7/31/2019 EM Chapter 1 Mcom
1/66
Entrepreneurial
Management
The EntrepreneurialPerspective
7/31/2019 EM Chapter 1 Mcom
2/66
Entrepreneur
Enterprendre French word- to undertake
One who innovates, raises money, assembles
inputs, chooses managers, sets organisation,with ability to identify them.
Visionary and intergrated peroson with
outstanding leadership qualities
Desire to excel
Priority to R&D
7/31/2019 EM Chapter 1 Mcom
3/66
Who is Entrepreneur
A person who has possession of new enterpriseventure or idea,
Assumes significant accountability for theinherent risks and outcomes.
Ambitious leader who combines land, labour &capital to often create & market new goods or
services Undertakes an enterprise especially,
intermediary between capital & labour.
7/31/2019 EM Chapter 1 Mcom
4/66
Term Entrepreneur
1. Small industrialists
2. Small business
3. Traders
4. Industrialists
Engaged in Manufacturing
Distribution
Service Founder-creator
Risk-taker
7/31/2019 EM Chapter 1 Mcom
5/66
Characteristics of Entrepreneur
Hard-work
Desire for high achievement
Highly optimistic
Independence
Foresight Good organiser
Innovative
Mental ability
Clear objectives
Business secrecy
Human relations abilityemotional stability,personal relationship, consideration, tactfulness
Communication ability
Technical knowledge
Motivator
Self-confidence
Long-term involvement High energy level.
Administrative ability
Organisational skills
Intelligence
Creativity
Persistent problem- solver Goal setter
Moderate risk taker
7/31/2019 EM Chapter 1 Mcom
6/66
Functions of an Entrepreneur
Idea generation & scanning of suitable idea
Determination of business objective
Product analysis & market research
Determination of form of ownership
Completion of promotional formalities
Raising necessary funds
Procuring machine and material Recruitment of men
Undertaking business organisation
7/31/2019 EM Chapter 1 Mcom
7/66
New concept of Entrepreneur
Perceives opportunities for profitableinvestments.
Explores prospects of starting manufacturing
enterprise. Obtains industrial licenses
Arranges initial capital
Provides personal guarantees to financial
institutions Meets shortfall of capital
Supplies technical know-how
7/31/2019 EM Chapter 1 Mcom
8/66
Indian Entrepreneur
Jamsetji Tata
Jamnalal Bajaj
Laxmanrao Kirloskar
Ghanshyamdas Birla
Visionaries, builders, thinkers, scientists
7/31/2019 EM Chapter 1 Mcom
9/66
Types of Entrepreneurs Innovative Entrepreneurs
New goods, new method of production, discovers new markets, reorgaises enterprise
Imitative Entrepreneurs Adopt innovations by innovating entrepreneurs.
Fabian entrepreneurs imitates only when, failure to do so will result in loss of relative position in enterprise
Drone Enterprise Refuse to adopt different opportunities or changes
Solo operators Work alone
Active partners Enterprise as joint venture
Inventors Interest in research & innovative activities
Challengers Enter because of challenges present in market
Buyers Buy ongoing ones
Lifetimes Family enterprise, business
7/31/2019 EM Chapter 1 Mcom
10/66
Key Element for Entrepreneurship
1. Innovation
2. Risk-taking
3. Vision
4. Organising skill Inter-related
Continuous process in business
Pursuit for operational excellence
Innovative technology Being responsive to market place
7/31/2019 EM Chapter 1 Mcom
11/66
Entrepreneurial Behaviour
Grasping opportunity
Take initiative
Solve problems creatively Managing autonomously
Responsibility & ownership
Seeing things through
Judgement to take calculated risk
Manage interdependence
7/31/2019 EM Chapter 1 Mcom
12/66
Entrepreneurial Attributes
Achievement Orientation & ambition
Self confidence & self esteem
PerseveranceAction orientation
Hard-working
Determination creativity
7/31/2019 EM Chapter 1 Mcom
13/66
Entrepreneurial Skills
Problem solving
Persuading
Negotiating Selling
Strategic thinking
Intuitive decision-making under uncertainty networking
7/31/2019 EM Chapter 1 Mcom
14/66
Intrapreneur
An Emerging groups of persons left bigcorporations & started their own small businessin America either because their ideas were notaccepted by their top bosses or because ideaswere innovative enough to offer ample scope ofmaking profit.These persons turned toentrepreneurs & achieved great success in their
new ventures. These entrepreneurs came to beknown as intrepreneur.
7/31/2019 EM Chapter 1 Mcom
15/66
Entrepreneur/Intrapreneur Independent
Raises funds on his own initiative
Takes profits of the business
Bears the full risk of business
Real owner of business
Operates from outside theorganisation
Converts the ideas of Intrapreneurinto viable opportunities
Semi-independent- on the owner
Depends upon the industry inwhich he works for gettingfinance
Does not take profit out ofinnovations but he can be
provided with a variety ofperquisite for their innovations
Bears the risk of the businesswhich is small part of the entirebusiness
Not the real owner of thebusiness, rather he works for thebusiness
Operates within the organisation
Takes responsibility of creatinginnovation of any kind from withinthe organisation
7/31/2019 EM Chapter 1 Mcom
16/66
Entrepreneurship
Is a process undertaken to augment hisbusiness interest
Is a composite skill, the resultant of a mix ofmany qualities and traits, include tangible factorsas imagination, readiness to take risk and bringtogether and put to use other factors ofproduction, capital, land, labour as alsointangible factors & to mobilise scientific andtechnological advances.
7/31/2019 EM Chapter 1 Mcom
17/66
Concept
Entrepreneur
Person
Entrepreneurship
Process of action
Enterprise
object
7/31/2019 EM Chapter 1 Mcom
18/66
Entrepreneurial Process
Leadership function which centres around dynamics ofentrepreneurial growth and change.
Stages
1. Change in socio economic environment leading tochanges in aspect of life creating needs for newgoods and services.
2. Starting new venture
3. Intrapreneurship extend entreprises through new
combination and exploiting new opportunities.4. Coordinating various activities to achieve
entrepreneurial goal.
7/31/2019 EM Chapter 1 Mcom
19/66
Entrepreneurial structure
Structure represents formal, official taskrelationship of people in entrepreneurialactivities.
Entrepreneurial activities policies,programmes, practices & measurement forinnovation & growth.
Planning, directing, controlling, marketing,leading, motivating , channelising activities
Entrepreneurial goal.
7/31/2019 EM Chapter 1 Mcom
20/66
Relationship
entrepreneur/entrepreneurship Person
Organiser
Innovator
Risk-bearer
Motivator Creator
Visualiser
Leader
Initiator
Technician
Decision maker Planner
administrator
Process
Organisation
Innovation
Risk-bearing
Motivation Creation
Vision
Leadership
initiative
Technology
Decision Planning
administration
7/31/2019 EM Chapter 1 Mcom
21/66
Entrepreneur/Manager
Motive to start venture
Status owner ofenterprise
Risk-bearing assumesall risks and uncertainty
Rewards profits
Innovations
Qualifications high
achievement motive,originality thinking,foresight, risk-bearing..
Motive is to renderservice
Service of enterprise
Does not bear any risk Salary certain and fixed
Only executes the plans.
Distinct qualifications-management theory &
practice
7/31/2019 EM Chapter 1 Mcom
22/66
Entrepreneurs + factors of
environment Socio-economic environment
Family background
Standard of education and technical knowledge Financial stability
Political stability and government policy
Caste and religious affiliation
Personality and personal skill
Achievement motivation
7/31/2019 EM Chapter 1 Mcom
23/66
7/31/2019 EM Chapter 1 Mcom
24/66
Entrepreneurship - economic
development Promotes capital formation by mobilising idle saving
Large scale employment reduce unemployment (majorsocio-economic problem)
Balanced regional development Reduce the concentration of economic power
Effective resource mobilisation of capital and skill
Induces backward and forward linkages stimulatesprocess of economic development
Promotes country export An economy is the effect for which enterpreneurship is
the cause
7/31/2019 EM Chapter 1 Mcom
25/66
Characteristic of an ideal
entrepreneur Creativity
Innovation
Dynamism
Leadership
Team building
Achievement, motivation
Problem solving Goal orientation
Risk taking & decision making ability.
7/31/2019 EM Chapter 1 Mcom
26/66
Entrepreneurial skills
Technical skills
Behavioural skills
Conceptual skills
Economic business skills
Evaluating skills
Implementing skills
7/31/2019 EM Chapter 1 Mcom
27/66
Characteristics of intrapreneurial
environment Innovative ideas
Encourage experimentation
Initial opportunity parameter
Availability of resources Encourage team work
Evaluation
No force
Reward Alteration
Support of top management
7/31/2019 EM Chapter 1 Mcom
28/66
Intrapreneurial Qualities
Innovator
Visionary
Knowledgeable Flexibility
Encourage team work
Diplomatic
Open to discussion & idea
motivator
7/31/2019 EM Chapter 1 Mcom
29/66
Intrapreneurs characteristics
Self motivated
Self-confident & courageous
Freedom
Education
Systems
7/31/2019 EM Chapter 1 Mcom
30/66
Classification of Intrapreneur
Innovating, marketing, technical ,
manufacturing, financial service
7/31/2019 EM Chapter 1 Mcom
31/66
Nature & importance of
entrepreneurs For growth, on going basis
Rapid growth of employment & incomes
7/31/2019 EM Chapter 1 Mcom
32/66
Analysis of nature & importance of
entrepreneurs Entrepreneurial qualities innate
Enhanced by training, experience
Indispensable quality imagination Foresight
Delegation skill & organizational skills
7/31/2019 EM Chapter 1 Mcom
33/66
Entrepreneurial Functions
Product Development & organisation
structure
Carries activities of businessNew ideas, demand & exploit opportunities
Recognises commercial potential of
product or service, design operatingpolicies in marketing, production
7/31/2019 EM Chapter 1 Mcom
34/66
functions
1. Assumption of risk Assumes all risk of business problems
Taste of consumers, new inventions in market.
Reduce them by initiative, skill, good judgement
2. Business decision nature /type of business decide
Best prospects & produce..
3. Managerial functions Formulates production plan
Finance
Purchase of RM
Production facilities Sales management
Performs entrepreneurial function but different from managerial function.
7/31/2019 EM Chapter 1 Mcom
35/66
Decision Maker
Develop of organisation, relation withemployees/subordinates
Adequate financial resources
Good relation with existing & potential investors Determination of objective & if any changes
required
Use of efficient technological equipment
Develop market for products Good relation with public authorities & society
7/31/2019 EM Chapter 1 Mcom
36/66
Entrepreneurial decision
Despite recession, inflation, high rate of
interest, lack of infrastructure, economic
uncertainity etc. Stimulation for change comes from
negative force- disruption
7/31/2019 EM Chapter 1 Mcom
37/66
Women Entrepreneurs
US 25% of the business
1/3 in canada
1/5 France
7/31/2019 EM Chapter 1 Mcom
38/66
Women Entrepreneur
Retail trade, restaurants, hotel, education,
cultural, cleaning, insurance &
manufacturing.
7/31/2019 EM Chapter 1 Mcom
39/66
Leadership qualities
Accept challenges
Ambitious
Drive
Enthusiastic
Hardwork
Patience
Industrious Motivator
skilful
Unquenchable optimisim
Adventurous
Conscious
Determination to excel
Keenness to learn
Experienced
Intelligent Perseverance
studious
7/31/2019 EM Chapter 1 Mcom
40/66
importance
Generating employment in unorganised
sectors
Status of women
7/31/2019 EM Chapter 1 Mcom
41/66
Function & role of women
entrepreneur Prospectus of starting a new enterprise
New innovations or invitation of successful
one.
Undertaking risks & handling of economic
& non economic uncertainties
Co-ordination, administration & control
Supervision & provide leadership.
7/31/2019 EM Chapter 1 Mcom
42/66
Development of women
entrepreneurnew industrial policy
Product and process oriented courses.
Upliftment of status in economic and social
field.
Providing of credit facility with concession
terms and on priority basis.
7/31/2019 EM Chapter 1 Mcom
43/66
Common features of women
entrepreneurs in india Majority are married
Unmarried women face financial difficuties
Low income group
Small families women Lack vocational training
Economic necessity
Gender discrmination
Prefer diversification to specialisation
Security oriented > growth oriented
Stabilisation of income & minimisation of risk maximisation of
income
7/31/2019 EM Chapter 1 Mcom
44/66
Problems faced
Family responsibilities
Social attitude
Low mobility
High cost of production
Lack of education
Low need for achievement
Shortage of finance Inefficient arrangement for marketing and data
Shortage of raw materials
Stiff competition
7/31/2019 EM Chapter 1 Mcom
45/66
WOMEN ENTREPRENEURSHIP
DEFINED Definition
An enterprise owned and controlled by a women having a minimumfinancial interest of 51 per cent of the capital and giving at least 51per cent of the employment generated by the enterprise to women,
Government of India
A woman entrepreneur can be defined as a confident, innovative andcreative woman capable of achieving self economic independenceindividually or in collaboration, generates employment opportunitiesfor others through initiating, establishing and running the enterpriseby keeping pace with her personal, family and social life.
Kamal Singh
7/31/2019 EM Chapter 1 Mcom
46/66
Factors Influencing Women
Entrepreneurs Economic independence
Establishing their own creativity
Establishing their own identity Achievement of excellence
Building confidence
Developing risk-taking ability
Motivation
Equal status in society
Greater freedom and mobility
7/31/2019 EM Chapter 1 Mcom
47/66
Strategies for development of
women entrepreneurs. Education and awareness
Better time management
Set-up home based business
Efficient use of information techonology
Organise workshops and seminars
Group entrepreneurship
Simplified procedures Dispense collateral security
Finance cells
7/31/2019 EM Chapter 1 Mcom
48/66
Common Features of Women
Entrepreneurs in India Women with small families are more likely to become entrepreneurs. A majority of women entrepreneurs are married. Unmarried women face difficulties in getting financial support to launch their enterprises. Many women
entrepreneurs belong to the low-income group.
A large number of women with little or no education enter Into business without undergoing anytraining. Most of these practicing women entrepreneurs lack vocational education.
Working capital Is limited and profit margins are low.
Women from the low-income group exercise greater freedom in making the decision to start businessas compared to middle-class women who suffer from cultural constraints.
Many women become entrepreneurs out of economic necessity.
Womens hard work Is generally responsible for the launch and sustainability of the business.
Support systems do not effectively handle their important need for vision and confidence building andalso for developing better business orientation and skills.
Gender discrimination Is encountered at every stage of business development.
Women entrepreneurs are security oriented rather than growth oriented.
Women prefer diversification to specialization. Women prefer stabilization of income and minimization of risk over maximization of income.
Though the trend Is changing, It is not uncommon to find enterprises owned by women but run bymen.
In the field of technology women have made a conscious decision to set up technology-basedenterprises. Many have ventured Into hi-tech areas such as manufacturing solar thermals, vacuumreactors, television boosters, air compressors1 voltage stabilizers, and amplifiers as reflected Inthe data collected about women entrepreneurs. However, for most women their businesses remainmicro-enterprises.
7/31/2019 EM Chapter 1 Mcom
49/66
WOMEN ENTREPRENEURSHIP
ENVIRONMENT context of women entrepreneurship
development described in three different
spheres Micro sphere
Meso sphere
Macro sphere
7/31/2019 EM Chapter 1 Mcom
50/66
7/31/2019 EM Chapter 1 Mcom
51/66
Meso sphere There are a large number of organisations involved inproviding support services to entrepreneurs. However, for
a variety of reasons, many of the organisations tend to actas barriers when it comes to providing assistance towomen entrepreneurs. In some cases this can beattributed to a lack of awareness about womens concernsand insensitivity towards gender issues. It is at the mesolevel that it is found that the lack of support for womenentrepreneurs by many of the organisations whichimplement poLicies and operational programmescontribute greatly to theircontinuing disempowerment.
The State might formulate gender progressive laws andpolicies, but the resistance offered by the bureaucracy,judiciary and other such official organisations, mighthinder the implementation of these measures.
7/31/2019 EM Chapter 1 Mcom
52/66
Macro sphere The macro environment within which women entrepreneurs
develop and grow comprises many interconnecting structures anddynamics,including laws and regulations, economy, internationaltrade, including market liberalisation and globalisation, availability offinance and credit, labour market, human capital resources,technology, physical infrastructure and natural resources.
This environment has an impact on all enterprises, large and small,
run by both women and men. There is much evidence to indicatethat women are more at a disadvantage than men in relation to theopportunities and barriers arising from these structures anddynamics. It is partly because womens ability to bargain in thelabour market, as in other arenas, is critically affected bypredominant gender ideology and practices. Bargaining takes placeover wages, conditions of work, and workers rights. Howeverwomens bargaining power in the work place, as compared to thatof men, is constrained not only by gender gaps in skills andeducation, but also by the employers assumption regarding theirabilities, work commitment, efficiency, and needs, which is furtherexacerbated by the unequal sharing of family responsibilities at themicro level. This contributes towards disempowermnent of women.
7/31/2019 EM Chapter 1 Mcom
53/66
STRATEGIES FOR THE DEVELOPMENT
OF WOMEN ENTREPRENEURS
In small and medium enterprises due to limited sources, majority of the functions haveto be performed by the owners themselves. In case of women entrepreneurs, theproblems get compounded because certain functions have gender dimensionsattached to them.
Domestic commitments and child-care support are the two main responsibilities of
women. This, along with the still narrow outlook of society in accepting woman as anentrepreneur makes her life more difficult. Some suggestions to meet these challengesand to encourage women entrepreneurship are given below.
To overcome the resistance from husband and members of the family at the time ofsetting up of their venture, prospective women entrepreneurs are advised to maintaintheir cool and persistently convince them, without confronting them, regarding thebenefits of setting up of an enterprise. The woman requires to have a strong will power
under the circumstances, The inflow of money will eventually solve this problem. Shouldering the dual responsibilities of an entrepreneur and a homemaker can be
effectively undertaken by a women entrepreneur through better time management. Themembers of the family can also be involved in the business. which will help in sharingthe burden of entrepreneurial work. Moreover, the women entrepreneur must try tomake her husband and children self-sufficient at home. With tact and diplomacy, sheshould solicit cooperation in running the enterprise from the family.
A t t h b i h h hild h t
7/31/2019 EM Chapter 1 Mcom
54/66
A women can start her business when herchildren are grown up enough totake care of their own small needs. This gives the women enough timeenough to manage her enterprise.
Women must acquire education and go through confidence-building trainingto get rid of the traditional feeling that they are inferior to men and are
dependent on men. For marketing her products, a women entrepreneur must establish her
credibility in terms of quality and competitiveness of product or service. Sheshould acquire relevant techniques and skills to win customers loyalty.Ecommerce businesses will also help greatly in this regard. For publicityand advertisement, the women entrepreneur can work on alternatives likecable TV, pamphlets, leaflets, slides in cinema halls, banners at strategic
locations, and so on. Effective and efficient use of information technology like the Internet can help
in assimilating information about the variety, range, and quality of saycompeting products, and publicity and marketing of products and services.
Workshop and seminars should be organised frequently for the officials offinancial and support agencies and for women entrepreneurs to make theirrelations more cordial.
Procedures for financial assistance by banks and government organisationsmust be simplified. Women inspectors, if available, should be asked toinspect women enterprises.
It has been observed, that there is a tendency to project a higher value ofsales, production, and profits in project reports to impress the bankers.Such a project profile is not appropriate from a financial management pointof view. So. women entrepreneurs need to undertake training in various
aspects of financial management to understand its finer implications.
7/31/2019 EM Chapter 1 Mcom
55/66
Since complicated and lengthy procedures make it difficult to acquire loansfrom government financial agencies and banks, it is suggested that womenentrepreneurs search for non-formal sources of finance like privatefinanciers, relatives, friends, and others.
Banks and financial institutions must maintain a minimum target of loan to be
disbursed to women entrepreneurs. Collateral security should bedispensed with in the case of women entrepreneurs because many womenhardly have any property or other assets in their name to keep asguarantee. Margin money for projects to be undertaken by womenentrepreneurs should not exceed 10 per cent. Subsidies should also hegiven to women entrepreneurs at the initial stage itself.
Women entrepreneurs should acquire relevant training in technology and in
details of their plant and machinery. They should be knowledgeable aboutthe functioning of machines and processes. They should be more assertivewith their employees. They should employ more women workers in theirenterprises. They must undergo training in management skills to handlehuman resources as well as training in effective communication skills andpractices and the legal aspects of running a business.
Group entrepreneurship is a viable option for the weaker sections of the
society and it helps woman to overcome their poverty. It empowers womenand provides the necessary confidence for entrepreneurship. Womensorganisations. womens cooperatives, and NGOs should be promoted toassist self- employment for poor women.
7/31/2019 EM Chapter 1 Mcom
56/66
Institutions supporting women
entrepreneurshipIn India are:
Consortium of Women Entrepreneurs of India (CWEI),
Federation of Indian Women Entrepreneurs (FIWE),
Federation of Ladies Organisation (FLO), Womens India Trust (WIT),
Central Bank of India Credit Schemes, National Bank for Agriculture and Rural Development (NABARD).
State Government Schemes for Development of Women and ChildrenIn Rural Areas (DWCRA).
Small Industries Development Bank of India (SIDBI),
Self-Employment Women Association (SEWA), Association of Women Entrepreneurs of Karnataka (AWAKE).
7/31/2019 EM Chapter 1 Mcom
57/66
International Entrepreneurship
Opportunities
International business means Cross borderbusiness translations International businessentails satisfying different needs or tastes or
preferences of people in different countries.
Thus, simple and common definition ofinternational business is that it is businessacross national borders. As includes exportsand import to goods and services orinternational sourcing of factors
BENEFITS OF INTERNATIONAL BUSINESS
7/31/2019 EM Chapter 1 Mcom
58/66
BENEFITS OF INTERNATIONAL BUSINESS
OPPORTUNITIES
Competing in the global marketplace benefits, such as.
I. Increased sales: The entrepreneur will attract new buyers and widen the customerbase. He may also import unique products that local customers can buy
2. Reduced cost: The entrepreneur may sell the goods at reduced price. Manufacturersin other countries can produce goods at a lower cost because of low labour cost oravailability of raw materials.
3 decreased dependence on current markets and suppliers: When the economicconditions of a country suddenly change workers. exports might help to sell theproducts and services abroad till the economy stabilize.
4. achieving higher rate of profit : When the domestic market do not provide a higher rateof profits, the entrepreneur can expand the operations to foreign countries wherethere is higher rate of profit
5. limited home market: Due to the size of population or due to lower purchasing power ofthe people etc.. size of the home market becomes limited. under such circumstancesentrepreneur has no option other than exports. Example European countries.
6. Severe competition in the domestic market: When there is severe competition from the
other competitors in the domestic country. it may not be possible to survive for a longperiod. The best option is to enter the new markets .
7,Availability of technology & managerial competence: When the availability oftechnology and managerial skills are lacking in some countries the entrepreneurprefers to so abroad to set that benefit
8, To increase market share: To larger companies expand their business operationabroad to increase the market share. Example Coca-cola. Pepsi. unilever etc.
7/31/2019 EM Chapter 1 Mcom
59/66
9. availability of raw material : One of the major reasonsfor attracting the companies from other countries is theavailability of raw-material abundantly in a countryExample: Minerals. Petroleum etc.
I0. availability of human Resources: When there isquality human resource available in a country at alesser cost, the entrepreneur prefers to start theoperations in that country Example: Software industry
II. Tarrifs and import quotas: Imports of productsdepends on the governments policies towards tariffs orduties and import quotas to reduce the competition tothe domestic companies from foreign companiesTherefore, there is an opportunity to the entrepreneurthe country where there is no such, restrictions.
12. Political stability There is bright businessopportunities in those countries where there isContinuation of same policies of the government. eventhere is change of political parties
MODES OF INTERNATIONAL
7/31/2019 EM Chapter 1 Mcom
60/66
MODES OF INTERNATIONAL
BUSINESS OPPORTUNITIES
International trade is one way the entrepreneur canbecome part of the global marketplace. he can export orimport the products or services
f
7/31/2019 EM Chapter 1 Mcom
61/66
Modes of international entrepreneurship opportunities.
A, General Classification
I Importing
2. Exporting
B. Non-equity Arrangements3, Licensing
4. Turn-Key Project
5.Management Contracts
C. Direct Foreign investment
6. Minority Interest
7. Majority Interest8. 100% ownership
9. Joint Ventures
D. Mergers & AcquisitionsHorizontal
Vertical
Product extensionDiversified activity
E. II. Using world wide web
F Other modes12. Strategic alliance
13. Third country location
14. Counter trade
7/31/2019 EM Chapter 1 Mcom
62/66
I. Importing:. import products due to reasonable priceand good quality.
to make their own products
2. Exporting:
Direct export
Indirect export
7/31/2019 EM Chapter 1 Mcom
63/66
Advantages: Licensing arrangement is an excellentmethod.
I. The process is loss risk.
2. Need not make an extensive capital investment.
3. Can generate savings in tariff and transportation cost.
4, Licensing is a more realistic means of expansion thanexporting. particularly for the high-tech firm
5, Access to the market is easier in comparison with equityinstruments.
6 Foreign governments are more likely to give theirpermission because technology is being brought into thecountry
7. There is potential for the licensees to become partnerand contributor in improving the learning curve oftechnology.
7/31/2019 EM Chapter 1 Mcom
64/66
Disadvantages:
I. It is possible the licensee will become a
competitor after the contract expires. honda is acompetitor of kinetic.
2. To fit the licensee market. the licensermust setthe licensee to meet contractual obligationsand adjust the products & services.
3. Conflicts and misunderstanding may occur.Therefore the entrepreneur must manage therelationships.
4. There may be a problem of integrity and
independence of both the licenser andlicensee.
7/31/2019 EM Chapter 1 Mcom
65/66
Entrepreneurial Development
Programme Designed to help strengthen & fulfill his
entrepreneurial motive,
Acquire skills & capabilities To develop first generation entrepreneurs
3 major variables location, target group,
and enterprise. Continuous process of training & motivating
7/31/2019 EM Chapter 1 Mcom
66/66
Objectives of EDP
To develop small & medium enterprise,
Encourage self- employment
To stimulate new ventures& encourage
expansion by special programme for rural
areas.
Create employment opportunities in
processing of indigenous raw material
Develop potential entrepreneurs and
upgrade managerial skills
Top Related