DEPARTMENT OF

ELECTRONICS AND COMMUNICATION ENGINEERING

TECHNOLOGICAL INNOVATION MANAGEMENT

AND ENTREPRENEURSHIP
BEC501
V SEMESTER
MODULE 1 NOTES
Prepared by,
[Link] A M
Assistant Professor
Dept. of ECE
MIT Thandavapura

A Unit of Maharaja Education Trust®

MAHARAJA INSTITUTE OF TECHNOLOGY

THANDAVAPURA

NH 766, Nanjanagud Taluk, Mysuru- 571 302

(An ISO 9001:2015 and ISO 21001:2018 Certified Institution)
(Affiliated to VTU, Belagavi and approved by AICTE, New Delhi)
 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

MODULE 1 CONTENTS
CHAPTER 1- MANAGEMENT
 Nature and Functions of Management – Importance
 Definition
 Management Functions
 Levels of Management
 Roles of Manager
 Managerial Skills
 Management & Administration
 Management as a Science
 Art & Profession (Selected topics of Chapter 1, Text 1)

CHAPTER 2 - PLANNING
 Planning-Nature
 Importance
 Types
 Steps and Limitations of Planning
 Decision Making – Meaning,
 Types and Steps in Decision Making (Text 1)

Text Book 1: Principles of Management – P.C Tripathi, P.N Reddy, McGraw Hill Education, 6th
Edition, 2017
 CHAPTER 1
NATURE AND FUNCTION OF MANAGEMENT
1. IMPORTANCE OF MANAGEMENT
Q.: Explain the importance of management. (7M)

 Management is a critical element in the economic growth of a country

 The 4 factors which serves as a resource are people, money, material and machines, by bringing
together the 4 factors the management enables a country to experience a substantial level of
economic development.
 The country with enough income and manpower can still be poor if it does not have proper
managers to coordinates these resources.
 Without management a country’s resource can never become production.
 Management is essential in all organization, be it a business activity or any other activity
 Principles of management are universal. It is not only applied for managing business, it is applied
for other organizations like education, military, social and government.
 Thus management is same process in all organization but varies with complexity depending on
size of organization.
 Management is dynamic in every organization
 The term dynamic means coordinating current organizational activities and planning for future.
 It settles disputes and promotes leadership within the organization.
 The quality and performance of the management determines the success of the organization.

2. DEFINITION OF MANAGEMENT
Q.: Define Management. (VTU - 1M) or Give different definitions of management as interpreted by
management scholars (VTU - 7M) *****

 Definition 1:Mary Parker Follett:“Management is the art of getting things done through people"
 This definition defines fundamental difference between a manger and personnel of an organization.
 Manager is one who contributes to the organization goals indirectly by directing the efforts of others
– not by performing the task himself.
 Person who is not a manager makes his contribution to the organizations goal directly by performing
the tasks by himself.
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 Sometimes the person can play both roles simultaneously. For example, sales manager can perform

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 managerial role by directing sales team to meet the goals set up by the organization and non-
managerial role by handling customers directly in negotiating the deals.
 2 weakness of Mary Parker Follett’s definition are:
1. The use of term “Art” in defining the management: Which says management is an Art which
is half-truth. Art deals with application of knowledge, management also involves gaining of
knowledge i.e. science.
2. The definition does not involve various functions of manager.

 Definition 2: Elaborate definition of management is given by George R. Terry: "Management is a

process consisting of planning, organizing, actuating and controlling, performed to determine and
accomplish the objectives by use of people and resources".
 The 4 management activities included in this process are:
1. Planning: the manager thinks of their actions in advance
2. Organizing: the manager coordinates humans and Materials resources
3. Actuating: the manager motivates and direct subordinates
4. Controlling: the manager ensures that there is no deviation from the plan

3. MANAGEMENT FUNCTIONS OR THE PROCESS OF MANAGEMENT

Q.: Define management. Explain any 4 management functions. (VTU - 10M) or List and explain 4
basic function of management. (VTU – 10M) or Explain the process of management (10M) *****

 Though many authors have defined several functions of management, there are 6 essential and well
accepted functions of management. They are:
1. Planning
2. Organising
3. Directing
4. Controlling
5. Innovating
6. Representing
 Management process is a circular continuous movement which is carried out in order starting from
planning till representing, as shown in figure 1.
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 Figure 1: Management Process

1. PLANNING

 Planning is the function that determines “what” should be done in “advance”. It is looking ahead and
preparing for future.
 It determines what is to be done, how it is to be done and where the things need to be done. It also includes
who as to do it and how results are to be evaluated.
 It is a process of deciding the business objectives and charting out the methods of attaining those
objectives.
 Planning is not only done at the organization levels, it is made at all divisions, department and sub-units.
 Thus, planning in performed by mangers at all 3 levels – top, middle and first-line manger levels.
 Plans made by the top managers of the organization may take long period of over years (5-10 years).
 Plans made by middle and first-line managers may take shorter period of over few months, weeks or
sometimes within few days.

2. ORGANISING

 To organize a business well, it is required to provide all the useful resources for its proper functioning.
Resources like people, money, raw materials, and tools.
 Organizing can be divided into 2 sections:
1. Human organization
2. Material organization
 Human organization:
 Once the managers define the objectives, and plans to achieve then, they must design and develop
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human organization to carry out the plan successfully.

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  The purpose human organization is creating an environment for human performance by identifying
and grouping work among people so same interest and defining roles and responsibility for each
individual and establishing the relationship.
 Staffing is also an important function in building human organization. In staffing manager finds the
right person for each job.
 Staffing also provides manager the authority of hiring adequate manpower for all the positions in
the organization.
 Staffing also involves selecting and training of future managers and encouraging all to have a
disciplined approach towards work.
 Material organization:
 The purpose of material organization is to utilize the proper raw material required for production at
the right point of time.
 It includes process like Procurement, inspection, storage and monitoring of components.

3. DIRECTING

 In directing the manager explains his people what they have to do and help them do it to the best of their
ability.
 This function can be called as leading, directing, motivating, actuating and so on.
 Directing involves 3 sub-sections: Leadership, Motivation and Communication.
1. Leadership: Leadership is a process by which a manger guides and influences the work of his
subordinates.
2. Motivation: Motivation means encouraging workers to give their best. 2 classification of motivation
are: financial motivation which takes the form of salary, bonus, etc. and non-financial motivation
takes the form of job security, appreciation, etc.
3. Communication: Communication is the processing of passing information from one person to
another.

4. CONTROLLING

 Controlling is measuring and correcting of activities of subordinates to make sure that the work is going
on as per the plans.
 Controlling generally relates to the measurement of achievement. This involves three elements.
1. Establishing standards of performance.
2. Measuring current performance and comparing with established standards.
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3. Taking necessary corrective action to meet the set standards.

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 5. INNOVATING

 These days it is not necessary for an organization to grow big, but it is necessary for the organization to
grow better.
 This makes innovation an important function of a manager.
 Innovation means creating new ideas which improves the product, process and practice.
 For example, innovation can be implemented in packaging (Creating trail packs), distribution, and
business models.

6. REPRESENTING

 A manager also needs to spend part of his time in representing the organization before various outside
groups which have some stake in the organization.
 These stakeholders can be government, suppliers, customers, etc.
 Every function has 2 dimensions:
1. Substantive Dimension – Defines what is done and How it is done.
2. Procedural Dimension - Defines where is it done.

4. LEVELS OF MANAGEMENT
Q.: Describe the levels of management. (VTU – 5M) *****

 There are 3 levels of management as shown in figure 2.

Figure 2: Management levels

1. Top Management: It is a Top Management which defines policies for the company and consist of
Chairman, Directors, President, Vice-President and CEO.
2. Middle Management: It is a vast and diverse group that includes Manager in Project, Sale, Marketing
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and department Heads.

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3. First-line Management: It is a lower management group made up of Supervisors, and Foreman.

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  There are 2 approaches to management:
1. Top-Down approach: The top-down approach to management is a strategy in which the decision-
making process occurs at the Top management level and is then communicated to the lower levels.
2. Bottom-Up approach: Bottom-up approach is a strategy in which the actual work will be initiated by
the workers at the first-line management level and is integrated in middle and top management.
 Time management in different levels are as follows:
1. Plans made by the top managers of the organization may take long period of over years (5-10 years).
2. Plans made by middle and first-line managers may take shorter period of over few months, weeks or
sometimes within few days.

5. ROLES OF A MANAGER
Q.: Explain 10 different roles played by manager. (VTU – 10M) or List and explain the roles of a
manager (VTU – 10M) *****

 Manager in any organization plays variety of roles responding to a particular situation.

 The three important roles played by a manager are:
1. Interpersonal roles
2. Decision roles
3. Informational roles

1. INTERPERSONAL ROLES
 These includes figurehead, leader and liaison roles.
FIGUREHEAD ROLE
In figurehead role, the manager will perform some duties that are casual and informal ones like, receiving
and greeting visiting dignitaries, attending to social functions of employees, entertaining customers by
offering parties and lunches etc.
LEADER
As a leader, managers motivate, direct and encourage his subordinates. He also try to adapt the individual
needs with the goals of the organization.
LIAISON
In the role of liaison, the manager must develop contacts with outside people and collects useful
information for the well-being of the organization.
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 2. INFORMATION ROLES
 A manager plays as monitor, disseminator and spokesman.
MONITOR
A manager monitors his environment and collects information through his personal contacts with
colleagues and subordinates.
DISSEMINATOR
As a disseminator, the manager passes some of the information directly to his subordinates.
SPOKESMAN
As a spokesman, he communicates the information of organization before various outside groups which
have stakes in the organization. These stakeholders are government officials, suppliers, customers etc. He
also communicates the performance of company to shareholders and the rules and responsibilities to his
subordinates.

3. DECISION ROLES
 There are four decision roles played by a manager. They are entrepreneur, disturbance handler,
resource allocator and negotiator.
ENTREPRENEUR
As an entrepreneur, a manager continuously looks for new ideas and tries to improve the organization by
going along with changing work environment.
DISTURBANCE HANDLER
As a disturbance handler, manager works like a fire fighter by given solutions to various problems that
arises in the company – Customer may go bankrupt, suppliers may back off from his contract and so on.
RESOURCE ALLOCATOR
As a resource allocator, the manager divides the work, provides required resources and facilities to carry
allocated work and delegates required authority among his subordinates. He decides who has to do what
and who gets what.
NEGOTIATES
As a negotiator, manager negotiates with the employees and tries to resolve any internal problems like
trade agreements, strikes and grievances of employees.
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6. MANAGERIAL SKILLS
Q.: List and explain managerial skills with the help of skill- mix diagram (VTU – 10M) or Explain
skill-mix at different levels of management (VTU – 10M). *****

 A manager should possess basic 3 major skills:

1. Conceptual skill
2. Technical skill
3. Human relations skill

1. CONCEPTUAL SKILLS
 Conceptual skill refers to the ability of a manager to take in abstract, his innovative and creative
ability and his ability to assess the environment.
 Managers at the top are responsible for deciding what’s good for the organization.
 Senior executives are often called on to “think outside the box” - to arrive at creative solutions to
complex, sometimes ambiguous problems.
 They need both strong analytical abilities and strong creative talents.

2. TECHNICAL SKILLS
 The technical skill is the managers understanding of the nature of job that the people around him
have to perform.
 It refers to person’s knowledge in any type of process or techniques.
 There are 3 things a manager must know about technical skills:
1. Which skill should be employed?
2. What is the role of each skill employed?
3. How are different skills interrelated?

3. HUMAN RELATIONS SKILL

 Human relations skill is an ability to interact effectively with people at all levels.
 This skill in manager has an ability to:
 Recognize the feelings and sentiments of others
 To judge the outcome of various course of action he may undertake
 To examine his own concepts and values which enables to develop useful attitude.
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Figure 3 shows the skill-mix of a manager with the change in his levels.

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At top management, technical skill becomes least important and conceptual and human relations skills seems to
be important aspect.
Middle management is the equal combination of all skills embedded in a manager.
At supervisory level. Conceptual skill becomes least important and technical and human relations skills seems
to be important aspect.

.
Figure 3: Skill-Mix at different management levels

7. MANAGERIAL EFFECTIVENESS
 According to Peter Drucker, manager’s performance can be measured in terms of 2 concepts:
1. Efficiency: It is the ability of the manager to do somethings correctly i.e., at lowest possible cost.
2. Effectiveness: It is the ability of the manager to do correct things i.e. achieve high levels of value.
 Maximizing efficiency and effectiveness often creates conflict between 2 goals.
 Manager needs both, but efficiency is important and effectiveness is critical.

8. MANAGEMENT AND ADMINISTRATION

 There is lack of concurrence among management writers over the meaning and use of the words
management and administration.
 One group of management writers feels that:
 Administration involves "thinking". It is a top level function that centers around the preparation of
plans, rules, policies and objectives of an organization.
 Management involves "doing" and is a lower level function, concerning with execution and direction
of policies and operations.
 Another group of management writers feels that:
 Management is regarded as comprehensive general function covering entire process of planning,
organizing, directing and controlling.
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 Administration is regarded as a branch of management that comprises of two functions - planning

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 and controlling.
 According to them, the function of management is divided into two categories - the upper level
management usually called as administrative management and the lower level management which is
termed as operative management.
 According to Peter Drucker, the basic difference between management and administration lies in use of
these terms in different fields.
 Managing of business enterprises is called management and
 Managing non business organizations is called administration.
 Hence financial performance plays key role in management.
 But in managing non business organizations like educational institutions, government offices,
military etc., administration is more priority than financial decisions.
 Figure 4 shows the time spent in administrative and managerial functions at different levels where top
level spends more time in administration activity and as it moves down in the organization more time is
spent in management activity.

Figure 4: Time spent in administrative and managerial functions at different levels

9. MANAGEMENT – A SCIENCE OR AN ART?

1. MANAGEMENT AS A SCIENCE
 Science is an organized knowledge. A discipline can be called scientific if its:
 Methods of inquiry are systematic and practical: Being systematic means being orderly and unbiased.
 Information can be accumulated and analysed: All the scientific information collected first as raw
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data is finally arranged in order and analysed with the help of statistical tools.
 Results are cumulative and communicable: Science is also cumulative in that what is discovered is
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 added to that which has been found before.
 The essential feature of any science is the application of scientific methods to the development of
knowledge.
 We learn from past mistakes and go in right direction in future. On the basis of the above discussions of
science, it can be accepted that management is also a science.

2. MANAGEMENT AS AN ART
 Under science one learns “why” of a phenomenon and under art one learns “how” of it.
 It is the art of getting things done through others in dynamic and mostly non-repetitive situations.
 Art is concerned with the understanding of how a practical work can be accomplished. Management in
this sense is more of an art.
 Managing, like any other practice such as medicine, music composition, engineering, accounting or even
cricket - is an art.
 Thus management involves both elements – those of a science and or an art. While certain aspects of
management make it a science, certain others which involve application of skill make it an art.

10. MANAGEMENT – A PROFESSION?

 It is seen that management is partly an art and partly a science. Management does not possess the
characteristics of a profession.
 A profession is expected the following characteristics:
 Organized and systematic knowledge
 Formalized methods of acquiring training and experience
 Ethical code to regulate the behavior of the members of the profession
 Charging of fees based on service
 Unlike medicine and law, the management does not have any fixed norms of managerial behavior. There
is no uniform code of conduct or licensing of managers.
 Lawyers and doctors take up profession after obtaining a valid academic qualification where as a manager
job is not restricted to individuals with a special academic degree only. Based on this factors, it can be
concluded that management is not a profession.
 However, the present trend is towards the professionalization of management. Nowadays, it has become
essential to acquire management degrees or training in management to be called as good manager.
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 There is increased demand for qualified managers with M.B.A degree after graduation.
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 Peter Drucker's opinion on management is: "A degree in management does not by itself make an

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 individual a professional manager any more than does a degree in philosophy make an individual a
philosopher".
 By insisting on holding a degree, we are over emphasizing knowledge and completely overlooking skill.
This leads to loosing of good and skilled managers who do not have required degree.
 There have been good examples of efficient managers without any professional managerial degree. Some
of them are, Ford of Ford Motors, Bill Gates of Microsoft, Jemshedji Tata Birla, Dhiru Bhai Ambani of
Reliance group etc.
 But nowadays, management has become a profession than art or science.

QUESTION BANK
MODULE 1 CHAPTER 1

1. Define Management? Explain any 4 management functions. (10M - Mar 2022, July 2023)*****
2. Explain the roles of a manager. (10M - Mar 2022, Feb 2023, July 2023) *****
3. List and explain managerial skills with the help of skill-mix diagram. (10M – July 2023, Aug 2022)
*****
4. Give different definition of management as interpreted by management scholars. (7M – Feb 2021)
5. Describe levels of management. (7M – Feb 2021)
6. Explain 10 different roles played by manager. (10M – Aug 2022) *****
7. Distinguish between management and administration. Draw the diagram for time spend in administrative
and managerial function at different levels. (6M – Feb 2023) ***
8. Discuss modern approaches of management. (6M – Feb 2021)

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 CHAPTER 2
PLANNING
1. NATURE OF PLANNING
 Planning is the beginning process of management. Manager must plan before organize, staff, direct or
control.
 Planning sets all other function into action. Without planning other function produces confusion or
sometimes nothing. This is called as “Principle of Primacy of Planning”.
 Planning as 3 sub-systems:
 Environmental sub-system: Includes factors like population changes, governmental actions
 Competitive sub-system: Includes past and present actions of competitors
 Internal sub-systems: Includes unique features of firm like location, facilities, personnel etc.
 It is an intellectual process, which requires a manager to think before acting. It is referred to as "deciding
in advance" as to what to do, how to do, when to do and who has to do it.
 According to Koontz and O'Donnell, planning is a continuous process. A manager should continuously
watch the progress of the plans like a navigator who constantly checks where his ship is going in the
vast ocean. They call it the principle of navigational change.
 A plan should be flexible to change to adapt to the changing situating without undue cost. This calls for
flexibility in the areas like technology, market, finance, personnel and organization.
 Planning is vital at all levels of an organization. Top level managers are concerned with long range
planning involving 2 to 5 years, middle level managers are concerned with medium range planning
involving few months to one year and first-line managers are concerned with planning the activities of
daily or week or up to a month.
 There are various levels of planning:
 Strategic planning: It is a long-term planning which involves question like what business should the
organization be in the decade from now?
 Tactical planning: It is a short-term planning which involves question like what are our short-term
financial and personnel needs?
 Contingency planning: It is a planning for what to do if there is a change in government policy
 Planning is non-static and is basically a discrete exercise. It is dynamic in nature. It is a blue print to
which the accomplishment must confirm.
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2. IMPORTANCE OF PLANNING***
Define planning. Describe importance of planning. (8M – Feb 2023)

1. Minimize risk and Uncertainty

In the today's complex organizations, decision making cannot be relied only upon intuition, planning
plays a vital role in decision making. Planning provides logical facts and procedure to managers for
making decisions. This logical decision making based on plans to organization minimizes uncertainty
and risk. In a developing country like India, with rapidly changing social and economic conditions,
planning helps the managers to cope up with uncertainty and risk.
2. Leads to success
Planning does not ensure success, but planning leads to success. This is because if the work is planned
in advance, there will be no confusions arising and things will happen as per plan and achieve goals.
3. Focuses attention on the organization’s goals
Planning helps the manager to focus their attention on the goals and activities of organization. This
makes the entire organization to walk towards the goals and create coordination in accomplishing the
goals.
4. Facilitates Control
In Planning, manager sets goals, targets and means to accomplish these goals. These goals and plans
become standards or benchmarks against which performance can be measured. Thus good plans help
effective control on the activities.
5. Trains Executives
Planning is also an excellent means for training executives. They involved in activities of organization,
and the plans arouse their interest in the various aspects of planning.

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3. TYPES OF PLANS / HIERARCHY OF ORGANISATIONAL PLANS *****
Explain the Hierarchy of organizational plan with the help of a diagram. (10M – Aug 2022)

 Types of plans that are arranged in a hierarchy within the organizational is as shown in the figure below:

Figure: Hierarchy of organizational plans

1. VISION
 At the top of this hierarchy is the vision.
 Vision is the dream that an entrepreneur creates about the direction of the business in future.
 It describes aspiration, beliefs and values of the organization.
 A vision should be brief, focused, clear and inspirational to an organizations employee.
 Vision should be linked to customer’s needs and convey general strategy.

2. MISSION
 Mission is the unique aim of an organization.
 It is an organizations specialization in area like service, product, client.
 Mission specifies general strategy for achieving vision.
 Example of mission: “imparting quality education to women”.
 The mission statements can be multiple points which may also mention cultural values. Ex: Corporate
unity, business ethics, quality.
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 It may be changes over time of few years with new opportunities or new market conditions.
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3. OBJECTIVES
 Objectives are goals or aims that a management whishes the organization to achieve in pursuit of it
mission.
 These are the end point for all business activities.
 Only after these end point manager can decide kind of organization, personnel, qualification, supervisor
and direction of the work.
 Objectives should be described by the word purpose.
 Purpose of the organization should be its primary role which is defined by the society. Ex: purpose of
each university is to impart education.
 Purpose is therefore the broad aim which applies to the organization and society.
 Objectives are the specific targets to be reached by an organization.

CHARACTERISTICS OF OBJECTIVES ***

Explain any 5 important characteristics of objectives in planning (10M – July 2023)
1. Objectives are multiple in number: every business or organization can have multiple objectives with
various key areas like: Market standing, innovation, productivity, resources, profit, manager
performance, work performance and public responsibility.
2. Objectives changes over time: Due to economical, technical, social, political or ethical changes objectives
may change according to the current trends.
3. Objectives are either tangible or intangible: objectives key areas like Market standing, innovation,
productivity, resources, profit are tangible which are measured and manager performance, work
performance and public responsibility are intangible which cannot be measured.
4. Objectives have a priority: At given time accomplishment of one objective is important than others. Ex:
Objective of maintain the minimum cash balance is more important than meeting due dates on account.
5. Objectives are generally arranged in a hierarchy: generally, organization objectives are defined at the top,
followed by divisional or departmental objectives. Next come objectives of each section and finally
individually objectives.
6. Objectives sometimes clash with each other: A entire organization is break down into multiple units like
production, sale, finance, etc. each unit defines the individual objectives which must clash with other
unit’s objectives. Ex: Ex: Production unit defining the objectives – Low cost, and Sales unit defining the
objectives – High Quality.
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 REQUIREMENTS OF SOUND OBJECTIVES
1. Objectives must be clear and acceptable: clarity is measure of peoples understanding and also accepted
by people.
2. Objectives must support one another: Objectives should interfere with one another.
3. Objectives must be precise and measurable: Objectives must always precise in terms of goals and
measurable in terms of standards of “how well” and “how much”. Ex: Quality education – Result, Newer
teaching – Activity.
4. Objectives should always remain valid: Manager should constantly review and reassess the objectives
from time to time.

ADVANTAGES OF OBJECTIVES
1. They provide basis of planning
2. They act as motivator
3. They facilitate coordination among various groups
4. They function as a basis for managerial control.
5. They facilitate better management
6. They reduce misunderstandings.

4. STRATEGIES
 Strategy is defined as a giving a response to a competitive environment by performing SWOT (Strength,
Weakness, Opportunity and Threat) analysis.
 The 2 activities involved in strategy formylation are: Environmental appraisal and Corporate appraisal.
 Environmental appraisal: It is done by analyzing the components and attributes of environment.
 The components of external environment are:
1. Political and legal component: Stability of government, Industrial licensing law, fiscal policies and
restriction on capital movement.
2. Economical component: Level of economic development, trends in price, exchange rate, supply of
labors, raw martials and capital.
3. Competitive components: Identification of competitor, analysis of their performance, anti-monopoly
laws and rules, protection of patents.
4. Social and cultural components: Literacy level of population, religious and social characteristics,
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  Corporate appraisal: This involves the analysis of company strengths and weakness. The company
strengths may lie in its outstanding leadership, excellent product design, low-cost manufacturing skill,
personal relationship with the customer, efficient transportation and logistics, effective sales
promotions, effective sales promotion, and so on.
 Any of this strengths represents unique skill or resources that can determine the company’s competitive
edge are called its core competency.

MODE OF STRATEGY FORMULATION

5. OPERATIONAL PLANS *****

List some of the standing plans and single-use plans and explain. (6M – Feb 2021)
 Based on their use, plans are classified as standing plans and single use plans.
 Standing plans are designed for situations that often repeat. These plans can be used again and again.
 Single use plans are developed to achieve a specific end. After reaching that target, that plan becomes
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 STANDING PLANS
 Standing plans are designed for situations that often repeat. These plans can be used again and again.
 Ex: Bank uses same plan for loan application for each new client.
 There are 4 types of standing plans: policies, procedures, methods and rules of any organization.

1. POLICIES
 A policy is a general guideline for decision making. It sets up the boundaries around decision.
 As defined by Terry, "Policy is a verbal, written or implied overall guide, setting up boundaries that
supply the general limits and direction in which managerial action will take place".
 They deal with "how to do" the work. They only provide a framework within which decisions must
be made by the management in different areas of organization.
 There are several policies in different functions of any organization like personal policy, promotion
policy, marketing policy, purchase policy, pricing policy, training policy, recruitment policy,
payment policy etc.
 Types of policies
1. Classifications on the basis of sources: Policies may be divided into
 Originated policies - Established formally by top managers for the purpose of guiding action
of their sub-ordinates.
 Appealed policies – Arises from the appeal made by the subordinates against supervisor.
 Implied policies – These policies are stated neither in writing or verbally. Only by watching
the actual behavior of the supervisor these policies are made.
 Externally imposed policies – Policies imposed by external agencies such as government,
trade associations.
2. Classifications the basis of functions: Classification like personnel policy, promotion policy,
pricing policy, distribution policy, investment policy etc.
3. Classifications on the basis of organizational level: Classification like Top level policy,
departmental policy, shop level policy etc.

2. PROCEDURES
 Procedures are the detailed guidelines that are used to carry out the policies.
 A procedure provides a detailed set of instructions for performing a sequence of actions involved in
doing a certain piece of work.
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 Procedures are to be followed every time when that activity is performed.

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 Procedures may also exist for conducting meetings of board of directors, shareholders, issuing raw

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 materials from stores, packaging of finished goods, inspection etc.
 The difference between policy and procedures are given below:
Policy Procedure
1. General guidelines of the organization. 1. General guidelines at the action level.
2. Top level activity. 2. Departmental activity.
3. Policies fulfill the objectives of an 3. Procedures guide the way to implement the
organization. policies.
4. Policies are often made without any study 4. Procedures are always made after thorough
or analysis. study and analysis of work.

3. METHODS
 A method is a prescribed way in which one step of a procedure is to be carried out. Thus a method is
a part of procedure.
 A procedure has a number of steps, each step may have number of methods to do it. Methods help in
increasing the effectiveness of a procedure.

4. RULES
 Rules are detailed and recorded instructions that a specific action must or must not be done under the
given instructions.
 Reporting time to office, lunch time, availing of leaves, use of LTC facility etc., are some of the
examples that follow rules.
 A rule is different from a policy or procedure. Since it does not give a guide to thinking, it is not a
policy. Since it is not a sequential procedure hence it is not a procedure.

SINGLE-USE PLAN
 Single use plans are developed to achieve a specific end. After reaching that target, that plan becomes
useless.
 The major types of these plans are: Programmes and Budget.
1. PROGRAMMES
 Programmes are precise plan which needs to be made to carry out non-routine and non-repetative
task.
 The essential key factors of every programme are time and budget.
 Single step in a programme is set up as a project. Ex: If a company need some personnel, then hiring
process as to be set up, which is a project.
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 A schedule specifies the time where each action takes place and Budget specifies the money for each
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 action.
2. BUDGET
 Budget is a financial quantitative statement prepared before time period.
 Budgets are the plan for future period. They are expressed in numerical terms.
 Important budgets are sales budget, production budget, etc.

BUSINESS PLAN
A good business plan must have the following characteristics:
 It must provide full information on all topics to reader
 It must be an objective tone
 It must not be over critical of past mistakes
 It should not be full of technical details

4. STEPS IN PLANNING AND PLANNING PREMISES*****

Discuss various steps involved in planning (7M/10M – Feb 2021)
The main steps involved in planning are as follows:
1. Establishing verifiable goals or set a goals to be achieved: the first step in planning is to determine the
enterprise objectives set by top managers. It is very important to establish objectives for the entire
enterprise and the objectives for each subordinate work units. That is, the major objectives are broken
down into departmental and individual objectives. It is a very crucial step in planning.
2. Establishing planning premises: It is the process of creating assumptions about the future on the basis
of which the plan will be ultimately formulated. Planning premises are important for the success of
planning as they reveal facts and information relating to the future such as economic conditions,
production costs competition, availability of material, resources and capital, government policies,
population trends etc. This tells about which plan is to be carried out. There three types of planning
premises:
I. Internal and external premises: Internal premises are premises within the organization. Some of
the examples are: policies, forecasts, investment, availability of equipment, capability of work force,
funds flow etc. External premises are premises outside the organization. They include: Government
policies, technological changes, business environment, economic conditions, population, buying
power, political stability, sociological factors, demand etc.
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II. Tangible and intangible premises: Tangible premises are the measurable premises. For example,
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population, investment, demand etc., are tangible premises. Intangible premises are those which

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 cannot be quantitatively measurable. Examples of this are: business environment, economic
conditions, technological change etc.
III. Controllable and uncontrollable premises: Some of the premises are controllable like, technical
man power, input technology, machinery, financial investment etc. Some other premises like, strikes,
non-availability of raw material, change in government policies, socioeconomic changes, phase-shift
in technology, wars etc., are uncontrollable by the organization.
3. Deciding the planning period: Businesses vary considerably in their planning period from years to
decades. There are 3 classes of planning period: Time for new product development, Time required to
recover capital investment and Commitment time.
4. Finding alternative courses of action: Next step is to search and identify some alternative courses of
action. It is very rare that for a plan there will be no alternatives. In this step alternatives are listed.
5. Evaluating the alternatives and selecting the best course of action: Once the alternatives are found,
then the next step is to evaluate them with respect to the premises and goals. A desired and best suitable
alternative is selected by comparative analysis with reference to cost, risk, and gain etc., keeping in mind
the goals and objectives.
6. Developing derivative plans: In order to complete the task, the selected plan must be translated into
programs, working plans and financial requirements in the sub-units. These sub-derived plans from main
plan are termed as derivative plans.
7. Establishing and deploying action plans: action represents the lowest level of execution. The action
plan identifies particular activities necessary for the purpose and specifies the who, what, when, where
and how of each action.
8. Measuring and controlling the progress: This is the last step in planning. Each activity of plan is
monitored on a continuous basis and if any deviation or shortfall is noticed, then the manager will initiate
suitable corrective action.

5. LIMITATIONS OF PLANNING*****
Explain the limitations of planning. (8M – Mar 2022)

1. Planning is time Consuming: Planning involves the collection of data, analysis of data, forecasting, etc.
All this consumes a lot of precious time. Therefore, planning is a time-consuming activity.
2. Planning is expensive: Planning is the work of experts. They get paid very high salaries to make good
plans. Companies spend an enormous amount of money in collecting and analyzing data. Therefore,
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planning is a costly affair.

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3. Planning is Restrictive: Planning sometimes restricts the organization to risk-free opportunities. Is

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 forces the manager to work within the limits.
4. Planning is limited: The scope of planning is limited in organizations with rapidly changing situations.
5. Planning is inflexible: Establishment of advance plan tends to make administration inflexible. When
sudden changes like business recession, change in government policy etc. takes place there is a need to
do fresh plan which alters the original plan.
6. Problem for Technical Staff: The technical or creative staff do not like planning. They feel it is only
paperwork. It is so, since, it limits their creativity.
7. Resistance to Change: Planning brings many changes in the organization. However, people do not like
changes. So, they do not give full cooperation. Without their cooperation, the plans cannot succeed.
8. Inter-Departmental Rivalries: Planning requires coordination and cooperation of all the departments.
If there exist any inter-departmental rivalries and disputes, then the plans will fail. For example,
Production Department wants to produce Product A, but the Marketing Department insists on selling
Product B.

6. DECISION MAKING DEFINTION

Decision making is defined as "the process of choosing among alternatives". Decision-making occurs at
many stages of planning process. Decision-making and choosing the best alternative is probably the most
important activity of the planning process.

7. TYPES OF DECISIONS*****
Decisions are classified into 7 categories:
1. Programmed and Non-programmed decisions
2. Major and Minor decisions
3. Routine and Strategic decisions
4. Sequential and Bear-by-the-tail decisions
5. Individual and Group decisions
6. Simple and Complex decisions
7. Heuristics and Intuitive decisions

1. PROGRAMMED AND NON-PROGRAMMED DECISIONS

Explain programmed and non-programmed decisions. (4M/ 6M – Aug 2022, July 2023, Feb 2023)
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 Programmed decisions are those that are made in accordance with some policy, rule and procedure.
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 These decisions are generally repetitive, and routine hence easy for the manager to make.

Dept. of ECE, MIT Thandavapura

  Example: determining salary payment to employee who have been ill, recording office supplies and son
on.
 Non-programmed decisions are non- repetitive in nature.
 These decisions are not arisen before, so it deserves custom-tailored treatment and handled by non-
programmed decisions.
 Example: Failing product line, allocation of resource, and so on.
 In case of programmed decisions, each manager is guided by same set of rules whereas in non-
programmed decisions, manager may bring his own personal beliefs, values and judgments in decisions
process.
 Manager usually spends more time in making routines, unimportant, programmed decisions and less
time for making non-routines, important, non-programmed decisions. This is called as “Gresham’s Law
of Decision making”.

2. MAJOR AND MINOR DECISIONS

Minor decisions are those decisions related to day-to-day and periodical occurrences. Purchase of
stationary, granting leave and permissions etc., are some examples of minor decisions. Major decisions are
those decisions generally taken by top management. Some of them are purchasing new machinery,
employing new technology, hiring new people etc., are some of the major decisions.
Major and minor decisions can be measured in 4 ways:
1. Degree of futurity of decision: A decision which has a long range impact like replacement of men by
machinery which lies under major decision. The decision to store raw materials maybe considered as
minor decision which doesn’t have long range impact.
2. Impact of decision on other functional areas: If decision affects only one function it is a minor
decision like shifting from book ledger to loose leaf ledger. If decision affects more than functional
areas then it is a major decision like preparing department’s profit and loss account.
3. Qualitative factors that enter the decision: A decision which involves certain subjective factors is
an important decision. The subjective factors are principles of conduct, ethical values, social and
political beliefs.
4. Recurrence on decisions: Decisions which are rare and have no rules are treated as major decisions
like renew of office subscription to business and decision is made at top level. Decisions which reoccur
very often and have rules becomes minor decisions like day-to-day spot decision and decision is made
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at lower level.
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 3. STRATEGIC AND ROUTINE DECISIONS

Strategic decisions are similar to major decisions and are generally taken by top management. Some
examples are price increase/discount, change in product range etc. Routine decisions are decisions related
to day-to-day operations of an organization that are routine in nature.

4. SEQUENTIAL AND BEAR-BY-THE-TAIL DECISIONS

In sequential decision the manager makes a decision one part at a time, once the result of first part is
known, then the second part can will be decided and so on. Hence series of decisions can be made to solve
one main problem. Bear-by-the-tail decisions are like making important or difficult decisions.

5. INDIVIDUAL AND COLLECTIVE DECISIONS

 Decisions may be taken by an individual or a group of individuals. If the decisions are taken by single
person, they are called individual decisions and if taken by a committee or group of people, then they
are called collective decisions.
 Individual decisions are taken where the problem is of routine nature, and definite rules and procedures
exist. Inter departmental decisions and important strategic decisions are generally taken by a group.
 Group decision-making has advantages like increased acceptance, better communication and better
co-ordination. It has some disadvantages also like, delay in arriving at decision, groups may be
indecisive, and groups may compromise or dominate.
 To utilize the advantages of group decisions and avoid its disadvantages, two new techniques are
proposed known as 'Nominal group techniques' and Delphi Techniques.
 In nominal group technique, the members independently generate their idea and give in writing. The
ideas are summarized and discussed for clarity and evaluation. Finally, each member silently gives
his rating and opinion about each idea through voting system. The one with maximum vote is selected
as the group's decision.
 In Delphi technique, persons who are physically dispersed and anonymous to one another are asked
to send their opinion on a topic through mail. A carefully designed questionnaire is circulated for this
purpose. The responses are summarized into a feedback report and sent back to them with a second
questionnaire. A final summary is developed on the basis of replies received second time.
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 6. SIMPLE AND COMPLEX DECISIONS

 A simple decision is one that is related to a problem with few number of variables. When there are
many variables, the decisions making will be complex.
 Decisions in which the problem is simple and the outcome has high degree of certainty. These are
called routine decision. Ex: Standard operating procedure.
 Decisions in which the problem is simple and the outcome has low degree of certainty. These are
called judgmental decision. Ex: Product promotion.
 Decisions in which the problem is complex and the outcome has high degree of certainty. These are
called analytical decision. Ex: Area of production.
 Decisions in which the problem is complex and the outcome has low degree of certainty. These are
called adaptive decision. Ex: change is corporate plan according to change in environment.

7. HEURISTICS AND INTUITIVE DECISIONS

 Heuristics are rules of thumb which organizations evolve from their experience. Ex: Cut down on
advertising in a recession.
 Intuitive are decisions which relies on feelings rather than facts.

8. STEPS IN DECISION MAKING / RATIONAL DESCION MAKING

PROCESS*****
Explain all steps in rational decision making with a neat block diagram (8M – Feb 2023) or explain the
steps involved in decision making (7M – Feb 2021)

Step 1: Recognizing the problem: The first step in decision-making is the problem recognition. A problem
may exist either due to a deviation from the past experience, a deviation from the plan, people bringing problems
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to the manager or problems arising from competition.

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Step 2: Deciding priorities among problem: The manager should identify the problems which he can solve,

Dept. of ECE, MIT Thandavapura

the problems which he feels that his subordinates can solve and the problems which are to be referred to the
higher officers. With this decision, the manager is left with very few problems to solve.
Step 3: Diagnosing the Problem: Correct diagnosis of the problem is very important for any manager.
Managers should follow systems approach in diagnosing a problem. He should make a thorough study of all the
sides of a problem coupled with organization before arriving at solution. If the diagnosis is made correctly, then
finding solution becomes easy.
Step 4: Developing alternative solutions or courses of action: After having diagnosed the problem, the next
step is to find alternate solutions. For every problem there will be some alternate solutions. It is very rare that
there is a problem with only unique solution. Alternatives do exist. Sometimes, in the absence of past history of
alternate solutions, the manager has to depend only on his own ability in finding alternatives.
Step 5: Measuring and comparing the effect of alternative solution: The alternative solutions are measured
and compared for their consequences. This involves a comparison of the quality and acceptability of these
alternatives.
Step 6: Converting the decision into effective action: The next step is to convert the decision into action. This
requires the communications of the decisions to the concerned employees in clear and simple terms. If there is
any opposition or non-acceptance from the employees, steps should be taken to convince them to accept the
same.
Step 7: Follow-up: After having implementing the decision, the manager has to carry out the follow up action.
If the result is not satisfactory, the manager has to take necessary corrective action or modify his decision.

QUESTION BANK
MODULE 1 CHAPTER 2

1. Define planning. Explain any 4 limitations of planning. (Mar 2022)

2. Explain the types of decision making. (Mar 2022)
3. List and explain any 5 importance characteristics of objectives in planning (July 2023)
4. Explain programmed and non-programmed decisions. (Aug 2022, July 2023, Feb 2023)
5. Define planning. Describe importance of planning. (Feb 2023)
6. Explain all steps in rational decisions making with a neat block diagram (Feb 2023) or steps
involved in decisions making. (Feb 2021)
7. Discuss steps involved in planning. (Feb 2021)
8. List some of the standing plans and single use plans and explain. (Feb 2021)
9. Explain the hierarchy of organizational plan with the help of a diagram. (Aug 2022)
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 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

TECHNOLOGICAL INNOVATION MANAGEMENT

AND ENTREPRENEURSHIP
BEC501
V SEMESTER
MODULE 2 NOTES
Prepared by,
[Link] A M
Assistant Professor
Dept. of ECE
MIT Thandavapura

A Unit of Maharaja Education Trust®

MAHARAJA INSTITUTE OF TECHNOLOGY

THANDAVAPURA
NH 766, Nanjangud Taluk, Mysuru- 571 302
(An ISO 9001:2015 and ISO 21001:2018 Certified Institution)
(Affiliated to VTU, Belagavi and approved by AICTE, New Delhi)
 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

MODULE 2 CONTENTS
CHAPTER 1- ORGANIZING AND STAFFING

 Organization-Meaning
 Characteristics
 Process of Organizing
 Principles of Organizing
 Span of Management (meaning and importance only)
 Departmentalization-Process Departmentalization, Purpose Departmentalization
 Committees– Meaning, Types of Committees.
 Staffing-Need and Importance
 Recruitment and Selection Process

CHAPTER 2 - DIRECTING AND CONTROLLING

 Meaning of Directing
 Requirements of Effective Direction
 Giving Orders
 Motivation-Nature of Motivation
 Motivation Theories (Maslow’s Need-Hierarchy Theory and Herzberg’s Two Factor Theory)
 Communication – Meaning, Importance and Purposes of Communication
(Text 1)
 Leadership -Meaning
 Characteristics
 Behavioral Approach of Leadership
 Coordination-Meaning
 Types
 Techniques of Coordination
  Controlling – Meaning
 Need for Control System
 Benefits of Control
 Essentials of Effective Control System
 Steps in Control Process (Text 1)

Text Book 1: Principles of Management – P.C Tripathi, P.N Reddy, McGraw Hill Education, 6th
Edition, 2017
 CHAPTER 1
ORGANIZING AND STAFFING
1. MEANING OF ORGANIZATION
Q.: Define Organization. (1M)

 Organization - It is a rational coordination of the activities of a number of people for the achievement of
some common explicit goals, through division of labor and function and through a hierarchy of
responsibility and authority.
 They involve a significant amount of conscious planning, coordination and deliberate structuring

2. CHARACTERSTICS OF AN ORGANIZATION
Some important characteristics of an organization has:
 Common Objective - A purpose, goal already indicated during planning.
 Well defined authority and responsibility - A clear concept of major duties or activities required to
achieve the purpose
 Division of Work - Classification of activities into jobs
 Co-ordination - Establishment of relationships between these jobs in order to ensure coordination.

3. PROCESS OF ORGANISING
Organizing means designing the organization structures. The manager differentiates and integrates the activities
in the organization. Process of organizing can describe this differentiation and integration in terms of a seven-
step procedure.
1. Consideration of objectives
 The first step in organizing is to know the objectives of the enterprise.
 Objectives determines the various activities.
 Example: The Structure of an Educational Institution is not the same as that for a Business Enterprise.
Therefore, Consideration of Objectives has the First & Foremost Role to play in the Process of
Organizing.
2. Deciding organizational boundaries
 After consideration of objectives, the next step is to decide what to do inside and outside the
boundaries of the organization.
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 Making manufacture V/S buy choices for different goods and services.
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 Making choice about strategic alliances with other firms.

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  Choices have to be made to extend to different of the organization interact directly with environment.
3. Grouping of activities into departments
 To group all closely related and similar activities into departments and sections.
 Sometime different activities may be observed closely and grouped in one department.
 In addition, the activities of each Department can be further classified & placed under different
sections of that Department.
 Example: In the clothing Shop, separate sections may be created for men, women, kids, etc.
4. Analyzing inter-department relations and deciding which departments will be key departments
 The contributions which each department makes downward, upward and sideways to decide its
relative status.
 It is necessary to know the key departments, which renders key operations for fulfilling of goals.
 The attention of top management is focused on the minor issues raised by vocal managers known as
“Decibel system”.
 Example: Company which thinks advertising is the major aspects, creates a separate advertising &
Department which report directly to the president of the organization.
5. Determining levels at which various types of decisions are to be made
 Relative importance of various departments the levels at which various major and minor decisions are
to made is determined.
 Frim must decide for itself as to how much decentralization of authority and responsibility it wants to
have.
 Extreme Decentralization may lead to loss of Control, on the other hand, Extreme Centralization may
lead to improper decisions, failure to take decisions at the right time, delays & complete breakdown
of the morale of the employees.
 Therefore, Top Management must very carefully decide the levels of the enterprise at which various
types of decisions can be taken in order to achieve overall Objectives of the enterprise most effectively
& efficiently.
6. Determining the span of management
 One has to decide on the Span of Management. i.e., the Number of Subordinates who should report
directly to each Executive.
 The Narrower the Span, the taller would be the Structure with several levels of Management. This will
complicate Communication & increase financial burden of Salaries.
 For these reasons, a Flat Structure is generally desirable. However, the Span of Management, of each
Executive Position must be tailored to meet the satisfactory working environment of the enterprise.
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7. Setting up a coordination mechanism

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  Proper Coordination among various departments and its individuals is very important for the
successful and smooth running of the enterprise.
 As departments and individuals carry out their specialized activities.
 Therefore, effective Coordination Mechanisms are required to enable members of the Organization to
keep sight of the Organization Goals and reduce inefficiencies and conflicts.

4. PRINCIPLES OF ORGANIZATION
1. Objectives: the objective of the enterprise influences the organization structure hence it should be clear
and well defined.
2. Specialization: the activities of the enterprise must be grouped according to the functions and assigned
to persons according to their specialization.
3. Span of control: The span of control should be the minimum. That means, a Manager should be asked to
supervise a reasonable number of subordinates.
4. Management by exception principle: As the managers at higher level has very less time only
exceptionally complex problems should be referred to them and day-to-day routine problems should be
handled by the subordinates at the lower levels.
5. Scalar Principle: This principle is known as “Chain of Command”. The line of authority from the top
management to first-line management must be clearly defined. The principle simply states that an
organization is a hierarchy.
6. Unity of command: Each subordinate should have only one superior whose command has to obeyed.
Multiple subordinates must be avoided.
7. Delegation: Proper authority should be delegated at the lower levels of organization also. The authority
delegation should be equal to responsibility. Each manager should have enough authority to accomplish
the task assigned.
8. Responsibility: The supervisor should be held responsible for the acts of his subordinates. No supervisor
should be allowed to avoid responsibility.
9. Authority: The authority is the tool by which manager is able to accomplish the desired objectives. Hence
authority of each manager should be clear.
10. Efficiency: The organization structure should enable the enterprise to function effectively and accomplish
its objectives with lowest possible cost.
11. Simplicity: The Organization Structure should be as simple as possible and the Organization levels should,
as far as possible, be minimum. A large number of levels of Organization means difficulty of effective
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communication and coordination.

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12. Flexibility: The Organization should be flexible, should be adaptable to changing circumstances and

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 permit expansion, replacement without dislocation and disruption of the basic structure.
13. Balance: There should be reasonable balance in the size of various departments between Centralization
and Decentralization, between the principle of span of control and short chain of command, and among all
types of factors such as Human, Technical and Financial.
14. Unity of Direction: There should be one Objective and one plan for a group of activities having the same
Objective. Unity of Direction facilitates coordination of activities at various levels.
15. Personal Ability: As people constitute an organization, there is a need for proper selection, placement and
training of staff. further, the organization structure must ensure optimum use of human resources and
encourage management development programs.
16. Acceptability: The structure of the organization should be acceptable to the people. 2 things generally
happen if people oppose the structure: It is modified gradually by people or it is used inefficiently.

5. SPAN OF MANAGEMENT OR MEANING AND IMPORTANCE

 Span of Management is also referred as Span of Control.
 This indicates the number of subordinates who report directly to a manager.
 This determines the effective utilization of the managers and also the effective performance of their
subordinates
 If the span is wider than the manager gets overstrained and the subordinates won’t get the proper guidance
 If the span is narrow, then the manager is underutilized and the subordinates will be over controlled.
 Example for span of management which explains, decreasing the span of management increases the
number of levels. Suppose a sales manager has 16 salesmen reporting directly to him, the span of
management is 16.
 To reduce the span, consider there are 4 sales Assistant Sales Manager under 1 Sales Manager and each
Assistant Sales Manager will supervise 4 salesmen, the span of management is 4.
 By adding levels of management, communication between sales manager and salesmen should pass
through 4 additional assistant sales manager.
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 Figure 1: Decreasing the span of management increases the number of levels

6. DEPARTMENTALISATION / DEPARTMENTATION
 Departmentalization refers to dividing people into group or department based of criterion.
 There are 2 categories in departmentalization: Process departmentalization, Purpose departmentalization.

PROCESS DEPARTMENTALISATION
There are 2 classifications for dividing work by process:
1. Departmentalization by Business or organisational Functions:
 Functional Departmentalization is done on the basis of organizing activities and is present in almost
every Enterprise at some level in the organization structure.
 Example: Each Major function of the enterprise is grouped into a Departments like production, sales,
finance and HR.
 Advantages:
1. It is simple form of grouping activities for small organization.
2. It promotes excellence in performance because of experts in the specific domain.
3. It promotes economies of scale, like producing all product in one plant.
 Disadvantages:
1. Many times it is not easy to make clear breaks between each department.
2. It sometimes combines dissimilar jobs in single department.
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3. Each manager thinks about his department goals and does not think in terms of company as a whole.

Dept. of ECE, MIT Thandavapura

 4. It does not provide good training ground for the overall development of a manager.
5. It is not suitable for the organization with larger size.
2. Departmentalization by Technology
 Technology Departmentalization is done on the basis of several discrete stages in the process or
technologies involved in the manufacture of a product.
 This process used when work that would be done in several different locations in an enterprise is done
in one place because of the usage of special equipment.
 Example: Production of vegetable oil have separate departments like: crushing, refining and finishing.
 Advantages:
1. It facilitates the use of heavy and costly equipment’s in an effective manner.
2. It follows the principles of specialization where each department follows the special type of works.
3. It is suitable for the organizations having number of processes in manufacturing the product.
 Disadvantages:
1. Workers tends to feel less responsible for the whole product.
2. It does not provide good training ground.
3. When technology is sequential, the breakdown of one department slowdowns the work of all the
other departments.
4. It is difficult to compare the performance of different technology based department.

PURPOSE DEPARTMENTALISATION
There are 5 external ways in which work can be departmentalized by purpose: Product, Customers, Regions,
Territory or Location, Division, and Time.
2. PRODUCT DEPARMENTALISATION
 Under this method for each major product, a separate department is created and separate manager will
handle each department.
 Product departmentalization is defined as “Grouping activities based on products or product lines”
which is suitable for large organizations.
 This is evident when an organization is diversified and each product need different raw materials,
technology, marketing methods.
 Within each department all the needed manufacturing, engineering, marketing, manpower and other
facilities are assembled.
 Example: Hindustan Lever manufactures detergents, soaps, chemicals and agro-based products.
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  ADVANTAGES
 Leads to continuous and undivided attention
 Helps top manager to compare performance of different products and act accordingly
 Product performance can be measured
 Department works with a clear goal
 DISADVANTAGES
 Duplication of staffs and facilities
 The department may divert from overall organizational goal

3. CUSTOMERS DEPARMENTALISATION
 An enterprise may be divided into number of departments on the basis of customer’s service.
 Ex: Educational Institutes to impart quality education: Day college (Full time), Evening college
(Employed students), Correspondence (Outstation students)
 ADVANTAGE
 It ensures full customers satisfaction
 DISADVANTAGE
 It results in under-utilization of resources in some department
 There may be duplication of facilities

4. REGIONS, TERRITORY OR LOCATION DEPARMENTALISATION

 It is most suitable for organizations which are dispersed over the globe in various locations.
 Many government organizations prefer this type as they can provide similar and adoptive services to
the regions
 Ex: Railways – Southern railways, Northern railways, Western railways, and Eastern railways.
 ADVANTAGES
 Places responsibility even at the lower level
 Emphasizes local markets and problems
 Can take locational advantages like availability of raw material
 It affords top management training
 Can invest in a region with better profit
 DISADVANTAGES
 Increases problem for top management to exercise control.
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 Unity of direction may be lost.

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5. DIVISION DEPARMENTALISATION
 Multi-product company segment themselves into several independent centers on the basis of product,
territory or customers, this is called as Divisions or Free-Form organizations.
 Each division is free to handle and operate their division within the framework of general company –
wide policies.
 Example: Samsung, Apple, Microsoft.

6. TIME DEPARMENTALISATION
 Activities are grouped on the basis of timing of their performance.
 Example: Small company expansion – owner or manager has 2 choices – extra shift or renting more
shops

COMBINED BASE
 There are typically different bases for departmentalization for dealing with specific problems.
 The 2 important combined base structures are: 1. Combined based organization 2. Matrix organization.

1. COMBINED BASE ORGANIZATION

 Consider an organization manufacturing agricultural machinery may follow 3 different levels like
Primary level, Intermediate level and Ultimate level.
 The primary level is the level immediately below the chief executive which is “Product” as the base
like tractor department, appliance department, generator department etc.
 Intermediate level is “Territory” as the base which comprise of region like Eastern plant, Southern plant
and Western plant.
 Ultimate level is “Function” as the base which mainly includes the functionalities like production, sales,
finance, etc.

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 Figure 2: Combined base organization

2. MATRIX ORGANIZATION
 Another form of combined base organization which is popular nowadays is “Matrix Organization”.
 It is also called as Grid or Lattice pattern organization.
 It is a form of organization where 2 types of departmentalization – Functional and Product exist
simultaneously as shown in figure 3.

 Functional departmentalization consists of General manager which is permanent fixture of the matrix
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organization, they hold the complete authority for the overall operation of their respective units.

Dept. of ECE, MIT Thandavapura

  Product departmentalization consists of Project managers are created as the need for them arises hence
they are temporary fixture of the matrix organization.
 Members of a project team are borrowed from the functional departments and are placed under the
direction of project manager.
 On the completion of the project the member of the team including the project manager revert to their
respective department until next assignment.
 The solid line is Functional departmentalization which are permanent and the dotted lines is Product
departmentalization which are temporary.
 ADVANTAGES
 Combination of all necessary inputs at one place reduces problem of communication and
coordination.
 Flexibility in organization resources helps in innovation.
 Stress on optimization of total project eliminates chances of sub-optimization of goals.
 Change of project to employee promotes intellectual growth.
 DISADVANTAGES
 It interrupts the unity of command.
 It causes interpersonal conflicts.
 The employee needs to work under 2 bosses - Functional manager and project manager.

CHOICE OF A SUITABLE BASE

 Factors that are considered for suitable base selection are as follows:
1. Specialization: The base should ensure maximum specialization of skill and efforts. Question asked
in specialization will be like: How will the choice affect differentiation among specialists?
2. Coordination: The base should ensure proper coordination and control of the activities of different
departments. Question asked in coordination will be like: Which base provides the best hope of
obtaining the required control and coordination?
3. Economy: All the departmentalization used, its benefits should always be more than its cost.
Question asked in Economy will be like: Which base provides efficient utilization of machinery?
4. Whole task: Organization should be broken down so that each department has a “Whole task”.
Nature of task are may be like, in Technological departmentalization - weaving and spinning in
textile work, Time departmentalization – work based on shifts.
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7. COMMITTEES
 COMMITTEE DEFINITION: It is a group of people who have been formally assigned some task or
some problem for their decision and implementation.
 Committees are setup for group participants when they have:
 Recurring problem arises in the same group or
 Major problem that can be resolved after series of discussion with the group
 The new pattern of management is proposed by Likert which replaced the one-to-one relationship
characteristics with “Inter-locking groups” approach.
 Under this approach, each unit head and his subordinates would work as a decision-making committee.
 Each unit head will serve as a “Chief” for the level below him and as a subordinate for the level above
him, he will be like a linking pin function as shown in figure 4.

 Committees are classified into 2 main categories: Advisory committee and Executive committee.
 Advisory committee is vested with only staff authority, they can only give advice and cannot enforce
the implementation. Examples are: Sales committee, finance committee.
 Executive committee is vested with line authority they not only take decisions but also enforce its
implementation. Examples are: Board of Directors, CEO.
 Committee can also be classified as Standing committee and ad hoc forces.
 Standing committee are permanent committee deals with recurrent organizational problem and
members are chosen because of their tittle or position, instead of individual qualifications or skills
Ex: finance committee in a company, loan approval company in a bank, admission company in a
college.
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 Ad hoc force are short term forces that dissolve after the task is over. The members are chosen for their
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skills and experience

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  ADVANTAGES
 Committees consist of all department heads as a member which promotes better understanding
between each other.
 Committee provides forum for sharing knowledge and experience to all.
 Committee provides opportunity for participants in decision-making.
 Committee promotes transmitting ideas, and information to the all.
 Committee decisions are based on facts and are unbiased.
 DISADVANATGES
 No members will be held responsible in the committee if any wrong decisions are passed.
 A huge amount is spent in setting meetings and allowance to members.
 Decisions are made though certain compromises among the members.
 Secrecy maintenance is difficult.

SUGGESTIONS FOR MAKING COMMITTEES EFFECTIVE

To overcome the limitations following suggestions will be carried out:
1. The number of members in the committee should not be very large.
2. The committee’s authority should be carefully spelled out, and its activities correctly choose and
closely defined.
3. The members of committee should enjoy equal form of status.
4. The members should give importance to organizational goal rather than departmental goal.
5. The chairman of the committee should plan and conducting meeting fairly.
6. It is useful to take careful minutes of meeting, circular them for draft for corrections and then have a
final copy.
7. The work of the committee should be periodically reviewed to determine if it works effectively.
8. It is important to know whether the committee benefits are worth its cost.

8. STAFFING
 It is the process of filling and keeping filled positions in an organization.
 It includes several sub-functions:
 Recruitment-getting applicants for the jobs as they open up.
 Selection of the best qualified from those who seek the jobs.
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 Transfers and promotions.

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 Training to improve the effectivity of the jobs.

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9. IMPORTANCE AND NEED FOR PROPER STAFFING
 It helps to search the talented and competent people.
 It ensures improved productivity by matching people with job.
 It helps to avoid disruption of work due to shortage of personnel.
 It helps to prevent under-utilization of personnel or overburdening of human resource.

10. RECRUITMENT
 It is the process of attracting candidates to fill the positions in the organization structure.
 Once the requirement of manpower is known, the recruitment process starts.

SOURCES OF RECRUITMENT

 The source of recruitment can be classified in 2 main categories: Internal and External.
 Internal sources refer to present working force in the company.
 External sources refer to vacancies to be filled by external people. Most commonly used external
sources are:
1. Re-employing former employees – Former employees who have been laid off or have left the
company for personal reason may be re-employed. These people may require less initial training.
2. Friends and relatives of present employees – Company with good personnel relation encourage their
employees to recommend their friends and relatives.
3. Applicants at the gate – Unemployed persons who calls at the gates of the company are interviewed
and those who found suitable for existing vacant position are selected.
4. College and technical institutions – Many big companies remain in touch with the colleges and
technical institutes from where young and talented persons may be recruited.
5. Employment exchange - Employment exchange is an office setup by the government for bringing
together those who are search of job and those employers who are looking for workers. Those who
found suitable for existing vacant position are selected.
6. Advertisements – Advertising the vacancy in leading papers may also helpful for searching workers.
7. Labour unions – In company with strong labour union, person is recommended for appointment by
their labour union.
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INTERNAL VS EXTERNAL SORUCES OF RECRUITMENT

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 From the point of impact on motivation, external sources are not desirable, when there are adequate and

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 qualified person’s already inside the organization.
 If management wants his workers to improve prospects by participating effectively inside the
organization program, it is desirable to follow a policy of recruitment from within. Outside workers will
have lack of knowledge of products and cannot participate effectively.
 On the other hand, internal candidates are too advanced in age, it may become it may be difficult for
the management to recover outside sources of recruitment.

INTERNAL RECRUITMENT ADVANTAGES AND DISADVATAGES

 ADVANTAGES
 A sense of security develops among the employee.
 Employee remains loyal to the organization.
 People recruited within does not require induction program.
 Labour turnover is reduced.
 People are motivated and become efficient.
 DISADVANTAGES
 Limits the choice of selection to few candidates.
 It may encourage favoritism.

EXTERNAL RECRUITMENT ADVANTAGES AND DISADVATAGES

 ADVANTAGES
 New workers bring fresh ideas.
 Field of choice becomes wide.
 DISADVANTAGES
 Present employee may lose their sense of security and become disloyal.
 There will be loss in employee-employee relationship.

11. SELECTION PROCEDURE

 There are several Steps in selection procedure:
1. Application blank
 Filling the “application blank” by the candidates is the first step in the process of selection.
 In this the candidate gives details about his qualification, specialization, experience, etc.
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2. Initial interview of the candidate

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 This is done to clarify the information already furnished in application blank and also to

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 create a friendly environment for the candidates.
 The interview must be properly planned and the interviews from different specialization must
make applicant feel ease.
3. Employment tests
 To test further abilities of the candidates, some tests are conducted in this step.
 These tests determine candidate’s particular traits, attitude, likes, dislikes, intelligence and
capacity to learn.
 There are several types of tests that can be listed as follows:
1. Aptitude tests – This test measures the applicant’s capacity to learn the skill required for
a job.
2. Interest tests – This is the test used to find out the type of work in which the candidates
have an interest. Ex: Sales job, Marketing job.
3. Intelligence test – This test is used to find out the candidate’s intelligence. By this test
candidate’s mental alertness, reasoning ability, power of understanding can be judged.
Ex: Reading and summarizing the paragraph in the allotted time, writing 10 to 15 words
that begins with the same letter.
4. Performance test – This is the test used to measure the candidate’s level of knowledge
and skill in the particular job in which appointed.
5. Personality test – It is used to measure those characteristics of the candidates which
constitutes his personality. Ex: Self-confidence, judgment, temperament, originality, etc.
4. Checking reference
 If the candidate is found satisfactory, then it is very important to get his personal background,
history, character, etc. For this the candidate’s friends, previous employer can be contacted.
 With the increase in the percentage of fake resumes, seeking help from the external screening
agencies which is used for verification of educational and professional qualifications, pre-
employment status and past criminal records of job applicant.
5. Physical or medical examination
 It is done to check the physical fitness of the candidates for the job.
 To prevent the unwarranted claims by the candidates.
 To prevent communicable diseases entering the company.
6. Final interview
 This is just an informal interview wherein the candidate will be intimated about his selection
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and briefed about his future prospects in the company.

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*****

Dept. of ECE, MIT Thandavapura

 QUESTION BANK
MODULE 2 CHAPTER 1

1. Explain span of management concepts and its importance. (5M – Feb 2023, 10M – Aug 2022, 6M
– Feb 2021) *****
2. Define committee. Explain different types of committees. (5M – Feb 2023)
3. What is recruitment? Explain steps in selection process. (10M – Feb 2023, 10M – Mar 2022) *****
4. Explain different sources of recruitment. (10M – Aug 2022, 10M – July 2023) *****
5. Define organization. Explain principles of organization. (10M – Feb 2021, 10M – Mar 2022) *****
6. List the characteristics of organization. (4M)
7. Explain 5 external ways in which work can be departmentalized by purpose. (Product, Customers,
Regions, Territory or Location, Division, and Time)
8. Explain the typical matrix organization or Grid or Lattice pattern organization. ***

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 CHAPTER 2
DIRECTING AND CONTROLLING

1. DIRECTION OR DIRECTING MEANING

 Direction means issuance of orders and leading and motivating subordinates as they execute the orders.
 Haimann – “Directing consists of the process and techniques utilized in issuing instructions and making
certain that operations are carried on as originally planned”
 Koontz and O’Donnell – “Direction is the interpersonal aspect of managing by which subordinates are
led to understand and contribute effectively and efficiently to the attainment of enterprise objectives”.

2. REQUIREMENTS OF EFFECTIVE DIRECTION

1. Harmony of objectives
 An organization functions best when the goal of the organization is in complete harmony with the
goal of the members.
 In directing subordinates, manager should take advantage of individual motives to gain group goal.
 Ex: If the employee is told to work hard so that company profit may increase, they probably will
not. But if they are told they will receive bonus or promotions they are more likely to work hard.
2. Unity of command
 Subordinates should receive orders and instructions from the supervisor only.
 The violation of instructions may lead to conflicts between supervisor and subordinates.
 Boss is the only person who knows about the nature of his subordinates, responses to different
motivations and he is responsible for selecting best directing techniques to maximize productivity.
3. Direct supervision
 Every supervisor must maintain face-to-face direct contact with his subordinates.
 Direct supervision boosts morale of employees, increases loyalty and provides immediate feedback
about their work progress.
4. Efficient communication
 Communication is the instrument of direction.
 Supervisor communicates to his subordinates where he transfers information from one person to
another by transmitting ideas, facts, thoughts, feelings and values.
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 Efficient communication is a 2-way process.

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 5. Follow-through
 Direction is not only telling subordinates what they should do but also seeing that they do it in a
desired way.
 The manager should follow up the entire performance of the subordinates and keep a track of their
activities.

3. GIVING ORDERS
 The order is a device employed by a line manager in directing his immediate subordinates to start an
activity, stop it or to modify it.
 The orders should be clear and complete, compatible with the purpose of organization and with the
personal interest of the organization.
 Mary Parker Follett stated 3 principles followed for giving order:
1. Attitude – It is necessary for carrying out an order and should be prepared in advance.
2. Face-to-face suggestions – These are preferable for long distance orders.
3. Depersonalized – An order should be depersonalized and made an integral part of a given situation.
 Chester Barnard stated 4 conditions followed for giving order:
1. Order should be clear and complete
2. Order should be compatible with the purpose of organization
3. Order should be compatible with the employee’s interest
4. Orders should be operational
 Orders can be communicated verbally or in writing. There are 5 conditions for written orders:
1. Subject is important
2. Several individuals are affected
3. Details are involved
4. Distance exist between order-giver and recipient
5. Deadline missed
 Manager follows 4 methods for orders:
1. Force – “Do what is say, or else….” Meaning that employee will be punished if he does not follow
the order. The result is frustration and restriction to output.
2. Paternalism – “Do what I say because I am good to you” Meaning that the employee develops a
feeling of gratitude towards the manager.
3. Bargain – “You do what I say and later I will do what you say” The result of this effect is managers
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control is gradually reduced.

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 4. Harmony of objectives – “If we perform well together each will achieve his goal” This is the best
formula for ensuring compliance to orders.

4. MOTIVATION
 Motivation means Mover which means “To Move”.
 Motivation – It is an ability to move other people in the right direction to get work done.
Techniques of coordination.

NATURE OF MOTIVATION

1. Individuals differ in their motives: The individual goal differs so do their motives. One example is,
there are 2 men playing football, the first man play football with the focus of winning and the second
man play football for enjoyment. This means there is no single motive to same job, it differs from person
to person hence manager should deal with human diversity.
2. Sometimes the individual himself is unaware of his motive: Only the small part is conscious and
visible, the rest is beneath the surface. Below the surface concepts is unconscious motive.
3. Motives change: Each individual motives are not fixed. For example, a temporary worker may work
hard in the beginning to become permanent. When made permanent his motive will be gain promotion.
Hence each individuals motive changes from time to time.
4. Motives are expressed differently: The way in which motives are turned into actions also vary
between one individual and others. For example, the motive is “If I work hard, I will be successful”,
one person can work hard in the allotted hours to be successful and another will work hard even beyond
the working hours to be successful. Hence the same motives might be expressed differently from each
individual.
5. Motives are complex: It is difficult to explain and predict the behavior of workers. For example, a
group of people plan for a trip with varieties of plans and on the day of trip only few people will turn
up. Upon this it is found that many people disagree with the location, time and dates, hence motives are
complex and hard to accept by all.
6. Multiple motives make the choice of goals difficult for an individual: Motives operates
simultaneously with each individuals. This results in 3 types of motivational conflicts:
 Approach-Approach Conflicts – Person has 2 motives which he likes equally, but it is possible to
have only one. Example: Person has choice of either remaining at his present place with same salary
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or going to new place with salary hike. In this situation choosing tow work towards satisfaction of
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one motive results in other motive remaining unsatisfied.

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  Avoidance-Avoidance Conflict – Person is forced to choose between 2 motives, both are disliked
equally. Example: person is dissatisfied with his present job, wants to leave it but also wants to
avoid unemployment.
 Approach-Avoidance Conflict – Person is attracted to the positive characteristics of the motive, but
wants to avoid negative characteristics. Example: Person may be motivated to work overtime for
extra pay but may get scolding for reaching home late. One motive has both negative and positive
characteristic.

MOTIVATION THEORIES
 Motivational theories under each head are as follows:
1. Maslow’s Need Hierarchy Theory
2. Herzberg’s Two-factor Theory

1. MASLOW’S NEED-HIERARCHY THEORY

 All people have variety of needs, some needs are satisfied and some are not. An unsatisfied need is the
starting point in the motivation process.
 When a person has unsatisfied needs, they attempt to do something to satisfy the needs. This is called
as goal.
 According to A.H. Maslow, needs are arranged in a hierarchy with 5 categories as shown in figure 1.

 Physiological needs: These are the basic needs for sustaining human life, such as food, water, shelter
and sleep.
 Security needs: These are both economical and psychological secure related to man’s confidence that
he will be able to deal with the problem that might occur such as lay-off, disaster and dismissal.
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 Social needs: These are the needs associated with different people and accepted by them to love and to
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be loved.

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  Esteem needs: These are the needs related to respect and prestige. There are 2 types: Self-esteem – It
is an individual need to inside himself that he is worthy. Esteem from others - It is the others thinks that
he is worthy.
 Self-fulfilment needs: These are the needs for realizing one’s potential. These include the need for
realizing one’s capabilities to the fullest.

CHARACTERISTICS OF HUMAN NEEDS

2. HERZBERG’S TWO-FACTOR THEORY

 According to Herzberg, absence of certain job factors tends to make workers dissatisfied.
 Presence of same factor in themselves does not produce high levels of motivation.
 Herzberg called these factors as maintenance or hygiene factors.
 The 10 maintenance factors are:
1. Fair company policies and administration
2. A supervisor who knows the work
3. A good relationship with one’s supervisor
4. A good relationship with one’s peers
5. A good relationship with one’s subordinates
6. A fair salary
7. Job security
8. Personal life
9. Good working condition
10. Status
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 To build high level of motivation, different factors are necessary. These are called as Motivators or
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satisfiers. There are 6 factors:

Dept. of ECE, MIT Thandavapura

 1. Opportunity to accomplish something significant
2. Recognition for significant accomplishments
3. Change of advancement
4. Opportunity to grow and develop on the job
5. Chance for increased responsibility
6. The job itself
 Maintenance factors has 2 groups known as Intrinsic rewards – They are internally generated by the
task itself and are not tangible which are visible to others and Extrinsic rewards – They are distributed
by other people and are tangible and visible to others.
 The 2 groups defined are unidirectional, which means the effect can be seen only in one direction.
 In the absence of maintenance factors, workers may feel dissatisfied, there might be more absence, and
more quits. In the presence of it, workers may fell motivated.

5. COMMUNICATION
 COMMUNICATION – “Communication means the process of passing information and understanding
from one person to another.”
 IMPORTANCE – Communication is necessary for achieving goals of the organization.

PURPOSES OF COMMUNICATION
There are10 different purposes under communication:
1. Communication is needed in Recruitment process to hire employees. The recruits are told about the
organization structure, policies and its practices.
2. Communication is needed in orientation to make people understand the rules and regulations in the
organization.
3. Communication is needed to enable employees to perform their function effectively. Employees need to
know their jobs relationship and importance to the overall operation.
4. Communication is needed for evaluation of work of the subordinates and their contribution towards the
organization.
5. Communication is needed to teach employee about the personal safety about the job. This is essential to
reduces accidents, this lowers compensation, legal cost and also decreases recruitment and training cots.
6. Communication is needed for projecting the organization in society.
7. Communication helps the manager in the decision process. The manager should make a choice of useful
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and essential information.

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 8. Communication helps in achieving coordination. In a larger organization, work is carried out on the
basis of division of labors and specialization, there is a need of coordination among the several units.
9. Communication is the effective way to build support for change. This develops mutual understanding,
cooperation and goodwill between them and management.
10. Communication increases managerial efficiency. The success of the manager in the performance of his
duties depends on his ability to communicate. The effective communication is very essential for the
efficiency of a manager.

*****

QUESTION BANK
MODULE 2 CHAPTER 2

1. Explain Maslow’s need-hierarchy motivational theory with the help of neat block diagram. (10M
– Aug 2022) *****
2. Write about the requirements of effective direction. (8M – Feb 2023, 10M – July 2023) *****
3. Explain Maslow’s need-hierarchy motivational theory and Herzberg’s two factor theory as
applicable to an organization. (10M – Mar 2022) *****
4. Discuss the purpose of communication. (10M – Mar 2022) *****
5. Explain the concepts of giving orders suggested by Mary Follett and Chester Barnard along with the 4
methods involved in giving order. ***

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 LEADERSHIP
1. DEFINITION OF LEADERSHIP
 George R Terry - “The will to do is triggered by leadership and lukewarm desires for achievement are
transformed into burning passion for successful accomplishment by the skillful use of leadership”
 Peter Drucker - “Leadership is the lifting of man’s visions to higher sights, the raising of man’s
performance to a higher standard, the building of man’s personality beyond its normal limitations”
 Alford and Beatty - “Ability to secure desired actions from a group of followers voluntarily without the
use of forces”
 Peter Drucker - “Ability to prompt others to seek defined objectives enthusiastically”

2. CHARACTERSTICS OF LEADERSHIP
Some important characteristics of a leadership are as follows:
1. Leadership implies the existence of followers–The quality of person’s leadership can be
determined by studying his followers. Questions like: What kind of followers does he have? How
strong is the committee as a result of his leadership? By answering these questions nature and
quality of leadership can be measured. Leaders within the organization also have followers. The
supervisor can have several levels both in upward and downward like branch head, division
manager, vice-president of the department.
2. Leadership involves a community of interest between leader and his followers – The objective
of both leader and his men are one and the same. If the leader strives for one purpose and workers
for another purpose, then it is no leadership.
3. Leadership involves an unequal distribution of authority among leaders and group members–
Leaders can direct some of the activities of group members, that is the group members are
compelled or are willing to obey most of the leader’s directions. The group of members cannot
direct the leader’s activities, though they will obviously affect those activities in a number of ways.
4. Leadership implies that the leaders can influence their followers or subordinates in addition
to being able to give their followers or subordinates legitimate directions – Leaders not only tell
their subordinates what to do by way of command but also influence by their behavior and conduct.
The use of command by leaders succeeds only in bringing about the temporary behavioral change
in the followers. Permanent attitude changes come through the use of influence.

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3. TRADITIONAL APPROACHES TO LEADERSHIP –
BEHAVIOURALAPPROACH

 The behavioral approach is based on the assumption that the leaders are not born but they can be
trained.
 Under behavioral approach, leadership approach is categorized from 3 viewpoints:
1. Motivation
2. Authority
3. Supervision

MOTIVATION
 Motivation leadership behavior can have either positive or negative aspects.
 In Positive behavior aspect the leader’s emphasis on Rewards to motivate the subordinates.
 In Negative behavior aspect the leader’s emphasis on Punishments and penalties.

AUTHORITY
 From the view of authority, leadership styles can be described in 3 styles:
1. Autocratic Leadership
2. Democratic Leadership
3. Free Rein Leadership

1. AUTOCRATIC LEADERSHIP
 In this types of leadership, leader alone determines policies and makes plan. He tells what to do and
how to do.
 He demands strict and obedience way behavior from the employee. He might use rewards for obtaining
obedience from his employee.
 Employees dislikes both these forms because in one form they have constant fear and in another form
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they remain under constant gratitude.

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  MERITS
 Increase efficiency, save time and get quick result.
 Save time as the workers have to work with the plan defined by the leader.
 Produces quick result since there will be no deviation in the plan.
 Chain of command and division of work is clear
 DEMERITS
 It motivates people through Fear.
 Leader alone is involved in decision making.
 They express low morale, low productivity and massive resistance.

2. DEMOCRATIC LEADERSHIP
 In this type the leader thinks “with” rather than “for” the people. Leader along with team determines
policies and makes plan.
 The entire group is involved in and accepts responsibility for goal setting and achievements.
 Subordinates have considerable freedom of action.
 He serves as a coordinator for the team, and he shows greatest concern for his people rather than high
production.
 MERITS
 Team participates in making decisions.
 Improves quality of decision.
 Provides motivation.
 Encourages people to grow.
 DEMERITS
 Takes more time.
 Loss of leader control.
 Leaders might avoid responsibility.

3. FREE-REIN LEADERSHIP
 This type of leadership is also called as Laissez Faire Leadership. The leader has no control.
 He only provides information, materials and facilities for group objectives.
 Here the workers should handle Kind of freedom.
 MERITS
 Team takes all decisions.
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  DEMERITS
 More conflicts for decisions making.
 Loss of leader control.
 Figure 1 shows the spectrum of a wide variety of leadership styles moving from a very authority style
to democratic style.

SUPERVISOR
 Supervision is the act of overseeing work done by people.
 From supervisor point of view, leadership style can either be employee-oriented or production-oriented.
 Employee-oriented leader is a one who cares about welfare of his subordinates rather than production.
 Production-oriented leader is a one who cares about production welfare of his subordinates.
 The 2 important studies under this category are: Ohio State University study and Management Grid.

1. OHIO STATE UNIVERSITY MODEL

 The Ohio state model is as shown in figure 2. Which consist of Initiating structure and consideration.

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  The Initiating structure refers to leader’s behavior in structuring the job of the follower and establishing
well-defined patterns of organization and communication.
 Consideration is the leader’s behavior showing mutual respect, trust and friendship.
 These 2 types of leader’s behaviors are independent.
 Some leaders follow structure and give little consideration, others are considerate but provide little
structure. Many leaders do not fit into both categories. They use mix of structure and consideration.
 Thus there are 4 styles of leadership in Ohio state model:
1. Low consideration, High Initiating structure
2. High consideration, High Initiating structure
3. High consideration, Low Initiating structure
4. Low consideration, Low Initiating structure

2. MANAGERIAL GRID / MANAGERIAL STYLES

 Robert and Jane use a chart called Managerial Grid to describe five types of managerial styles. They
use a terms like “Concern for production” and “Concern for people”. These 2 dimensions are plotted on
a 9-point scale on two separate axes as shown in figure 3.

 Concern for people is shown in horizontal axis and Concern for productionis shown in vertical axis.
Thus there are 81 combinations of concerns represented in a grid.
 There are 5 major grids which are seen more often. They are:
1. Task Management: Here the management shows maximum concern for production and least
concern for people. Therefore, it is called “Authority-Obedience” approach.
2. Country-Club Management: This is reverse of Task Management. Here the management shows
maximum concern for people and least concern for production. Therefore, it is called “Love
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conquers all” approach.

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 3. Impoverished Management: Here the management shows least concern for production as well as
for people. The manager wants just the things to be done, he ignores human relationship as well as
production. Therefore, it is called “Speak no evil, hear no evil, see no evil” approach.
4. Team Management: Here the management shows maximum concern for production as well as for
people. Maximum concern for production is based on decision arrived from the worker’s
participation and maximum concern for people is based on workers task related morale. Therefore,
it is called “One plus one can add up to three” approach.
5. Dampened pendulum or the middle of the road style: Here the management shows balanced
concern for production as well as for people. Neither too much production is expected nor too much
concern for people is expressed. The manger follows middle position. Therefore, it is called “Get
results but do not kill yourself” approach.

4. CO-ORDINATION
 MEANING: Some definitions of the term 'co-ordination' would be:
 “Coordination is the management of interdependence in work situation”
 "Co-ordination refers to the orderly arrangement of individual and group efforts to ensure unity of
action in the realization of common goals." - Mooney and Reiley
 "To co-ordinate means, to unite and correlate all activities." - Henry Fayol
 "Co-ordination means balancing and keeping the team together by ensuring a suitable allocation of
working activities to the various members, and seeing that these are performed with due harmony
among the members themselves" - E.F.L. Brech

5. TYPES OF COORDINATION
 Coordination may be classified as Internal or External, Vertical or Horizontal and Procedural or
Substantive.
 Internal coordination - Coordination among the employees of the same department or section, among
workers and managers at different levels, among branch offices, plants, departments and sections is
called internal coordination.
 External coordination - Coordination with customers, suppliers, government and outsiders with whom
the enterprise has business connections is called external coordination.
 Vertical coordination– It is what exists within a department where the departmental head is called
upon to coordinate the activities of all those placed below him.
 Horizontal coordination–It takes place sideways. It exists between different departments such as
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 production, sales, purchasing, finance, personnel, etc.
 Procedural coordination - It is meant the specification of the organization itself - that is, the
generalized description of the behaviors and relationships of the members of the organization.
 Procedural coordination establishes the lines of authority, and outlines the sphere of activity and
authority of each member of the organization.
 Substantive coordination - It is concerned with the content of the organization’s activities.
 In an automobiles factory, an organization chart is an aspect of procedural coordination, while
blueprints for the engine block of the car being manufactured are an aspect of substantive coordination.

6. TECHNIQUES OF COORDINATION/APPROACHES TO COORDINATION

1. Employing only basic coordinating techniques: This approach can serve the needs of organization
with required condonation requirements.
a. Rules, Procedures and Policies: The specification of rules, procedures and policies is a very
common device to coordinate sub-units for repetitive activities. It covers all possible situations
for example, if sales and credit department makes a great deal, the coordination between
management and sales and credit team may improve.
b. Planning: Planning ensures coordinated effort. Under planning target of each department joins
with the targets of all other department.
c. Hierarchy: The oldest and simplest way for achieving coordination is hierarchy or chain of
command. By putting interdependent units under one boss, some coordination activities is
ensured. Example: Purchase, stores, inspection, etc. may put in one executive department for
purpose of coordination.
2. Increasing coordination potential: The organization whose coordination is not fulfilled by basis
coordination techniques, needs additional coordinating mechanism such as:
a. Direct contact – To avoid overload of problems on top level executives, the problems with least
concern can be resolved in the lower level by informal contacts.
b. Task force–This is temporary group formed for those departments which are facing a problem. It
exists till the problem exist later it will be resolved.
c. Committees – The periodic decision committee which are permanent is called as committee.
This will ease the hierarchical structure, promotes effective communication, and make their
implementation more effective.
d. Induction–Inducting new employee into new social setting of his work is also a coordinating
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 policies.
e. Indoctrination – Indoctrinating organizational members with the goals and mission of the
organization, a device used commonly in religious and military organizations is coordinating
device. Here the leader should be capable to develop in minds of workers to create desire and will
to work together for the purpose.
f. Incentives – Providing incentives through profit-sharing plan, which promotes team spirit and
better cooperation between employees, superiors and subordinates.
g. Liaison departments–Liaison help to handle the contact and communication between two
departments, which typically occurs between sales and production unit.
h. Work flow – A workflow is the sequence of steps by which organization acquires input and
transforms them into output. Its uses technology, economic, ands social consideration and helps
in coordination.
3. Reducing need of coordination: This is used in those organization in which even expanded
coordinating mechanism fails. Some new forms of organization structure are used like autonomous
work teams and matrix organization which reduces coordination needs.

7. CONTROLLING DEFINATION / MEANING

 E F L Brech - “Control is checking current performance against predetermined standards contained in

the plans, with a view to ensuring adequate progress and satisfactory performance”
 George R Terry - “Controlling is determining what is being accomplished, that is, evaluating the
performance and if necessary applying corrective measures so that the performance takes place
according to plans”.

8. NEED FOR CONTROL SYSTEM

A control system is need for 4 purposes:
1. Measuring progress: There is a close link between planning and controlling the organization’s
operations. The fundamental goals and objectives of the organization and the methods for attaining
them are established. The control process continually measures progress towards goals, control is used
in verifying whether everything happens according to the plan adopted, the instructions issued and
principles established. As the navigator manager continually takes readings to see where his
department is heading with the plan adopted.
2. Uncovering deviations: Once a business organization is set into motion toward sits specific
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objectives, events occur that tend to pull it "off target". Major events which tend to pull an
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 organization “off target" are as follows:
Change
Change is an integral part of any organization which occurs due to Markets shift, new products
emerge, new materials are discovered and new regulations are passed. The control function enables
managers to detect change that are affecting their organization’s products or services,
Complexity
Organizations are geographically have separated plants and decentralized operations make control
necessary. Diversified product lines need to be watched closely to ensure that quality and profitability
are being maintained; sales in different retail outlets need to be recorded accurately and analyzed.
Mistakes
Managers and their subordinates very often commit mistakes. For example, wrong parts are ordered,
wrong pricing decisions are made, problems are diagnosed incorrectly, and so on. A control system
enables managers to catch these mistakes before they become serious.
Delegation
When managers delegate authority to subordinates, their responsibility to their own superiors is not
reduced. The only way managers can determine if their subordinates are accomplishing the tasks that
have been delegated to them is by implementing a system of control.
3. Indicating corrective action: Controls are needed to indicate corrective actions. For example, the
plans need to be redrawn or goals need to be modified or there is need for reassignment or clarification
of duties or for additional staffing or for conforming to the way the work should be done.
4. Transmitting corrective action to the operation: Controls are needed to transmit corrective action to
the operation which reduces error and keeps the output "on course" with the modification of
transformation subsystem. The thermostat is a example, where the room temperature drops below a
desired level, the control mechanism in the transformation subsystem at once transmits this
information and the temperature begins to rise till it reaches the selected level.
The transformation subsystem takes the shape of a closed loop as shown in Figure 4. However, the
system is closed only in the short run. Human intervention is involved to adjust the system
periodically. Thus, the overall system is open, but we have closed loop control once the system is set.
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9. BENEFITS OF CONTROL
 Increases productivity
 Reduces defects and mistakes
 Helps meet deadlines
 Facilitates communication
 Improves safety
 Lowers cost
 Gives the workers control over their environment.

10. ESSENTIALS OF EFFECTIVE CONTROL SYSTEM

The essentials of an effective control system are as follows.
1. Suitable: The control system will differ between activities. Controls used in the sales department will
be different from those used in finance and personnel. Similarly, a machine-based method of
production requires a control system which is different from the system that is used in labor intensive
methods of production. Hence, every control system depends on specific needs.
2. Timely and Forward Looking: Although an ideal control system, as in certain electric controls,
should be able to detect deviations before they occur, the same is not possible in personnel and
marketing controls which always include a time lag between the deviation and corrective action. In
any case, the feedback system should be as short and quick as possible and the information should
reach the superior before it is too late to head off failures.
3. Objective and Comprehensible: The control system should be both objective and understandable.
Objective controls specify the expected results in clear and definite terms. Employees are not made to
go up and down the hierarchy to get the information. It provides employees with direct access to any
additional information which they may need to perform their task.
4. Flexible: The control system should be flexible so that it can be adjusted to suit the needs of any
change in the basic nature of the inputs and/or the sizes, varieties or types of the same product or
service. One way of introducing flexibility into a control system is to make the adjustments automatic.
Both flexible budgets and standard costs, for example, provide a shifting standard for expenses, as the
volume of work goes up or down.
5. Economical: Economy is another requirement of every control system. The benefit derived from a
control system should be more than the cost involved in implementing it. To spend a dollar to protect
99 cents is not control. It is waste.
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6. Prescriptive and Operational: A control system in order to be effective and adequate must not only
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 detect deviations from the standards but should also provide for solutions to the problems that cause
deviations. In other words, the system should be prescriptive and operational. It must disclose where
failures are occurring, who is responsible for them, and what should be done about them. It must focus
more on action than on information.
7. Acceptable to Organization Members: The system should be acceptable to organization members.
When standards are set only by upper level managers, there is a danger that employees will regard
those standards as unreasonable or unrealistic. They may then refuse to meet them. Individuals who
have to report deviations to someone they perceive as a lower level staff member may stop taking the
control system seriously.
8. Reveal Exceptions at Strategic Points: A control system should be such as to reveal exceptions at
strategic points. Small exceptions in certain areas have greater significance than larger deviations in
other areas. It should also to be noted here that a good controlling system is actually designed to keep
things from going wrong, and not just to correct them afterwards.
9. Motivate people to high performance: A control system is most effective when it motivates people
to high performance. Since most people respond to challenges meeting tough standards. If the target is
so tough, it is impossible to meet and more likely to discourage than to motivate efforts.
10. Should not lead to less attention to other aspects: Control of one aspect of operations should not
lead to less attention to other aspects. For example, if control put pressure on employee to increase
output, the quality of work, care of equipment, and prevention of waste should be neglected.
11. Should be periodically reviewed and evaluated: Every control system should be periodically
reviewed and evaluated in relation to its objectives to see how effective and efficient the design proved
to be or why is failed.

11. STEPS IN CONTROLLING

The various steps that are involved in the process of controlling are as follows:

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 Step 1: Setting of standards
The first step in the control process is to establish standards. Standards are the targets against which
actual performance will be compared. Since entire operations cannot be observed, each organization
must develop its own list of key areas for which standards need to be established. Some key areas are:
profit, production, market position, employee attitude and public.
Guidelines for setting pars/standards
1. They must be specifically determined in quantitative terms: Pars or standards expressed in general
terms such as “cost should be reduced” or “order should be executed quickly”.
2. They should be accepted by the individuals involved.
3. They need to be flexible in order to adapt to changing conditions.
4. They should emphasize the achievements of results more than rules and methods.
Step 2: Measuring and comparing actual results against standards
The second step in the control process is to measure actual performances of various individuals, teams
and departments in the background of established standards. Wherever quantitative measurement is
applicable, it is easy to measure, while qualitative standards are difficult to measure. Tests, surveys,
employee appraisals, exit interviews, media reports, open forums etc., are some of the ways employed
to measure qualitative standards.
Step 3: Taking corrective action
The final step in the control process consists of taking remedial actions so that deviation may not
occur again in future. Corrective steps are initiated so that any defects in the actual performance may
be rectified.
Corrective actions may include the following activities.
1. Change in methods, rules, procedures strategies etc.
2. Introduce training programs
3. Job redesign
4. Replacement of personnel
5. Re-establishing budgets and standards
6. Better compensation packages to employees
7. Changing machinery and processes

*****
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 QUESTION BANK
MODULE 3 CHAPTER 1

1. Explain 5 types of managerial styles using managerial grid chart. (Aug 2022, Jul
2023 -10M)*****
2. Discuss essentials of effective control system. (Jan 2021 -6M)*****
3. Discuss different leadership styles from authority view point. (Jan 2021 – 7M) or
discuss autocratic, democratic, and free rein leadership styles. (Feb 2023 – 8M)
*****
4. What is the meaning of control? Write the benefits of control. (Feb 20203 – 4M) ***
5. Explain the detail step in control process. ***
6. Discuss different leadership styles from supervisor view point. (Ohio state university model and
managerial grid / managerial styles) ***
7. Write a note on techniques of coordination/approaches to coordination.

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 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

TECHNOLOGICAL INNOVATION MANAGEMENT

AND ENTREPRENEURSHIP
BEC501
V SEMESTER
MODULE 3 NOTES
Prepared by,
[Link] A M
Assistant Professor
Dept. of ECE
MIT Thandavapura

A Unit of Maharaja Education Trust®

MAHARAJA INSTITUTE OF TECHNOLOGY

THANDAVAPURA
NH 766, Nanjangud Taluk, Mysuru- 571 302
(An ISO 9001:2015 and ISO 21001:2018 Certified Institution)
(Affiliated to VTU, Belagavi and approved by AICTE, New Delhi)
 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

MODULE 3 CONTENTS
CHAPTER 1 - SOCIAL RESPONSIBILITIES O F BUSINESS
 Meaning of Social Responsibility
 Social Responsibilities of Business towards Different Groups
 Social Audit
 Business Ethics and Corporate Governance (Text 1)
Text Book 1: Principles of Management – P.C Tripathi, P.N Reddy, McGraw Hill Education, 6th
Edition, 2017

CHAPTER 2 – ENTREPRENEURSHIP
 Definition of Entrepreneur
 Importance of Entrepreneurship
 Concepts of Entrepreneurship
 Characteristics of successful Entrepreneur
 Classification of Entrepreneurs
 Myths of Entrepreneurship
 Entrepreneurial Development models
 Entrepreneurial development cycle
 Problems faced by Entrepreneurs
 Capacity building for Entrepreneurship

Text Book 2: Entrepreneurship Development Small Business Enterprises- Poornima M Charantimath,

Pearson Education 2008,
 CHAPTER-1
SOCIAL RESPONSIBILITIES OF BUSINESS
1. MEANING OF SOCIAL RESPONSIBILITY
 Adolph Berle: Social responsibility is the manager responsiveness to public consensus
 Keith Davis: Social responsibility refers to 2 types of business obligations:
1. Socio-Economic Obligation: Every business sees the economic consequences of its actions, which
does not focus on public welfare.
Ex: Promote employment, maintains competition
2. Socio-Human Obligation: Every business sees to nurture and develop human values.
Ex: Motivation, coordination, team work

2. SOCIAL RESPONSIBILITY OF BUSINESS TOWARDS DIFFERENT

GROUPS
 Business enterprises have responsibility towards:
[Link] the Consumer and the Community
[Link] Employees and Workers
3. Towards Shareholders and Other Businesses
[Link] the state
1. Towards the Consumer and the Community
 Production of cheap and better-quality goods and services by developing new skills, innovations
and techniques, by locating factories and markets at proper places.
 Levelling out seasonal variations in employment and production.
 Deciding priorities of production in the country's interest and conserving natural resources.
 Providing social audit.
 Making real consumer needs as the criterion for selecting messages to be given by product
advertisements. Example: Toothpaste is bought not to kill bacteria but to create white teeth. This
kind of advertising promotes over-consumption, forces consumers to constantly compare
themselves negatively with others, creates in them dissatisfaction with the old products.
 Preventing creation of monopolies. Monopolies are bad in that they make the community face high
prices, short supply and inferior quality of goods.
 Providing after sale services.
 Ensuring hygienic disposal of wastes after production and voluntarily assisting in making the town
 environment satisfying.
 Achieving better public relations by giving to the community, true, adequate and easily intelligible
information about its working.
 Supporting programmes like supporting education. Slum clearance and similar other programs.

2. Towards Employees and Workers

 Fair wages to employees, which is possible only when the businessman is willing to accept a
voluntary on his own profits.
 Selection, training and promotion irrespective of race, religion.
 Social security measures and good quality of work life.
 Good human relationship i.e., maintaining industrial peace, educating workers to produce their
own leadership.
 Freedom, self-respect and self-realization.
 Recognition of talented workers and provide appreciation through incentives.

3. Towards Shareholders and Other Businesses

 Promoting good governance through internal accountability and transparency.
 Fairness in relations with competitors. Competition with rival businessmen should always be fair
and healthy. Businessmen sometimes treat their rivals as enemies and try to harm each other.

4. Towards the state

 Keeping away active participation in and direct identification with any political party.
 Observing all the laws of land which may have the following objectives:
a. To provide direction to the economic and business life of the community.
b. To bring about harmony between the limited enterprise interest and social interest.
c. To provide safeguard against wrong business practices.
d. To compel business to play fair to all participants
e. To enforce maximum production lines.
f. To allocate limited resources according to social priorities and preferences.
g. To implement rural uplift and secure balanced.
h. To enforce distributive justice.
i. To prevent week partners in business getting exploitation.
3. SOCIAL AUDIT
 A social audit is a systematic study and evaluation of the organization’s social performance as
distinguished from its economic performance. The term "social performance" refers to any
organizational activity that effects the general welfare of society.
 BENEFITS
1. It supplies data for comparison with the organization’s social policies and standards. The
management can determine how well it is living up to its social objectives.
2. It develops a sense of social awareness among all employees. In the process of preparing reports
and responding to evaluations, employees become more aware of the social implications of their
actions.
3. It provides data for comparing the effectiveness of different types of programmes.
4. It provides data about the cost of social programmes, so that the management can relate this data
to budgets, available resources, company objectives, etc.
5. It provides information for effective response to external groups which make demands on the
organization.
 LIMITATIONS
1. They are difficult to measure.
2. Their classification under "good" or "bad" is not universally accepted. In other words, the same
social result may be classed as "good" according to one opinion, and as "bad" according to an-
other.
3. Most of them occur outside the organization, making it difficult for the organization to secure
data from these outside sources.

4. BUSINESS ETHICS
 Business ethics is the application of moral principles to business problems. Ethics extend beyond the
question of legality and involve the goodness or badness of an act.
 An action may be legally right but ethically wrong. For example, a small village community located
twenty miles from the closest urban shopping area has a single grocer's shop. The owner of the shop
can charge extra price for his product though legally but not ethically.
 Discrimination against women in pay and promotion opportunities is also unethical, which continues
to exist despite there being the Equal Remuneration Act, 1976.
 One of the most commonly cited reasons for the lack of promotions of women is the effect a term
used for artificial barriers based on attitudinal or organizational bias that prevent qualified women
 from progressing in the organization into senior management level positions.
 How does a manager decide what is ethical or unethical? There are four important factors which
affect his decision.
 Government legislation.
 Business codes - But being voluntary in nature these codes, though pointed to with pride, are
usually ignored in practice.
 Pressure groups - For example, in recent years’ Indian carpet industry has been facing
consumer boycott from the west for employing child labor.
 Personal values of the manager himself - But a manager with strong personal values mostly
finds himself in a dilemma when an unethical course of action becomes his only choice to
achieve the company's goal.

5. CORPORATE GOVERNANCE
 The term "corporate governance" is used to denote the extent to which companies run in an open and
honest manner in the best interest of all stake-holders.
 The key elements of good corporate governance are transparency and accountability which
incorporates a system of checks and balances between all key players, viz., board of directors,
auditors and stake-holders.
 Major recommendations of this committee are as under:
 Non-executive directors whose most important role is to bring an independent judgement to bear
on issues of strategy, performance, resources, etc. should be picked through a formal selection
process on merits.
 Companies should have remuneration committees consisting wholly or mainly of non-executive
directors which should recommend to the board executive directors' emoluments.
 Companies should have audit committees consisting of minimum 3 non-executive directors to
report on any matter relating to financial management.
 Audit partners should be rotated and there should be fuller disclosure of non-audit work.
 This is a voluntary code and has only some moral requiring companies to mention in their annual
report whether they are following the code, and if not, why.
 Benefits of Good Corporate Governance
1. It creates overall market confidence and long-term trust in the company.
2. It leads to an increase in company's share prices.
3. It ensures the integrity of company's financial reports.
4. It maximizes corporate security by acting as a whistle blower.
 5. It limits the liability of top management by carefully articulating the decision-making process.
6. It improves strategic thinking at the top by inducting independent directors who bring a wealth of
experience and a host of new ideas.

6. CORPORATE GOVERNANCE IN INDIA

1. The Securities and Exchange Board of India (SEBI) monitors corporate governance of listed
companies in India which should comply the following rules:
 50% of board should consist of independent directors if the company has an executive
chairman. In case of non-executive chairman, 1/3rd of the board should consist of independent
directors.
 Following persons are not qualified for becoming independent directors:
 Shareholder with more than 2% shareholding in the company
 Former executive who left the company less than 3 years ago
 Partner of current legal, audit, and consulting firm
 Relative of promoter, an executive director or senior executive
2. The companies have introduced several provisions relating to corporate governance such as setting
up of audit committee.
3. The world council for corporate governance has instituted the Golden Peacock Award to foster
competition among companies to improve their quality of cooperate governance.
4. India has several bodies that rate companies for their credit-worthiness. Important amongst them are:
SRISIL (Credit Rating and Information Service of India Ltd.), ICRA (Information and Credit Rating
Agency of India Ltd.) and CARE (Credit Analysis and Research).

*****
 QUESTION BANK
MODULE 3 CHAPTER 1
1. Explain benefits and limitations of social audit. (Aug 2022, Jan 2021, Feb 2023, Mar 2022 – 10M)
*****
2. Discus corporate governance. Explain the benefits of corporate governance. (Jan 2021, Feb 2023 –
7M) *****
3. Explain corporate governance in India. (Aug 2022, Jul 2023 -10M) *****
4. How do u understand business ethics? What are the factors which affects the decision in ethical or
unethical? (Jan 2021 – 6M)
5. What is the meaning of social responsibility? Describe the social responsibilities of business towards
consumer and community. (Feb 2023 – 6M)
6. Describe the social responsibilities of business towards employee and worker. (Jul 2023 – 10M)
7. Describe the social responsibilities of business towards different group. (Mar 2022 -10M) *****

Dept. of ECE, MIT Thandavapura

 CHAPTER2
Entrepreneurship

1. Definition of Entrepreneur

 An individual who bears the risk of operating a business in the face of uncertainty about the future
conditions

Encyclopedia Britannica

 He is the one who innovates and introduces something new in the economy.

-Joseph A. Schumpeter

 He shifts economic resources out of an area of lower and into an area of higher productivity and
greater yield.

-J. B. Say (French economist)

 He searches for change, responds to it and exploits opportunities. Innovation is the specific tool of an
entrepreneur.

Peter F. Drucker

 Entrepreneurs are people who have the ability to see and evaluate business opportunities together with
the necessary resources to take advantage of them and to intimate appropriate action to ensure
success.

International Labour Organisation (ILO)

 He is the one who is endowed with more than average capacities in the task of organising and coordi
nating the various factors of production. He is a pioneer and captain of industry.

-Francis A. Walker

 He is a critical factor in economic development and an integral part of economic transformation.

-William Diamond

 He is a person who is able to look at the environment, identify opportunities to improve the
14

environment. Marshall Resources, and implement action to maximize those opportunities.

Page

-Robert E. Nelson

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  He is the agent who buys means of production at a certain price in order to combine them into a
product that is going to sell at prices that are certain at the moment at which he commits himself to hi
s costs.

-Cantillion

 The word entrepreneur is derived from a Sanskrit word called "Antaraprerana",

-Poornima Charantimath
2. Importance of Entrepreneurship

 Entrepreneurial development today has assumed special significance, since it is a key to economic
development.

 Entrepreneurs are, thus the seeds of industrial development and the fruits of industrial development
are greater employment opportunities to unemployed youth, increase in per capita income.

 Higher standard of living and increased individual saving, revenue to the government in the form of
income tax, sales tax, export duties. Import duties and balanced regional development.

 India needs entrepreneurs. It needs them for two reasons: to capitalize on new Opportunities and to
create wealth and new jobs.

3. Concepts of Entrepreneurship

 "Entrepreneur" is a person who creates an enterprise. The process of creation is called as

"entrepreneurship". The word "entrepreneur" has been taken from French, where it was originally
meant to designate an organiser of musical and other entertainment

 The word "entrepreneur" is derived from the French verb enterprendre, which means 'to undertake '.
This refers to those who "undertook" the risk of new enterprises.

 In the earlier part of the 16th century, the French men who organised and led military expeditions
were referred to as entrepreneurs. French tradition regarded an entrepreneur as a person translating a
profitable idea into a productive activity. During the year 1700. the architects and contractors of
public works were called entrepreneurs. Quensnay recognised a rich farmer as an entrepreneur who
manages and makes his business profitable by his intelligence and wealth.

 In economics and commerce, an entrepreneur is an economic leader who possesses the ability to
recognise opportunities for the successful introduction of new commodities, new techniques, and new
sources of supply, and to assemble the necessary plant and equipment

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  In early 16111 century, the entrepreneur was denoted as a dealer who bought a thing at a certain price
and sold it at uncertain price, making a profit.

4. Characteristics of successful Entrepreneur

 The following are some characteristics that every success full entrepreneur must possess in adequate
measure.

 Creativity

 Innovation

 Dynamism

 Leadership

 Team building

 Achievement motivation

 Problem solving

 Goal orientation

 Risk taking and decision making ability

 Commitment.

 Creativity: The terms creativity and innovation are often used to mean the same thing, but each has a
unique connotation. Creativity is "the ability to bring something new into existence".

 This definition emphasises the "ability", not the "activity." of bringing something new into existence.
A person may therefore conceive of something new and envision how it will be useful, but not
necessarily take the necessary action to make it a reality. Innovation is the process of doing new
things, but creativity is a prerequisite to innovation.

 Ideas usually evolve through a creative process whereby imaginative people bring them into
existence, nurture them, and develop them successfully.

 The creative process for an idea involves five stages

 Germination

 Preparation

 Incubation

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  Illumination

 Verification

A model of the creative process is shown in Figure

 Germination: The germination stage is the seeding process. It is not like planting seed as a farmer
does to grow corn, but more like the natural seeding that occurs when pollinated flower seeds,
scattered by the wind, find fertile ground 10 take root.

 The exact manner in which an idea is geminated is a mystery; it is not something that can be
examined under a microscope. However, most creative ideas can be traced to an individual's interest
in or curiosity about a specific problem or area of study.

 Preparation: Once the seed of curiosity has taken form as a focused idea. Creative people embark on
a conscious search for answers. If it is a problem they are trying to solve-such as Alexander Graham
Bell's determination to help those with impaired hearing-then they begin an intellectual journey.
Seeking information about the problem and how others have tried to resolve it.

 If it is an idea for a new product or service, then market research is the business equivalent. Inventors
will set up laboratory experiments. Designers will begin engineering new product ideas. And
marketers will study consumer-buying habits.

 In rare instances the preparation stage will produce results more often Conscious deliberation will
only overload the mind, but the effort is important to gather information and knowledge vital to an
eventual solution.

 Incubation: Individuals sometimes concentrate intensely on an idea but more often they simply allow
ideas time to grow without intentional effort The idea once seeded and given substance through
preparation is put on a back burner: the subconscious mind is allowed time to assimilate information.

 Incubation is a stage of "mulling it over" while the subconscious intellect assumes control of the
creative process. This is a crucial aspect of creativity because when we consciously focus on a
problem we behave rationally to attempt to find systematic resolutions. When we rely on

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 subconscious processes our minds are untrammeled by the limitations of human logic.

 Therefore when a person has consciously worked to resolve a problem without success. Allowing it to
incubate in the subconscious will often lead to a resolution.

 Illumination: The fourth stage, occurs when the idea resurfaces as a realistic creation. There will be a
moment in time when the individual can say. ··Oh, see!”Illumination may be triggered by an
opportune incident the important point is that most creative people go through many cycles of
preparation and incubation, searching for that catalyst of an incident that can give their idea full
meaning.

 Verification: An idea once illuminated in the mind of an individual continues to have little meaning
until verified as realistic and useful. Entrepreneurial effort is essential to translate an illuminated idea
into a verified, realistic, and useful application.

 Verification is a stage of development that refines knowledge into application, during this stage many
ideas fall by the wayside as they prove to be impossible or have little value. More often, a good idea
has already been developed, or the aspiring entrepreneur finds that competitors already exist.
Inventors quite of come to this harsh conclusion when they seek to patent their products only to
discover similar inventions registered.

(b) Innovation: Entrepreneurs innovate Innovation is the specific instrument of entrepreneurship. It is the
act that endows resources with a new capacity to create wealth. Innovation, indeed, creates resource
Successful entrepreneurs. Whatever their individual motivation- be it money, power, curiosity, or the
desire for fame and recognition-try to create value it and to make a contribution.

 Systematic innovation means monitoring following seven sources for innovative opportunity.

 The unexpected-unexpected success, unexpected failure, unexpected outside event.

 The incongruity-between reality as it actually is and reality as it is assumed to be or as it "ought to be"

 Innovation based on process need

 Changes in industry structure or market structure that catches everyone unawares

 Demographics (population changes)

 Changes in perception, mood, and meaning

 New knowledge-scientific and non-scientific

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 (c) Dynamism: Innovation together with dynamism constitutes a potential combination for
prosperity. Dynamism revises the targets of the enterprise upwards time and again The enterprise may
open up new vistas, better product mix or charismatic product image stimulating steady growth.

 A dynamic entrepreneur is always pragmatic. Given the potentialities of the enterprises, he sets
attainable goals, which are to be accomplished within specific timeframes. An entrepreneur tends to
approach problems to solve them rather than running away from them.

 Being the decision maker, he cannot wish away problems. They have to be analyzed systematically
and solved ill the interest of the enterprise. He must believe in. create, and practice "win-win"
situations. This is a condition where everyone wins and no one looses. A good entrepreneur-manager
trains his staff continuously besides undergoing the same process himself.

(d) Leadership: Leadership is the basic quality of an entrepreneur. This spirit keeps him paces
forward in any field, Leadership qualities will enable a person to stand apart in whatever profession he
might be in.

 The quality of hi s leadership is clear from personal relationships, mode of handling a problem,
generating resources and taking others in to one’s own stride. An enterprise endowed with the
resource of leadership will always be prominent in the market.

e) Teambuilding: An entrepreneur should have an ability to build a team. A team is a group of

individuals with a common purpose that is focused and aligned to achieve a specific task or set of
outcomes.

A good team will be able to share knowledge, core competency, and goals;

The teambuilding skill consists of the following steps.

 Step 1: Wanting to feel better

 Step 2 : Identifying the problem and needs of the enterprise

 Step 3 : Creating a vision

 Step 4 : Setting goals for the group

 Step 5 : Reviewing progress

(f) Achievement motivation: Entrepreneurs have a high need for achievement and arc guided by
their inner self. Motivating their behavior towards accomplishment.

Dept. of ECE, MIT Thandavapura

 (g) Problem solving: It is important that an entrepreneur should be able to solve problems and not
avoid them. A formal problem-solving model helps entrepreneurs solve problems on a logical manner.

The model consists of six steps.

(a) Define the problem

(b) Gather information

(c) Identify various solutions

(d) Evaluate alternatives and select the best option

(e) Take action

(t) Evaluate the action taken

(h) Goal orientation: Goal setting is the achievement of targets and objectives for successful
performance of an entrepreneur, both long run and short run. It helps to measure how well individuals
and groups are meeting the performance standards.

The goal-setting process requires three steps. Which are as follows?

1. Definition of goal

2. Specific goals

3. Feedback about goal achieved

(i) Risk taking and decision-making ability: Entrepreneurs arc persons who take decisions under
conditions of uncertainty and therefore are willing to bear risk, but never gamble with results. This is
evidenced by market studies exploring alternative lines of production or a new product mix, or a new
combination of inputs and so on they set goals that require high level of performance

 Risk bearing and decisions making calls for absolute clarity in thinking and coordinated actions.
Though decision-making can be taught in classrooms and perfected through experience individual
ability always stands supreme.

(j) Commitment: One of the subtle qualities of an entrepreneur is hi s willpower. Strong

determination with sound thinking fortifies will power. It is determination that provides the
entrepreneur energy to work for 15- 18 hours a day 7 days a week and 52 weeks in a year till the unit
reaches a natural stage of take off.

Dept. of ECE, MIT Thandavapura

 5. Classification of Entrepreneurs

a) Based on Functional Characteristics

1. Innovative entrepreneur: Such entrepreneurs introduce new goods or new methods of production or
discover new markets or reorganise their enterprises. Entrepreneurs in this group are characterized by
an aggressive assemblage of information for trying out a novel combination of factors. Such
entrepreneurs can do well only when a certain level of development has already been achieved: they
look forward to improving upon the past.

2. Imitative or adoptive entrepreneur: Such entrepreneurs do not innovate themselves but imitate
techniques and technology innovated by others. Entrepreneurs in this group are characterised by their
readiness to adopt successful innovations by successful entrepreneurs. Such entrepreneurs are
particularly suitable for underdeveloped economies as adoption saves costs of trial and error.

3. Fabian entrepreneur: Such entrepreneurs display great caution and skepticism in experimenting with
any change in their enterprise. They change only when there is an imminent threat to the very existence
of their enterprise.

4. Drone entrepreneur: Such entrepreneurs are characterised by a die-hard conservatism and may even
be prepared to suffer the loss of business.

(b) Based on the Developmental Angle

1. Prime mover: This entrepreneur sets in motion a powerful sequence of development, expansion, and
diversification of business.

2. Manager: Such an entrepreneur does not initiate expansion and is content just staying in business.

3. Minor innovator: This entrepreneur contributes to economic progress by finding better use for existing
resources.

4. Satellite: This entrepreneur assumes a supplier’s role and slowly moves towards a productive enterprise.

5. Local trading: Such an entrepreneur limits his enterprise to the local market.

(c) Based on Types of Entrepreneurial Business

1. Manufacturing: An entrepreneur who runs such a business actually produces the products that can
be sold using resources and supplies. For example, apparel and other textile products, chemical and
related products, electronics and other electrical equipment, fabricated metal products, industrial
machinery and equipment, printing and publishing, rubber and miscellaneous plastic products,
stone, clay etc.

Dept. of ECE, MIT Thandavapura

 2. Wholesaling: An entrepreneur with such a business sells products to the middle man.

3. Retailing: An entrepreneur with such a business sells products directly to the people who use or
consume them.

4. Service: An entrepreneur in this business sells services rather than products

(d) Based on the Nine Personality Types of Entrepreneurs

1. The Improver: If you operate your business predominately in the improver mode you are focused
on using your company as a means to improve the world your overarching motto is: morally correct
companies will be rewarded working on a noble cause. Improvers have an unwavering ability to run
their business with high integrity and ethics. Personality Alert: Be aware of your tendency to be a
perfectionist and over-critical of employees and customers.

2. The Advisor: This business personality type will provide an extremely high level of assistance and
advice to customers. The advisor's motto is: the customer is right and we must do everything 10
please them. Companies built by advisors become customer focused. Personality Alert: Advisors
can become totally focused o n the needs of their business and customers that they may ignore their
own needs and ultimately bum out.

3. The Superstar: Here the business is centered on the charisma and high energy of the Superstar
CEO. This personality often will cause you to build your business around your own personal brand.
Personality Alert: Superstars Can be too competitive and workaholics

4. The Artist: This business personality is the reserved but a highly creative type. Often found in
businesses demanding creativity such as web design and ad agencies. As an artist type you'll tend to
build your business around the unique talents and creativities that you have. Personality Alert: You
may be overly sensitive to your customer's responses even if the feedback is constructive. Let go the
negative self-image.

5. The Visionary: A business built by a Visionary will often be based on the future vision and
thoughts of the founder. You will have a high degree of curiosity to understand the world around
you and will set-up plan to avoid the landmines. Personality Alert: Visionaries can be too focused
on the dream with little focus on reality. Action must precede vision.

6. The Analyst: If you run a business as an Analyst, your company focus is on fixing problems in a
systematic way often the basis for science, engineering or computer firms. Analyst companies excel
at problem solving. Personality Alert: Be aware of analysis paralysis. Work on trusting others.

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 7. The Fireball: A business owned and operated by a Fireball is full of life. energy and optimism.
Your company is life energizing and makes customers feel the company has a get it done attitude in
a fun playful manner. Personality Alert: You may over commit your teams and act impulsively.
Balance your impulsiveness with business planning.

8. The Hero: You have an incredible will and ability to lead the world and your business through any
challenge. You are the essence of entrepreneurship and can assemble great companies Personality
Alert: Over promising and using forceful tactics to get your way will not work long term. To be
successful, trust your leadership skills to help others find their way.

9. The Healer: If you are a Healer, you provide nurturing and harmony to your business. You have an
uncanny ability to survive and persist with an inner calm. Personality Alert: Because of your
caring, healing attitude toward your business, you may avoid outside realities and use wishful
thinking. Use scenario planning to prepare for turmoil.

(e) Based on schools of Thought on Entrepreneurship

These are six schools of thought on entrepreneurship each with its own underlying set of beliefs. Each of
these schools can be categorized according to its interest in studying personal characteristics,
opportunities, management or the need for adapting an existing venture.

Assessing personal qualities

1. The Great Person school of entrepreneurship
2. The Psychological Characteristics school of entrepreneurship
Recognising opportunities
3. The Classical school of entrepreneurship
Acting and managing
4. The Management school of entrepreneurship
5. The Leadership school of entrepreneurship
Reassessing and adopting
6. The Intrapreneurship school of entrepreneurship

 The Great Person school of entrepreneurship: This school believes that an entrepreneur is born
with an intuitive ability, sixth sense, traits, and instincts. The successful entrepreneur is described as
having a strong drive for independence and success, with high levels of vigour. Persistence and self-
esteem.

 This "great person" has an exceptional belief in himself and his abilities. Attention is paid to such
traits as energy, perseverance, vision and single mindedness, or abilities such as being inspirational or

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 motivational. Other traits frequently mentioned include physical attractiveness, popularity and
sociability, intelligence, knowledge, judgment and fluency of speech as also tact, diplomacy, and
decisiveness.

 The Psychological Characteristics school of entrepreneurship: This school of thought focuses on

personality factors and believes that entrepreneurs have unique values and attitudes towards work and
life. These, along with certain dominant needs, propel the individual to behave in certain ways.
Entrepreneurs can be differentiated from non-entrepreneurs by personality characteristics.

 Three personality characteristics have received considerable attention in research: (1) personal values
such as honesty, duty responsibility, and ethical behavior; (2) risk-taking propensity; and (3) the need
for achievement.

 The Classical school of entrepreneurship: Innovation Creativity or discovery is the key factors
underlying the classical body of thought and research on entrepreneurship. In this view
entrepreneurship refers to the process of creating an opportunity or the opportunity-seeking style of
management that sparks innovation. The critical aspect of entrepreneurship is in the process of doing
rather than owning.

 The Management school of entrepreneurship: As in most fields of organizational study.

Entrepreneurship draws heavily from management theory. The management school suggests that an
entrepreneur is "a person who organises or manages a business undertaking assuming the risk for the
sake of profit". This school deals with the technical aspects of management and seems to be based on
the belief that entrepreneurs can be developed or trained in the classroom.

 Since many entrepreneurial ventures fail each year. A significant proportion of these failures might be
traced to poor management and decision making. as well as to financing and marketing weaknesses
according 10 this school. Entrepreneurship is a series of learned activities which focus on the central
functions of managing a firm.

 The Leadership school of entrepreneurship: An entrepreneur is often a leader who relies on people
to accomplish hi s purposes and objectives. The Leadership school of entrepreneurship is a non-
technical side of the management school which suggests that entrepreneurs need to be skilled in
appealing to others 10 joins the cause.

 A successful entrepreneur must also be a people manager or an effective leader/mentor that plays a
major role in motivating directing and leading people. Thus the entrepreneur must be a leader able to
define a vision of what is possible and attract people to rally around that vision and transform it into
reality.

Dept. of ECE, MIT Thandavapura

  The Intrapnmeurship school of entrepreneurship: The Intrapreneurship school evolved in
response to the lack of innovativeness within organisations. Intrapreneurs. to the limited extent that
they possess discretionary freedom of action are able to act as entrepreneurs and implement 'their
ideas without themselves becoming owners. Alertness to opportunities is one dimension of
intrapreneurial activity.

Myths of Entrepreneurship

Some of the major myths are discussed below.

(a) Entrepreneurs are born, not made

According to this long-prevalent myth the characteristics of entrepreneurs cannot be taught or learned
they are innate traits with which a person must be born. Today however the recognition of
entrepreneurship as a discipline is helping to dispel this myth. Like all disciplines. Entrepreneurship
has models, processes and case studies that allow the topic to be studied and the traits acquired by
training and development.
(b) Entrepreneurs are academic and social misfits

The belief that entrepreneur’s arc academically and socially ineffective is born of some business
owners having started successful enterprises after dropping out of school or quitting a job in fact.
Educational and social organisations did not recognise the entrepreneur they abandoned him or her as a
misfit in a world of corporate giants. Business education.
(c) Entrepreneurs fir an ideal profile

These lists were neither validated nor complete; they were based on case studies and on research
findings among achievement-oriented people. Today we realise that a standard entrepreneurial profile
is hard to compile. Contemporary studies being conducted at universities across the world will, in the
future, provide more accurate insights into the various profiles of successful entrepreneurs.

(d) All you need is money to be an entrepreneur

It is true that a venture needs capital to survive: it is also true that a large number of business failures
occur because of lack of adequate financing. Yet having money is not the only bulwark against failure.
Failure due to a lack of proper financing is often an indicator of other problems: managerial
incompetence, lack of financial understanding, poor investments, and poor planning, and so on.

(e) All you need is luck to be an entrepreneur

Being in "the right place at the right time" is always an advantage, but "luck happens when preparation
meets opportunity" is an equally appropriate adage. Prepared entrepreneurs who seize an opportunity
when it arises often appear to be "lucky". They are, in fact, simply better prepared to deal with

Dept. of ECE, MIT Thandavapura

 situations and turn them into successes. What appears to be luck is really a combination of preparation,
determination, desire, knowledge, and innovativeness.
(f) A great idea is the only ingredient in a recipe for success

A great idea may stay just that if it is not backed by adequate finance, demand for the product and,
most importantly, good management Venture capitalists say bad management is the main cause of
failures among small businesses. "The quality of management will determine the success/failure of the
venture."
(g) My best friend will be a great business partner

Teaming up with your best friend just because you share an idea and a drink every weekend may not
be a good idea. Sure, you may agree on most issues but misunderstandings can erupt over insignificant
aspects like who should be in the office first, who's in charge of supervising the office staff and so on.
(h) Having no boss is great fun

If you thought your boss was way too demanding, watch out for your vendors, bankers, investors,
suppliers and customers. The owner of a restaurant delivery service we met complains that a client
refused to pay for the order because the restaurant did not put in pickles. Since customers can make or
break you, their wish often ends up being your command.
(i) I can make lots of money

When Sumit Roy, a training consultant quit his job at Lintas and set up his own outfit called
Univbrands in 1992, he had to make quite a few sacrifices. "For the first three months I gave up my car
and traveled by bus," he says. For most people it is years, not months, before the money starts coming
in. Till that happens, you'll have to miss the security of your monthly pay cheque are you ready for
that'?
(j) I'll definitely become successful

Put it down to plain optimism, egoism or a survival strategy. but most business owners or even those
starting off on their own refuse to accept the possibility of failure. Do not believe those clichés about
winners never quitting and quitters never winning: the number of people who fail are legion and it can
happen to you as well.
(k) Life will be much simpler if f work for myself

Don’t believe it for one moment. Working for yourself is definitely more strenuous than working for
others, at least when starting off. Take for instance Dincsh Gupta. He set up Green Investors'
Grievances Services two years ago to take care of individuals' stock-related problems and has a
punishing schedule even now. His typical day starts at 5 a.m. and ends at 7 p.m.

Dept. of ECE, MIT Thandavapura

 6. Entrepreneurial Development Models
The models suggested for the development of entrepreneurship fall in the following categories.

(a) Psychological models

(b) Sociological models

(c) Integrated models

(a) Psychological Models

McClelland (1961) has given a significant lead in identification of determinants of entrepreneurship. In

his model, he ascribes more importance to achievement motives, which earlier related to child-rearing
practices. But in his recent book with D.G. Winter. he has altered his earlier proposition on the
importance of child rearing as the intrinsic determinant of the achievement motive.
(b) Sociological Models

Frank W. Young's theory of entrepreneurship is a theory of change based upon society incorporation
of relative such-groups. The relativeness of sub-group which has a low status in a larger society will
lead to entrepreneurial behavior if the group has better institutional resources than others in the society
at the same level. Young's model of entrepreneurship suggests the creation of supporting institutions in
society as the determinant of entrepreneurship.
(e) Integrated Models

T. V. Rao (1975) in "entrepreneurial disposition" has included the following factors.

(i) Need for motive is the dynamic which for the prospective entrepreneur has the greatest possibility
of achieving the goals if one performs those activities.
(ii) Long- term involvement is the goal either at thinking level or at activity level in entrepreneurial
activity that is viewed as a target to be fulfilled.
(iii) Personal, social and material resources which, he thinks are related to entry and success in the area
of entrepreneurial activity.
(iv) Social-political system to be perceived as suitable for establishment and development of his
enterprise.
B. S. Venkata Rao (1975) described the following five stages for promoting small entrepreneurship.
(1) Stimulation
(2) Identification
(3) Development
(4) Promotion
(5) Follow up

Dept. of ECE, MIT Thandavapura

 (1) Stimulation: This stage includes the creation of an industrial atmosphere, policy statement
emphasizing the role of small industry wide publicity of industrial development programmes and
formation of special schemes and creation of support institutions. This stage is necessary to
stimulate interest of the backward regions in industrial activity and to create awareness.
(2) Identification: This stage is necessary to identify prospective entrepreneurs the prospective
entrepreneurial force can be identified in rural artisan factory workers, persons with formal
training in engineering and technology, and graduates in business administration and management.
(3) Development: This stage would include organisation of motivation and managerial training
programmes along with advice on technology formulation of bankable project location and so on.
(4) Promotion: This stage would include government policy initiatives for promoting small
entrepreneurship.
(5) Follow up: This stage includes reviewing the policies and programmes of the government and
seeking follow up with a view to making them more effective.
7. Entrepreneurial development cycle

The entrepreneurial development cycle consisting of the following components for the promotion
and development of entrepreneurship.

1. Stimulatory activities: These activities ensure the emergence of entrepreneurs in the society.
They prepare the background for the entrepreneurship to sprout and for people to start looking
for entrepreneurial pursuits. They generate initial motivation and offer opportunity to acquire
skill. These can be achieved by the following activities.
 Entrepreneurial education
 Planned publicity for entrepreneurial opport-unities
 Identification of potential entrepreneurs through scientific methods
 Motivational training to new entrepreneurs
 Help and guidance in selecting products and preparing project reports
 Making available techno-economic information and product profiles
 Evolving locally suitable new products and processes
 Availability of local agencies with trained personnel for entrepreneurial counselling and
promotions

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  Creating entrepreneurial forums
 Recognition of entrepreneurs
2. Support activities: These activities help a person to develop into an entrepreneur. They
nurture and help Entrepreneurial Development Cycle entrepreneurship to grow. This can be
done by providing the necessary infrastructure in the form of computers, Internet connectivity,
offering consultancy and training, and providing all required information as to how a person
should groom himself as an entrepreneur. Financial assistance for projects and seminars could
also promote entrepreneurship. These activities can be promoted in the incubation centre to
groom a person to become an entrepreneur. The various support activities are given below.
 Registration of unit
 Arranging finance
 Providing land, shed, power, water, and so on.
 Guidance for selecting and obtaining machinery
 Supply of scarce raw materials
 Getting licences/import licences
 Providing common facilities
 Granting tax relief or other subsidy
 Offering management consultancy services
 Help marketing the product
 Providing information
3. Sustaining activities: These activities are all those that help in the continuous and efficient
functioning of entrepreneurship. These include modernization of infrastructure, encouraging
diversification providing opportunities and supporting industry-institute interaction through
consultancy, promoting quality, and organizing need-based common facilities centres. The
various sustaining activities are as follows.
 Help modernization
 Help diversification/expansion/substitute production
 Additional financing for full capacity utilization
 Deferring repayment/interest
 Diagnostic industrial extension/consultancy services
 Production unit’s legislation/policy change
 Product reservation/creating new avenues for marketing
 Quality testing and approving services
 Need-based common facilities centres

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 8. Problems Faced By Entrepreneurs and Capacity Building for
Entrepreneurship

The problems of entrepreneurs may be divided into two groups-external and internal. External
problems are those which result from factors beyond the control of the entrcpreneurs while internal
problems are those which are not influenced by external factors.
Internal Problems of Entrepreneurs
1. Planning
(a) Technical feasibility
 Inadequate technical know-how
 Locational disadvantage
 Outdated production process
(b) Economic viability
 High cost of inputs
 Break-even point too high
 Uneconomic size of project
 Choice of idea
 Feeble structure
 Faulty planning
 Poor project implementation
 Lack of strategies
 Lack of vision
 Inadequate connections
 Lack of motivation
 Underestimation of financial requirement
 Unduly large investment in fixed assets
 Overestimation of demand
2. Implementation
Cost over-runs resulting from delays in getting licences Sanctions and so on and inadequate
mobilization of finance
3. Production
(a) Production management
 Inappropriate product mix
 Poor quality control
 Poor capacity utilisation
 High cost of production
 Poor inventory maintenance and ,eplacement

Dept. of ECE, MIT Thandavapura

  Lack of timely and adequate modernisation and so on
 High wastage
 Poor production
(b) Labour management
 Excising high wage structure
 Inefficient handling of labour problems
 Excessive manpower
 Poor labour productivity
 Poor labour relations
 Lack of trained skilled labour or technically competent personnel
(c) Marketing management
 Dependence on a single customer or a limited number of customers/single or a limited number
of products
 Poor sales realisation
 Defective pricing policy
 Booking of large orders at fixed prices in an inflationary market
 Weak market organisation
 Lack of market feedback and market research
 Unscrupulous sale purchase practices
(d) Financial management
 Poor resource management and financial planning
 Faulty costing
 Dividend policy
 General financial indiscipline and application of funds for unauthorised purposes
 Deficiency of funds
 Over trading
 Unfavourable gearing or keeping adverse debt equity ratio
 Inadequate working capital
 Absence of cost consciousness
 Lack of effective collection machinery
(e) Administrative management
 Over centralisation
 Lack of professionalism
 Lack of feedback to management (Management Information System)
 Lack of timely diversification

Dept. of ECE, MIT Thandavapura

  Excessive expenditure on R and D

External Problems of Entrepreneurs

(a) Infrastructural
 Location
 Power
 Water
 Post Office and soon
 Communication
 Non-availability or irregular supply of critical raw materials or other inputs
 Transport bottleneck
(b) Financial
 Capital
 Working capital
 Long-term funds
 Recovery
(c) Marketing
(d) Taxation
(e) Raw material
(f) Industrial and financial regulations
(g) Inspections
(h) Technology
(i) Government policy
(j) Administrative hurdles
(k) Rampant corruption
(l) Lack of direction
(m) Competitive and volatile environment
9. Capacity Building for Entrepreneurship
India has an extraordinary talent pool with virtually limitless potential for entrepreneurship. India
must, however, commit to creating the right environment to develop successful business [Link]
do this, India must focus on four areas.
1. Create the right environment for success:

 Entrepreneurs should find it easy to start a business to do so most Indians would start slow with
capital borrow from family and friends: the CEO playing the role of salesman and strategies. a
professional team assembled months or perhaps years after the business was created.

Dept. of ECE, MIT Thandavapura

  The first challenge for India is to create a handful of such areas of excellence-the breeding
ground for ideas 10 grow into businesses. Some already exist in a very preliminary way (the
businesses are there). For example. Gurgaon and Hyderabad for remote services or Bangalore
for IT services. However these areas of excellence need strengthening before they can claim to
be India’s own "valley".
 One way of strengthening these areas is to consider the role of universities and educational
institutions-places where excellence typically thrives. Creating such educational institutions by
strengthening the Indian Institutes of Technology (IITs) and starting new ones is going to be
very important.
2. Ensure that entrepreneurs have access to the right skills:

 A survey conducted by Mc Kinsey & Company revealed that most Indian start up businesses
face two skill gaps: entrepreneurial (how to manage business risks. build a team. identify and
get funding) and functional (product development know-how. marketing skills. and soon).
 In other countries entrepreneurs either gain these skills by hiring managers or have access 10
"support systems" such as universities or other institutions that may nurture many regional
businesses. In addition business schools give young graduates the skill s and knowledge
required for business today.
 India can move towards ensuring that the curriculum in universities is modified to address
today's changing business landscape, particularly in emerging markets, and build "centres of
entrepreneurial excellence" in institutes that will actively assist entrepreneurs.
3. Ensure that entrepreneurs have access to "smart" capital:

 For a long time, Indian entrepreneurs have had little access to capital. It is true that in the last
few years, several venture funds have entered the Indian market. And, while the sector is still in
its infancy in India, VCs are providing capital as well as critical knowledge and access to
potential partners, suppliers, and clients across the globe. However, India has only a few angel
investors who support an idea in the early stages before VCs become involved.
 India Venture 2000 showed this to be a critical. gap. While associations such as TIE are
seeking to bridge the gap (by working at creating a TIE India Angel Forum), this is India's third
challenge: creating a global support network of "angels" willing to support young businesses.
4. Enable networking and exchange:

 Entrepreneurs learn from experience-theirs and that of others. Much of the success of Indians
in Silicon Valley is attributed to the experience, sharing, and support TIE members have
extended to young entrepreneurs. During India Venture 2000. Established entrepreneurs who
still remembered the challenges they faced, offered 10 support startups clearly.

Dept. of ECE, MIT Thandavapura

  India would benefit from creating a strong network of established entrepreneurs and managers
that entrepreneurs could draw on for advice and support.
 The rapid pace of globalisalion and the fast growth of Asian economics present tremendous
opportunities and challenges for India through planning and focus, India can aspire to create
the pool of entrepreneurs who will be the regions'-and the worlds ' -leaders of tomorrow.

Dept. of ECE, MIT Thandavapura

 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

TECHNOLOGICAL INNOVATION MANAGEMENT

AND ENTREPRENEURSHIP
BEC501
V SEMESTER
MODULE 4 NOTES
Prepared by,
[Link] A M
Assistant Professor
Dept. of ECE
MIT Thandavapura

A Unit of Maharaja Education Trust®

MAHARAJA INSTITUTE OF TECHNOLOGY

THANDAVAPURA
NH 766, Nanjanagud Taluk, Mysuru- 571 302
(An ISO 9001:2015 and ISO 21001:2018 Certified Institution)
(Affiliated to VTU, Belagavi and approved by AICTE, New Delhi)
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 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

MODULE 4
CONTENTS
CHAPTER 1 - Modern Small Business Enterprises
 Role of Small Scale Industries
 Impact of Globalization and WTO on SSIs
 Concepts and definitions of SSI Enterprises
 Government policy and development of the Small Scale sector in India
 Growth and Performance of Small Scale Industries in India,
 Sickness in SSI sector,
 Problems for Small Scale Industries, Ancillary Industry and Tiny Industry
Text Book 2: Entrepreneurship Development Small Business Enterprises- Poornima M Charantimath,
Pearson Education 2008,
CHAPTER 2 – Idea Generation and Feasibility Analysis
 Idea Generation
 Creativity and Innovation
 Identification of Business Opportunities
 Market Entry Strategies
 Marketing Feasibility
 Financial Feasibilities
 Political Feasibilities
 Economic Feasibility
 Social and Legal Feasibilities
 Technical Feasibilities
 Managerial Feasibility, Location and Other Utilities Feasibilities
Text Book 2: Entrepreneurship Development Small Business Enterprises- Poornima M Charantimath,
Pearson Education 2008,
2
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 CHAPTER-1
Modern Small Business Enterprises
1. Role of Small Scale Industries
 Today the small -scale industry (SSI) constitutes a very important segment of the Indian economy.
Credit for the development of this sector is due to the vision of former Prime Minister Jawaharlal
Nehru who supported to develop core industry and put in supporting sectors in the form of small-
sector enterprises.

 The small-scale sector has emerged as a dynamic sector of the economy. The sector has grown
phenomenally during the past five decades besides playing a vital role in fulfilling India's socio-
economic objectives.

Role of SSI
 Dynamic and vibrant sector of the economy
 Prominent role in socio -economic transformation of the country
 Accounts for 35 per cent of industrial production, 40 percent of exports and 60 percent of
employment opportunities

The Importance of Small Scale Industries

 Provide increased employment through labour-intensive process.
 Require lower gestation period.
 Easy to set up in rural and backward areas.
 Need small/local market.
 Encourage growth of local entrepreneurship.
 Create a decentralized pattern of ownership.
 Bring up diversification of economic activities.
 Introduce new products particularly to cater to local needs.
 Influence the standard of living of local people.
 Provide equitable dispersal of Industries throughout rural and backward areas.

2. Impact of Globalization on SSI in India

 The small scale industry never had a strong desire to grow to medium and large scale because of the
benefits of protection given to it.

 Many of the policies also discouraged the growth of small-scale units into large ones and had a
stunting effect on manufacturing, employment and output growth.
3

 With globalization, the SSIs are now more exposed to severe competition both from the large-scale
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 sector for-domestic and foreign-and from MNCs.

 The World Trade Organization (WTO) regulates multilateral Trade requiring its member countries to
remove import quotas, restrictions and reduce import tariffs.

 This opens up the possibility of direct competition in the domestic market with the imports of high-
quality goods from developed countries.

 In order to protect, support. and promote small enterprises as also to help them become self-
supporting , a number of protective and promotional measures have been undertaken by the Central
Government

The promotional measures cover the following.

 Industrial extension services
 Institutional support in respect of credit facilities
 Provision of developed sites for construction of sheds
 Provision of training facilities.
 Supply of machinery on hire-purchase terms
 Assistance for domestic marketing as well as exports
 Special incentive for setting up enterprises in backward areas and elsewhere
 Technical consultancy and financial assistance for technological up gradation

3. Impact of the WTO on SSI’s

 The emerging challenges to the small· scale sector are due to the impact of the agreements under the
WTO to which India is a signatory along with 134 member countries.

 The main outcome of WTO-stipulated requirements will be brought about through reduction in export
subsidies. Greater market access. Removal of non-tariff barriers and reduction in tariffs.

 Tighter patent laws through regulation of intellectual property rights under the TRIPS Agreement
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 Worldwide market and opportunity to export
 Intensified competition in the domestic market
 Import of high Quality goods

4. CONCEPTS AND DEFINITIONS OF SSI

 Small-scale Industrial Unit (SSI): An industrial undertaking in which the investment in fixed assets in
plant and machinery, whether held on ownership terms or on lease or by hire purchase, does not
exceed Rs 100 lakh as on March 31. 2001. Is to be treated as a small-scale industrial unit.
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  Ancillary Unit: This is a sub-class of SSIs. An industrial undertaking which is engaged or is proposed
to be engaged in (i) the manufacture of components. sub-assemblies, tooling's or intermediates: or (ii)
rendering of services, or supplying or rendering not less than 50 per cent of its production or its total
services, as the case may be, to other units for production of other articles and whose investment in
fixed assets in plant and machinery, whether held on ownership terms or on lease or on hire purchase,
does not exceed Rs 1 crore as on March 31, 2001, is to be treated as an ancillary enterprise

 Export-oriented Unit (EOU): An industrial undertaking in which the investment in fixed assets in
plant and machinery, whether held on ownership terms. or on lease. Or by hire purchase, does not
exceed Rs 100 lakh and have an obligation to export 30 percent of production.

 Tiny Unit: The investment limit in plant and machinery in respect of tiny enterprises is Rs 25 lakh
irrespective of the location of the unit.

 Women entrepreneurs: A small-scale industrial unit/industry related service or business enterprise,

managed by one or more women entrepreneurs.

 Small-scale Service and Business (industry-related) Enterprises (SSSBEs): Industry-related service

and business-related enterprises with investment in fixed assets. Excluding land and building, up to Rs
10 lakh, irrespective of location as on March 31, 2001. are to be treated as SSSBEs

5. GOVERNMENT POLI CY AND DEVELOPMENT OF THE SMALL-

SCALE SECTOR IN INDIA
 India's concern and support for small-scale enterprises has focused excessively on the small-scale
industry

 Various measures taken by the Central and State governments, for the development of the SSI have
included product reservations, preferential allocation of credit and interest subsidy in framework,
extension of business and technical services, marketing assistance including export promotion by
institutions such as National Small Industries Corporation

 India's SSI sector is divided into seven industry groups

Traditional Sector
 Handicrafts
 Handlooms
 Khadi, village and cottage industries
 Coir
 Sericulture
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Dept. of ECE, MIT Thandavapura

 Modern Sector
 Power looms
 Residual small-scale industries

Industrial Policy 1991

 The industrial policy measures announced in 1991 laid special emphasis on promotion and
strengthening of small, tiny, and village industries. Besides affecting changes in investment limits.

 The policy also proposed to encourage and support industry associations to establish counseling and
common testing facilities and technological up gradation aimed at improving productivity, efficiency
and cost effectiveness in the small scale sector.

Policy Initiatives Since 1999

 To better focus the attention on the problems of the SSl sector, a new Ministry of Small-scale
Industries and Agro and Rural Industries was created on October 14, 1999.

 New Credit Insurance Scheme was announced in the Budget 1999-2000 for SSI security to banks and
to improve the flow of investment credit to SSI units. Particularly export-oriented and tiny units.

 Banks on the basis of 20 per cent of their annual turnover determine the working capital limit for SSI
units.

 A national program to boost rural industrialization has been announced, with a mission to set up 100
rural clusters every year.

6. Sickness in SSI sector

 Sickness was identified through the latest definition of RBI given by the Kohli Commines. Incipient
sickness was identified in terms of continuous decline in gross output.

 Sickness in the total 551 sector was to the turn of 1 %, whereas in the registered and unregistered 551
sectors it was 3 .38% and 0 .64% respectively.

 The maximum number o f sick units- about 59.33 % was located in West Bengal, Kerala,
Maharashtra, Karnataka, and Andhra Pradesh.

 Out of the units having loan outstanding with institutional sources such as banks and financial
institutions, sickness was reported to be about 19.6 % in the registered 551, sector and 16.61 % in the
unregistered 551 sector. In the total 551 sector, this percentage was 17.8.

 Incipient sickness, identified interns of a continuous decline in gross output was 11.5% in the
6

registered 551 sector and 6.48 % in the unregistered 551 sector. In the total 551 sector, this percentage
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was 7.4
Dept. of ECE, MIT Thandavapura
  The States of Kerala, Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra had maximum
number of sick/incipiently sick 551 units. These five States together accounted for 54.28% of the sick/
incipiently sick SSI units in the country.

 “Lack or demand" .and "Shortage of working capital” was the main reason. For sickness/incipient
sickness in both the registered and unregistered 551 sectors.

7. Problems for Small Scale Industries, Ancillary Industry and Tiny

Industry
Internal problems
 Choice of idea
 Feeble structure
 Faulty planning
 Poor project implementation
 Poor management
 Poor production
 Quality
 Marketing
 Inadequate finance
 Labour problems
 Capacity utilization
 Lack of vertical and horizontal integration
 Inadequate training in skills
 Poor and loose organization
 Lack of strategies

External problems
 Infrastructure
(a) Location
(b) Power
(c) Water
(d) Post Office and so on
(e) Communication
 Financial
(a) Capital
(b) Working capital
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(c) Long-term funds

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Dept. of ECE, MIT Thandavapura

 (d) Recovery
 Marketing
 Taxation
 Raw Material
 Industrial and financial regulations
 Inspections
 Technology
 Policy
 Competitive and volatile environment

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Dept. of ECE, MIT Thandavapura

 CHAPTER-2
Idea Generation and Feasibility Analysis
1. IDEA GENERATION
 The feasibility study begins with the formulation of business idea, which you can obtain through
market research, family, friends, suggestion boxes or brainstorming. At this phase, you can downsize
the number of ideas and retain the most realistic one.

 Depending on your business culture, you can discard the extra ones or preserve them for future
references when you need to. You have to conceptualize and visualize your business’s final product, a
process that entails analyzing the product’s target market, size, quality, color and weight.

 Establishing yourself as a successful entrepreneur depends upon choosing a good idea that idea must
not only be good for the market, but good for the project and good for the entrepreneurs.

 It should also be manageable by you without much dependence on others. Importantly, the idea
should give satisfaction results to you.

 Ideas are the key to innovation. Without them, there is not much to execute and because execution is
the key to learning, new ideas are necessary for making any kind of improvement. It is obvious that
ideas alone won’t make innovation happen as you need to be able to build a systematic process for
managing those ideas. The point of ideation isn't just about generating a lot of them but about paying
attention to the quality of those as well.

 Idea generation is described as the process of creating, developing and communicating abstract,
concrete or visual ideas.

 The frontend part of the idea management funnel focuses on coming up with possible solutions to be
perceived or actual problems and opportunities, the fig below shows the idea management.

Idea management funnel

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  As mentioned, ideas are the first step towards making improvement. Making progress as individual
human beings depends on new ideas. From the perspective of an individual, new ideas can help you to
move forward if you feel stuck with a task or are unable to solve a certain problem.

 Favorite tips, tools and techniques that can be used to generate new ideas more systematically

 Idea Challenge

 SCAMPERTechnique

 OppositeThinking

 BrainstormCards

 Analogy Thinking

Idea Challenge

 Is a focused form of innovation where you raise a problem or opportunity with the hopes of coming
up with creative solutions.

 The point of idea challenge is to participate in ideation and generate ideas around a pre-defined theme
for a limited period of time.

 It allows you to form a specific question and direct that question at a specific audience to receive new
ideas and unique in sights.

The SCAMPER Technique

 Is a method used for problem-solving and creative thinking It’s a holistic way of applying critical
thinking to modify ideas, concepts or processes that already exist.

 The purpose of the SCAMPER is to make adjustments to some parts of the existing idea or process to
reach the best solution.

Opposite/reverse thinking

 Is a technique that can help you question long-held assumptions related to your business. It’s a useful
tool to consider if you feel your team is stuck with the conventional mindset and coming up with
those “out-of-the-box ideas” seems to be difficult.

 Often, finding the best solutions isn’t found through a linear thought process. Although our brains are
wired that way, opposite thinking can help us question the rule with this type of thinking, you
consider the exact opposite of what’s normal. You can even think backwards to find unconventional
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 Brainstorm Cards

 Brainstorm cards are a useful tool created by the Board of Innovation for coming up with dozens of
new ideas related to whatever challenge or problem you are currently working with.

 Brainstorm cards help you consider external factors such as: societal trends, new technologies, and
regulation in the context of your business.

Analogy thinking

 Is a technique for using information from one source to solve a problem in another context. Often one
solution to a problem or opportunity can be used to solve another problem.

 Analogy thinking can, for example, be used for analyzing a successful business, identifying what
makes it great, and then applying those same principles for your business. This is an effortless method
for coming up with new ideas that are pre-validated

 The purpose of generating new ideas is about improving what already exists as well as coming up
with something new.

 Coming up with completely new ideas can help you approach your problem or opportunity from a
new perspective. It enables you to expand the range of ideas beyond your current way of thinking
which eventually leads to more ideas.

2. Creativity and innovation

 Creativity is thinking new things, the ability to develop new ideas and to discover new ways of
looking at problems and opportunities.

 Innovation is doing new things, the ability to apply creative solutions to those problems and
opportunities in order to enhance people’s lives or to enrich society.

Creativity

 Creativity is the act of turning new and imaginative ideas in to reality. Creativity is characterized by
the ability to perceive the world in new ways, to find hidden patterns, to make connections between
seemingly unrelated phenomena, and to generate solutions. Creativity involves two processes:
thinking, then producing.

Innovation

 Is the implementation of a new or significantly improved product, service or process that creates value
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for business, government or society.

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  Innovation is important because it’s the only way that you can differentiate your products and services
from those of your competitors. For customers and clients to choose your business, your offer needs
to be distinctive and valuable, and the only way to achieve this is through innovation.

3. Identification of Business Opportunity

 Several studies have shown that previous experience in an industry helps entrepreneurs to recognize
business opportunities. In addition, the extent and depth of an individual's social network also affects
the identification of opportunity. People who build a substantial network of social and professional
contacts will be exposed to more opportunities and ideas than people with sparse networks.

 It is important for entrepreneurs to grab a business opportunity before the market becomes saturated with
competitors and the window of opportunity is closed to them. There are three general approaches entrepreneurs
use to identify an opportunity.

Observing trends:

 Entrepreneurs can identify business opportunities by carefully observing trends. The most important
trends to follow are economic, social, technological, and political trends.

Solving a problem:

 Another approach to identifying business opportunities is to recognize and solve a pressing problem
that customers are facing today. From an entrepreneur's point of view, every problem is a disguised
opportunity.

Finding gaps in the market place:

 A third approach to identifying business opportunities is to find a gap between what is needed by the
customer and what is actually provided to the customer. Finding such gaps can help entrepreneurs
develop new products and improve existing ones.

4. Market entry strategy in India

 A market entry strategy is the planned method of delivering goods or services to a new target market
India is the second-most populous market in the world, but also among the most complex to enter as a
company without any previous experience in the region.

 5 tips for better Indian market entry strategy

Find the right partner

 India is the world’s seventh largest economy in terms of GDP, and has a population of 1.3 billion
people. It is a complex market for the best Indian companies, and even more so for companies from
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  Businesses with a pre-determined mindset and less exposure to international markets might find the
commerce culture in India too intimidating.

 Identifying the right partner goes a long way in successfully navigating the complexities of the local
business environment for a new entrant in to the Indian market. A local partner can provide much-
needed assistance in understanding the Indian market.

 This partner can give you valuable market insights on competition, regulation and other important
issues. They can also introduce you to the network with the reach to target prospective clients without
much investment on the ground

Localize your products to meet consumer needs and preferences

 India is a vast and diverse country encompassing many different identities, languages, cultures and
religions. It is important to avoid making generalizations or assumptions, as local practices and
consumer behavior may vary substantially from region to region.

 Since India has such a pluralistic, multilingual society, more often than not, a one solution fits all
approach doesn’t work. Even a global bigwig like McDonald’s had to localize its product Offerings
based on the fact that half of Indians are vegetarian. They also have to leave their most popular item,
beef burgers, off the shelf given the religious sensibilities of the Indian population.

Remember the high level of price sensitivity

 It is extremely important for a new entrant into the Indian market to get its price strategy right,
particularly if it’s targeted towards the low and middle income populations. Even with a growing
economy and a growing middle class, there’s no denying the fact that India is still a low middle
income economy, with a per capita income of around $2,000 and a huge population still living below
the poverty line.

 Since the government cannot afford to provide for education and healthcare coverage, the majority of
the population has to pay for these necessities from their own income. With little disposable income
left after covering basic amenities, there’s not much money left in the hands of a significant portion of
the population. This makes the market price sensitive as many people need to spend judiciously.

Enter the Indian market for long-term growth, not to make a quick buck

 India is certainly not a place for businesses to make quick gains–you need to be invested for the long
haul. All though it’s a huge market with a population of 1.3billion people, including 400 million
middle class consumers, it has its share of challenges when it comes to market entry.
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  Because India is such a huge and attractive opportunity, there is no dearth of competition. More often
than not, you have companies looking for market share and compromising on potential short-term
profitability in order to establish them more firmly there. Given the complexity of the market, it takes
time for the companies to understand the environment and develop the right strategy.

Prepare to navigate a much different legal and regulatory landscape

 The Indian judicial system follows “common law”, and the constitution has provided for a single
integrated system of courts to administer both union and state laws.

 Due attention should be paid, including seeking professional advice, before entering into a formal
agreement. Court judgments are often delayed because of the huge backlog of cases, so any agreement
should provide the scope for alternate dispute resolution mechanisms.

5. Feasibility Analysis or Project Analysis

 Feasibility (possibility) analysis is used to determine the viability of an idea, such as ensuring a
project is legally and technically feasible as well as economically justifiable. It tells us whether a
project is worth the investment it ultimately tests the viability of an idea, a project, or a new business.

 A feasibility study may become the basis for the business plan, which outlines the action steps
necessary to take a proposal from ideation to realization.

 A feasibility study allows a business to address where and how it will operate, its competition,
possible hurdles, and the funding needed to begin. The business plan then provides a framework that
sets out a map for following through and executing on the entrepreneurial vision.

 A schematic diagram of the project feasibility study is shown in figure.

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 Types of Feasibility Analysis:

 Marketing feasibility

 Financial Feasibility

 Political feasibility

 Economic Feasibility

 Social Feasibility

 Legal feasibility

 Technical Feasibility

 Managerial feasibility

 Location and other feasibility

6. Marketing feasibility
 This mainly deals with determining the potential market and the market share for the proposed
project. Market analysis is concerned with forecasting the demand for the product/service under
consideration. It requires finding a variety of information on consumption trends, cost structures,
structures of the competition, the elasticity of demand, consumer behavior, and exports and imports.

 In simple words it determines whether a product or service can sustain in a specific market or not as
well as whether it is capable of generating financial surplus for the firm or not.

 Most market feasibility studies include:-

 Description of the industry
 Current Market Analysis
 Competition or presence of competing products.
 Anticipated future market potential.
 Potential buyers and sources of revenues.
 Sales projections.

 Market feasibility tests can be carried out not only on products but on ideas, campaigns, processes and
entire businesses too.

7. Financial Feasibility
 This mainly deals with determining the risk and return for the proposed project. Financial analy sis seeks to
15

ascertain whether the proposed project will be financially viable. It requires finding a variety of inhumation on
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the cost of the project and the means of finance; the cost of capital, the projected liability cash flows of the

Dept. of ECE, MIT Thandavapura

 project, the break-even point, the level of risk, the investment outlay and worthiness, and projected financial
position.

 In order to as certain financial viability, financial projections are made and on the basis of such
projections which need to be objective and realistic, the followings broad parameters are evaluated for
determining the feasibility of the project-
 Return on Investment
 Payback period of the outlay
 Internal rate of return
 Profitability index.

 In case of a new project, financial viability can be judged on the following parameters:
 Total estimated cost of the project
 Financing of the project in terms of its capital structure, debt to equity ratio and promoter’s share of
total cost
 Existing investment by the promoter in any other business
 Projected cash flow and profitability.

 The financial viability of a project should provide the following information:

 Full details of the assets to be financed and how liquid those assets are
 Rate of conversion to cash-liquidity
 Project’s funding potential and repayment terms
 Sensitivity in their payments capability to the following factors
 Mild slowing of sales
 Acute reduction/slowing of sales
 Small increase in cost
 Large increase in cost
 Adverse economic conditions.

 If, on the above mentioned parameters, the project is found suitable, then only further feasibility tests
are carried out.

8. Political feasibility
 Political feasibility is a measure of how well a solution to a policy problem, will be accepted by a set
of decision makers and the general public. For a policy to be enacted and implemented, it must be
politically acceptable, or feasible.


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Political feasibility analysis is used to predict the probable outcome of a proposed solution to a policy
problem through examining the performer, events and environment involved in all stages of the
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Dept. of ECE, MIT Thandavapura

 policy- making process.

9. Economic Feasibility
 This is also called social-cost benefit analysis and is mainly concerned with judging a project from the
social point of view. The focus is on the social costs and benefits of the proposed project. It deals with
determining benefits and costs in terms of shadow prices and other social impacts.

 Economic analysis requires finding a variety of information on economic costs and benefits measured
in terms of the efficiency (shadow) prices, employment to be generated by the project, impact of the
project on the distribution of income in society; and the impact of the project on the level of savings
and investment in society.

 The purpose of an economic feasibility study (EFS) is to demonstrate the net benefit of a proposed
project for accepting or disbursing electronic funds/benefits, taking in to consideration the benefits
and costs to the agency, other state agencies, and the general public as a whole.

 In sync with the phrase “Parity between haves and have not’s”, a social cost-benefit analysis (SCBA)
of the project should be carried out. This ensures that the organization is contributing to the GDP of
the economy and is also discharging its social obligations, by providing employment opportunities
and bringing in improvement in quality of life.

 Economic feasibility helps companies determine what that amount is before a project is ultimately
approved. This allows companies to carefully manage their money to insure the most
[Link] or not
revisions to a project that at first seems unfeasible will make it feasible.

10. Social Feasibility

 Social feasibility is a detailed study on how one interacts with others with in a system or an
organization. Social impact analysis is an exercise aimed at identifying and analyzing such impacts in
order to understand the scale and reach of the project’s social impacts.

 At a minimum, all projects demand a review of project data at the Appraisal Phase, so as to identify if
material social impacts exist. Social impact analysis greatly reduces the overall risks of the project, as
it helps to reduce resistance, strengthens general support, and allows for a more comprehensive
understanding of the costs and benefits of the project.

 However, social impact analysis can be expensive and time consuming, so the full analysis process
cannot be justified for all projects. At a minimum, all projects demand a review of project data at the
Appraisal Phase, so as to identify if material social impacts exist. If they do, a full social impact
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analysis should be conducted.

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Dept. of ECE, MIT Thandavapura

11. Legal Feasibility
 It should first be determined whether the proposed project conflicts with legal requirements, and if the
proposed venture is acceptable in accordance to the laws of the land. The project team has to make a
thorough analysis of the legal issues surrounding the project, across several dimensions.

 A detailed legal due diligence should be done to ensure that all for seeable legal requirements, which
have not or will not be dealt with, in other appraisal exercises, are met for the development of the
project.

 The main objectives of the legal feasibility analysis are as follows:

 To ensure that the project is legally do able
 To facilitate riskmanagement,indicating the risks and obstacles that need to be addressed within the
technical analyses, the financial model and/or the Value for Money analysis
 To avoid, to the extent possible, major problems in the project’s development and implementation,
specifying the requirements that need to be considered at subsequent stages of the PPP process,
[public private partnership]

12. Technical Feasibility

 This principally deals with determining the technical viability for successful of the proposed project
and for ascertaining whether sensible choices have been made with respect to location, size, process,
etc.

 Technical analysis requires finding a variety of information on the availability of raw material and
various other inputs, the type of technology to be adopted, choosing a suitable layout for the site,
building and plant, and choosing the appropriate plant, machinery, and process.

 This assessment is based on an outline design of system requirements, to determine whether the
company has the technical expertise to handle completion of the project. When writing a feasibility
report, the following should be taken to consideration.

 The technical feasibility assessment is focused on gaining an understanding of the present technical
resources of the organization and their applicability to the expected needs of the proposed system. It is
an evaluation of the hardware and software and how it meets the need of the proposed system.

 An in depth and critical study of following parameters is done:

 Plant location
 Layout
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 Plant &machinery and equipment

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Dept. of ECE, MIT Thandavapura

  Manufacturing process
 Infrastructure
 Technology
 Efficient waste disposal.

 The technical feasibility assessment is focused on gaining an understanding of the present technical
resources of the organization and their applicability to the expected needs of the
[Link] the proposed
system.

13. Managerial feasibility

 Managerial Feasibility analysis objectively and rationally uncover the strengths and weaknesses of an
existing business or proposed venture, opportunities and threats which are presented by the
environment, there sources required to carry through, and ultimately the prospects for success.

 In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.
Managerial feasibility study is an analysis of the viability of an idea. The Managerial feasibility study
focuses on helping answer the essential question of “should we proceed with the proposed project
idea?”

14. Location and other feasibility

 There is a saying that the three most important considerations in business are location, location,
location. If you’re starting a new business that operates primarily offline, location is critical.

 Your business location analysis should take into account demo graphics, psychographics, census and
other data, location analysis is to maximize chances of success in business.

 The location of a retail outlet is the most influencing factor for the success of the business. Therefore
selecting a location for a retail store or an outlet is a challenging process. The purpose of this study is
to define a method and develop a system to analyze the feasibility of a selected location for a retail
store.

 Consumer surveys were conducted in selected areas to get information about consumers' shopping
patterns and selections .From the web service, identify transport modes, locations of competing stores
and shopping areas.

 The retail industry is a fast growing and a highly revenue generating industry. The location of a retail
outlet is the most influencing factor for the success of the business. Therefore selecting a location for
a retail store or an outlet is a challenging process. The purpose of this study is to define a method and
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develop a system to analyze the feasibility of a selected location for a retail store.
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Dept. of ECE, MIT Thandavapura

  Many hospital and restaurant businesses fail due to in appropriate location or market entries.

 Location feasibility and market studies are an essential part of the building or growing a business.

15. Other Feasibilities

Schedule Feasibility
 A project will fail if it takes too long to be completed before it is useful. Typically this means
estimating how long the system will take to develop, and if it can be completed in a given time period
using some methods like payback period. Schedule feasibility is a measure of how reasonable the
project timetable is.

 Some projects are initiated with specific deadlines. It is necessary to determine whether the deadlines
are mandatory or desirable. To do proper scheduling, the versatile techniques like PERT & CPM are
adopted.
Resource Feasibility
 This involves questions such as how much time is available to build the new system, when it can be
built, whether it interferes with normal business operations, type and amount of resources required,
dependencies, and developmental procedures with company revenue prospects.

 There are resources necessary to complete any project. All the important resources like human
resource, artificial resources, and financial resource [Link] taken care of by indulging in complete
research on feasibility of the resources needed to complete the project.
Operational Feasibility
 Operational feasibility is the measure of how well a proposed system solves the problems, and takes
advantage of the opportunities identified during scope definition and how it satisfies the requirements
identified in the requirements analysis phase of system development.

 The operational feasibility assessment focuses on the degree to which the proposed development
projectsfitsinwiththeexistingbusinessenvironmentandobjectiveswithregardtodevelopment schedule,
delivery date, corporate culture and existing business processes.

 To ensure success, desired operational outcomes must be imparted during design and development.
These include such design-dependent parameters as reliability, maintainability, supportability,
usability, product ability, disposability, sustainability, affordability and others. These parameters are
required to be considered at the early stages of design if desired operational behaviors are to be
realized.
Commercial Feasibility
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 Commercial Feasibility is as curtained by finding out the following:

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 Current and Potential competition

Dept. of ECE, MIT Thandavapura
  Profit margin
 Size of the market.
 Degree of demand for the product
 Future growth of market
Environmental Feasibility:
 The environmental feasibility study considers both human and environmental health factors. The EF
is a comparative process that looks at all potential solutions, and then evaluates them against specific
criteria to ultimately find the best choice. It is a fact that external environment exerts considerable
influence on the organizations.

 In fact the climatic conditions in a particular area/region have a significant impact on the existence of
an enterprise. Therefore, it is necessary to ascertain the environment viability as well.

 The parameters considered are:

 Overall protection of public and environmental health
 Effective reduction of hazardous waste toxicity, mobility and volume.
 Long-term and short-term effectiveness of environmental policies of the company
 Potential consequences of the remedial measures taken for protecting environment
Ecological Feasibility

 This mainly deals with determining the quantum of damage likely to be caused by the proposed
project to the environment, and the cost of restoration measures required to be under taken to ensure
that the damage to the environment is within acceptable limits.

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Dept. of ECE, MIT Thandavapura

Q.01 (a) What is Planning? Explain various steps involved in Planning.

Planning is the process of setting objectives and determining the best course of action to
achieve them. It involves deciding in advance what to do, how to do it, when to do it,
and who will do it. Planning provides direction, reduces risks, and ensures effective
utilization of resources.

Steps involved in Planning:

1. Setting Objectives: Clearly define the goals that need to be achieved.

2. Establishing Planning Premises: Assess the environment and make assumptions about
future conditions.
3. Identifying Alternatives: Develop various potential courses of action.
4. Evaluating Alternatives: Analyze the strengths, weaknesses, and feasibility of each
alternative.
5. Selecting the Best Alternative: Choose the most appropriate course of action.
6. Formulating Supporting Plans: Create sub-plans (e.g., financial, marketing, and
operational plans) to support the main plan.
7. Implementing the Plan: Execute the plan by assigning responsibilities and allocating
resources.
8. Monitoring and Revising: Regularly check the progress and make necessary
adjustments.

Q.01 (b) Explain the roles of a manager.

A manager plays multiple roles, broadly categorized by Henry Mintzberg into three areas:

1. Interpersonal Roles:

 Figurehead: Representing the organization at formal events.

 Leader: Motivating and guiding employees.
 Liaison: Building networks within and outside the organization.

2. Informational Roles:

 Monitor: Gathering and analyzing information.

 Disseminator: Sharing important information within the organization.
 Spokesperson: Communicating on behalf of the organization to external parties.

3. Decisional Roles:

 Entrepreneur: Initiating and encouraging innovation.

 Disturbance Handler: Resolving conflicts and crises.
 Resource Allocator: Distributing resources effectively.
 Negotiator: Handling negotiations with other entities.
Q.01 (c) Distinguish between Management and Administration.

Aspect Management Administration

Formulating policies and setting
Definition Process of executing plans and policies.
objectives.
Scope Narrow, operational focus. Broad, policy-focused.
Level Middle and lower-level activity. Top-level activity.
Decision-making and goal
Focus Efficiency and results.
setting.
Determinative, focuses on
Nature Executory, focuses on doing.
thinking.
Operates within the framework set by
Authority Determines goals and policies.
administration.

Q.02 (a) Explain various functions of Management.

Management functions are essential activities that ensure the effective running of an
organization. Henri Fayol outlined five major functions, which are commonly
categorized into four today:

1. Planning:
o This involves setting goals, formulating strategies, and determining actions to achieve the
objectives.
o It provides a blueprint for decision-making and helps in risk management.
o Example: A company planning to launch a new product will define target markets, production
schedules, and promotional strategies.
2. Organizing:
o Structuring resources (human, physical, and financial) to implement the plan effectively.
o Involves assigning tasks, delegating authority, and establishing workflows.
o Example: Creating different departments like sales, production, and finance to streamline
operations.
3. Staffing:
o Concerned with recruitment, selection, training, and development of employees.
o Ensures that the organization has the right people in the right roles.
o Example: Hiring skilled professionals and providing necessary training programs.
4. Leading (Directing):
o Involves motivating and guiding employees to achieve organizational goals.
o Requires communication, leadership, and conflict resolution.
o Example: A manager inspiring the team to meet project deadlines through effective
communication and incentives.
5. Controlling:
o Monitoring and evaluating performance to ensure that objectives are met.
o Includes setting performance standards, measuring results, and implementing corrective
actions when necessary.
o Example: Conducting regular performance reviews to track progress and make adjustments.
Q.02 (b) Explain the types of decision making.

Decision making is the process of selecting the best course of action among alternatives. It
can be categorized into several types:

1. Strategic Decisions:
o Long-term, high-impact decisions that affect the overall direction of the organization.
o Example: Expanding into international markets.
2. Tactical Decisions:
o Mid-level decisions focused on how to implement strategic plans.
o Example: Launching a marketing campaign for a new product.
3. Operational Decisions:
o Day-to-day decisions related to routine operations.
o Example: Scheduling employee shifts or managing inventory.
4. Programmed Decisions:
o Repetitive decisions based on established rules or guidelines.
o Example: Approving leave requests based on company policy.
5. Non-Programmed Decisions:
o Unique, non-routine decisions requiring creative solutions and judgment.
o Example: Handling a product recall or responding to a competitor's unexpected move.
6. Financial Decisions:
o Decisions regarding resource allocation and financial management.
o Example: Budgeting for new technology investments.

Q.02 (c) List and explain managerial skills with the help of a skill-mix
diagram.

Managers require a combination of skills to effectively perform their roles. These skills can
be classified into three categories:

1. Technical Skills:
o Ability to perform specialized tasks.
o Important at lower management levels.
o Example: An IT manager knowing how to code or troubleshoot software issues.
2. Human (Interpersonal) Skills:
o Ability to work effectively with others and build relationships.
o Essential at all levels of management.
o Example: A manager resolving conflicts or motivating team members.
3. Conceptual Skills:
o Ability to think strategically, analyze complex situations, and make data-driven decisions.
o Critical at top management levels.
o Example: A CEO developing a long-term vision for the company.

Skill-Mix Diagram:

 Top-Level Management:
o High Conceptual Skills, moderate Human Skills, low Technical Skills.
 Middle-Level Management:
o Balanced mix of Conceptual, Human, and Technical Skills.
 Lower-Level Management:
o High Technical Skills, moderate Human Skills, low Conceptual Skills.

Diagram Representation:

yaml
Copy code
Conceptual Skills
▲
|
|
Human Skills ◄────┼────► Technical Skills
|
▼
Lower-Level

Q.03 (a) What is Organization? Explain the Principles of Organization.

Organization is the process of arranging and coordinating resources (people, materials,

and technology) to achieve the objectives of a business efficiently. It involves defining
roles, responsibilities, and establishing authority relationships.

Principles of Organization:

1. Unity of Objective:
o All organizational activities should align with the overall goals.
o Example: If the objective is to increase market share, all departments must contribute towards
that goal.
2. Division of Work:
o Tasks are divided into smaller jobs, allowing specialization and efficiency.
o Example: A manufacturing unit dividing work into assembly, quality control, and packaging.
3. Span of Control:
o Refers to the number of subordinates a manager can effectively supervise.
o Narrow spans are suitable for complex tasks, while broader spans work for simpler ones.
4. Authority and Responsibility:
o Authority must match responsibility. Managers should have the power to make decisions
corresponding to their duties.
5. Scalar Chain:
o There should be a clear chain of command from the top to the bottom of the organization.
o Example: Employees report to supervisors, who report to managers, creating a hierarchy.
6. Unity of Command:
o Each employee should receive orders from one superior only to avoid confusion.
7. Flexibility:
o The organizational structure should adapt to environmental changes.
8. Coordination:
o All departments and activities must work in sync to achieve common goals.
9. Simplicity:
o The structure should be simple and clear, avoiding unnecessary complexity.
10. Delegation of Authority:
 Authority must be delegated to subordinates to facilitate quick decision-making and efficiency.

Q.03 (b) Define Recruitment. Explain the steps involved in the selection
process.

Recruitment is the process of attracting, screening, and selecting qualified individuals for
a job. It ensures the organization has the right talent to achieve its objectives.

Steps in the Selection Process:

1. Job Analysis and Description:

o Define job roles, required skills, and qualifications.
2. Sourcing Candidates:
o Use internal promotions, employee referrals, job portals, or recruitment agencies.
3. Screening and Shortlisting:
o Review resumes and applications to shortlist suitable candidates.
4. Preliminary Interview:
o Conduct initial interviews to assess the basic qualifications and fit for the role.
5. Testing (if applicable):
o Assess technical skills, aptitude, or personality through tests.
6. Formal Interview:
o In-depth interviews by the HR team and department heads.
7. Reference and Background Check:
o Verify past employment, educational qualifications, and criminal records.
8. Job Offer and Negotiation:
o Offer the selected candidate a formal job letter and negotiate terms if necessary.
9. Onboarding and Orientation:
o Integrate the new employee into the organization through training and orientation

Q.04 (a) With the help of a diagram, explain Maslow’s Need Hierarchy
Theory with examples.

Maslow’s Hierarchy of Needs is a psychological theory that explains human motivation. It

suggests that people are driven by a hierarchy of needs, progressing from basic to
higher-level needs.

Diagram:

Self-Actualization
(Creativity, growth)
------------------------
Esteem Needs
(Recognition, respect)
------------------------
Social Needs
(Relationships, belonging)
------------------------
 Safety Needs
(Security, health, stability)
------------------------
Physiological Needs
(Food, water, shelter)

Explanation of Needs (Bottom to Top):

1. Physiological Needs:
o Basic survival needs like food, water, and shelter.
o Example: Employees expect fair wages to cover living expenses.
2. Safety Needs:
o Security, stability, and protection.
o Example: Job security, health insurance, and safe working conditions.
3. Social Needs (Belongingness):
o Need for relationships, love, and social connections.
o Example: Teamwork, company outings, and supportive management.
4. Esteem Needs:
o Recognition, respect, and self-confidence.
o Example: Promotions, awards, and employee recognition programs.
5. Self-Actualization:
o Fulfillment of personal potential and creativity.
o Example: Opportunities for growth, innovation, and leadership roles.

Q.04 (b) Define Controlling. Explain essentials of an effective control

system.

Controlling is the process of monitoring and evaluating organizational performance to

ensure goals are achieved. It involves comparing actual performance with planned
objectives and taking corrective actions if necessary.

Essentials of an Effective Control System:

1. Goal-Oriented:
o The system must align with organizational objectives.
o Example: A sales target monitoring system.
2. Accuracy:
o Control measures should provide accurate and reliable data.
o Example: Financial audits ensure accuracy in accounting.
3. Timeliness:
o Control should provide information quickly to allow timely corrective action.
o Example: Monthly performance reports.
4. Flexibility:
o The system must adapt to changes in the environment or objectives.
o Example: Adapting marketing strategies in response to competitor actions.
5. Simplicity:
o The control process should be simple to understand and implement.
6. Cost-Effectiveness:
o The benefits of the control system should outweigh its costs.
7. Focus on Critical Areas:
o Key performance areas (KPAs) should receive more attention.
o Example: Focusing on customer satisfaction metrics in service industries.
8. Corrective Action:
o Effective control systems lead to prompt corrective actions when deviations occur.
9. Participation and Communication:
o Employees at all levels should understand and participate in the control process.
o Example: Transparent feedback systems.
10. Continuous Monitoring:

 Control should be an ongoing process, ensuring continuous improvement.

Q.05 (a) Describe the social responsibility of business towards different

groups.

Social responsibility refers to the ethical obligation of businesses to contribute positively to

society and consider the impact of their operations on various stakeholders. It goes
beyond profit-making to ensure the well-being of the community, environment, and
society at large.

Social Responsibility towards Different Groups:

1. Responsibility towards Shareholders/Owners:

o Ensure profitability and sustainable growth.
o Provide timely and accurate information about financial performance.
o Example: Transparent annual reports and dividend distribution.
2. Responsibility towards Employees:
o Fair wages, safe working conditions, and opportunities for growth.
o Promote employee welfare, equality, and job security.
o Example: Providing health insurance and professional development programs.
3. Responsibility towards Customers:
o Deliver high-quality, safe, and fair-priced products or services.
o Ensure truthful advertising and ethical business practices.
o Example: Implementing product recalls for safety issues.
4. Responsibility towards Government:
o Abide by laws and regulations, pay taxes on time, and avoid corruption.
o Cooperate in nation-building efforts.
o Example: Adhering to environmental laws and labor regulations.
5. Responsibility towards Society and Community:
o Support social causes, promote education, and engage in community development.
o Example: Running CSR (Corporate Social Responsibility) initiatives like skill
development programs.
6. Responsibility towards Environment:
o Minimize pollution and environmental degradation.
o Adopt sustainable practices and reduce carbon footprints.
o Example: Switching to renewable energy sources or recycling initiatives.
Q.05 (b) What are the essential characteristics that define a successful
entrepreneur?

Successful entrepreneurs possess unique characteristics that enable them to innovate, take
risks, and turn ideas into profitable ventures.

Essential Characteristics of a Successful Entrepreneur:

1. Vision and Passion:

o Strong passion for their ideas and a clear vision for future growth.
o Example: Elon Musk's drive for innovation in electric vehicles.
2. Risk-Taking Ability:
o Willing to take calculated risks and face uncertainties.
o Example: Launching a new product in an untested market.
3. Creativity and Innovation:
o Ability to think outside the box and create novel solutions.
o Example: Developing disruptive technologies or services.
4. Resilience and Perseverance:
o Overcoming failures and learning from setbacks.
o Example: Entrepreneurs who rebuild businesses after failures.
5. Leadership and Decision-Making Skills:
o Guiding teams, making crucial decisions, and inspiring employees.
o Example: Strong leadership during challenging times.
6. Networking and Communication Skills:
o Building strong relationships with customers, investors, and stakeholders.
o Example: Engaging with venture capitalists to secure funding.
7. Goal-Oriented Approach:
o Setting realistic goals and striving to achieve them efficiently.
o Example: Creating short- and long-term objectives to track progress.
8. Market Knowledge and Awareness:
o Deep understanding of market trends and customer needs.
o Example: Entrepreneurs who adapt their products based on market feedback.

Q.06 (a) What are some common myths about entrepreneurship?

Entrepreneurship is often surrounded by myths that can create false perceptions.

Common Myths about Entrepreneurship:

1. Entrepreneurs are Born, Not Made:

o Reality: Entrepreneurship can be learned through experience, education, and practice.
o Example: Many successful entrepreneurs started with little knowledge but developed
skills over time.
2. Entrepreneurs are High Risk Takers:
o Reality: Entrepreneurs take calculated, manageable risks.
o Example: They conduct market research and feasibility studies before investing.
3. You Need a Lot of Money to Start:
o Reality: Many businesses start small with minimal capital and grow gradually.
o Example: Startups often begin in garages or homes with low initial investment.
4. Entrepreneurs Work Alone:
o Reality: Successful entrepreneurs build teams and rely on partnerships.
o Example: Co-founders and teams contribute significantly to business success.
5. A Great Idea is All You Need:
o Reality: Execution and perseverance are equally important as having a great idea.
o Example: Many ideas fail without proper implementation and market validation.
6. Entrepreneurship Guarantees Wealth:
o Reality: Success is not immediate, and many ventures face financial challenges.
o Example: Some entrepreneurs take years to see significant profits.

Q.06 (b) Explain key stages of the Entrepreneurial Development Cycle.

The Entrepreneurial Development Cycle outlines the journey of an entrepreneur from idea
generation to business growth.

Key Stages:

1. Idea Generation:
o Brainstorming new concepts or identifying gaps in the market.
o Example: Noticing unmet customer needs and devising solutions.
2. Feasibility Study and Market Research:
o Testing the practicality and demand for the idea.
o Example: Conducting surveys or pilot programs.
3. Business Plan Development:
o Creating a detailed roadmap that outlines business goals, strategies, and financial
projections.
o Example: A business plan for pitching investors.
4. Resource Mobilization:
o Gathering necessary resources such as capital, manpower, and technology.
o Example: Securing funding from investors or banks.
5. Implementation and Launch:
o Turning plans into reality by starting operations and entering the market.
o Example: Officially launching the product or service.
6. Growth and Expansion:
o Scaling the business by expanding market reach or introducing new products.
o Example: Opening new branches or diversifying product lines.
7. Sustainability and Maturity:
o Ensuring long-term profitability and adapting to changing market conditions.
o Example: Reinvesting profits for continuous innovation.
8. Exit Strategy (Optional):
o Exiting the business through mergers, acquisitions, or selling shares.
o Example: Entrepreneurs selling their companies to larger firms.

Q.07 (a) Explain the problems faced by Small Scale Industries (SSI).

Small Scale Industries (SSI) play a critical role in economic development but face
numerous challenges that hinder their growth and sustainability.

Problems Faced by SSI:

1. Financial Constraints:
o Limited access to credit and high interest rates restrict expansion and modernization.
o Example: Difficulty in securing loans from banks due to lack of collateral.
2. Lack of Skilled Labor:
o Inadequate skilled workforce leads to low productivity and quality issues.
o Example: Many SSIs operate with untrained workers, affecting efficiency.
3. Technological Obsolescence:
o Outdated technology reduces competitiveness and increases production costs.
o Example: Manual machinery instead of automated systems.
4. Marketing Challenges:
o Limited market reach and competition from large-scale industries make it hard to sell
products.
o Example: Inability to market products internationally.
5. Raw Material Shortages:
o Inconsistent supply and rising costs of raw materials disrupt production.
o Example: Shortage of essential materials like steel or cotton.
6. Regulatory Burden:
o Complex government regulations, taxes, and compliance requirements create
difficulties.
o Example: Multiple clearances required to start operations.
7. Infrastructure Issues:
o Poor infrastructure such as lack of power, transport, and communication facilities.
o Example: Frequent power cuts in rural areas hinder production.
8. Competition from Large Enterprises:
o Large firms with better resources often dominate markets, marginalizing SSIs.
o Example: Multinational companies producing similar goods at lower prices.
9. Delayed Payments:
o Payments from customers or larger firms are often delayed, affecting cash flow.
o Example: SSIs waiting months for payments from large corporations.
10. Lack of R&D and Innovation:

 Minimal investment in research and development limits innovation and growth.

 Example: SSIs relying on traditional methods rather than innovative processes.

Q.07 (b) Explain Financial Feasibility and Technical Feasibility.

1. Financial Feasibility:
o Assesses whether the business idea is economically viable and profitable.
o It evaluates the cost of resources, projected income, and funding availability.
o Key Aspects:
 Capital requirements (start-up costs).
 Break-even analysis.
 Return on investment (ROI).
 Funding sources (loans, investors, grants).
o Example:
 A business plan showing profitability within two years through cost reduction and
steady market demand.
2. Technical Feasibility:
o Determines if the business has the necessary technology, skills, and capacity to produce
goods or services.
o It evaluates production processes, equipment, and workforce capabilities.
o Key Aspects:
 Availability of technology.
 Production capacity and scalability.
 Technical know-how and expertise.
 Raw material sourcing.
o Example:
 A feasibility study for manufacturing solar panels assessing the availability of raw
materials and trained engineers.

Q.08 (a) Explain the Impact of Globalization and WTO on Small Scale
Industries (SSI) in India.

Impact of Globalization on SSI:

Globalization has opened opportunities for SSIs by providing access to international
markets but also introduced several challenges.

Positive Impacts:

1. Market Expansion:
o SSIs can export products globally, increasing revenue streams.
o Example: Indian handicrafts gaining international popularity.
2. Technological Advancement:
o Access to global technology improves production and efficiency.
o Example: Adoption of automated machinery from international markets.
3. Improved Quality Standards:
o Global competition pushes SSIs to improve product quality.
o Example: Certification processes like ISO enhance credibility.

Negative Impacts:

1. Increased Competition:
o SSIs face competition from global giants with better resources.
o Example: Chinese products flooding Indian markets.
2. Price Wars:
o International players often produce at lower costs, forcing SSIs to reduce prices.
3. Dependency on Imports:
o SSIs depend on imported raw materials, which can lead to price volatility.

Impact of WTO (World Trade Organization) on SSI:

WTO's trade agreements and liberalization policies have both benefits and drawbacks
for SSIs.

Positive Impacts:

1. Export Promotion:
o WTO agreements promote free trade, allowing SSIs to export without heavy tariffs.
o Example: Indian textile exports benefiting from reduced duties.
2. Intellectual Property Protection:
o WTO's TRIPS (Trade-Related Aspects of Intellectual Property Rights) protects
innovations by SSIs.

Negative Impacts:

1. Loss of Protectionism:
o WTO limits protective measures like subsidies, exposing SSIs to global competition.
o Example: Reduced government protection in sectors like agriculture and textiles.
2. Standardization Pressures:
o SSIs must comply with international standards, which can be costly.

Q.08 (b) What factors contribute to creating favorable business

opportunities in India?

India offers a conducive environment for businesses due to various economic, social, and
political factors.

Key Factors Contributing to Favorable Business Opportunities:

1. Growing Economy:
o India is one of the fastest-growing economies, with a rising middle class and increasing
consumer demand.
o Example: Growth in the e-commerce sector driven by higher purchasing power.
2. Government Support and Policies:
o Initiatives like Make in India, Startup India, and MSME incentives promote
entrepreneurship.
o Example: Tax benefits and subsidies for new ventures.
3. Large Market Size:
o India’s large population provides a vast market for products and services.
o Example: The booming telecom and automobile industries.
4. Technological Advancements:
o India is advancing in technology and digitalization, boosting opportunities in IT, AI, and
fintech.
o Example: Growth in the software export industry.
5. Skilled Workforce:
o India has a large pool of skilled and semi-skilled labor across industries.
o Example: Engineering and IT graduates fueling the tech industry.
6. Infrastructure Development:
o Ongoing investments in infrastructure (roads, ports, and electricity) create business
opportunities.
o Example: Development of smart cities enhancing industrial growth.
7. Foreign Direct Investment (FDI):
o Liberalized FDI policies attract global investors.
o Example: FDI in sectors like retail, defense, and telecommunications.
8. Diverse Sectors for Growth:
o India offers opportunities across diverse sectors, including agriculture, manufacturing,
healthcare, and services.
9. Entrepreneurial Culture:
o India’s entrepreneurial spirit is supported by incubators, accelerators, and funding
agencies.
o Example: Rapid growth in startups, especially in fintech and edtech.
10. Strategic Location:

 India’s geographic location facilitates trade and export to Southeast Asia, the Middle
East, and Africa.

Q.09 (a) Explain Government Schemes for Funding Business.

The Government of India has launched various schemes to support businesses, particularly
startups and MSMEs (Micro, Small, and Medium Enterprises). These schemes provide
financial assistance, promote innovation, and foster entrepreneurship.

Key Government Schemes for Funding Business:

1. Startup India Initiative:

o Aims to foster innovation, support startups, and create jobs.
o Benefits:
 Tax exemptions for three years.
 Access to a ₹10,000 crore fund.
 Fast-tracked patent applications and reduced fees.
2. Pradhan Mantri Mudra Yojana (PMMY):
o Provides financial assistance to small businesses.
o Loan Categories:
 Shishu (up to ₹50,000), Kishore (₹50,000 – ₹5 lakh), Tarun (₹5 lakh – ₹10 lakh).
o Focus: Non-corporate, non-farm small/micro enterprises.
3. Stand-Up India Scheme:
o Promotes entrepreneurship among SC/ST and women entrepreneurs.
o Funding: Loans between ₹10 lakh to ₹1 crore for greenfield enterprises.
4. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):
o Provides collateral-free credit to MSMEs.
o Coverage: Up to 75% of the credit facility.
5. PMEGP (Prime Minister’s Employment Generation Programme):
o Aims to generate self-employment through micro-enterprise creation.
o Funding: 15% to 35% subsidy based on the project cost.
6. National Small Industries Corporation (NSIC) Schemes:
o Facilitates credit support, marketing, and technology upgradation.
o Example: Raw Material Assistance Scheme.
7. DIC (District Industries Centre) Loans:
o Supports small businesses at the district level through financial aid and mentorship.

Q.09 (b) Explain Steps in PERT. Explain Advantages and Limitations of

PERT.
PERT (Program Evaluation and Review Technique) is a project management tool used
to plan, schedule, and control complex projects. It focuses on identifying the minimum
time needed to complete a project.

Steps in PERT:

1. Define Project Activities:

o Break down the project into smaller, manageable activities.
2. Determine Activity Sequence:
o Establish dependencies and the order of activities.
3. Estimate Time for Activities:
o Use three time estimates:
 Optimistic Time (O) – Minimum time if everything goes well.
 Pessimistic Time (P) – Maximum time if problems arise.
 Most Likely Time (M) – Time under normal conditions.
o Formula for Expected Time: TE=O+4M+P6TE = \frac{O + 4M +
P}{6}TE=6O+4M+P
4. Construct the PERT Network:
o Draw the network diagram to represent project flow.
5. Identify the Critical Path:
o Find the longest path through the network.
6. Monitor and Update:
o Continuously update as the project progresses.

Advantages of PERT:

 Visualization: Provides a clear graphical representation of project tasks.

 Risk Analysis: Accounts for uncertainty with three time estimates.
 Improved Scheduling: Identifies critical and non-critical tasks, optimizing resource
allocation.
 Efficient Time Management: Highlights potential delays and suggests corrective
actions.

Limitations of PERT:

 Complexity: PERT can become complicated for large projects.

 Time-Consuming: Requires detailed analysis and constant updating.
 Subjectivity: Time estimates are subjective and may lead to inaccuracies.
 Resource Overlook: Focuses on time, often ignoring resource allocation.

Q.10 (a) What are the biggest challenges entrepreneurs face when starting
their own business?

Entrepreneurs face numerous challenges during the initial phases of their ventures.

Key Challenges Faced by Entrepreneurs:

1. Lack of Capital:
o Difficulty in securing initial funding.
o Solution: Bootstrapping, venture capital, or government schemes.
2. Market Competition:
o Facing competition from established businesses.
o Solution: Focus on innovation and unique value propositions.
3. Uncertain Demand:
o Difficulty in predicting market demand.
o Solution: Conduct market research and pilot programs.
4. Building the Right Team:
o Recruiting skilled employees.
o Solution: Offer equity, build company culture, and provide training.
5. Regulatory and Compliance Issues:
o Navigating legal formalities and government regulations.
o Solution: Hire consultants and stay updated on industry regulations.
6. Time Management:
o Balancing multiple tasks and priorities.
o Solution: Use project management tools and delegate tasks.
7. Scaling Operations:
o Managing growth without compromising quality.
o Solution: Plan for gradual scaling and automate processes.

Q.10 (b) Why do some Business Plans Fail?

A business plan is a blueprint for success, but many fail due to several reasons.

Reasons for Business Plan Failure:

1. Unrealistic Goals:
o Setting unattainable objectives leads to disappointment and resource wastage.
2. Lack of Market Research:
o Failing to understand market needs and trends.
3. Poor Financial Planning:
o Inaccurate budgeting and unrealistic revenue projections.
4. Ignoring Competitors:
o Underestimating competitors' strengths and market presence.
5. Weak Execution:
o Lack of clear action plans and accountability.
6. Failure to Adapt:
o Inability to pivot based on feedback or market changes.
7. Insufficient Marketing Strategy:
o Failing to effectively promote the product or service.

Q.10 (c) Distinguish between PERT and CPM.

 Aspect PERT CPM (Critical Path Method)
Cost and time (trade-off
Focus Time (scheduling and planning)
analysis)
Research and development, new Construction, repetitive
Type of Project
projects projects
Time
Probabilistic (three estimates) Deterministic (single estimate)
Estimation
Nature of Tasks Non-repetitive, unpredictable tasks Repetitive, predictable tasks
Critical Path Can change based on time estimates Fixed critical path
Goal Minimize project duration Minimize cost and time
Application R&D, software development Construction, manufacturing

Example:

 PERT: Launching a new product with uncertain development phases.

 CPM: Constructing a building where activities and durations are known.