Enterprenuership and small business development

BBA -406
UNIT-02
Course:-BBA ,IV Semester Faculty name:- Ms. Divyasnhu chauhan

Entrepreneurial Development
Entrepreneurship development is the process of improving the skills and knowledge of
entrepreneurs through various training and classroom programs. The whole point of
entrepreneurship development is to increase the number of entrepreneurs.

Basically, entrepreneurship development is basically the process of improving the skill set as
well as the knowledge of the entrepreneurs. This can be done through various methods such
as classroom sessions or training programmes specially designed to increase the
entrepreneurial acumen.

Process of Entrepreneurship Development

(i) Clear View of the Objective of the Program

Before you get into training the prospective entrepreneurs, it is very important to have a clear
objective and plan in mind about what the program is going to encompass.

Without a proper plan and direction, the training would not yield the desired results. This
would lead to a loss of time, money, effort and most of all, valuable potential.

(ii) Selecting the Potential Targets

It is important to select the potential targets who are willing to enhance their skills and who
can be identified as the people who have some amount of business acumen. These can be
further divided into two categories- the educated target audience and the uneducated target
audience.

Educated audience refers to the target people who have a decent educational background and
want to be entrepreneurs. These people have the motivation to put their education to use by
starting a venture and working for themselves.

Uneducated audience refers to the people who are not as privileged as others in terms of
education about the market and have the potential to become entrepreneurs. These people are
constantly looking for alternative ways to earn money and support their families. Therefore
they are highly motivated and, given the right training and direction, can prove to be
exceptional entrepreneurs.

(iii) Identifying Local Talents and Markets

The process of entrepreneurship development program can be seen as most effective and
efficient when it is applied in the local markets and on the local entrepreneurs who know

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about it. These people understand and absorb the knowledge way more quickly and can apply
it in the current scenario because of which the results of the program can be seen more
quickly and effectively.

(iv) Choosing the Right Location

In India unfortunately, these programs can only be launched where support institutions and
resources are available, but ideally, these programmes should be planned and launched in the
areas where most people are interested and willing to take advantages of these programmes
so that this opportunity can be used most effectively and there is no loss of resources.

(v) Tying up with Institutions

A lot of times these programmes involve tying up with various institutions like universities,
NGO and some private institutions. This is done to give a real-world experience to assist the
program and give the people some idea of the situations in the real world.

(vi) Develop the Entrepreneurship Program as Needed

People and their skill sets are different and develop over time. Thus, it is very important to
keep developing the programs to suit the needs of the people enrolled in it. Moreover, the
focus must be on harnessing their strengths and working to minimize their weaknesses.

(vii) Analyze the Result for Future Development

This is a very important and final step in the process of entrepreneurship development. After
the program has run its course, it is very important to analyze the effectiveness of the
program. This is necessary to ensure that in future more effective programs can be developed.
For this one has to minimize the shortcomings of the existing program.

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Environmental Analysis
Environmental Analysis is described as the process which examines all the components,
internal or external that has an influence on the performance of the organization. The internal
components indicate the strengths and weakness of the business entity whereas the external
components represent the opportunities and threats outside the organization.

To perform environmental analysis, a constant stream of relevant information is required to

find out the best course of action. Strategic Planners use the information gathered from the
environmental analysis for forecasting trends for future in advance. The information can also
be used to assess operating environment and set up organizational goals.

It ascertains whether the goals defined by the organization are achievable or not, with the
present strategies. If is not possible to reach those goals with the existing strategies, then new
strategies are devised or old ones are modified accordingly.

Advantages of Environmental Analysis

 The internal insights provided by the environmental analysis are used to assess
employee’s performance, customer satisfaction, maintenance cost, etc. to take
corrective action wherever required.
 Further, the external metrics help in responding to the environment in a positive
manner and also aligning the strategies according to the objectives of the
organization.
 Environmental analysis helps in the detection of threats at an early stage, that assist
the organization in developing strategies for its survival.
 Add to that, it identifies opportunities, such as prospective customers, new product,
segment and technology, to occupy a maximum share of the market than its
competitors.

Steps Involved in Environmental Analysis

1. Identifying

First of all, the factors which influence the business entity are to be identified, to improve its
position in the market. The identification is performed at various levels, i.e. company level,
market level, national level and global level.

2. Scanning

Scanning implies the process of critically examining the factors that highly influence the
business, as all the factors identified in the previous step effects the entity with the same
intensity. Once the important factors are identified, strategies can be made for its
improvement.

3. Analysing

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In this step, a careful analysis of all the environmental factors is made to determine their
effect on different business levels and on the business as a whole. Different tools available for
the analysis include benchmarking, Delphi technique and scenario building.

4. Forecasting

After identification, examination and analysis, lastly the impact of the variables is to be
forecasted.

Environmental analysis is an ongoing process and follows a holistic approach, that

continuously scans the forces effecting the business environment and covers 360 degrees of
the horizon, rather than a specificsegment.

Entrepreneurship Development Programmes (EDP)

As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities
among the people. In other words, it refers to inculcation, development, and polishing of
entrepreneurial skills into a person needed to establish and successfully run his / her
enterprise. Thus, the concept of entrepreneurship development programme involves
equipping a person with the required skills and knowledge needed for starting and running
the enterprise.

Need for EDPs

That, entrepreneurs possess certain competencies or traits. These competencies or traits are
the underlying characteristics of the entrepreneurs which result in superior performance and
which distinguish successful entrepreneurs from the unsuccessful ones.

Then, the important question arises is: where do these traits come from? Or, whether these
traits are in born in the entrepreneurs or can be induced and developed? In other words,
whether the entrepreneurs are born or made? Behavioural scientists have tried to seek
answers to these questions.

A well-known behavioural scientist David C. McClelland (1961) at Harvard University made

an interesting investigation-cum-experiment into why certain societies displayed great
creative powers at particular periods of their history? What was the cause of these creative
bursts of energy? He found that ‘the need for achievement (n’ ach factor)’ was the answer to
this question. It was the need for achievement that motivates people to work hard. According
to him, money- making was incidental. It was only a measure of achievement, not its
motivation.

In order to answer the next question whether this need for achievement could be induced, he
conducted a five-year experimental study in Kakinada, i.e. one of the prosperous districts of
Andhra Pradesh in India in collaboration with Small Industries Extension and Training
Institute (SIET), Hyderabad.

This experiment is popularly known as ‘Kakinada Experiment’. Under this experiment,

young persons were selected and put through a three-month training programme and
motivated to see fresh goals.

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One of the significant conclusions of the experiment was that the traditional beliefs did not
seem to inhibit an entrepreneur and that the suitable training can provide the necessary
motivation to the entrepreneurs (McClelland & Winter 1969). The achievement motivation
had a positive impact on the performance of entrepreneurs.

In fact, the ‘Kakinada Experiment’ could be treated as a precursor to the present day EDP
inputs on behavioural aspects. In a sense, ‘Kakinada Experiment’ is considered as the seed
for the Entrepreneurship Development Programmes (EDPs) in India.

The fact remains that it was the ‘Kakinada Experiment’ that made people appreciate the need
for and importance of the entrepreneurial training, now popularly known as ‘EDPs’, to induce
motivation and competence among the young prospective entrepreneurs.

Based on this, it was the Gujarat Industrial Investment Corporation (GIIC) which, for the first
time, started a three-month training programmes on entrepreneurship development.
Impressed by the results of GIIC’s this training programme, the Government of India
embarked, in 1971, on a massive programme on entrepreneurship development. Since then,
there is no looking back in this front. By now, there are some 686 all-India and State level
institutions engaged in conducting EDPs in hundreds imparting training to the candidates in
thousands.

Till now, 12 State Governments have established state-level Centre for Entrepreneurship
Development (CED) or Institute of Entrepreneurship Development (lED) to develop
entrepreneurship by conducting EDPs. Today, the EDP in India has proliferated to such a
magnitude that it has emerged as a national movement. It is worth mentioning that India
operates the oldest and largest programmes for entrepreneurship development in any
developing country.

The impact of India’s EDP movement is borne by the fact that the Indian model of
entrepreneurship development is being adopted by some of the developing countries of Asia
and Africa. Programmes similar to India’s EDPs are conducted in other countries also, for
example, ‘Junior Achievement Programme’ based on the principle of ‘catch them young’ in
USA and ‘Young Enterprises’ in the U. K.

Objectives of EDP

The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:

(i) Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.

(ii) Analyse environmental set up relating to small industry and small business.

(iii) Select the product.

(iv) Formulate proposal for the product.

(v) Understand the process and procedure involved in setting up a small enterprise.

(vi) Know the sources of help and support available for starting a small scale industry.

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(vii) Acquire the necessary managerial skills required to run a small-scale industry.

(viii) Know the pros and cons in becoming an entrepreneur.

(ix) Appreciate the needed entrepreneurial discipline.

(x) Enable to communicate clearly and effectively.

(xi) Develop a broad vision about the business.

(xii) Make him subscribe to the industrial democracy.

(xiii) Develop passion for integrity and honesty.

(ivx) Make him learn compliance with law.

Problems of Entrepreneurship Development

Programmes (EDPs)
Problems of entrepreneurship development programmes (EDPs) are:

1. No Policy at the National Level

Though Government of India is fully aware about the importance of entrepreneurial

development, yet we do not have a national policy on entrepreneurship. It is expected that the
government will formulate and enforce a policy aimed at promoting balanced regional
development of various areas through promotion of entrepreneurship.

2. Problems at the Pre training Phase

Various problems faced in this phase are — identification of business opportunities, finding
& locating target group, selection of trainee & trainers etc.

3. Over Estimation of Trainees

Under EDPs it is assumed that the trainees have aptitude for self employment and training
will motivate and enable the trainees in the successful setting up and managing of their
enterprises. These agencies thus overestimate the aptitude and capabilities of the educated
youth. Thus on one hand the EDPs do not impart sufficient training and on the other financial
institutions are not prepared to finance these risky enterprises set up by the not so competent
entrepreneurs.

4. Duration of EDPs

An attempt is made during the conduct of EDPs to prepare prospective entrepreneurs

thoroughly for the various problems they will be encountering during the setting up and
running of their enterprises. Duration of most of these EDPs varies between 4 to 6 weeks,

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which is too short a period to instill basic managerial skills in the entrepreneurs. Thus the
very objective to develop and strengthen entrepreneurial qualities and motivation is defeated.

5. Non Availability of Infrastructural Facilities

No prior planning is done for the conduct of EDPs. EDPs conducted in rural and backward
areas lack infrastructural facilities like proper class room suitable guest speakers, boarding
and lodging etc.

6. Improper Methodology

The course contents are not standardized and most of the agencies engaged in EDPs are
themselves not fully clear about what they are supposed to do for the attainment of pre-
determined goals. This puts a question mark on the utility of these programmes.

7. Mode of Selection

There is no uniform procedure adopted by various agencies for the identification of

prospective entrepreneurs. Organizations conducting EDPs prefer those persons who have
some project ideas of their own and thus this opportunity is not provided to all the interested
candidates.

8. Non Availability of Competent Faculty

Firstly there is problem of non availability of competent teachers and even when they are
available, they are not prepared to take classes in small towns and backward areas. This
naturally creates problems for the agencies conducting EDP.

9. Poor Response of Financial Institutions

Entrepreneurs are not able to offer collateral security for the grant of loans. Banks are not
prepared to play with the public money and hence they impose various conditions for the
grant of loans. Those entrepreneurs who fail to comply with the conditions are not able to get
loan and hence their dream of setting up their own enterprises is shattered. Helpful attitude of
lending institutions will go a long way in stimulating entrepreneurial climate.