UNIT 2

ENTREPRENEURIAL DEVELOPMENT
&
DEVELOPING BUSINESS PLAN
Role of Entrepreneurship in Economic development, Micro & Small enterprises to the Economy, Factors
affecting entrepreneurship growth.
Developing Business Plan: Generating Business Ideas, Selecting a Business Idea, Elements of a Business
Plan, Building Competitive Advantage, Conducting feasibility Analysis
Role of Entrepreneurship in Economic
development
 Promotes Capital Formation
 Creates Large-Scale Employment Opportunities
 Promotes Balanced Regional Development
 Reduces Concentration of Economic Power
 Wealth Creation and Distribution
 Increasing Gross National Product and Per Capita Income
 Improvement in the Standard of Living
 Promotes Country's Export Trade
 Induces Backward and Forward Linkages
 Facilitates Overall Development
 INTRODUCTION
• Small & medium Enterprises are the
back bone of Industrial Development.
• Ministry of Micro Small & Medium
Enterprises Contributes Nearly 8% in
GDP, 40% in Manufacturing output &
45% in Exports.
• They provides the largest share of
employment after agriculture
• They have emerged as a dynamic and
vibrant sector of economy.
 INTRODUCTION
• They are widely dispersed across
the country and produces a
diverse range of product and
service.
• It helps in the growth of a
country
• They are the nursery for
entrepreneurship and
innovation
EMERGENCE OF MSME
• Based on Ghandhi model

• Encouraged by MSME act 2006

• During pre liberalization before 1991 India adopted

Industrial policy resolution 1948 that defined the role
of state in industrial development for the first time
• At that time India accorded high priority to small
and medium enterprises
• Despite numerous protection and policy measures
MSME has remained mostly small & technologically
backward
• The scenario of small scale sector changed
with industrial policy establishment in
1991
• Liberalization came into existence
• It was the post liberalization era (1991 to
2006)
• This reflected the growth of SSI’s
• In 1991 the growth rate of SSI was almost 3
times of the total industrial sector from
1992 to 1995
• However in 1995 the growth rate was
slightly lower but again it increased in
1996
MSME - Micro, Small and Medium Enterprises

Formation
❑ Micro; Small and Medium Enterprises Development (MSMED) Act was notified
in 2006.
❑ Ministry of Small Scale Industries and the Ministry of Agro and Rural
Industries were merged to form the Ministry of Micro, Small and Medium
Enterprises (M/o MSME)
❑ To encourage entrepreneurship, employment and livelihood opportunities
and enhance the competitiveness
 DEFINITION
⚫ The MSMEs are defined on the basis of investment in Plant & Machinery
and equipments under the MSMED Act, 2006.
⚫ The present investment limit for MSMEs is as under:
MANUFACTURING ENTERPRISES
(i)Micro enterprise: investment in plant and machinery upto Rs.
25 lakh
(ii)Small enterprise: investment in plant and machinery from Rs.
25 lakh to Rs. 5 crore.
(iii)Medium enterprise: Investment in plant and machinery from Rs.
5 crore to Rs. 10 crore
SERVICE ENTERPRISES
(i)Micro enterprise: investment in equipments
upto Rs. 10 lakh.
(ii)Small enterprise: investment in equipments from Rs.
10 lakh to Rs. 2 crore.
(iii)Medium enterprise: investment in equipments from
Rs. 2 crore to Rs. 5 crore.
 Who are Micro, Small & Medium Enterprises ?

 Contribution 33% of Manufacturing MSMEs in the country’s total GDP

 MSME Sector as of the estimated number of 633.92 lakh enterprises
 34.8 million establishments (59.48%) were found in rural areas and nearly 23.7 million establishments
(40.52%) were found to be located in urban areas.
 45% of industrial production
 30.5% of services sector
 Employing close to 110 million people.
 MSME related products in the country exports was 48.56% during 2017-18
 Important role in making India a manufacturing hub and “Make in India” campaign a success.
CHARACTERISTICS OF MSME’S
• Low cost of production
• flexibility
• High capacity to
innovate exports
• High employment
generation
• Reduction of regional
imbalance
 ROLE OF MSME’S IN INDIA

• EMPLOYMENT GENERATION
• PRODUCTION
• EXPORT CONTRIBUTION
• UTILISING RESOURCE OPTIMALLY
• INCREASE GDP
 PROBLEMS OF MSME’s

• Financial Problem- Credit facility

only up to 30%
• Raw material improper
• Technological problem – Less
Advertisement
• Managerial problem of MSME
SUGGESTIONS FOR
IMPROVEMENT
• Supply of technology
• Conduct of survey
• Awareness creation
• Involvement of stakeholders
• Venture capital
• Interaction with research and development sector
• Incrimination vehicle
CONTRIBUTION & PERFORMANCE OF
MSME’s
13 Million MSME’s
producing more
than 8000 Products

45 % Industrial
production MSME’ 10 % Exports

31 Million
Employment
Estimated Number of MSMEs (Activity Wise)
 MSME OFFICE IN TN
 Chennai

 Coimbatore

 Tuticorin

 Tirunelveli
MSME - Micro, Small and Medium Enterprises
Functions
 Facilitation and credit flow to MSMEs
 Improving competitiveness of MSMEs
 Improve manufacturing base through upgradation of technology
 Promotion of MSMEs through cluster bases approach
 Marketing support to MSMEs
 Skill development and entrepreneurship development training
 Creation of new Micro Enterprises through Prime Minister’s Employment Generation
Program
(PMEGP)
 Growth and development of Khadi and Village Industries (KVI) sector
 Growth and development of Coir Industry
MSME – Organizational Setup
❑ Two
❖ Divisions
Small & Medium Enterprises (SME) Division
1.Administration, vigilance and administrative supervision
2.Implementation of the schemes
3. Credit Rating and Assistance to Training
Institution
4. Performance Monitoring and Evaluation System
❖ Agro & Rural Industry (ARI) Division
1. Khadi and Village Industries Commission (KVIC),
2. Coir Board
3. Mahatma Gandhi Institute for Rural Industrialization (MGIRI)
4. supervises the implementation of the Prime Minister's Employment Generation Programme
(PMEGP).

❖ Integrated Finance (IF) Wing

❖ Data Analytics and Technical Coordination (DATC)
Wing,
MSME – Organizational Setup
MSME – Organizational Setup
statutory and non-statutory bodies
 Khadi Village Industries Commission (KVIC)
 Coir Board
 National Small Industries Corporation (NSIC)
 National Institute for Micro, Small and Medium Enterprises (NIMSME)
 Mahatma Gandhi Institute for Rural Industrialisation (MGIRI)

Head Schemes :
Prime Minister Employment Generation Programme and Other Credit Support Schemes

 Development of Khadi, Village and Coir Industries

 Technology Upgradation and Quality Certification

 Marketing Promotion Schemes

 Entrepreneurship and skill Development Programme

 Infrastructure Development Programme

 Scheme of Surveys, Studies and Policy Research

Purpose of the schemes
 Adequate flow of credit from financial institutions/banks
 Support for technology upgradation and modernization
 Integrated infrastructural facilities
 Modern testing facilities and quality certification
 Access to modern management practices
 Entrepreneurship development and skill upgradation through appropriate training facilities
 Support for product development, design intervention and packaging
 Welfare of artisans and workers
 Assistance for better access to domestic and export markets
 Cluster-wise measures to promote capacity-building and empowerment of the units and their
collectives
 Recent Policy Initiatives.
 Ease of Registration Process of MSMEs- Udyog Aadhaar Memorandum
 MyMSME
 Direct Benefit Transfer in the M/o MSME
 Grievance Monitoring
 MSME SAMADHAAN: To Address Delayed Payment to MSEs
• Deal with the issues relating to the Delayed Payments to Micro and Small Enterprises
(MSEs) by the buyers to the MSE supplier
 MSME-SAMBANDH
• Public Procurement Policy for Micro and Small Enterprises which mandates 20% of
annual procurement from MSEs including 4% from enterprises owned by SC/ST
entrepreneurs by the Central Ministries / Departments and Central Public Sector
Enterprises (CPSEs).
 MSME IN OTHER COUNTRIES

China
⚫ Has more SMEs than the total no. SMEs in Europe and US combined.

⚫SMEs contribute to over 68% of export . Japan

⚫Employs70% of the wage earners . Thailand

⚫ Employs 60.7% of population
⚫ Contribute 38% to the GDP.
Factors Affecting Entrepreneurial Growth

The emergence and development of entrepreneurship is not a

spontaneous one but a dependent phenomenon of economic, social,
political, psychological factors often nomenclatured as supporting
conditions to entrepreneurship development. These conditions may
have both positive and negative influences on the emergence of
entrepreneurship. For analytical purposes, these conditions/factors
are grouped and discussed under two categories, viz, economic
factors and non-economic factors.
Entrepreneurial Growth

Economi
c
Factors

Entrepreneurial
Growth
Non-
Economi
Government c Factors
Action
• Social
Condition
• Psychologica
l
Factors
From a strictly economic viewpoint, it can be said that the same factors which
promote economic development account for the emergence of
entrepreneurship also.

Capital

Labour
Economic
Factors Raw
Materials

Market
•Capital:
Capital is one of the most important prerequisites to establish an
enterprise.
Availability of capital facilitates the entrepreneur to bring together
the land of one, machine of another and raw material of yet another to
combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of
production/render services.

•Labour: The quality rather quantity of labour in another factor which

influences the emergence of entrepreneurship.
•Raw Materials:
The necessity of raw material hardly needs any emphasis for
establishing any industrial activity and therefore it influences in the
emergence of entrepreneurship.
In the absence of raw materials, neither any enterprise can be
established nor an entrepreneur can emerged.

•Market:
The fact remains that the potential of the market constitutes the
major determinant of probable rewards from entrepreneurial function.
The size and composition of market both influence entrepreneurship
in their own ways.
 Non-
Economic
factors

Social Psychological
Conditions Factors

Legitimacy of Social Need Withdrawal of

Marginality Security
Entrepreneurship Mobility Achievement Status Respect
Social Conditions

•Legitimacy of Entrepreneurship: The proponents of non-economic

factors give emphasis to the relevance of a system of norms and values
within a socio-cultural setting for the emergence of entrepreneurship.

•Social Mobility: Social mobility involves the degree of mobility, both

social and geographical, and the nature of mobility channels within a
system.
Social Conditions

•Marginality:
A group of scholars hold a strong view that social marginality also
promotes entrepreneurship.
Individuals or groups on the perimeter of a given social system or
between two social systems provide the personnel to assume the
entrepreneurial roles.

•Security:
 Security is a significant factor for entrepreneurial development.
If individuals are fearful of losing their economic assets or of being
subjected to various negative sanctions, they will not be inclined to
increase their insecurity by behaving entrepreneurially.
 Psychological Factors
• Need Achievement:
According to David Mcclelland’s psychological theory of need achievement, a constellation
of personality characteristics which are indicative of high need achievement is the major
determinant of entrepreneurship development.
 if the average level of need achievement is a society is relatively high, one
would expect a relatively high amount of entrepreneurship development in the
society.

•Withdrawal of Social Respect: Hagan believes that the initial condition leading to
eventual entrepreneurial behavior is the loss of statues by a group. He postulates that
four types of events can produce status withdrawal:
 It may drift into situation of status inconsistency; and
 It may mot be accepted into expected status on migration in a new society.
 The group may be displaced by force;
 It may have its valued symbols denigrated
 The government by its actions or failure to act also does influence both the
economic and non-economic factors for entrepreneurship development.
Any interested government in economic can help, through its clear
expressed industrial policy, promote entrepreneurship in one way or other, by
creating basic facilities, utilities and services and by providing incentives and
concessions,
The government can provide the prospective entrepreneurs a facilitative
socio-economic setting. Such conductive setting minimizes the risks which the
entrepreneurs are to encounter.
 The supportive actions of the government appears as the most conductive to
the entrepreneurial growth.
Other Factors Affecting Entrepreneurial
Growth in Bangladesh

 Political Stability
 Political Ideology

 Education helps in the development of capabilities of individuals which

facilitates the emergence and growth of entrepreneurship
 These technological development provide opportunities for
the entrepreneurs to develop and produce new product.

Food Habit, Lifestyle, norms within a society influence entrepreneurial

growth.
 Values and behavior accepted within the society
 Family Norms influences Entrepreneurial Growth.
 Joint Family can Provide Family Resources to Invest and Expand Family
Business.

 In some countries there is a belief that high profit is unethical, hence it drives
Entrepreneurial growth negatively.
 Islam Does not allow Interest, Alcohol based business.
Hinduism forbidden cattle slaughtering, as the cow’s status as a 'caretaker'
led to identifying it as an almost maternal figure.

Mindset and preconception influences entrepreneurial growth. Like in

Bangladesh average number people are service centric rather self
employment.
 Our Society as well does not encourage entrepreneurship development.
Leading banks providing loans to MSME’s
MSME’s CLIPS…..
Manipur handicraft factory…..
RUGS FACTORY- JAIPUR
BANGELS FACTORY……
Paper Mache small enterprise
sources

 ROLE OF ENTREPRENEUR.pdf (gacbe.ac.in)