C)
Pros of e-commerce
No checkout queues

Reduce prices

You can shop anywhere in the world

Easy access 24 hours a day

Wide selection to cater for all consumers
Cons of e-commerce
Unable to examine products personally

Not everyone is connected to the Internet

There is the possibility of credit card
number theft

On average only 1/9th of stock is available
on the net
Project management
problems/challenges
Undefined Goals
Working with the team- challenge for
project managers
Inadequate skills for the project
Lack of Accountability
Poor communication
Impossible deadlines
Your client gives you ever changing
requirements
Project management
problems/challenges
The project doesnt start on time
You try to manage every project in same
way
Proper co-ordination
E-Auction
Auction- Market mechanism by which
buyers make bids and sellers place offers;
characterized by the competitive and
dynamic nature by which the final price is
reached

Electronic auctions (e-auctions)- Auctions
conducted online
Types of dynamic pricing
Negotiation,
Bargaining,
Reverse
Auction
Forward or
Regular
Auction
Dynamic
Exchanges
BUYERS
One
Many
SELLERS
Many One
Benefits of E-Auction
To sellers
Increased revenues
Optimal price setting
Removal of expensive
intermediaries
Better customer
relationships
Lower transaction
costs
Lower administrative
costs
To Buyers
Opportunities to find
unique items and
collectibles

Lower prices

Entertainment

Convenience
Limitations of E-auctions

Possibility of fraud

Limited participation

Security

Long cycle time

Monitoring time

Order fulfillment costs