Unit 3 -Digital Notes - MG 8091 EDP - VIII Sem.pdf

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MG 8091 – ENTREPRENEURSHIP DEVELOPMENT
UNIT - III
Department: Mechanical Engineering
Batch/Year:2018-22/IV
Updated by: Mr. Sankarlal R L, Asst. Prof (Gr-II) / Mech
Date: 24/04/2022

1.TABLE OF CONTENTS
1. Contents
2. Course Objectives
3. Pre Requisites
4. Syllabus
5. Course outcomes
6. CO- PO/PSO Mapping
7. Lecture Plan
8. Activity based learning
9. Lecture Notes
10. Assignments
11. Part A Question & Answer
12. Part B Question & Answer
13. Supportive online Certification courses
14. Real time Applications in day to day life and to Industry
15. Contents beyond the Syllabus
16. Assessment Schedule
17. Prescribed Text Books & Reference Books
18. Mini Project suggestions

2. COURSE OBJECTIVES
To develop and strengthen entrepreneurial quality and
motivation in students and to impart basic entrepreneurial
skills and understanding to run a business efficiently and
effectively.

3. PRE REQUISITE CHART
MG 8591 - Principles of Management
GE 8077 - Total Quality
Management
MG 8091 – Entrepreneurship
Development

4. SYLLABUS
MG 8091 ENTREPRENEURSHIP DEVELOPMENT L T P C 3 0 03
UNIT I
ENTREPRENEURSHIP
SYLLABUS: Entrepreneur – Types of Entrepreneurs –
Difference between Entrepreneur and Intrapreneur Entrepreneurship in Economic
Growth, Factors Affecting Entrepreneurial Growth.
UNIT-2
MOTIVATION
SYLLABUS: Major Motives Influencing an Entrepreneur – Achievement Motivation
Training, Self Rating, Business Games, Thematic Apperception Test –
Stress Management, Entrepreneurship Development Programs – Need,
Objectives.
UNIT III
BUSINESS
SYLLABUS: Small Enterprises – Definition, Classification – Characteristics,
Ownership Structures – Project Formulation – Steps involved in setting up a
Business – identifying, selecting a Good Business opportunity, Market Survey and
Research, Techno Economic Feasibility Assessment – Preparation of Preliminary
Project Reports – Project Appraisal – Sources of Information – Classification of
Needs and Agencies.
UNIT IV
FINANCING AND ACOUNTING
SYLLABUS: Need – Sources of Finance, Term Loans, Capital Structure, Financial
Institution, Management of working Capital, Costing, Break Even Analysis, Taxation
– Income Tax, Excise Duty – Sales Tax.
UNIT V
SUPPORT TO ENTREPRENEURS
SYLLABUS: Sickness in small Business – Concept, Magnitude, Causes and
Consequences, Corrective Measures - Business Incubators – Government Policy for
Small Scale Enterprises – Growth Strategies in small industry – Expansion,
Diversification, Joint Venture, Merger and Sub Contracting.

5. COURSE OUTCOMES
1. Understand and Explain the role of entrepreneur in
economic growth of the nation
2. Outline the major motivation factors for becoming an
entrepreneur
3. Classify, compare and analyze for setting up of a good
business opportunity.
4. Summarize the various sources of finance and method of
accounting
5. Plan for establishing business opportunity with the
knowledge on Government norms
6. Apply the knowledge expanding business.

6. CO- PO/PSO MAPPING
PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8 PO9 PO10 PO11 PO12
CO1 - - 1 - - 1 1 - - - 3 -
CO2 - - - - - - - 2 3 - 3 -
CO3 - - - - 1 - - - - - 3 -
CO4 - - - - 1 - - - - - 3 -
CO5 - - - - - - - - - 1 3 -
CO6 - - 2 - - - 3 - - - 3 -
PSO1 PSO2 PSO3
CO1 - - 1
CO2 - - 1
CO3 - - 1
CO4 - - 2
CO5 - - 1
CO6 - - 1

7. LECTURE PLAN
UNIT 1 – ENTREPRENEURSHIP
S.
No. Topic
Total
No.
Of
Periods
Proposed
Date Actual
Lecture
Date
Pertaining
CO
Taxono
my
Level
Mode of
Delivery
1 Entrepreneur 2 CO1 K2 MD2
2 Types of
Entrepreneurs
2
CO1 K2 MD2
3
Difference
between
Entrepreneur
and
Intrapreneur
2
CO1 K2 MD2
4
Entrepreneurs
hip in
Economic
Growth
2
CO1 K2 MD2 &
MD3
5 Factors
Affecting
Entrepreneur
ial Growth
1
CO1 K2 MD2 &
MD3
Signature of Staff Incharge Signature of HOD
MODE OF DELIVERY:
MD 1. Chalk & Talk
MD 2. Power Point Presentation
MD 3. Video Lecture
MD 4. Seminar
MD 5. Field visit

UNIT 2 - MOTIVATION
S.
No. Topic
Total
No.
Of
Perio
ds
Proposed
Date Actual
Lecture
Date
Pertaini
ng
CO
Taxono
my
Level
Mode of
Delive
ry
1
Major Motives
Influencing an
Entrepreneur
1
CO2 K2 MD2
2
Major Motives
Influencing an
Entrepreneur
1 CO2 K2 MD2
3
Achievement
Motivation
Training, Self
Rating,
Business
Games
2
CO2 K2 MD2
4
Thematic Apperception
Test 1
CO2 K2 MD2
&
MD3
5
Stress Management 2
CO2 K2 MD2
6
Entrepreneurship
Development Programs
– Need, Objectives
2 CO2 K2 MD2
MODE OF DELIVERY:
MD 1. Chalk & Talk
MD 3. Video Lecture
MD 4. Seminar
MD 5. Field visit

UNIT 3 - BUSINESS
S.
N
o.
Topic
Total
No.
Of
Periods
Proposed
Date
Actual
Lecture
Date
Pertaini
ng
CO
Taxon
om
y
Le
vel
Mode
of
Deliv
ery
1
Small Enterprises –
Definition, Classification,
Characteristics
1 CO3 K2 MD2
2 1 CO3 K2 MD2
3
Ownership Structures,
Project Formulation – Steps
involved in setting up a
Business
1 CO3 K2 MD2
4
1
CO3 K2 MD2
5
Identifying,
selecting a Good
Business
opportunity, Market
Survey and
Research
1
CO3 K2 MD2
&
MD4
6
Economic Feasibility
Assessment –
Preparation of
Preliminary Project
Reports
1
CO3 K2 MD2
7
Project Appraisal
1 CO3 K2 MD2
8 Sources of Information –
Classification of Needs and
Agencies.
2
CO3 K2 MD4
MODE OF DELIVERY:
MD 1. Chalk & Talk
MD 3. Video Lecture
MD 4. Seminar
MD 5. Field visit

UNIT 4 – FINANCING AND ACCOUNTING
S.
N
o.
Topic
Total
No.
Of
Periods
Proposed
Date Actual
Lecture
Date
Pertaini
ng
CO)
Taxono
my
Lev
el
Mode
of
Deliver
y
1
Need – Sources of
Finance
1
CO4 K2 MD2
2
Term Loans 1 CO4 K2 MD2
3
Capital Structure
1 CO4 K2 MD2
4
Financial Institution
1 CO4
K2 MD2
5 Management of working
Capital, Costing 1 CO4
K2 MD2
&
MD3
6 Break Even Analysis
2 CO4
7
Taxation – Income Tax
1
CO4
K2 MD2
8 Sales Tax 1 CO4 K2 MD2 &
MD3
MODE OF DELIVERY:
MD 1. Chalk & Talk
MD 3. Video Lecture
MD 4. Seminar
MD 5. Field visit

UNIT 5 – SUPPORT TO ENTREPRENEURS
S.
No
.
Topic
Total
No.
Of
Periods
Proposed
Date
Actual
Lecture
Date
Pertaini
ng
CO
Taxono
my
Leve
l
Mode of
Deliver
y
1 Sickness in small
Business –
Concept
1 CO5 K2 MD2
2 Sickness in small
Business-
Magnitude
1 CO5 K2 MD2
3 Causes and
Consequences &
Corrective
Measures
1
CO5 K2 MD5
4
Business
Incubators –
Government
Policy for Small
Scale Enterprises
1
CO5 K2 MD2
5 Growth Strategies in
small industry –
Expansion
1
CO5 K2 MD2
6
Growth Strategies in
small industry –
Diversification, Joint
Venture
2
CO6 K2 MD2
7 Growth Strategies in
small industry –
Merger and Sub
Contracting
2
CO6 K2 MD2 &
MD3
MODE OF DELIVERY:
MD 1. Chalk & Talk
MD 3. Video Lecture
MD 4. Seminar
MD 5. Field visit

ACTIVITY BASED LEARNING
16
12
8. ACTIVITY BASED LEARNING:

9. LECTURE NOTES
UNIT III – Business
A business (also known as an enterprise, a company or a firm)
It is an organizational entity involved in the provision of goods and services to
consumers.
Businesses as a form of economic activity are prevalent in capitalist economies, where
most of them are privately owned and provide goods and services to customers in exchange
for other goods, services, or money.
Businesses may also be social non-profit enterprises or owned public enterprises
charged by governments with specific social and economic objectives.
A business owned by multiple individuals may form as an incorporated companion
jointly organize as a partnership. Countries have different laws that may ascribe different
rights to the various business entities.
The word "business" can refer to a particular organization or to an entire market
sector (for example: "the music business") or to the sum of all economic activity ("the
business"). Businesses aim for their sales to exceed their expenditures, resulting
in profit or gain or surplus.
Manufacturing Enterprises-
The enterprises engaged in the manufacture or production of goods pertaining to any
industry specified in the first schedule to the industries (Development and regulation) Act,
1951) or employing plant and machinery in the process of value addition to the final product
having a distinct name or character or use.
The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
Service Enterprises:-
The enterprises engaged in providing or rendering of services and are defined in terms of
investment in equipment
17
14

9. LECTURE NOTES
The SME and micro-enterprise (ME) sector encompasses a very broad range of firms, from
established traditional family businesses employing over a hundred people to “survivalist”
self-employed people working in informal micro enterprises. While the upper end of the range
is comparable across developed
Six forms of enterprises that you can start in India are:
1. Sole Proprietorship
2. Partnership Firm
3. Company
4. Limited Liability Partnership
5. One-person Company
6. Small Companies!
Small-Scale Industries in India:
In Indian economy small-scale and cottage industries occupy an important place,
because of their employment potential and their contribution to total industrial output and
exports.
Government of India has taken a number of steps to promote them. However, with the
recent measures, small-scale and cottage industries facing both internal competition as well
as external competition.
18
14
Manufacturing Sector
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees
Service Sector
Enterprises Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Small Enterprises More than ten lakh rupees but does not exceed two crore rupees
Medium Enterprises More than two crore rupees but does not exceed five core rupees

9. LECTURE NOTES
There is no clear distinction between small-scale and cottage industries. However it is
generally believed that cottage industry is one which is carried on wholly or primarily with the
help of the members of the family. As against this, small-scale industry employs hired labour.
Moreover industries are generally associated with agriculture and provide subsidiary
employment in rural areas. As against this, small scale units are mainly located in urban areas
as separate establishments.
Definition:
(i) Small-Scale Industries:
These are the industrial undertakings having fixed investment in plant and machinery,
whether held on ownership basis or lease basis or hire purchase basis not exceeding
Rs. 1 crore.
(ii) Ancillary Industries:
These are industrial undertakings having fixed investment in plant and machinery not
exceeding Rs. 1 crore engaged in or proposed to engage in,
(a) The manufacture of parts, components, sub-assemblies, tooling or
intermediaries, or
(b) The rendering of services supplying 30 percent of their production or
services as the case may be, to other units for production of other articles.
(iii) Tiny Units:
These refer to undertakings having fixed investment in plant and machinery not
exceeding Rs. 23 lakhs. These also include undertakings providing services such as
laundry, Xeroxing, repairs and maintenance of customer equipment and machinery,
hatching and poultry etc. Located m towns with population less than 50,000.
(iv) Small-Scale Service Establishments:
These mean enterprises engaged in personal or household services in rural areas and town
with population not exceeding 50000 and having fixed investment in plant and machinery not
exceeding Rs. 25 lakhs.
19

9. LECTURE NOTES
(v) Household Industries:
These cover artisans skilled craftsman and technicians who can work in their own
houses if their work requires less than 300 square feet space, less than 1 Kw power,
less than 5 workers and no pollution is caused. Handicrafts, toys, dolls, small plastic
and paper products electronic and electrical gadgets are some examples of these
industries.
Characteristics of Small-Scale Industries:
(i) Ownership:
Ownership of small scale unit is with one individual in sole-proprietorship or it
can be with a few individuals in partnership.
(ii) Management and control:
A small-scale unit is normally a one man show and even in case of partnership
the activities are mainly carried out by the active partner and the rest are generally
sleeping partners. These units are managed in a personalised fashion. The owner is
activity involved in all the decisions concerning business.
(iii) Area of operation:
The area of operation of small units is generally localised catering to the local or
regional demand. The overall resources at the disposal of small scale units are limited
and as a result of this, it is forced to confine its activities to the local level.
(iv) Technology:
Small industries are fairly labour intensive with comparatively smaller capital
investment than the larger units. Therefore, these units are more suited for economics
where capital is scarce and there is abundant supply of labour.
(v) Gestation period:
Gestation period is that period after which teething problems are over and
return on investment starts. Gestation period of small scale unit is less as compared to
large scale unit.
20

9. LECTURE NOTES
(vi) Flexibility:
Small scale units as compared to large scale units are more change susceptible
and highly reactive and responsive to socio-economic conditions.
They are more flexible to adopt changes like new method of production,
introduction of new products etc.
(vii) Resources:
Small scale units use local or indigenous resources and as such can be located
anywhere subject to the availability of these resources like labour and raw materials.
(viii) Dispersal of units:
Small scale units use local resources and can be dispersed over a wide territory.
The development of small scale units in rural and backward areas promotes more
balanced regional development and can prevent the influx of job seekers from rural
areas to cities.
Objectives of Small Scale Industries:
The objectives of small scale industries are:
1. To create more employment opportunities with less investment.
2. To remove economic backwardness of rural and less developed regions of the economy.
3. To reduce regional imbalances.
4. To mobilise and ensure optimum utilisation of unexploited resources of the country.
5. To improve standard of living of people.
6. To ensure equitable distribution of income and wealth.
7. To solve unemployment problem.
8. To attain self-reliance.
9. To adopt latest technology aimed at producing better quality products at lower costs.
21

9. LECTURE NOTES
Setting up of a Small Business Enterprise (Six Steps)
(i) Information Collection
(ii) Information Organization
(iii) Acquiring Required/Vocational Skills
(iv) Financial Requirements
(v) Market Assessment
(vi) Provision for Crisis
(i) Information Collection:
The first step involved is to decide which enterprise one wants to set up. This
begins with collecting information about the units already working in that field of
concern. This can be done by various ways such as going through the telephone
directories or by visiting the registrar’s office of the small-scale units.
This will enable the prospective entrepreneur to make an assessment of the
present market situation in that business activity. Based on this information, they can
weigh the pros and cons involved in entering into that business activity.
For example, they can come to know that the medical transcription and call
centers have been doing very well in the service sector enterprises in the country. This
is because of high labour cost in high income countries; the multinational companies
have gradually started shifting their labour-intensive manufacturing activities to the
developing countries.
In view of this, there is a great opportunity to tap those products which would
be outsourced by the Multi-National Companies (MNCs) through quality vendors.
Similarly, the rapid increase in the tourist influx in Jammu & Kashmir due to
improvement and restoration of peaceful law and order situation indicates very good
prospects for service providing enterprises like travel, tour, and hospitality industry in
the region.
22

9. LECTURE NOTES
(ii) Information Organization:
Having collected information about enterprise concern, the prospective
entrepreneur needs to organize the same in an orderly and systematic manner to
derive the meanings from them. This will help to make assessment about the minimum
requirements to start an enterprise in a particular business line.
Here, one generally undertaken exercise is to prepare a checklist for ready
reference of all required and available resources in terms of space, fund, training and
development, and manpower requirements. Once this exercise is over, the step
involved will be to prepare a summary of how the checklist will be transformed into the
desired products and services. Here we are presenting you one exercise based on your
above understanding.
Identification of Business Opportunity: Idea Generation and Opportunity!
In general sense, the term opportunity implies a good chance or a favourable situation
to do something offered by circumstances. In the same vein, business opportunity means a
good or favourable change available to run a specific business in a given environment at a
given point of time.
The term ‘opportunity’ also covers a product or project. Hence, the identification of
an opportunity or a product or project is identical and, therefore, all these three
terms are used as synonyms. The Government of India’s “Look East Policy” through North
East is an example of ‘opportunity’ to do business in items like tea, handicrafts, herbals,
turmeric, etc.
Opportunity identification and selection are like comer stones of business
enterprise. Better the former, better is the latter. In a sense, identification and
selection of a suitable business opportunity serves as the trite saying ‘well begun is
half done.’ But, it is like better said than done. Why? Because if we ask any intending
entrepreneur what project or product he/she will select and start as an enterprise, the
obvious answer he/she would give is one that having a good market and is profitable.
But the question is how without knowing the product could one know its market?
23

9. LECTURE NOTES
Whose market will one find out without actually having the product? Whose
profitability will one find out without actually selling the product? There are other problems,
besides. While trying to identify the suitable product or project, the intending entrepreneur
passes through certain processes.
The processes at times create a situation, or say, dilemma resembling ‘Hen or Egg’
controversy. That is, at one point, the intending entrepreneur may find one product or project
as an opportunity and may enchant and like it, but at the other moment may dislike and turn
down it and may think for and find other product or project as an opportunity for him/her.
This process of dilemma goes on for some intending entrepreneurs rendering them into the
problem of what product or project to start. Then, how to overcome this problem of product
identification and selection?
One way to overcome this dilemmatic situation is to know how the existing
entrepreneurs identified the opportunity and set up their enterprises. An investigation into the
historical experiences of Indian small enterprises in this regard reveals some interesting
factors.
To mention the important ones, the entrepreneurs selected their products or
projects based on:
a. Their own or partners’ past experience in that business line;
b. The Government’s promotional schemes and facilities offered to run some specific
business enterprises;
c. The high profitability of products;
d. Which indicate increasing demand for them in the market?
e. The availability of inputs like raw materials, labour, etc. at cheaper rates;
f. The expansion or diversification plans of their own or any other ongoing business
known to them;
g. The products reserved for small-scale units or certain locations.
24

9. LECTURE NOTES
Idea Generation:
Sources of Ideas:
In a sense, opportunity identification and selection are akin to, what is termed
in marketing terminology, ‘new product development.’ Thus, product or opportunity
identification and selection process starts with the generation of ideas, or say, ideas
about some opportunities or products are generated in the first instance.
The ideas about opportunities or products that the entrepreneur can consider
for selecting the most promising one to be pursued by him/her as an enterprise, can
be generated or discovered from various sources- both internal and external.
These may include:
(i) Knowledge of potential customer needs,
(ii) Watching emerging trends in demands for certain products,
(iii) Scope for producing substitute product,
(iv) Going through certain professional magazines catering to specific interests like
electronics, computers, etc.,
(v) Success stories of known entrepreneurs or friends or relatives,
(vi) Making visits to trade fairs and exhibitions displaying new products and services,
(vii) Meeting with the Government agencies,
(viii) Ideas given by the knowledgeable persons,
(ix) Knowledge about the Government policy, concessions and incentives, list of items
reserved for exclusive manufacture in small-scale sector,
(x) A new product introduced by the competitor, and
(xi) One’s market insights through observation.
In nutshell, a prospective entrepreneur can get ideas for establishing his/ her enterprise from
various sources. These may include consumers, existing products and services presently on
offer, distribution channels, the government officials, and research and development.
25

9. LECTURE NOTES
Businessman Should focus on the following:
Consumers:
No business enterprise can be thought of without consumers. Consumers demand for
products and services to satisfy their wants. Also, consumers’ wants in terms of preferences,
tastes and liking keep on changing. Hence, an entrepreneur needs to know what the
consumers actually want so that he/she can offer the product or service accordingly.
Consumers’ wants can be known through their feedback about the products and services they
have been using and would want to use in future.
Existing Products and Services:
One way to have an enterprise idea may be to monitor the existing products and services
already available in the market and make a competitive analysis of them to identify their
shortcomings and then, based on it, decide what and how a better product and service can
be offered to the consumers. Many enterprises are established mainly to offer better products
and services over the existing ones.
Distribution Channels:
Distribution channels called, market intermediaries, also serves as a very effective source for
new ideas for entrepreneurs. The reason is that they ultimately deal with the ultimate
consumers and, hence, better know the consumers’ wants.
As such, the channel members such as wholesalers and retailers can provide ideas for new
product development and modification in the existing product. For example, an entrepreneur
came to know from a salesman in a departmental store that the reason his hosiery was not
selling was its dark shade while most of the young customers want hosiery with light shade.
The entrepreneur paid heed to this feedback and accordingly changed the shade of his
hosiery to light shade. Entrepreneur found his hosiery enjoying increasing demand just within
a month.
26

9. LECTURE NOTES
Government:
At times, the Government can also be a source of new product ideas in various ways. For
example, government from time to time issues regulations on product production and
consumption. Many a times, these regulations become excellent sources for new ideas for
enterprise formation.
For example, government’s regulations on ban on polythene bags have given new idea to
manufacture jute bags for marketing convenience of the sellers and buyers. A prospective
entrepreneur can also get enterprise idea from the publications of patents available for
license or sale.
Besides, there are some governmental agencies that assist entrepreneurs in obtaining specific
product information. Such information can also become basis for enterprise formation.
Research and Development:
The last but no means the least source of new ideas is research and development (R&D)
activity. R&D can be carried out in-house or outside the organization. R&D activity suggests
what and how a new or modified product can be produced to meet the customers’
requirements.
Available evidences indicate that many new product development, or say, new enterprise
establishments have been the outcome of R&D activity. For example, one research scientist in
a Fortune 500 company developed a new plastic resin that became the basis of a new
product, a plastic molded modular cup pallet. Most of the product diversifications have
stemmed from the organization’s R&D activity.
Methods of Generating Ideas:
As seen above, there could be variety of sources available to generate ideas for enterprise
formation. But, even after generating ideas to convert these into enterprise is still a problem
for the prospective entrepreneur. The reason is not difficult to seek.
27

9. LECTURE NOTES
Available evidences indicate that many new product development, or say, new enterprise
establishments have been the outcome of R&D activity. For example, one research scientist in
a Fortune 500 company developed a new plastic resin that became the basis of a new
product, a plastic molded modular cup pallet. Most of the product diversifications have
stemmed from the organization’s R&D activity.
Methods of Generating Ideas:
As seen above, there could be variety of sources available to generate ideas for enterprise
formation. But, even after generating ideas to convert these into enterprise is still a problem
for the prospective entrepreneur. The reason is not difficult to seek.
This involves a process including first generating the ideas and then scrutinizing of the ideas
generated to come up with an idea to serve as the basis for a new enterprise formation. The
entrepreneur can use several methods to generate new ideas. However, the most commonly
used methods of generating ideas are: focus groups, brainstorming, and problem inventory
analysis.
Problem Inventory Analysis:
Problem Inventory analysis though seems similar to focus group method, yet it
is somewhat different from the latter in the sense that it not only generates the ideas,
but also identifies the problems the product faces. The procedure involves two steps:
One, providing consumers a list of specific problems in a general product category.
Two identifying and discussing the products in the category that, suffer from the
specific problems. This method is found relatively more effective for the reason that it
is easier to relate known products to a set of suggested problems and then arrive at a
new product idea.
However, experiences available suggest that problem inventory analysis method
should better be used for generating and identifying new ideas for screening and
evaluation. The results derived from product inventory analysis need to be carefully
screened and evaluated as they may not actually reflect a genuine business
opportunity.
28

9. LECTURE NOTES
For example, General Foods’ introduction of a compact cereal box in response to
the problem that the available boxes did not fit well on the shelf was not successful, as
the problem of package size had little effect on actual purchasing behaviour.
Therefore, to ensure the better if not the best results, problem inventory analysis
should be used primarily to generate product ideas for evaluation.
All of above sources and methods may give a few ideas about the possible
projects to be examined as the final project or product.
Following are some illustrative sources of generation of business ideas:
a. Realizing that especially service class people find it inconvenient to take milk pot
with them to office that they need to buy milk while coming back from the office in the
evening, to provide milk in sachets or tetra packs could be a new business idea.
b. Having faced difficulty in finding out accommodation and transport facility while on
visits to a new/tourist place may give one an idea to start a travel agency providing
complete package of facilities to the visitors to a new / tourist place.
c. Knowing that many people have hobby or even develop passion for gardening may
give rise to an idea of setting up one’s own nursery.
d. Seeing that most of the people coming from outside to a particular place buy its
unique items as souvenir like tea from Assam, the Model of Taj from Agra, etc. may
give idea to produce the local item as souvenir.
e. Recognizing the increasing application of computers in offices as well as business
organizations, irrespective of its size, may give an idea to set-up a computer-training
centre.
Once ideas have being generated following the above process, the next step comes is
identification of above generated ideas as opportunities.
Opportunity/Product Identification:
After going through above process, one might have been able to generate some ideas that
can be considered to be pursued as ones business enterprise.
29

9. LECTURE NOTES
Opportunity/Product Identification:
After going through above process, one might have been able to generate some ideas that
can be considered to be pursued as ones business enterprise.
Imagine that someone have generated the five ideas as opportunities as a result of
above analysis:
1. Nut and bolt manufacturing (industry)
2. Lakhani Shoes (industry)
3. Photocopying unit (service-based industry)
4. Electro-type writer servicing (service-based industry).
4. Polythene bags for textile industry (ancillary industry)
An entrepreneur cannot start all above five types of enterprises due to small in size in terms
of capital, capability, and other resources. Hence, he/she needs to finally select one idea
which he/she thinks the most suitable to be pursued as an enterprise. How does the
entrepreneur select the most suitable project out of the alternatives available? This is done
through a selection process discussed subsequently.
Having gone through idea generation, also expressed as ‘opportunity scanning’ and
opportunity identification, we can distinguish between an idea and opportunity. We are giving
below the two situations that will help you understand and draw the line of difference
between an ‘idea’ and an ‘opportunity’.
30
Situation I Situation II
Having completed their Master of
Business Administration (MBA), Mrinmoy
and Chandan met after about six months.
The two were conversing with each other
about who is doing what. Mrinmoy is
running his business of travel agency and
Chandan is still searching for a job.
Mrinmoy suggests Chandan to start some
business. Observe and read the market
scenario and produce what the
consumers actually want.
On completion of his engineering degree, Tridip got a
job in Assam State Transport Corporation. He was
the in-charge of the purchase department. Having
worked in the purchase department for over ten
years, he had gained good idea about which
components have more demand and who are the
buyers of these parts in bulk. He, therefore, thought
good prospects of manufacturing of some of the
components having good demand in bulk.

9. LECTURE NOTES
Now, it is clear that, in the above mentioned two satiations, situation I is at the ‘idea stage’
and situation II at the ‘opportunity stage’. At the idea stage, there is simply an idea about
what to do. But at the opportunity stage, idea has actually been germinated about what to
start/do. The understanding of such a difference between an ‘idea’ and ‘opportunity’ is very
important for the intending entrepreneurs who are seriously trying to identify an ‘opportunity’
to be pursued as an enterprise.
Ownership Structure
Economic activity is daily increasing in complexity. Governmental legislation, awakening social
conscience, economic necessities-all play their roles in the creation and existence of
enterprises. Entrepreneurship has several dimensions and an entrepreneur is expected to
know them thoroughly to be successful. One such dimension is a legal dimension. An
entrepreneur is concerned with law from the very beginning. From the point of view of
ownership, there are, in the private sector, four forms of organization to run a business unit.
They are as follows:
a) Sole proprietorship
b) Partnership firm
c) Joint stock Company
d) Co-operative undertaking.
Hindu Joint Family Firm can be considered as the fifth form, although this is fast losing
ground as a form of business organization.
Thus, conforming to legal requirements will be the first thing for starting an enterprise. Then,
of course, any enterprise has to be run within the legal framework doing business according
to mercantile law, labour laws, tax laws, etc.
31

9. LECTURE NOTES
Forms of Legal Ownership
Enterprise
Commercial Industrial
Private Sector Public Sector
Individual ownership Group ownership
Sole proprietorship i. Partnership i. Govt. Dept.
ii. Company ii. Public Corporation
iii. Co-operative society iii. company
iv. Hindu joint family firm
Sole Proprietorship Business
This is the oldest form of business ownership. It is also the simplest and the most natural. 35
Characteristic features
1) One-man ownership
2) Personal control
3) Total or undivided risk
4) Liability is unlimited
Suitability
1) When enterprise is small in size.
2) When little capital is required
3) Where risk involved is not heavy
4) When control by one man is sufficient
5) Where personal attention to customer’s needs and tastes is important
Advantages
1) Ease of formation
2) Complete degree of control
3) Promptness in division-making
4) Maintenance of survey
5) Fallibility in operation
6) Catering to individual tastes
7) Minimum Governmental regulation
32

9. LECTURE NOTES
Disadvantages
1) Limited amount of capital
2) Limited managerial ability 36
3) Liability is unlimited
4) Risk is heavy
5) Uncertainty of continuity
Partnership
The law of partnership is contained in the Indian Partnership Act, 1932. The Act defines
partnership as “the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all”.
The essential characteristics of partnership are:
1) Association of two or more persons
2) Agreement
3) Business
4) Sharing of Profits
5) Mutual Agency
A partnership is based on an agreement. The partnership agreement may be made orally or
in writing or may be implied from the course of dealings among partners. However, all the
essential elements of a valid contract must be present.
Legal Implications of Partnership
1) Legal position-Not a legal entity.
2) Liability-unlimited, joint and individual
3) Utmost good faith. 37
4) Implied Authority-Each partner is an agent and hence has an implied authority to
bind all the partners.
5) Unanimity of consent is a must.
6) Non-transferability of share or interest without the consent of other partners.
7) Dissolution-Unless there is an agreement to the contrary, death or insolvency of a partner
dissolves the firm.
33

9. LECTURE NOTES
Registration of a partnership firm
The partnership Act does not provide for the compulsory registration of firms. But indirectly,
by creating certain disabilities from which an unregistered firm suffers, it makes registration
advantageous.
Partnership Deed
Though a partnership is constituted by agreement between the parties, it need not
necessarily be in writing. It may be of the most informal character, even oral, though the
business of partnership may involve millions of rupees, or on the other hand, it may be an
elaborate written document called the Deed of Partnership or Articles of Partnership, and
drafted by a lawyer. Where the partners have decided to enter into a deed of partnership, it
should be stamped according to the provisions of the Stamp Act. A properly drawn up Deed
of Partnership should ordinarily cover the following points:
1. Name of the firm together with the names of the partners composing it. 38
2. The nature of business and the duration of partnership
3. The amount of capital each partner undertakes to contribute and the manner of its
contribution.
4. The ratio for sharing profit and loss.
5. Salaries, commissions, etc., if any, payable to partners, and also any drawings which
may be allowed.
6. Valuation goodwill.
7. Matters relating to retirement, death and admissions of partners.
8. Settlement of account at the dissolution of the firm.
9. Arbitration clause.
10. Any other clause or clauses found necessary.
Company form of enterprise
For enterprises which require huge capital base, individual proprietorship or partnership may
not be able to supply the required capital. Therefore, it becomes necessary to have another
form of organization through which large sums of money could be arranged from a large
number of people who are either not capable of running business enterprises or have no time
to do so.
34

9. LECTURE NOTES
They will, however, be willing to invest their savings in a business provided they are assured
that their money is safe and they will not be called upon to pay anything more than what
they undertake to invest. The form suitable to serve these purposes is found to be a ‘Limited
Company’. This firm enables the entrepreneurs to get the necessary capital from friends,
relatives, general public, etc., retaining at the same time, the control and management in
their own hands. Joint stock company is, in fact, much better than partnership form of
business. In joint stock companies, the capital is contributed by a large group of people,
known as shareholders.
Some of the Labour Laws an Entrepreneur should be familiar with:
1. Workmen’s compensation Act, 1923.
2. Trade Union Act, 1926.
3. Payment of Wages Act, 1936.
4. Industrial Disputes Act, 1947.
5. Minimum Wages Act, 1948.
6. Factories Act, 1948.
7. Employees Provident Funds and Family Pension Fund Act, 1952.
8. Employees State Insurance Act, 1952.
9. Payment of Bonus Act, 1965.
10. Payment of Gratuity Act, 1972.
Video 3 - Market Survey for Small Business - https://www.youtube.com/watch?v=gy4Xyfcbpic
Video 4 - Market Feasibility Study: More Important Than a Business Plan – YouTube -
https://www.youtube.com/watch?v=2Zwlb_lQ23I
35

10. ASSIGNMENT ( in K2 Level)
1. Business means ________.
A. Commerce.
B. industry and commerce.
C. trade and commerce.
D. selling and buying of goods.
2. Which of the following leads to under-capitalization?
A. raising of more money by issue of shares.
B. acquiring fixed assets on excessive amounts.
C. over-estimation of earnings for enterprise.
D. under-estimation of initial rate of earnings.
3. The expenses incurred on the setting up of the enterprise are called as _________.
A. Cost of financing.
B. Cost of promotion.
C. Cost of fixed assets.
D. Cost of current assets.
4._____________ is primarily concerned with the identification, qualification and evaluation
of the project resources.
A. Techno-economic analysis.
B. Feasibility analysis.
C. Input analysis.
D. Financial analysis.
5. The application for registration of a small scale unit should be submitted to the _______.
A. General manager, DIC.
B. Director, DIC.
C. General manager. NSIC.
D. Director, NSIC.
36

6. The main disadvantage of a general partnership is:
a. the unlimited liability of the partners.
b. disagreement amongst partners.
c. shared management.
d. difficulty of termination.
7. The most effective form of business organization for raising capital is the
a. joint venture.
b. P artnership.
c. Corporation
d. proprietorship.
.
8. The simplest form of business ownership is a:
a. partnership.
b. corporation
c. cooperative
d. multinational.
9. The form of business organization that has the largest sales volume is the
a. partnership.
b. corporation
c. cooperative
d. multinational.
10. Which of the following is least likely to influence the timing of new business births?
A. Government policies.
B. Profitability.
C. Consumer expenditure.
D. Weather conditions
37

S.No PART A Question with Answer Blooms
Level
CO’S
1 Define Small Scale Industries.
The definition of Small-Scale Industry (SSI) varies from one
country to another and from one time to another in the same
country depending upon the pattern and stage of
development. The term small scale industries have been
defined in three ways (i) Conventional (ii) Operational and (iii)
National income
K1
CO3
2 What are the classifications of SSI?
Manufacturing Industries
Feeder Industries
Serving Industries
Ancillary to large Industries
Mining and Quarrying
K1 CO3
3 List the importance of SSI.
1. Innovative and Productive
2. Individual tastes, fashions and personalized service.
3. Symbols of National Identity
4. Always winners of the Game
5. Dispersal over wide area.
K1 CO3
4 What is partnership deed?
A partnership is an agreement between two or more persons
to operate a business. When the agreement is in written form,
it is called 'partnership deed.' It must be duly signed by the
partners, stamped and registered. Any alteration in
partnership deed can be made with the mutual consent of all
the partners.
K1 CO3
38
34
11. PART – A QUESTIONS & ANSWERS

Level
CO’S
5. Define Sole Proprietorship.
A sole proprietor carries on a business for his or her own
benefit, without participation of other persons except
employees
K1 CO3
6. Define Partnership.
A partnership is an agreement between two or more persons to
operate a business particularly when investment or knowledge
from others required
K1 CO3
7. Define company.
According to Chief Justice John Marshall of USA defined a
company as “corporation is an artificial being invisible,
intangible and existing only in contemplation of law. Being the
mere creature of law, it Possesses only those properties which
the charter of its creation confers up on it, either expressly or
an incidental to its very existence”.
K2 CO3
8. Define Co-operation.
The Indian Co-operative Societies Act, 1912, Section 4, defines
as “a co-operative is a joint enterprise where ten or more
individuals contribute capital and labor and also manage its
affairs and effectively meets the competition from large
enterprise with an understanding to primarily distribute among
themselves equally the profits earned or profits derived out of
the venture”.
K2 CO3
9. Define the term project.
A project is defined as a scientifically evolved work plan devised
to achieve a
specific objective within a specific period of time
K2 CO3
39

Level
CO’S
10. What are the significances of project formulation?
A well formulated project is the best gate way for obtaining the
required assistance from financial instruction. Project report will
also be a great assistance or obtaining necessary
Government clearances and in meeting the hurdles of
procedural formation
K1 CO3
11. What are the elements of project formulation?
Feasibility Analysis
Techno-economic Analysis
Project Design and Network Analysis
Input Analysis
K1 CO3
12. Write note on feasibility study.
Feasibility study is used to investigate the project in six different
aspects economic, technical, managerial, organizational,
commercial and financial. The relative importance of these
different aspects varies considerably according to the type of
project involved
K2 CO3
13. What is feasibility report?
A feasibility report of a new enterprise or an expanding enterprise
consists of some background information about the industry to
which the project belongs, and the enterprise submitting the
report in general. It also contains the economic information,
financial data and technical details which save a finite number of
discrete economic processes or cost structure of the industry
concerned
K2 CO3
14. What is techno economic feasibility?
Techno-economic feasibility makes an analysis of the market and
technology. The choice of technology itself will be based on the
demand potential and aid in project
design. Techno-economic analysis gives to the project
individuality and sets the stage for detailed design development
K2 CO3

Level
CO’S
15. What is non-probabilistic sampling?
Non-probabilistic sampling is a sampling technique where the
samples are gathered in a process that does not give all the
individuals in the population equal chances of being
selected
K1 CO3
16. What are the steps involved in the process of a market survey?
Defining the purpose or objectives. Gathering data from
secondary source. Gathering information from primary source
Analyzing and interpreting the report
K1 CO3
17. Mention the types of marketing research.
Consumer research Market/Demand research Competition
research Distribution research Price research
Advertising/promotion research
K2 CO3
18. What are the sources of Business ideas?
Market characteristics Import and Export
Emerging new technology and Scientific know how Social and
Economic Trends
Product profile
Change in consumption pattern Revival of sick units
K2 CO3
19. What are the steps in identifying business opportunities?
Preliminary evaluation Selection of product or service Conduct or
market survey
Contractual programs to collect sufficient information about
proposed venture Succeeding in the market
K2 CO3
20 Identify the problems faced by small enterprise
Problem of skilled manpower
Inadequate credit assurance
Irregular supply of raw material
Absence of organized marketing
Competition from Large-scale units and imported articles.

S.No Questions
Blooms
Level
CO’S
1 Discuss the important of feasibility assessment and
preparation of project reports with a suitable case
study.
K2 CO3
2 What is Business Environment? What are the
methods of preparing Entrepreneurship
development program in detail?
K2 CO3
3 Explain the meaning and scope of Market survey
and Research. Discuss its role in entrepreneurship
K2 CO3
4 What are the criteria for selecting a particular
project? What are the subject matters behind
preliminary project report preparation? [April
2011] Discuss the methods of
project appraisal
K1 CO3
5 What are all the functional risks faced by a small
business? Discuss the reason for
Bankruptcy and remedial actions against them?
K2 CO3
6 Discuss the importance and objective of network
analysis technique with suitable
example
K4 CO3
7. Explain the meaning and scope of Market survey
and Research. Discuss its role in Entrepreneurship
K2 CO3
8.
Discuss the ownership structures of small business
K2 CO3
9. Discuss the classification and characteristics of
small business
K2 CO3
42
12. PART – B QUESTIONS

S.NO Link Academy
1 https://www.edx.org/course/subject/econo
mics-finance
EDX
2 https://www.edx.org/learn/entrepreneurshi
p
EDX
3 https://www.coursera.org/browse/business
/entrepreneurship
coursera
4 https://www.startupindia.gov.in/content/sih
/en/reources/l-d-listing.html
msme
5 https://www.upgrad.com/entrepreneurship
-certificate-program/
upgrad
6 https://alison.com/courses/entrepreneurshi
p
Alison
43
13. SUPPORTIVE ONLINE CERTIFICATION COURSES

Case Study 1 : For years, Andrew worked for a national airline as a pilot. When the stress
got to him, he decided to simplify his life. He packed his bags and moved to Key West.
Andrew decided to start his own transportation and touring service for travelers. To
accomplish his goal, he needed to purchase a small commuter plane. He only had one
problem—money. Andrew telephoned his very wealthy uncle in Seattle to see if he would
like a piece of the action. Andrew proposed that he would run the day-to-day activities of
the company, while his uncle would just provide a percentage of the capital. His uncle
agreed, and Andrew contacted an attorney to develop a written agreement
Case Study 2 : As a successful businessperson, Ben wanted to take the next step to
expand his mid-size company internationally. He knew he didn’t have enough capital and
know-how to get into foreign markets. He contacted a former business associate who
owned a garment manufacturing company in Australia. Together, they worked out a deal
that would benefit both of their companies in a relationship that would last no longer than
one year.
Case Study 3 : Tom purchased franchise rights to open a Maggie Moos ice-cream shop.
Since this was his first business ownership venture, he decided to take advantage of the
business proposition that a local merchant offered. The merchant owned a discount store in
the center of town and asked Tom if he would like to open his business in the discount
store. The arrangement proved beneficial to both Tom and the store owner.
Case Study 4 : James owns part of a business. He purchased several hundred shares of
stock in a large, nationally recognized steel company. Several thousand other people own
stock in the company too. Each year, all the shareholders receive a detailed report about
the financial activities of the company.
Case Study 5 : Chip and Charlie own a local pizza shop. The pizza was the talk of the
neighborhood. When customers suggested that they open more stores, Chip and Charlie
were hesitant. They didn’t have the money. Chip and Charlie went ahead with plans to open
another shop across town. To finance the venture, the partners formed a private
corporation and sold shares of stock to friends. They chose a legal arrangement that
allowed them to avoid dual taxation.
14. REALTIME APPLICATIONS –CASE STUDIES IN
OWNERSHIP

15.CONTENT BEYOND SYLLABUS
Large Scale Industries
A business can range from a single proprietor enterprise to a large
corporation which employs thousands of workers across multiple countries. Based on
the scale of business, organizations are classified as micro-enterprises, small-
scale enterprises, large scale industries, public enterprises, and multinational
corporations. In this article, we will take a quick peek at large scale industries.
What are Large Scale Industries?
Industries which requires huge infrastructure and manpower with an influx of
capital assets are Large Scale Industries. In India, large-scale industries are the ones
with a fixed asset of more than one hundred million rupees or Rs. 10 crores.
The Indian economy relies heavily on such industries for economic growth,
generation of foreign currency, and the creation of job opportunities for millions of
Indians.
Here are some advantages of large scale industries:
•They provide an impetus to the industrialization of the country.
•Large scale industries, usually, produce capital and basic goods (instruments,
machines, chemicals, etc.)
•They are capable of generating funds for the research and development of new
technologies.
•Due to the large scale of operations, they have the potential to lower the cost of
goods.
•Further, they create opportunities for small-scale and cottage industries to evolve
and flourish.
•Also, the employment opportunities created by large scale industries are huge.

15.CONTENT BEYOND SYLLABUS
Large Scale Industries in India
The term ‘large-scale’ is generic in nature and includes different types
of industries. In India, the following heavy industries fall under the purview of large
scale industries:
•Iron and Steel Industry
•Textile Industry
•Automobile Manufacturing Industry
•Over the last two decades, Information and Technology (IT) industry has evolved
and has contributed huge revenues while creating thousands of jobs for Indians.
Hence, many economists include it in the large-scale industry sector.
•Telecom Industry
It is important to note that these industries are either manufacturing units or those
which use both indigenous and imported technologies. Here are some more
examples:
Fertilizer , Cement , Natural gas , Coal , Metal extraction , Metal processing ,
Petroleum , Mining , Electrical , Petrochemical , Food processing units , Tourism ,
Banking , Sugar , Construction , Automobile , Communication equipment , Cement ,
Chemicals , Earth movers , Consumer durables (like television, refrigerators, etc.) ,
Engineering products , Vehicle assembly , Beverages , Agricultural processing ,
Insurance and Finance.
In recent years, as the markets opened up due to globalization, there has been a
mixed effect on large-scale industries. There are some who have managed to attract
international customers, foreign trade and technology, tie-ups. However, there are
also others who were unable to cope with the competitiveness ushered in by the
open market.

16. ASSESSMENT SCHEDULE
Unit Test I :
Unit Test II :
Internal Assessment Test I :
Internal Assessment Test II :
Model Examination :

17.PRESCRIBED TEXT BOOKS &REFERENCE BOOKS
TEXT BOOK:
1. Khanka. S.S., “Entrepreneurial Development” S.Chand & Co. Ltd., Ram Nagar,
New Delhi, 2013.
2. Donald F Kuratko, “Entreprenuership – Theory, Process and Practice”,
9th Edition, Cengage Learning, 2014.
REFERENCES:
1. Hisrich R D, Peters M P, “Entrepreneurship” 8th Edition, Tata McGraw-Hill, 2013.
2. Mathew J Manimala, "Enterprenuership theory at cross roads: paradigms and
praxis” 2nd Edition Dream tech, 2005.
3. Rajeev Roy, "Entrepreneurship" 2nd Edition, Oxford University Press, 2011.
4. EDII “Faulty and External Experts –
A Hand Book for New Entrepreneurs Publishers: Entrepreneurship
Development”, Institute of India, Ahmadabad, 1986.

18. MINI PROJECT SUGGESTIONS
1.To Study and Prepare the Ownership Structure of Reliance
India Company.
Course Outcome : CO1
Program Outcome : PO2,PO3,PO4,PO5,PO10,PO11 & PO12
idea etc.
2. Design and suggest a new Solution for any of the existing
product using CAD Tools imparting innovation.
Course Outcome
Program Outcome
: CO1
: PO2,PO3,PO4,PO10,PO11 & PO12

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