EDP Notes

It has always been important for a business to know and understand how it fits in and interacts with the surrounding environment on both an internal (office/factory/shop environment) and external view (how your business operates with the outside world). Researching your environment will benefit you and/or your management team by putting you in a position to develop a strategy for both the long and short term.
Analyzing the Business
The most influential way of doing this is to perform a SWOT analysis of the company. It is a common phrase used to abbreviate Strengths, Weaknesses, Opportunities and Threats. Each term is a heading for a separate analysis of the business but they can be related as seen below: Strengths provide an insight to your business opportunities & weaknesses in your business can cause immediate threats A guideline of how to carry out the analysis is explained in the next section, but it is important to know that the SWOT analysis is only based upon information that is known by the assessors (you), and is seen as perhaps the more basic approach of analyzing a business‟ position: but SWOT is still a powerful tool when looking for immediate benefits.
Performing SWOT

Recognizing the Strengths and Weaknesses before tackling the Opportunities and Threats is the best way to approach the analysis: the more Strengths and Opportunities the better they can both be seen as the bigger influences for the success of your company. You need to be aware that the most important rule is not to leave anything out no matter how small the issue may be. There is no fixed way of doing a SWOT analysis, but it should be done in a way that you feel most comfortable with, and more importantly that you understand it. The objective is to be in a position where you can determine a strategy for the future to improve your company‟s overall performance (or maintain it if you are happy with your final analysis).

Strengths

The Strengths can be considered as anything that is favourable towards the business for example:
1. Currently in a good financial position (few debts, etc)
2. Skilled workforce (little training required)
3. Company name recognized on a National/Regional/Local level
4. Latest machinery installed
5. Own premises (no additional costs for renting)
6. Excellent transport links (ease of access to/from the Company)
7. Little/non-threatening competition

Weaknesses

Recognizing the Weaknesses will require you being honest and realistic. Don‟t leave anything out as this is an important part as to realize what needs to be done to minimize this list in the future. Here are a few examples:
1. Currently in a poor financial position (large debts, etc)
2. Un-Skilled workforce (training required)
3. Company name not recognized on a National/Regional/Local level
4. Machinery not up to date (Inefficient)
5. Rented premises (Adding to costs)
6. Poor location for business needs (Lack of transport links etc)
7. Stock problems (currently holding too much/too little)
8. Too much waste

Opportunities Keeping in mind what you have listed as your Company Strengths, SWOT Analysis can now influence the Opportunities for the business. These can be seen as targets to achieve and exploit in the future for example:

1. Good financial position creating a good reputation for future bank loans and borrowings
2. Skilled workforce means that they can be moved and trained into other areas of the business
3. Competitor going bankrupt (Takeover opportunity?)
4. Broadband technology has been installed in the area (useful for Internet users)
5. Increased spending power in the Local/National economy
6. Moving a product into a new market sector

Threats

The final part of the analysis will also be seen as the most feared- the Threats. It has to be done and therefore taking into account what you have listed as your weaknesses, the threats will now all seem too clear. Examples

1. Large and increasing competition
2. Rising cost of Wages (Basic wage, etc)
3. Possible relocation costs due to poor location currently held
4. Local authority refusing plans for future building expansion
5. Increasing interest rates (increases borrowing repayments, etc)
6. End of season approaching (if you depend on hot weather, etc)
7. Existing product becoming unfashionable or unpopular

Using the Analysis

Once the SWOT analysis is complete, it will then be time to put it all together and look closely to form a strategy. This will involve how you can exploit the Opportunities and how to eliminate or deal with the Threats. This may well depend on your company‟s original objectives and goals but the whole process will certainly give an overall look at the current position of your business. You might argue that you can make a list in your head about the areas that make up your analysis and that no benefit can be derived from a SWOT exercise. Try a quick list with the four areas and identify where one area impacts on another. If you find one instance that is a current issue, you would then have cause to complete the full analysis.
Summary

As previously stated, SWOT analysis is used primarily to evaluate the current position of your business to determine a Management strategy for the future. It should also help you to look at how you may do this by looking closely at your Weaknesses and Threats that you have identified. Great care needs to be taken when planning a strategy not to disturb the balance of your Strengths as you could find that your Strengths suddenly become a Weakness if you don‟t use them. The way that SWOT has been introduced to you is the simplest way that it can be found. It can be used further to analyze your business (depending on its size) on a Local, National and Global level. This is done by splitting up the Strengths, Weaknesses, Opportunities and Threats of your business into the appropriate category (e.g. High Unemployment in the area- Local Threat because of less spending). It cannot be stressed enough that the analysis is carried out fairly and thoroughly. This will then put you in a position to forecast and prepare for the future accurately to give realistic objectives and tasks.

Women empowerment should be one of the primary goals of a society. Women should be
given equality, right of decision-making and entitlements in terms of dignity. They should attain
economic independence. The most important step to achieve women empowerment is to create
awareness among women themselves. Development of women can be achieved through health,
education and economic independence. Realizing the importance of women entrepreneurs, Govt. of
India has taken a number of measures to assist them. Some of the important measures are outlined
as follows:
1) TRYSEM: Training of Rural Youth For Self Employment was launched on 15th August
1979 which is still continuing. The objective of TRYSEM is to provide technical skills to rural
youth between 18 and 35 years of age from families below the poverty line to enable them to take
up self employment in agriculture and allied activities, industries, services and business activities.
This is a sub scheme of IRDP. Training given through ITIs, Polytechnics, Krishi Vigyan Kendra,
Nehru Yuva Kendras etc has helped many rural women set up their own micro entreprises with
IRDP assistance.
2) BANKS: Banks particularly commercial banks have formulated several schemes to
benefit women entrepreneurs. These includes Rural Entrepreneurship Development Programmes
and other Training programmes, promotion of rural non-farm enterprise, women ventures etc.
3) NABARD: NABARD as an apex institution guides and assists commercial banks in
paying special attention to women beneficiaries while financing. It has also been providing
SCHOOL OF DISTANCE EDUCATION
ENTREPRENEURSHIP DEVELOPMENT 22
refinance to commercial banks so as to help the latter institutions to supplement their resources
which could be deployed for the purpose of financing women beneficiaries.
4) INDUSTRIAL POLICY: The new Industrial policy of Government has specially
highlighted the need for conducting special entrepreneurship programme for women.
5) INSTITUTIONS AND VOLUNTARY ASSOCIATION: Several voluntary agencies
like FICCI Ladies Organization (FLO), National Alliance of Young Entrepreneurs (NAYE)
and others assist women entrepreneurs.
NAYE has been a leading institution engaged in the promotion and development of
entrepreneurship among women. It convened a conference of women entrepreneurs in November
1975. It assists the women entrepreneurs in:
(a) Getting better access to capital, infrastructure and markets.
(b) Identifying investment opportunities.
(c) Developing managerial and productive capabilities.
(d) Attending to problems by taking up individual cases with appropriate authorities.
(e) Sponsoring participation in trade fairs, exhibitions, special conference etc.
6) NATIONAL POLICY FOR THE EMPOWERMENT OF WOMEN, 2001: As to the
commitments made by India during the Fourth World Conference on women held in Beijing during
September, 1995, the Department of women and children has drafted a national policy for the
empowerment of women. This is meant to enhance the status of women in all walks of life at par
with men.

The following measures may be taken to solve the problems faced by women entrepreneurs
in India:
1) In banks and public financial institutions, special cells may be opened for providing easy
finance to women entrepreneurs. Finance may be provided at concessional rates of interest.
2) Women entrepreneurs’ should be encouraged and assisted to set up co-operatives with a
view to eliminate middlemen.
3) Scarce and imported raw materials may be made available to women entrepreneurs on
priority basis.
4) Steps may be taken to make family members aware of the potential of girls and their due
role in society.
5) Honest and sincere attempts should be undertaken by the government and social
organizations to increase literacy among females.
6) In rural areas self employment opportunities should be developed for helping women.
7) Marketing facilities for the purpose of buying and selling of both raw and finished goods
should be provided in easy reach.
8) Facilities for training and development must be made available to women entrepreneurs.
Family members do not like women to go to distant place for training. Therefore mobile training
centres should be arranged. Additional facilities like stipend, good hygienic chreches, transport
facilities etc., should be offered to attract more women to training centres

The basic problem of a woman entrepreneur is that she is a woman. Women entrepreneurs
face two sets of problems specific to women entrepreneurs. These are summarized as follows.
1) Shortage of Finance: Women and small entrepreneurs always suffer from inadequate
fixed and working capital. Owing to lack of confidence in women’s ability, male members in the
family do not like to risk their capital in ventures run by women. Banks have also taken negative
attitude while lending to women entrepreneurs. Thus women entrepreneurs rely often on personal
saving and loans from family and friends.

2) Shortage of Raw Material: Women entrepreneurs find it difficult to procure material
and other necessary inputs. The prices of many raw materials are quite high.
3) Inadequate Marketing Facilities: Most of the women entrepreneurs depend on
intermediaries for marketing their products. It is very difficult for the women entrepreneurs to
explore the market and to make their product popular. For women, market is a ‘chakravyuh’.
4) Keen Competition: Women entrepreneurs face tough competition from male
entrepreneurs and also from organized industries. They cannot afford to spend large sums of
advertisement.
5) High Cost of Production: High prices of material, low productivity. Under utilisation of
capacity etc. account for high cost of production. The government assistance and subsidies would
not be sufficient for the survival.
6) Family Responsibilities: Management of family may be more complicated than the
management of the business. Hence she cannot put her full involvement in the business
.Occupational backgrounds of the family and education level of husband has a direct impact on the
development of women entrepreneurship.
7) Low Mobility: One of the biggest handicaps for women entrepreneur is her inability to
travel from one place to another for business purposes. A single women asking for room is looked
upon with suspicion. Sometimes licensing authorities, labour officials and sales tax officials may
harass them.
8) Lack of Education: About 60% of women are still illiterate in India. There exists a
belief that investing in woman’s education is a liability, not an asset. Lack of knowledge and
experience creates further problems in the setting up and operation of business.
9) Low Capacity to Bear Risks: Women lead a protected life dominated by the family
members. She is not economically independent. She may not have confidence to bear the risk
alone. If she cannot bear risks, she can never be an entrepreneur.
10) Social Attitudes: Women do not get equal treatment in a male dominated society.
Wherever she goes, she faces discrimination. The male ego stands in the way of success of women
entrepreneurs. Thus, the rigid social attitudes prevent a woman from becoming a successful
entrepreneur.
11) Low Need for Achievement: Generally, a woman will not have strong need for
achievement. Every women suffers from the painful feeling that she is forced to depend on others
in her life. Her pre-conceived notions about her role in life inhibit achievement and independence.
12) Lack of Training: A women entrepreneur from middle class starts her first
entrepreneurial venture in her late thirties or early forties due to her commitments towards children.
Her biggest problem is the lack of sufficient business training.
13) Lack of Information: Women entrepreneurs sometimes are not aware of technological
developments and other information on subsidies and concessions available to them. They may not
know how to get loans, industrial estates, raw materials etc.

In spite of the initiatives taken by the government, the growth of women entrepreneurship is
very slow in the state. The reasons are outlined as below:

• Unfavourable family background.
• Lack of business education.
• Dual role of women.
• Lack of aptitudes and training.
• Absence of individualistic spirit.
• Lack of freedom to choose a job according to ability, influence of sex, custom etc.
• Inadequate infrastructure facilities.
• Shortage of capital and technical knowhow.
• Lack of adequate transport and communication facilities.
• Shortage of power.
• Lack of security.
• Absence of ideal market conditions.
• Corruption in administration.

According to the general concept, women entrepreneur may be defined as a women or a
group of women who initiate, organize and operate a business enterprise. The Government of India
has defined a women entrepreneurship as “an enterprise owned and controlled by a women having
a minimum financial interest of 51% of the capital and giving at least 51% of the employment
generated in the enterprise to women”. Kerala Government defined women industrial units as units
owned/ organized by women and engages in small scale and cottage industries with not less than
80% of the total workers as women. With effect from 6th Feb. 1992, the definition of ‘Women
Entrepreneurs’ Enterprises is as follows: “A small scale industrial units/industrially related services
or business enterprise managed by one or more women entrepreneurs in proprietary concerns in
which she/they will individually or jointly have share capital of not less than 51% as partners/
shareholders / directors of private limited company, members of co-operative society”.

Women constitute about 50% of the world population. In traditional societies, they are
confined to performing household activities. Hence women are generally called home makers. But
today, in modern society, they have moved out of the house and are taking part in all areas of life.
Today, the entrepreneurial world is open to the womenfolk. Thailand tops the list with 18.5% of
women as entrepreneurs followed by India with 14.1% women entrepreneurs. Japan has the lowest
rate of women entrepreneurs with just 0.6% women as entrepreneurs.

It may be classified into two types:
A) PERSONAL ENTREPRENEURIAL COMPETENCIES: These are required to perform the
tasks effectively and efficiently. This includes the following:
 Initiative: It is an inner urge in an individual to do or initiate something.
 Ability to See and Act on Opportunities: Entrepreneurs look for opportunities and take
action on such opportunities.
 Persistence: It means the capacity or skill to take repeated and different actions to
overcome obstacles.
 Information Seeking: A successful entrepreneur always keeps his eyes and ear open. He
should accept new ideas which can help him in realizing his goals. He is ready to consult
experts for getting their expert advice.
 Concern for High Quality of Work: Entrepreneurial persons act to do things that meet or
beat existing standards of excellence.
 Commitment to Work: Successful entrepreneurs are prepared to make all sacrifices for
completing the commitments they have made.
 Commitment to Efficiency: Entrepreneurial persons have to look and find ways for or find
ways to do things faster or with fewer resources or at a lower cost. They should try new
methods aimed at making work easier, simpler, better and economical.
 Systematic Planning: Entrepreneurial persons should be able to develop and use the logical
step by step plans to reach goals.
 Problem Solving: Entrepreneurial persons are supposed to possess the skill of identifying
new and potentially unique ideas to reach goals. They should generate new ideas or
innovative solutions to solve problems.
 Assertiveness: They assert own competence, reliability or other personal or company’s
qualities. They also assert strong confidence in own company’s products or services.
 Persuasion: Entrepreneurs should have the ability to successfully persue others to perform
the activities effectively and efficiently.
 Use of Influence Strategies: Entrepreneurs should have the competence of using a variety
of strategies to influence others. Such entrepreneurs can develop business contacts and use
influential people to accomplish his/her own objectives.
B) VENTURE INITIATION AND SUCCESS COMPETENCIES:
An entrepreneur must also posses the competencies required for launching the enterprise and for its
survival and growth. These competencies may be further divided into two categories of
competencies:
1. ENTERPRISE LAUNCHES COMPETENCIES: These include the following:
 Competency to understand the nature of business.
 Competency to comply with Government regulations.
 Competency to deal with the business.
 Competency to finance the business.
 Competency to locate the business.
 Competency to plan the marketing strategy.
 Competency to choose the type of ownership.
 Competency to obtain technical assistance.
 Competency to develop a business plan.
 Competency to determine the potential as an entrepreneur.
2. ENTERPRISE MANAGEMENT COMPETENCIES: These include the following:
 Competency to protect the business.
 Competency to manage customer credit and collection.
 Competency to manage the finances.
 Competency to manage the business records.
 Competency to manage sales efforts.
 Competency to promote the products and services of the business.
 Competency to manage human resources.
 Competency to manage the business.

Competency is a characteristic of a person, which results in effective and/or superior performance
in a job. It is a combination of knowledge, skills and appropriate motives or traits that an individual
must possess to perform a given task.
MEANING OF ENTREPRENEURIAL COMPETENCIES
It is defined as characteristics such as generic and special knowledge, motives, traits, selfimage,
social roles and skills which result in birth of a venture, its survival and/ or growth. In short,
the competencies required by an entrepreneur for starting a business venture and carrying it on
successfully are known as entrepreneurial competencies

Entrepreneur is a lead player in the drama of business. According to Kilbt, an entrepreneur has to
perform four groups of functions:
EXCHANGE RELATIONSHIP:
1) Perceiving market opportunities
2) Gaining command over scare resources.
3) Purchasing inputs.
4) Marketing of the products and responding to competition.
POLITICAL ADMINISTRATION:
1) Dealing with public bureaucracy (concession, licences and taxes)
2) Managing the human relation within the firm.
3) Managing customer and supplier relations.
MANAGEMENT CONTROL:
1) Managing finance.
2) Managing production.
TECHNOLOGY:
1) Acquiring and overseeing assembly of the factory.
2) Industrial engineering.
3) Upgrading process and product quality.
4) Introducing new products.
According to Arther H. Cole, an entrepreneur performs the following functions:
1) Determining the objectives of the enterprise and revising the objectives in the light of
changed circumstances.
2) Developing an organization including efficient relations with subordinates and all
employees.
3) Securing adequate finance.
4) The requisition of efficient technological equipment.
5) Developing a market for the products and devising new products to meet customers
demand.
6) Maintaining good relations with public authorities and with society.

Now-a-days, new products and services are conceived, create, tested, produced and
marketed very quickly and with great speed. Therefore, today’s entrepreneur needs to have a
different mindset about establishing and operating a business. This mindset is called
ULTRAPRENEURING. An entrepreneur with this mind set is known as Ultrapreneur. The
concept of Ultrapreneuring is to identify a business opportunity, determine its viability and form a
company. It requires assembling a super competent management team, who then develop, produce
and markets the product or service in the shortest optimum time period. They create business and
then sell out, merge or combine.

The term intrapreneur was coined in USA in the late seventies. Many senior executives of
big companies in America left their jobs and started small business of their own. They left the
organisation because they did not get any opportunity to apply their own ideas and innovative
ability. These entrepreneurs become successful in their own ventures. Some of them caused a threat
to the corporations they left. This type if entrepreneurs have come to be called Intrapreneurs. They
believe strongly in their own talents. They have desire to create something of their own. They want
responsibility and have a strong drive for individual expression and more freedom in their present organisational structure. When this freedom is not forthcoming, they become less productive or
even leave the organisation to achieve self actualisation elsewhere.

Copreneurs are entrepreneurial couples who work together as co-owners of their business.
They are creating a division of labour that is based on expertise as opposed to gender studies show
that companies co-owned by spouses represent one of the fastest growing business sectors. Marcia
Sherrill with her husband William Kleinberg (USA) runs Kleinberg Sherrills, a leather goods and
accessories business. She says, “There is nothing more exciting than nurturing a business and
watching it grow with someone you love.”

Entrepreneurs may be classified in a number of ways.
A. ON THE BASIS OF TYPE OF BUSINESS.
Entrepreneurs are classified into different types. They are
1) Business Entrepreneur: He is an individual who discovers an idea to start a business
and then builds a business to give birth to his idea.
2).Trading Entrepreneur: He is an entrepreneur who undertakes trading activity i.e;
buying and selling manufactured goods.
3) Industrial Entrepreneur: He is an entrepreneur who undertakes manufacturing
activities.
4) Corporate Entrepreneur: He is a person who demonstrates his innovative skill in
organizing and managing a corporate undertaking.
5) Agricultural Entrepreneur: They are entrepreneurs who undertake agricultural
activities such as raising and marketing of crops, fertilizers and other imputs of agriculture. They
are called agripreneurs.
B. ON THE BASIS OF USE OF TECHNOLOGY: Entrepreneurs are of the following types.
1) Technical Entrepreneur: They are extremely task oriented. They are of craftsman type.
They develop new and improved quality goods because of their craftmanship. They concentrate
more on production than on marketing.

2) Non-Technical Entrepreneur: These entrepreneurs are not concerned with the technical
aspects of the product. They develop marketing techniques and distribution strategies to promote
their business. Thus they concentrate more on marketing aspects.
3) Professional Entrepreneur: He is an entrepreneur who starts a business unit but does
not carry on the business for long period. He sells out the running business and starts another
venture.
C. ON THE BASIS OF MOTIVATION:
Entrepreneurs are of the following types:
1) Pure Entrepreneur: They believe in their own performance while undertaking business
activities. They undertake business ventures for their personal satisfaction, status and ego. They are
guided by the motive of profit. For example, Dhirubhai Ambani of Reliance Group.
2) Induced Entrepreneur: He is induced to take up an entrepreneurial activity with a view to avail
some benefits from the government. These benefits are in the form of assistance, incentives,
subsidies, concessions and infrastructures.
3) Motivated Entrepreneur: These entrepreneurs are motivated by the desire to make use of their
technical and professional expertise and skills. They are motivated by the desire for self-fulfillment.
4) Spontaneous Entrepreneur: They are motivated by their desire for self-employment and to
achieve or prove their excellence in job performance. They are natural entrepreneurs.
D. ON THE BASIS OF STAGES OF DEVELOPMENT: They may be classified into;
1) First Generation Entrepreneur: He is one who starts an industrial unit by means of his own
innovative ideas and skills. He is essentially an innovator. He is also called new entrepreneur.
2) Modern Entrepreneur: He is an entrepreneur who undertakes those ventures which suit the
modern marketing needs.
3) Classical Entrepreneur: He is one who develops a self supporting venture for the satisfaction of
customers’ needs. He is a stereo type or traditional entrepreneur.
E. CLASSIFICATION ON THE BASIS OF ENTREPRENEURIAL ACTIVITY: They are
classified as follows:
1) Novice: A novice is someone who has started his/her first entrepreneurial venture.
2) Serial Entrepreneur: A serial entrepreneur is someone who is devoted to one venture at
a time but ultimately starts many. He repeatedly starts businesses and grows them to a sustainable
size and then sells them off.
3) Portfolio Entrepreneurs: A portfolio entrepreneur starts and runs a number of
businesses at the same time. It may be a strategy of spreading risk or it may be that the entrepreneur
is simultaneously excited by a variety of opportunities.
F. CLASSIFICATION BY CLARENCE DANHOF: Clarence Danhof, On the basis of American
agriculture, classified entrepreneurs in the following categories:
1) Innovative Entrepreneurs: They are generally aggressive on experimentation and
cleverly put attractive possibilities into practice. An innovative entrepreneur, introduces new goods,
inaugurates new methods of production, discovers new markets and reorganizes the enterprise.
Innovative entrepreneurs bring about a transformation in lifestyle and are always interested in
introducing innovations.
2) Adoptive Or Imitative Entrepreneurs: Imitative entrepreneurs do not innovate the
changes themselves, they only imitate techniques and technology innovated by others. They copy
and learn from the innovating entrepreneurs. While innovating entrepreneurs are creative, imitative
entrepreneurs are adoptive.
3) Fabian Entrepreneurs: These entrepreneurs are traditionally bounded. They would be
cautious. They neither introduce new changes nor adopt new methods innovated by others
entrepreneurs. They are shy and lazy. They try to follow the footsteps of their predecessors. They
follow old customs, traditions, sentiments etc. They take up new projects only when it is necessary
to do so.
4) Drone Entrepreneurs: Drone entrepreneurs are those who refuse to adopt and use
opportunities to make changes in production. They would not change the method of production
already introduced. They follow the traditional method of production. They may even suffer losses
but they are not ready to make changes in their existing production methods.
There is another classification of entrepreneurs. According to this, entrepreneurs may be
broadly classified into commercial entrepreneurs and social entrepreneurs.
Commercial Entrepreneurs: They are those entrepreneurs who start business enterprises for their
personal gain. They undertake business ventures for the purpose of generating sales and profits.
Most of the entrepreneurs belong to this category.
Social Entrepreneurs: They are those who identify, evaluate and exploit opportunities that create
social values and not personal wealth. Social values refer to the basic long standing needs of
society. They focus on the disadvantaged sections of the society. They play the role of change
agents in the society. In short, social entrepreneurs are those who start ventures not for making
profits but for providing social welfare.

It is the psychological need to achieve. It provides drive to the entrepreneur
to set up a new venture, to achieve targets, to sense problems and opportunity, to take much risk so
as to run the business successfully. It is nothing but a person’s desire either for excellence or to
succeed in competitive situation. Thus achievement motivation means a drive to overcome
challenges in reaching higher goals. It is a strong desire to achieve a higher goal and make dreams
come true. In short it is the strong desire to win

In order to organize and run it successfully, the entrepreneur must possess some qualities and traits.
They are as following:
1) Willingness to Make Sacrifices and Assume Risks: - A new venture is full of
difficulties and unanticipated problems. In such an inhospitable environment entrepreneur has to be
prepared to sacrifice his time, energy and resources in order to carry out the venture and make it
success.
2) Hard Work: - Willingness to work hard distinguishes a successful entrepreneur from an
unsuccessful one. For example, Assim Premji (chairman of Wipro) works in his office fourteen
hours every day. He is a successful entrepreneur. He is one of the richest persons in India.
3) Optimism: - Successful entrepreneurs are not worried by the present problems that they
face. They are optimistic about the future. This enhances their confidence and drives them towards
success. Some of the world’s greatest entrepreneurs failed before they finally succeeded.

4) Self Confidence: - This is the greatest asset of a successful entrepreneur. He must have
the confidence to make choices alone and bounce back when he fails.
5) Leadership: - Successful entrepreneur generally has strong leadership qualities. He
should be a good judge of human nature and a good leader. He must be able to select, train and
develop persons who can properly manage and control the labour force. McClelland identified two
main characteristics in an entrepreneur- (1) Doing things in a new and better manner. (2) Decision
making under uncertainty. A successful entrepreneur must be capable and well-informed, a
successful leader of men, a keen judge of things, courageous and prudent. Above all he must be
gifted with a large measure of practical common sense. There are not many Fords, Tatas, Birlas,
Thapars and Ambanis in the world. Entrepreneurship is not limited to any class, community or
religion. There is no age bar, for any person who possesses certain behavioural traits and attitudes
can work to become an entrepreneur.

There are large number of varied factors which contribute to the growth of entrepreneurship. These
factors can be broadly classified into five.
 PSYCHOLOGICAL FACTORS: - Inspiration for achievement prepares an entrepreneur to
set higher goals and achieve them. The important psychological factors influencing
entrepreneurial growth may be outlined as below:
(A) Need for Achievement: - Need for achievement means the drive to achieve a goal. People
having need for achievement will be so much self – confident that they do not believe in mere
luck. If an individual has need for achievement, he will become a successful entrepreneur.
(B) Personal Motives: - These have been found to be one of the crucial factors responsible for
entrepreneurship amongst individuals. Bill Gates dreamt that one day he would become the richest
person. His dream became a reality later.

(C) Recognition: - Many people become successful entrepreneurs just for getting recognition
from others.
(D) Need of Authority: - ‘Need of authority’ will inspire men to work. When they become
entrepreneurs, they can exercise authority over managers, employees etc.
 CULTURAL FACTORS: - Culture consists of (1) Tangible man – made objects like furniture,
buildings etc.., (2). Intangible concepts like Laws, morals, knowledge etc.., (3) Values and
behaviour acceptable within the society. The important cultural factors influencing
entrepreneurial growth are briefly explained as follows:
(A) Culture: - Culture is closely related with accepted values and human behaviour. For e.g.
some societies have customs of polygamy and some have not.
(B) Religious Belief: - According to Max Weber, entrepreneurism is a function of religious belief
and the impact of religion shapes the entrepreneurial culture. He emphasized that the
entrepreneurial energies are exogenous supplied by means of religious belief.
(C) Minority Groups: - Hoselitz explained that the supply of entrepreneurship is governed by
cultural factors, and culturally minority groups are the spark plugs of entrepreneurial and
economic development. Minority groups like the Jews and Greeks in Medieval Europe, the
Lebanese in West Africa, the Indians in East Africa has important roles in promoting economic
development.
(D) Spirit of Capitalism: - It guides the entrepreneur to engage in activities that can bring more
and more profits. The profit motive character coupled with the attitude towards acquisition of
money urges the individual to start new venture.
 SOCIAL FACTORS: - What mould a man into an entrepreneur is the sociological and
environmental factors during childhood, and at the school, personal experience in adult life at
the college and job environments, the mobility, occupation and support from parents. The
social factors include:
(A) Legitimacy of Entrepreneurship: - System of norms and values within a socio – cultural
setting is responsible for the emergence of entrepreneurship. The degree of approval or
disapproval granted to entrepreneurial behaviour will influence its emergence and its
characteristics if it does emerge.
(B) Social Marginality: - Individuals or groups on the perimeter of a given social system or
between two social systems provide the personnel to assume the entrepreneurial roles. Social
marginality is likely to promote entrepreneurship are largely determined by two factors, namely
the legitimacy of entrepreneurship and social mobility.
(C) Family, Role Models and Association with Similar Type of Individuals: - If an individual
has a supportive family, he or she is more likely to become an entrepreneur. Similarly, if an
individual has role models who have been successful in entrepreneurship, certainly, he may be
motivated to start ventures. If a person is in association with entrepreneurs, this may add to his or
her desire of setting up a new venture. Reliance, Tata, Birla etc. are the industries depend upon
family based inheritance. Roberts (1991) has developed the idea of the ‘entrepreneurial heritage ‘
to describe the importance of the family background for the entrepreneur. This heritage includesfactors such as the father’s occupation, the family work ethic and religion, family size and the first
born son, growing up experience and so on.
(D) Caste System: - Certain religions and caste encourage the growth of entrepreneurial talent.
Some religious communities like the parsees, marwaris and sindhees seem to have an affinity for
entrepreneurial activity. The caste system in Hindu society has promoted to the growth of business
and professional skills.
(E) Occupation :- Those born in rich families with silver spoons in their mouth have not only an
advantage of having financial resources for carrying out business but also learn the business skill
by continuous interaction and contacts with parents, customers, employees and visitors in family
shops, offices and homes.
(F) Education and Technical Qualifications: - Education is the best means of developing man’s
resourcefulness which encompasses different dimensions of entrepreneurship. It may be expected
that the high level of education may enable the entrepreneurs to exercise their entrepreneurial
talent more efficiently and effectively.
(G) Social Status: - Every human being aspires for a high social status and once he achieves a
reasonable level, his aspirations and desires for its start getting multiplied. People work hard to
maintain their status as it also contributes to their entrepreneurial growth.
(H) Social Responsibility: - It is the obligation to the society in which the business enterprise
operates. An entrepreneur generates employment for others besides helping himself.
 ECONOMIC FACTORS: - Economic factors also influence the growth of entrepreneurship.
The important economic factors are:
(A)Infrastructural Facilities: - Entrepreneurship development requires certain basic
infrastructure like power, transportation, communication, technical information etc. These provide
external economies and improve the efficiency of investments by entrepreneurs. These
infrastructural facilities are scarce in less developed countries. The entrepreneurs themselves have
to procure these facilities at their own cost. They have to obtain these facilities at higher costs.
This will greatly discourage the entrepreneurship development. In advanced countries, those who
are desirous of starting an enterprise will find no difficulty in procuring the infrastructural
facilities at reasonable costs.
(B) Financial Resources: - Finance is the life blood of business activity. Capital is required to
obtain materials, machinery, equipment, etc. and to undertake innovation. Capital is regarded as
lubricant to the process of production. The lack of financial resources discourages the youth and
potential entrepreneurs to start new ventures. Hence, the need for fixed and working capital should
be adequately met if new entrepreneurs are to come forward and grow.
(C) Availability of Material and Know – How: - Entrepreneurship is encouraged only if there is
an adequate supply of materials and know-how. Easy availability of materials attracts more
individuals towards entrepreneurship. Technical know-how is essential for innovation. With
technical knowledge, men discover more and sophisticated techniques of production.
(D) Labour Conditions: - The quality rather than quantity of labour is another factor which
influences the emergence and growth of entrepreneurship. The availability of cheep labour
positively affects entrepreneurship. Labour problem can be solved not by capital intensive
technologies but by increasing their mobility, by offering them facilities, incentives and
concessions in every remote corner of the country.

(E) Market: - The size and composition of market influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market.
(F) Support System: - Ability, initiative and support systems include financial and commercial
institutions, research, training, consultancy services, ancillary industry etc.
(G) Government Policy: - The socio- political and economic policies of the government inhibit or
foster entrepreneurial growth. Land and factory sheds at concessional rates, adequate sources of
power, supply of materials and other physical facilities should be provided by the government to
facilitate the setting up of new enterprises. The government has a dominant role to play in the
industrial development of backward regions with a view to attain a balanced regional
development.
 PERSONALITY FACTORS: - The supply of entrepreneurship in a society is largely
influenced by the presence of individuals with the initiativeness, foresightedness and organizing
and managerial competence. The following personality factors contribute to the entrepreneurial
development:
(A). Personality: - The entrepreneurial personality comprises of the person, his skills, styles and
motives. Impressive personality and individual skill help to develop entrepreneurship. These
qualities are required for entrepreneurs because they have to work with officers, managers,
engineers, labourers, customers, investors, govt. officers, ministers etc.
(B). Independence:-Another personality factors which influences entrepreneurship is
independence. An entrepreneur works out plans on his own, searches and explores resources and
experiences and uses inner urge to make the enterprise a success instead of waiting for
suggestions or directions from others.
(C). Compulsion: - Certain compelling reasons also force the people to become entrepreneurs.
These include: (a) unemployment or dissatisfaction with existing job or occupation, (b) to use
technical or professional knowledge and skills, (c) to put the idle funds to use. A large number of
technically qualified people after gaining initial experience and confidence and not being satisfied
by their growth in the profession have a compulsive reason to try entrepreneurship

Kerala is industrially backward. There are many reasons for this condition. One of the
important reasons is lack of an entrepreneurial class. The trade and the commerce of the state were
originally in the hands of outsiders who migrated to Kerala for business purposes. Later on
Christians and Muslims entered the field of business. Majority of the people of Kerala show no
interest in trade and commerce. Everybody wants a white-collar job. Further adequate funds are not
being channelized into entrepreneurial activities. A considerable portion of capital is being utilized
for non-productive purposes. For example, people spend much of their savings in constructing
houses. This tendency is very prominent in Malabar. People working in Middle East are interested
in acquiring landed property and Gold with their savings.
Another cause for the state’s poor entrepreneurship is the large amount of capital is flowing
out of state. For instance, LIC collects huge funds from within the state, but utilizes only a very
little portion for the state’s development.

Entrepreneurial development is very slow in under developed and developing countries.
This is due to the presence of several factors. Gunnar Myrdal pointed out that Asian societies lack
entrepreneurship not because they lack money or raw material but because of their attitudes. These
barriers to entrepreneurship are classified into three as follows:
A. ENVIRONMENTAL BARRIERS
Following are the important environmental barriers to entrepreneurship:
1) Non-Availability of Raw Material: - Non-availability of raw materials especially during peak
season is one of the obstacles inhibiting entrepreneurship. This leads to competition for raw
material.
2) Lack of Skilled Labour: - This is the most important resource in any organization.
Unfortunately, desired manpower may not be available in an organization. This is either due to the
lack of skilled labour or due to lack of committed or loyal employees in the organization.
3) Lack of Good Machinery: - Good machines are required for the production of goods, because
of rapid technological developments, machines become obsolete very soon. Small entrepreneurs
find it difficult to get large amount of cash for installing modern machinery.
4) Lack of Infrastructure: - Lack of infrastructure facilities is a major barrier to the growth of
entrepreneurship particularly in under developed and developing economies. The infrastructural
facilities include land and building, adequate and cheap power, proper transportation, water and
drainage facilities etc.
5) Lack of Fund: - There are various methods by which an entrepreneur arranges for funds, e.g.,
own savings, borrowings from friends and relatives, banks and other financial institutions. Many
people do not enter into entrepreneurial activities because of lack of funds.
6) Other Environmental Barriers: - Lack of business education, Lack of motivation from
government, corruption in administration, high cost of production etc. are the other environmental
barriers that inhibit the growth of entrepreneurship in underdeveloped countries.
B PERSONAL BARRIERS
Personal barrier are those barriers that are caused by emotional blocks of an individual. Some
of the personal barriers may be outlined as below:
1) Unwillingness to Invest Money: - Even though people have money, still they do not
come in entrepreneurship. They are not willing to take the risk of investing money in business.
2) Lack of Confidence: - Many people thing that they lack what it takes to become an
entrepreneur. They feel that they could not master all the skills. Thus most people are reluctant to
become entrepreneurs.
3) Lack of Motivation: - When an individual starts a new venture, he is filled with
enthusiasm and drive to achieve success. But when he faces the challenges of real business or bears
loss, or his ideas don’t work, he loses interest or motivation.

4) Lack of Patience: - The desire to achieve success in the first attempt or to become rich
very soon is the prime motivating factor of modern youth. When such dreams do not come true ,
they lose interest. This gradually drives to fail in business.
5) Inability to Dream: - Entrepreneurs, who are short on vision or become satisfied with
what they achieve, sometimes lose interest in further expansion/growth of business.
C SOCIAL BARRIERS
The social attitude inhibits many people even from thinking of starting a business. The
important social barriers are as follows.
1) Low Status: - The society things that entrepreneurs are the people who exploit the
society. Thus the attitude of the society towards entrepreneurs is not positive.
2) Custom and Tradition of People: - Most people want a real job. Even parents who are
entrepreneurs wouldn’t like their children to be entrepreneurs. Thus lack of support from society
and family hinder the growth of entrepreneurs.

Entrepreneurship involves the following types of risks.
1) FINANCIAL RISK: The entrepreneurship has to invest money in the enterprise on the
expectation of getting in return sufficient profits along with the investment. He may get attractive
income or he may get only limited income. Sometimes he may incur losses.
2) PERSONAL RISK: Starting a new venture uses much of the entrepreneur’s energy and
time .He or she has to sacrifice the pleasures attached to family and social life.
3) CARRIER RISK: This risk may be caused by a number of reasons such as leaving a
successful career to start a new business or the potential of failure causing damage to professional
reputation.

4) PSYCHOLOGICAL RISK: Psychological risk is the mental agonies an entrepreneur
bears while organizing and running a business venturesome entrepreneurs who have suffered
financial catastrophes have been unable to bounce back.