DIBRUGARH UNIVERSITY QUESTION PAPERS
2017 (November)
COMMERCE (General/Speciality)
Course: 502 (Entrepreneurship Development)
Time: 3 hours
The figures in the margin indicate full marks for the questions
(NEW COURSE)
Full Marks: 80
Pass Marks: 24
1. (a) Write True or False of the following: 1x4=4
(i) There is difference between a manager and an entrepreneur. True
(ii) Innovativeness is essential for an entrepreneur. True
(iii) Self-help groups are formed by the government. False
(iv) Entrepreneur is not a risk-taker. False
(b) Write the full forms of the following: 1x4=4
(i) MSMDO Micro, Small and Medium Enterprises Development Organisation
(ii) IIE Indian Institute of Entrepreneurship
(iii) KVIC Khadi and Village Industries Commission
(iv) SIDBI Small Industrial Development Bank of India
2. Write short notes on the following (any four): 4x4=16
(a) Objectives of Self-help groups.
Ans: Objectives of SHGs : The concept of Self Help Group is initiated towards fulfillment of the following social objectives:
1. To support economic freedom of the rural people living Below Poverty Line: The rural people are mostly poor and a large section of them lives Below Poverty Line (BPL). They lack adequate disposable income in their hands. As such, it is hoped, if these people are given adequate support to work and develop their own ventures through the creation of SHGs, a time will come when they will be able to change their economic conditions.
2. To encourage poor rural folk in developing their habit of working in groups: Building of rural community with homogeneous groups of vulnerable sections of the society becomes essential to give them mental strength through the spirit of group work.
3. To develop Entrepreneurial Culture among poor rural people: Entrepreneurial culture is grossly absent in our rural areas due to variety of causes. Introduction of the concept of SHG helps poor rural people to undertake income generating projects both at the individual level and at the group level. Thus, Entrepreneurial Culture is developed among poor rural people.
4. To Help the vulnerable section of the society, who does not have access to institutional finance: Due to lack of collateral securities; most of the vulnerable sections of our society like women, SC, ST etc fail to get loans from financial institutions in doing any kind of business. Therefore, the SHGs are created to help such people in taking up small business ventures through micro-credit and government support.
(b) Entrepreneurial Development Programme.
Ans: Entrepreneurial Development Programme (EDP) can be defined as a programme, formally designed to help an individual in strengthening his/her entrepreneurial motive and in acquiring skill and capabilities necessary for playing entrepreneurial role effectively. In fact, it is an academic exercise to build up human resources by including them to take up entrepreneurial activities through motivation and developing the required entrepreneurial skills through exposure creation to effectively manage their enterprises. According to N.P. Singh, EDP is not merely a training programme. It is a process of:
a) Enhancing and motivation, knowledge and skills of the potential entrepreneurs;
b) Arousing and reforming the entrepreneurial behavior in their day-to-day activities; and
c) Assisting them develop their own ventures or enterprise as a sequel to entrepreneurial action.
Thus, EDPs endeavous to change educate and equip a person to become a successful entrepreneur. The whole process envisages developing the participant’s latent qualities and skills as also equipping him with other capabilities. By the end of the programme, the participant is expected to be in a position to crystalise his vision in to action and launch and manage his enterprise with competence. The system involves a selection procedure and only those who prove to have certain minimum initial traits are selected as potential entrepreneurs to be trained up to develop the other required traits through interventions.
(c) Social responsibilities of an entrepreneur.
Ans: An entrepreneur is someone who perceives business opportunity, organizes resources needed for exploiting that opportunity and exploits it. The term business is commonly referred to the commercial activities conducted with a view to earn profit. The primary aim of entrepreneurs was to maximise profit but the present perspectives on business are not only to maximise profits but also to fulfill its responsibility towards the society.
Social Responsibility:
a) Effective leadership: The activities of employees are largely affected by activities and attitude of the entrepreneur. If entrepreneurs cheat, manipulates and uses unfair means in his business, then are sending wrong message to the employees.
b) Employees satisfaction: Employees need must be adequately satisfied. Employees are the part of society and entrepreneurs must look after their needs as his social responsibility.
c) Environment protection: Entrepreneurs must not do any act which is hazardous to the nature. They must create eco-friendly product and avoid use of plastic.
d) Consumers welfare: It is a social responsibility of entrepreneurs to charge reasonable price for products and services. They must also supply good quality product to their consumers and must avoid manipulated or false advertisements.
(d) Skill Development Programme.
Ans: Skill development programme: Skill development and vocational training programs are conceptualized, executed and monitored by various organizations, working closely with the government of India. There are various plans and schemes that are dedicated to achieve scalable skilling with quality and higher productivity, particularly in the unorganized or informal sector which accounts for 83% of India’s workforce. The Ministry of Skill Development and Entrepreneurship (MSDE) is responsible for the co-ordination of overall skill development efforts across the country, building the vocational and technical training framework, skill up-gradation, building of new skills, and innovative thinking not only for existing jobs but also jobs that are to be created.
(e) Self-employment.
Ans: Self-employment is the state of working for oneself instead of working for others. It is an act of generating income directly from customers rather than working as an employee of a business or organisation. Entrepreneurship development training helps in strengthening informal and unorganised sector to motivate people to opt for self employment and entrepreneurial career. The country is required to divert the youth with latent entrepreneurial traits from wage career to self employment career. Such alternate path through entrepreneurship could help the country in defusing social tension and help in solving the problem of increasing unemployment to some extent.
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3. (a) Define the term ‘entrepreneur’. Explain the different classifications of entrepreneurs.
Ans: Entrepreneur: The word “entrepreneur” is derived from the French word entreprendre which means to initiate or undertake. In the early sixteenth century, the Frenchmen who organised and led military expeditions were referred to as “entrepreneurs”. The term entrepreneur was applied to business in the early eighteenth century by French Economist Richard Cantillon. According to him, the entrepreneur buys factor services at certain prices with a view to sell their products at uncertain prices in the future. Richard Cantillon conceived of an entrepreneur as a bearer of non-insurable risk.
Types of Entrepreneurs
Entrepreneurs are classified as under different heads as given below. This helps the potential entrepreneurs to choose his own nature and style of entrepreneurship.
a) According to the Type of Business: Entrepreneurs are found in various types of business occupations of varying size. We may broadly classify them as follows:
Business Entrepreneur: Business entrepreneurs are individuals who conceive an idea for a new product or service and then create a business to materialize their idea into reality. They tap both production and marketing resources in their search to develop a new business opportunity. They may set up a big establishment or a small business unit.
Trading entrepreneur: Trading entrepreneur is one who undertakes trading activities and is not concerned with the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire and interest among buyers to go in for his product. He is engaged in both domestic and overseas trade.
Industrial Entrepreneur: Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.
Corporate Entrepreneur: Corporate entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.
Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who undertake such agricultural activities as raising and marketing of crops, fertilizers and other inputs of agriculture. According to the use of Technology.
Technical Entrepreneur: A technical entrepreneur is essentially an entrepreneur of “Craftsman type”. He develops a new and improved quality of goods because of his craftsmanship. He concentrates more on production than marketing.
Non-technical Entrepreneur: Non-technical entrepreneurs are those who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business.
Professional Entrepreneur: Professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established.
b) According to Motivation: Motivation is the force that influences the efforts of the entrepreneur to achieve his objectives. An entrepreneur is motivated to achieve or prove his excellence in job performance. He is also motivated to influence others by demonstrating his power thus satisfying his ego.
Pure Entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.
Induced Entrepreneur: Induced entrepreneur is one who is being induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture.
Motivated Entrepreneur: New entrepreneurs are motivated by the desire for self-fulfillment. They come into being because of the possibility of making and marketing some new product for the use of consumers. If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in terms of profit and enlarged customer network.
Spontaneous Entrepreneur: These entrepreneurs start their business out of their natural talents and instinct. They are persons with initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity.
Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up a high growth industry. These entrepreneurs choose an industry which has substantial growth prospects.
Super-Growth Entrepreneur: Super-growth entrepreneur are those who have shown enormous growth of performance in their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.
c) According to Stages of Development
First-Generation Entrepreneur: A first generation entrepreneur is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator, combining different technologies to produce a marketable product or service.
Modern Entrepreneur: A modern entrepreneur is one who undertakes those ventures which go well along with the changing demand in the market. They undertake those ventures which suit the current marketing needs.
Classical Entrepreneur: A classical entrepreneur is one who is concerned with the customers and marketing needs through the development of a self supporting venture. He is a stereo type entrepreneur whose aim is to maximize his economic returns at a level consistent with the survival of the firm with or without an element of growth.
Innovating Entrepreneurs: Innovating entrepreneurship is characterized by aggressive assemblage of information and analysis of results, deriving from a novel combination of factors. Men/women in this group are generally aggressive in experimentation who exhibit cleverness in putting attractive possibilities into practice.
Imitative Entrepreneurs: Imitative entrepreneurship is characterized by readiness to adopt successful innovations by innovating entrepreneurs. They first imitate techniques and technology innovated by others.
Fabian Entrepreneurs: These categories of entrepreneurs are basically running their venture on the basis of conventions and customary practices. They don’t want to introduce change and not interested in coping with changes in environment. They have all sorts of inhibitions, shyness and lethargic attitude. They are basically risk aversor and more cautious in their approach.
Drone Entrepreneurs: Entrepreneurs who are reluctant to introduce any changes in their production methods, processes and follow their own traditional style of operations. Though they incur losses and looses their market potential, will not take any effort to overcome the problem. Their products and the firm will get natural death and knockout.
Forced Entrepreneurs: Sometimes, circumstances made many persons to become entrepreneurs. They do not have any plan, forward looking and business aptitude. To mitigate the situational problem, they are forced to plunge into entrepreneurial venture. Most of the may not be successful in this category due to lack of training and exposure.
Or
(b) Distinguish between the following: 7x2=14
(i) Entrepreneur and Manager.
Ans: Comparison of Entrepreneurs and Traditional Managers
| Basis | Traditional Managers | Entrepreneurs |
| Primary motives | Promotional and other Traditional corporate Rewards, such as office, Staff, and power | Independence, Opportunity to create And money |
| Time Orientation | Short-term meeting quotas and budgets, weekly monthly, quarterly, and the annual planning horizons. | Survival and achieving 5-10 year growth of business. |
| Activity | Delegates and supervises More than direct involvement | Director involvement |
| Risk | Careful | Moderate risk taker |
| Status | Concerned about status symbols. | No concern about status symbols. |
| Failure and mistakes | Tries to avoid mistakes and surprises | Deals with mistakes and failures. |
(ii) Entrepreneur and Entrepreneurship.
Ans: Distinguish between the terms entrepreneur and entrepreneurship.
Though both the terms entrepreneur and entrepreneurship are almost similar they possess several differentiating terms with them. The differences between the entrepreneurs and entrepreneurship are as follows:-
| Entrepreneur | Entrepreneurship |
| An entrepreneur one who undertakes and operates a new enterprise and assumes some accountability for the inherent risks. | Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in responses to identified opportunities. |
| Entrepreneur is often synonymous with founder. | Entrepreneurship ranges in scale from solo projects to major undertakings creating many job opportunities. |
| The person who starts and operates a business enterprise is an entrepreneur. | The process in which an entrepreneur starts and operates his business enterprise is entrepreneurship. |
| The entrepreneur is a coordinator as he coordinates all the three elements of production i.e. land, labor and capital. | Entrepreneurship is the coordination maintained by an entrepreneur. |
| The person who innovates something new is an entrepreneur. | The innovation of something new or the process of innovation is entrepreneurship. |
| He who leads an enterprise towards its vision thorough leadership, motivation is an entrepreneur. | The way in which an entrepreneur leads his manpower, motivates them for the achievement of the firms goal is entrepreneurship. |
| He who bears risk of the firm for the sake of making a reasonable profit is an entrepreneur. | The risk bearing practice that is done by an entrepreneur is entrepreneurship. |
4. (a) What do you mean by rural entrepreneurs? Discuss the problems faced by the rural entrepreneurs in Assam. 4+10=14
Ans: Meaning: Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business units in the rural sector of the economy. In other words, establishing industrial and business units in the rural areas refers to rural entrepreneurship. In simple words, rural entrepreneurship implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural industrialisation. Thus, we can say, entrepreneurship precedes industrialization.
According to KVIC (Khadi and Village Industry Commission), "village industries or Rural industry means any industry located in rural areas, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand rupees"
Problems Faced By Rural Entrepreneurs
Most of the rural entrepreneurs face peculiar problems like illiteracy, fear of risk, lack of training and experience, limited purchasing power and competition from urban entrepreneurs. Some of the major problems faced by rural entrepreneurs are as under.
1. Paucity of funds: Most of the rural entrepreneurs fail to get external funds due to absence of tangible security and credit in the market. The procedure to avail the loan facility is too time-consuming that its delay often disappoints the rural entrepreneurs.
2. Competition: Rural entrepreneurs face severe completion from large sized organizations and urban entrepreneurs. They incur high cost of production due to high input cost.
3. Middlemen: Middlemen exploit rural entrepreneurs. The rural entrepreneurs are heavily dependent on middlemen for marketing of their products who pocket large amount of profit.
4. Legal formalities: Rural entrepreneurs find it extremely difficult in complying with various legal formalities in obtaining licenses due to illiteracy and ignorance.
5. Procurement of raw materials: Procurement of raw materials is really a tough task for rural entrepreneur. They may end up with poor quality raw materials, may also face the problem of storage and warehousing.
6. Risk element: Rural entrepreneurs have less risk bearing capacity due to lack of financial resources and external support.
7. Lack of technical knowledge: Rural entrepreneurs suffer a severe problem of lack of technical knowledge. Lack of training facilities and extension services crate a hurdle for the development of rural entrepreneurship.
8. Lack of infrastructural facilities: The growth of rural entrepreneurs is not very healthy in spite of efforts made by government due to lack of proper and adequate infrastructural facilities.
9. Poor quality of products: Another important problem is growth of rural entrepreneurship is the inferior quality of products produced due to lack of availability of standard tools and equipment and poor quality of raw materials.
10. Negative attitude: The environment in the family, society and support system is not conducive to encourage rural people to take up entrepreneurship as a career. It may be due to lack of awareness and knowledge of entrepreneurial opportunities.
Or
(b) Explain the following in brief: 7x2=14
(i) Development of women entrepreneurship in the global perspectives.
Ans: Emergence of woman entrepreneurs in National and Global perspective
Women’s entrepreneurship has hit a media tipping point. Women-owned entities in the formal sector represent approximately 37 percent of enterprises globally — a market worthy of attention by businesses and policy makers alike. While aggregated data is often challenging to find, the recent Global Entrepreneurship Monitor (GEM) found 126 million women starting or running businesses, and 98 million operating established (over three and a half years) businesses.
That’s 224 million women impacting the global economy — and this survey counts only 67 of the 188 countries recognized by the World Bank. These entrepreneurs have cross the spectrum of micro to high growth — from supporting life to creating wealth. They include hair salon owners, high tech visionaries and everything in between, all making critical economic contributions.
Women entrepreneurs tend to be more successful because of their trusted status in the community. Controlling for firm characteristics, research suggests that women-owned firms outperform those owned by male counterparts.
In this conflict-ridden Himalayan territory, entrepreneurship has witnessed many a metamorphosis. Initially, it was taken up by the educated upper class men who invested their own money to build their fortunes. Then educated women followed and few have made a significant mark over the years. However, what has not been recognised is that many uneducated women are also enthusiastically raising family incomes through micro ventures and reinvesting their earnings in their families and communities. These women also inspire other women in their localities to pursue their dreams through entrepreneurship at the grassroots level.
For Instance, Kashmir is an agrarian economy with more than 70 per cent of the population depending upon agriculture for their livelihood. Even though grassroots female entrepreneurs are not undertaking their businesses at a commercial level, they are breaking barriers and inspiring other women to become self-reliant.
Unlike many working women who are finding it difficult to manage their professional and personal life, many females set an example. The uneducated women entrepreneurs, especially in rural areas, still do not have access to technical and financial support that can give a fillip to their businesses from a domestic to a commercial level.
There are cultural and societal norms that hinder equal participation of women in ventures that men undertake. But women have to contribute to entrepreneurial activities in the best way possible. Collectively, women entrepreneurs look different than their male counterparts. Their lower employment numbers and growth aspirations have historically led to questions of how to “fix” them. But different doesn’t mean deficient — or underperforming. Entrepreneurial activity creates growth and prosperity — and solutions for social problems. And today’s trends show that women will be a driving force of entrepreneurial growth in the future.
In India, women comprise about 30 percent of corporate senior management positions, which is notably higher than the global average (24 percent). But in the overall workforce, India is one of the worst countries in the world — 113th out of 135 — when it comes to the gender gap. And women entrepreneurs constitute only 10 percent of the total number of entrepreneurs in the country.
Women entrepreneurs have an edge over male entrepreneurs. Edges matter to investors. And the numbers back this up outside India and this is also true in India. One of the most obvious reasons to invest in women leaders in India is that women control the vast majority of household spending. So unless you are a business that is focussed mostly on men, women are more likely to better understand customer perspective.
Another is that women are often better at building long-term relationships than men. Lasting relationships benefit a business tremendously, as only so much can be achieved without trust… with employees, customers, suppliers, shareholders, government,
(ii) Role of entrepreneurship in the development of Indian Economy.
Ans: ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
The entrepreneur is the key to the creation of new enterprises that energise the economy and rejuvenate the established enterprises that make up the economic structure. Entrepreneurs initiate and sustain the process of economic development in the following ways:
1. Capital formation: Entrepreneurs mobilise the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilisation of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in per capita income: Entrepreneurs locate and exploit opportunities. They convert the talent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase net national product and per capita income in the country, which are important yardsticks for measuring economic growth.
3. Improvement in living standards: Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and increase variety in consumption.
4. Economic independence: Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries. Businessmen also export goods and services on a large scale and thereby earn the scarce foreign exchange for the country. Such import substitution and export promotion help to ensure the economic independence of the country without which political independence has little meaning.
5. Backward and forward linkages: An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several backward and forward linkages. For example, the establishment of a steel plant generates several ancillary units and expands the demand for iron ore, coal, etc. These are backward linkages. By increasing the supply of steel, the plant facilitates the growth of machine building, tube making, utensil manufacturing and such other units.
6. Generation of Employment: Entrepreneurship development training which helps in strengthening informal and unorganised sector is expected to motivate enterprising people to opt for self employment and entrepreneurial career. It will therefore, help in solving the problem of increasing unemployment to some extent.
7. Harnessing Locally Available Resources and Entrepreneurship: India is considered to be very rich in natural resources. In spite of about five decades of planned development a large number of states have remained economically backward. A few large scale industries started by entrepreneurs from outside the state in an economically backward area may help as model of pioneering efforts, but ultimately the real strength of industrialisation in backward areas depends upon the involvement of local entrepreneurship in such activities: Increased activities of local entrepreneurs will also result in making use of abundantly available local resources.
5. (a) Define self-help group. Explain the funding procedure of self-help groups in India.
Ans: Concept of Self Help Group (SHGs)
A self help group is defined as a group consisting of people who have personal experience of a similar issue or life situation, either directly or through their family and friends. Sharing experiences enables them to give each other a unique quality of mutual support and to pool practical information and ways of coping.
Self help groups are small informal association of the poor created at the grass root level for the purpose of enabling members to reap economic benefits out of mutual help solidarity and joint responsibility. Self help groups are formed voluntarily by the rural and urban poor to save and contribute to a common fund to be lent to its members as per group decision and for working together for social and economic uplift of their families and community.
Funding Procedure of SHGs
The fund is owned by the group and consists of savings of the members. The fund is used to make short-term loans with interest to the members. The profit of the fund (i.e. interest on loan plus fines) is divided to the members of the group at the end of the year. Apart from the fund generated by an SHG through the small savings of its members on regular basis, it acquires funds through other sources as follows:
a) Bank Linkage: The NABARD initiated three models under the Bank-SHG linkage programme. There are:
Model I: SHGs formed and financed by banks. In this model banks themselves take up the work of forming and nurturing the groups, opening their saving accounts and providing them bank loans.
Model II: SHGs formed by formal agencies (NGOs/Voluntary Associations) other than banks, but directly financed by banks.
Model III: SHGs financed by banks, using NGOs and other agencies as financial intermediaries. In areas where the formal banking system faces constraints, the NGOs are encouraged to approach a suitable bank for bulk loan assistance. This in turn, is used by the NGO for lending to the SHGs.
b) Revolving Fund: Every SHG which is in existence at least for a period of six months and which has demonstrated the potential of a viable group through regular savings and active participation of members, pass through a scanning to be qualified for first grading to kick-start lending activity by bank, gets Revolving Fund of Rs. 25,000 from bank as cash-credit facility. Of this, a sum of Rs. 15,000 is given to the bank by the District Rural Development Agency (DRDA). Bank may charge interest only on the sum exceeding Rs. 15,000. The Revolving Fund is provided to the group for augmenting their group corpus so as to enable larger number of members to avail loan and also to facilitate increase in the per capita loan available to the members.
c) Bank Loan for Economic Activities: Once an SHG receives Revolving Fund, its activities are closely monitored by the bank with regard to usage of the fund, financial discipline, account keeping; and once again graded. This second grading revolves around financial management of the funds provided. The concerned bank and the DRDA take active part in grading exercise of the SHG. After the second grading, the successful groups become eligible for bank financing for undertaking economic activities. The bank loan is generally payable as per the project cost; in addition to other considerations like the size of internal resource generated by the SHG, activities of the members, type of project taken up by the group and its members, etc.
d) Capital Subsidy: The Govt. of India, through the Ministry of Rural Development, grants Capital Subsidy of Rs. 15,000 to each of the members of a group belonging to the general category and Rs. 20,000 to ST/SC and people with disabilities. In addition to this, each of the SHG groups gets Rs. 20,000 per capital subject to a maximum of Rs. 2.5 lakh, whichever is less.
e) Interest Subsidy: This is another mode of funding SHGs. This was announced under the Government of India’s National Rural Livelihood Mission (NRLM) in 2011. Under this scheme, subsidy on interest rate above 7%, per annum charged by the bank is given for all SHG loans availed from banks, based on prompt payment. This subsidy is provided to individual beneficiary or SHG member till he/she has availed a bank loan up to an amount of Rs. 1 lakh. However, this subsidy is not available on such occasions when the SHG is availing Capital Subsidy.
Or
(b) Discuss the various theories of leadership in brief. 14
Ans: Theories of Leadership
The Trait Theory: This approach represents the earliest notions of leadership and until up to three decades ago this approach was very popular. According to this theory, there are certain personal qualities and traits which are essential to be a successful leader. The advocates of this theory are of the opinion that persons who are leaders are psychologically better adjusted to display better judgement and to engage themselves in social activities. Ordway Tead has given a list of ten qualities.
a) physical and nervous energy
b) a sense of purpose and direction
c) enthusiasm
d) friendliness and affection
e) integrity
f) technical mastery
g) decisiveness
h) intelligence
i) teaching skill
j) faith
According to Hill, "Courage, self-confidence, morale qualities, self sacrifice, paternalism, fairness, initiative, decisiveness, dignity and knowledge of man are all essential qualities of a leader."
Stogdill classified the leadership qualities under six heads: capacity, achievement, responsibility, participation, status and situation.
But the trait theory has many shortcomings, and has been generally criticized on the following grounds:
1. Various studies prove that the trait theory cannot hold good for all sets of circumstances.
2. The list of trait is not uniform and different authors have give lists of different traits.
3. It fails to take into account the influence of other factors on leadership.
4. The theory fails to indicate the comparative importance of different traits.
5. There are many persons who have been outstanding leaders in business although they have been humour less, narrow-minded, unjust and authoritarian. In the same manner, there have been many persons who were not good leaders although they had traits as specified for leaders.
The Behavioural Theory: The short comings of the trait theory led to a significant change in the emphasis of leadership approach. This shift in emphasis began to focus an attention on the actual behaviour and actions of leaders as against personal qualities or traits of leaders. According to his approach, leadership involves an interpersonal relationship between a leader and subordinates in which the behaviour of the leader towards the subordinates constitutes the most critical element. The good behaviour of the leader raises the morale, builds up confidence and spirit among the team members and the lack of good behaviour will discard him as a leader.
But the behavioural theories also suffer from certain limitations, e.g., what constitutes the most effective style of leadership behaviour? Moreover, a particular behaviour or action of a leader may be effective at one point of time while the same may be ineffective in some other point of time and in some other circumstances.
The Situational Theories: The situational theories emphasize not on personal qualities or traits of a leader, but upon the situation in which he operates. The advocates of this approach believe that leadership is greatly affected by a situation and maintain that leadership pattern is the product of situation at a particular time. A good leader is one who moulds himself according to the needs of a given situation.
The situational theory of leadership suffers from the drawback that it fails to consider the fact that in the complex process of leadership, individual qualities and traits of the leader also play an important role. In the words of Thomas Gordon, "Situationist has overlooked the possibility that some traits influence their possessors to attain leadership success and some others increase the chances of their becoming leaders.
The Follower Theory: The shortcomings of the Trait Theory, the Behavioural Theory, and the Situational Theory influenced certain researchers to focus their attention on the followers. According to this theory the essence of leadership is follower ship and it is the willingness of people to follow that makes a person a leader. The members of a group tend to follow only those whom they recognize as providing means for achieving their personal desires, wants and needs.
Like all other theories, the Follower Theory also sounds well but it also represents only one sided view. The best ting will be to integrate the various theories to study leadership pattern. To conclude, we can say that effective leadership depends on the traits of the leader, situation and the type of the followers.
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Also Read:************************************Also Read (Dibrugarh University)
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6. (a) Write a note on various agencies for the promotion of micro, small and medium enterprises. 14
Ans: Micro, Small and Medium Enterprises Development Organisation (MSME – DO)
This is the apex body for promotion and development of micro, small and medium enterprises in India. On enactment of the MSME Act 2006, MSME – DO came into being after revocation of the Small Industries Development Organisation (SIDO). The MSME – DO is headed by the Additional Secretary and Development commissioner under the Ministry of Micro, Small and Medium Enterprises.
Functions: The major functions of the organisation are:
a) To advice the Government of India in formulation of national policy for promotion and development of Micro, Small and Medium Enterprises.
b) To provide techno-economic and managerial consultancy, common facilities and extension services to the MSME sector.
c) Extending facilities for technology upgradation, modernization, quality improvement and meeting infrastructural needs of the MSME sector.
d) Making available the economic information services needed for the MSME sector.
e) Developing human resources through training and skill upgradation.
DISTRICT INDUSTRIES AND COMMERCE CENTRE (DI&CC)
The District Industries and Commerce Centre (DI&CC) operate from the District head quarters of Assam. The centres work in close association with the Commissioner of Industries and Commerce, Guwahati. All the preliminary works relating to availing of the Govt. policy supports by the entrepreneurs in the form of schemes and incentives are done at the DI&CC level.
Functions of DI&CC: The DI&CC words at the grass-root for promotion and development of indigenous entrepreneurship in the state through policy supports initiated by the central and the state Governments. The major functions include the following:
1. To facilitate the voluntary filling of Memorandum by the Micro and Small Enterprises (MSEs) as per the Government of India’s MSME Development Act 2006.
2. To facilitate the compulsory filling of Memorandum by the Manufacturing Sector Medium Enterprises as per the Govt. of India’s MSME Development Act 2006.
3. To facilitate pre registration of the enterprises to avail benefits under the different schemes of assistance and supports under the central and the state Governments.
4. To guide the prospective entrepreneurs through appropriate counseling and suggestions in staring their new enterprises.
KHADI AND VILLAGE INDUSTRIES COMMISSION (KVIC)
It is a statutory body created by an Act of Parliament in 1956 and became operative from April 1957 by taking over the work of the erstwhile “All India Khadi and Village Industries Board” set up in 1950. The Commission is engaged in the task of promoting and developing Khadi and Village Industries (KVI) with a view to creating employment avenues in the rural areas thereby strengthening the rural economy of India. It functions under the administrative control of the Ministry of Micro Small and Medium Enterprises, Govt. of India.
KVIC has its central office at Mumbai. It has 36 State and Divisional offices, 6 Zonal offices, 15 Departmental and 23 Non-Departmental Training Centers and a number of accreted Training Centers in addition to 13 Departmental Sales Outlets. The KVIC operates through 33 Boards spread over in different states and union territories of the country, in addition to thousands of institutions and co-operatives including DIC/DICCs.
Objectives: The broad objectives of the KVIC are of three-fold as under:
· The social objective of providing employment;
· The economic objective of producing saleable articles, and
· The wider objective of creating self-reliance amongst the people and building up a strong rural community spirit.
Functions: The crucial functions which the KVIC performs towards attainment of its avowed objectives are as follows:
1. Works towards planning, promotion, organization and implementation of programmes for the development of Khadi and other village industries in the rural areas of the country in coordination with the other agencies engaged in rural development.
2. Works towards building up of a reserve of raw materials and implements for supply to producers, creation of common service facilities for processing of raw materials as semi-finished goods and provision of facilities for marketing of KVI products.
3. Organizes training of artisans engaged in Khadi and Village Industries.
KHADI AND VILLAGE INDUSTRIES BOARD (KVIB)
It is a state level statutory body formed by an Act of the concerned state legislature. In India, at present there are 33 KVIBs in different States and Union Territories. The Assam Khadi and Village Industries Board Act was passed in the year 1955. The basic objective of the Board is to work towards organizing, developing and regulating the village industries in the state.
Functions: As a statutory Body of the Govt. of Assam the KVIB is required to perform numerous functions for promotion and development of Khadi and Village Industries in the State. The most important functions of the Board as enumerated in the Assam Khadi and Village Act, 1955 are listed below:
1. To start, encourage, assist and carry on Khadi and Village Industries and to carry on trade and business on such industries and to deal with matters incidental to such trade or business.
2. To help the people providing them with work in their homes and to give those monetary help.
3. To encourage establishment of Co-operative Societies for Khadi and Village Industries.
4. To conduct Training Centres and to train people with a view to equipping them with the necessary knowledge for starting for carrying on KVIs.
NORTH EASTERN DEVELOPMENT FINANCE CORPORATION (NEDFi)
The North Eastern Development Finance Corporation Ltd (NEDFi) is a Public Limited Company registered under the Companies Act 1956 on 9th August, 1995. It is notified as a Public Financial Institution under Section 4A of the said Act and was registered as an NBFC in 2002 with RBI. The shareholders of the Corporation are IDBI, SBI, LICI, SIDBI, ICICI, IFCI, SUUTI, GIC and its subsidiaries. The management of NEDFi has been entrusted upon the Board of Directors comprising representatives from shareholder institutions, DoNER, State Governments and eminent persons from the NE Region and outside having wide experience in industry, economics, finance and management.
NEDFi provides financial assistance to micro, small, medium and large enterprises for setting up industrial, infrastructure and agri-allied projects in the North Eastern Region of India and also Microfinance through MFI/NGOs. Besides financing, the Corporation offers Consultancy & Advisory services to the state Governments, private sectors and other agencies. NEDFi conduct sector or state specific studies under its Techno-Economic Development Fund (TEDF) and is the designated nodal agency for disbursal of Govt. of India incentives to the industries in the North-East India under North–East Industrial and Investment Promotion Policy 2007 (NEIIPP 2007).
Objectives: The main objective of NEDFi is to provide finance and other facilities for promotion, expansion and modernization of industrial and infrastructure projects in the NE-region.
Functions: The NEDFi aims to be a dynamic and responsive organization catalyzing the economic development of the North East India. It assists in the efficient formation of fixed assets by identifying and nurturing eco-friendly and commercially viable industrial and infrastructure projects in the region. Thus, the NEDFi prime role is to enhance the wealth of the region and prosperity of its people. The major functions of the NEDFi are as follows:
a) To provide financial assistance to MSMEs for setting up industrial units, infrastructure and agri-allied projects in the North Eastern Region of India.
b) To extend Micro-Finance to Non-Government Organizations (NGOs) and voluntary Agencies (Vas) with good track-records for on-lending to the needy who can take up income generating activities for self-employment.
c) To offer Consultancy and Advisory services to the state Governments private sectors and other agencies.
d) To conduct state specific studies under the state’s Techno-Economic Development Fund (TEDF).
e) To serve as a designated nodal agency for disbursement of the Government of India’s incentives to industries in the N.E. Region under the “North East Industrial and Investment Promotion Policy (NEIIPP) 2007” and also under the “Prime Minister’s Employment Generation Programme (PMEGP)” scheme.
f) In addition to the above, the NEDFi takes up promotional activities which include NEDFi Haat, NEDFi Convention Centre, NEDFi Pavilion, etc.
IMPORTANT FINANCE SCHEMES OF THE NEDFI
The NEDFi finances a wide spectrum of activities which include agro-processing, mining, shipping, leasing, transport, tourism, information technology, medical & health services generation and distribution of electricity, setting up and development of industrial estates and other commercially viable infrastructure facilities. Some important financing schemes of the NEDFi are highlighted below:
a) Rupee Term Loan Scheme (RTL): The scheme aims to provide medium and long term financial assistance for setting up of new projects, expansion, diversification or modernization of existing projects in various manufacturing or services sector.
b) Equipment Finance Scheme: The scheme grants financial assistance for acquiring specific machinery/equipment by financially sound and profit making companies having good credit record.
c) Corporate Finance Scheme: the objective of the scheme is to provide finance to meet normal capital expenditure, working capital margin, shortfall in working capital, payment of high cost debt and also for meeting the general corporate purpose like funding of business acquisition, or for brand building, etc. where no tangible asset creation may be envisaged.
d) Working Capital Term Loan Scheme: The aim of the scheme is to provide one-time core working capital assistance to deserving units in the form of working capital term loan.
NORTH EASTERN INDUSTRIAL AND TECHNICAL CONSULTANCY ORGANIZATION LIMITED (NEITCO)
The North Eastern Industrial and Technical Consultancy Organization Limited (NEITCO) is a premier consultancy organization setup in 1973 by the all India financial institutions, nationalized banks and state development corporations under the aegis of the Industrial Development Bank of India (IDBI) to cater to the consultancy needs of the north eastern states of India. The co-promoters are ICICI, IFCI, IIBI, SBI, UCO BANK, UBI, AIDC, MIDC and APIDFC. The NEITCO pioneer in systematic entrepreneurship development movement in the entire North Eastern Region, has been organizing and conducting Entrepreneurship Development Programmes (EDPs) in the region since 1982 under the sponsorship of North Eastern Council (NEC), IDBI, SIDBI, IFCI, ICICI, NABARD, SBI, Department of Science and Technology, Govt. of India and state Governments of North Eastern Region. The organization operates from its head office at Guwahati in addition to branch offices at Shillong and Itanagar.
Indian Institute of Entrepreneurship (IIE)
Indian Institute of Entrepreneurship (IIE) is an autonomous organization under the Ministry of Skill Development & Entrepreneurship. The main aim of the Institute is to provide training, research and consultancy activities in Small and Micro Enterprises (SME), with special focus on entrepreneurship development. The Indian Institute of Entrepreneurship (IIE) registered under the Societies Registration Act,1860 was established in the year 1993 in Guwahati by the erstwhile Ministry of Industry (now the Ministry of Micro, Small and Medium Enterprises), Government of India. The Institute began operating from April 1994 with the North East Council (NEC), Governments of Assam, Arunachal Pradesh and Nagaland and SIDBI as its other stakeholders. IIE has been transferred to the Ministry of Skill Development & Entrepreneurship on 22nd May’2015. The head quarter of IIE is situated in Guwahati.
OBJECTIVES OF IIE
a) To promote and develop entrepreneurship.
b) To conduct research and provide consultancy for entrepreneurship development.
c) To coordinate and collaborate with other organizations in undertaking training, research and other activities to increase outreach of the institute.
d) To provide consultancy and monitoring service to MSMEs/ potential entrepreneurs and enhancing employability of participants.
e) To promote greater use of information technology in the activities/ functions of the IIE.
f) To comply with statutory responsibility.
FUNCTIONS OF IIE
a) Designing and organising training activities for different target group and undertaking research in the relevant to entrepreneurship.
b) Improving the efficiency, effectiveness and delivery of the change agents and development practitioners i.e. trainers, support organizations engaged in enterprise building. etc.
Or
(b) Examine the role of Micro, Small and Medium Enterprises Development Act, 2006 in the context of entrepreneurship development. 14
Salient features of Micro, Small and Medium Enterprises Development Act, 2006 are as follows (Role)
By enacting the Micro, Small and Medium Enterprises Development Act, 2006, the Government has recently fulfilled one of the needs felt and articulated by this segment for long. This Act seeks to facilitate promotion and development and enhancing competitiveness of these enterprises. It provides the first-ever legal framework for recognition of the concept of “enterprise” (comprising both manufacturing and services) and integrating the three tiers of these enterprises, namely, micro, small and medium. Apart from clearer and more progressive classification of each category of enterprises, particularly the small, the Act provides for a statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises.
1. Section 7 of Act provides for the following classification in respect of industries engaged in production or manufacture of goods or rendering service enterprises:
| Class | Manufacturing Enterprises – Investment in Plant & Machinery | Services Enterprises – Investment in Equipment |
| Micro | Less than Rs. 25 lacs | Less than Rs. 10 lacs |
| Small | Greater than Rs. 25 lacs but up to Rs. 5 Cr. | Greater than Rs. 10 lacs but upto Rs. 2 Cr |
| Medium | Greater than Rs. 5 Cr. but up to 10 Cr. | Greater than Rs. 2 Cr. but upto Rs. 5 Cr. |
2. Filing of Memoranda by MSMEs: Process of two-stage registration of Micro and Small Enterprises dispensed with and replaced by filing of memoranda. 1. Filing of Memorandum optional for all Micro and Small Enterprises. 2. Filing of Memorandum optional for Service Sector Medium Enterprises. 3. Filing of memorandum mandatory for Manufacturing Sector Medium Enterprises.
3. Constitution of National Board: National Board for Micro, Small and Medium Enterprises (MSME) to be headed by the Central Minister in-charge of MSMEs and consisting of 46 members from among MPs and Representatives of Central Ministries, State Governments, UT Administration, RBI, SIDBI, NABARD, Associations of MSMEs including women etc.
Functions of the National Board: Examine the factors affecting the promotion and development of MSMEs and review the policies and programmes of the Central Government in this regard.
4. Advisory Committee Headed by Central Government Secretary I/c of MSMEs and including not more than five officers of the Central Government and not more than three representatives of State Governments; and One representative each of the Associations of micro, small and medium enterprises.
5. Functions of the Advisory Committee
Ø To examine the matters referred to it by the National Board;
Ø To advise Central Government on matters relating to classification of MSMEs, programmes, guidelines or instructions for the promotion and development and enhancing the competitiveness of MSMEs.
Ø To advise State Governments on matters specified in the rules related to repeal of, “The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, including anything done or any action taken under the Act so repealed
6. Promotional and Enabling Provisions Central Government to notify programmes, guidelines or instructions for facilitating the promotion and development and enhancing the competitiveness of MSMEs. Central Government to administer the Fund or Funds for purpose mentioned in Section 9 and coordinate and ensure timely utilization and release of sums with such criteria, as may be prescribed.
7. Credit: The policies and practices in respect of credit to the MSMEs shall be progressive and such as may be specified in the guidelines or instructions issued by the Reserve Bank of India, with the aims of:
Ø Ensuring smooth credit flow to the MSMEs,
Ø Minimizing sickness among them, and
Ø Ensuring enhancement of their competitiveness
8. Procurement Policies: Central Government or a State Government to notify preference policies in respect of procurement of goods and services produced and provided by MSEs, by its Ministries, departments or its aided institutions and public sector enterprises.
9. Provisions to Check Delayed Payments
Ø Provisions related to delayed payments to micro and small enterprises (MSEs) strengthened.
Ø Period of payment of MSEs by the buyers reduced to forty-five days.
Ø Rate of interest on outstanding amount increased to three times the prevailing bank rate or Reserve Bank of India compounded on monthly basis.
Ø Constitution of MSE Facilitation Council(s) mandatory for State Government.
Ø Declaration of payment outstanding to MSE supplier mandatory for buyers in their annual statement of accounts.
Ø Interest (paid or payable to supplier) disallowed for deduction for income tax purposes.
Ø No appeal against order of Facilitation Council to be entertained by any Court without deposit of 75% of the decreed amount payable by buyer.
Ø Appellate Court may order payment of a part of the deposit to the supplier MSE
10. Facilitating Closure of Business: Central Government may (within one year of the commencement of the Act) notify a scheme for facilitating closure of business by a micro, small or medium enterprise. The objectives of the rehabilitation policy are to give guidelines in the following areas:
• Identifying the sickness at an early stage.
• Initiating remedial measures promptly with a pro active approach
• Formulation and implementation of rehabilitation package for potentially viable sick MSME units
(Old Course)
Full Marks: 80
Pass Marks: 32
1. (a) Write True or False of the following: 1x4=4
(i) Richard Cantillon first used the term ‘entrepreneur’ in the economic theory. True, In 1755
(ii) Entrepreneur is an innovator. True
(iii) There is no difference between entrepreneur and manager. False
(iv) Head office of IIE at Guwahati. True
(b) Fill in the blanks of the following: 1x2=2
(i) Entrepreneurs are born not made.
(ii) The concept of venture capital was originated in USA in 1950s..
(c) Write the full forms of the following: 1x2=2
(i) SHG Self Help Group
(ii) KVIC Khadi and Village Industries Commission
2. Write short notes on the following: 4x4=16
(a) Entrepreneurial Motivation
(b) First Generation Entrepreneur
(c) Rural Entrepreneur
(d) SIDBI and North-East
3. (a) Define the term ‘entrepreneur’. Explain the functions of an entrepreneur. 3+8=11
Or
(b) What are the different kinds of entrepreneur? Explain. 11
4. (a) Critically examine the innovation theory of entrepreneurship. 11
Or
(b) Discuss the problems and prospects of women entrepreneurs. 11
5. (a) Discuss the concept of micro, small and medium enterprises. Explain its role in the economy of North-East. 2+2+2+5=11
Or
(b) Discuss the following in brief: 5+6=11
(i) Entrepreneurship Development Programmes.
(ii) Development of indigenous entrepreneurship in Assam.
6. (a) Discuss the various steps taken in the establishing a new business unit. 11
Or
(b) What is meant by opportunity analysis? Explain the relationship of social environment and entrepreneurship. 5+6=11
7. (a) Distinguish between the following: 6+6=12
(i)Entrepreneur and Manager.
(ii) Innovative entrepreneur and Imitative entrepreneur.
Or
(b) Discuss in brief the various sources of funds for an entrepreneurs. 12
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