Entrepreneurship ,

Marketing and
Financial Management
Praveen Kumar Jain
School of Agriculture
IGNOU, New Delhi

Contents
Entrepreneur and Entrepreneurship
Development of entrepreneurial skills
Business and development of
business plan
Project Report and Project appraisal
Finance and material procurement
Concept of marketing and marketing
management
2

Self Employment
Start any economic activity of our
own for being self-employed.
Once the activity grows it can also
generate wage-employment for
others, then it is called
entrepreneurship.
Example: Small business,
Manufacturing unit or Service-cumrepair unit
3

Benefits to self-employed
Gainful use of ones own
capabilities and time
Develops initiative and ability to
plan and manage business activity
Learns many things on the job
Learns to be innovative and
growth-oriented
4

Need for entrepreneurship

Increases national production

Balanced area development
Dispersal of economic power
Reinvestment of profit for the welfare
of the area of profit generation
Development is a function of
motivation and human resource

Who is Entrepreneur
organize activities, and manage and
run an enterprise
Independence and having control
over ones own life
innovative and reaching towards
excellence
creating job opportunities for others
Sensing economic opportunities
6

Setting Challenging Goal Risk

Taking
Trade off between Challenging Goal and Risk
Taking
Entrepreneurs are Moderate or calculated risktakers.
This involves a number of processes:
Understanding the situation
Gathering as much information as possible
Assessing one's own resources
Setting challenging goals for oneself, on the
basis of the information and resources
Testing one's own abilities
Modifying the goals set on the basis of
previous Experience (one's own and others).
7

Entrepreneur and
Gambler
Gambler:
takes risks, the pay off is solely determined by the result
of a chance
Operates without using earlier experience
Learning is not possible
Entrepreneur:
Also stakes and hopes, but continuously intervenes to
influence the outcome.
Entrepreneur takes only such risks where one cannot
control the outcome
risk-taking is mainly governed by learning
8

Sensing Opportunities
What is opportunity?
It may be a chance to do something
new;
it may also be a way of getting
something for nothing? or
it may be a job or admission to a
school or college.
Another type of opportunity: Problem
9

Sensing
Opportunities......
Entrepreneurs perceive opportunities
quickly, synthesize the available
information and analyze emerging
patterns that escape others.
Opportunity available in the
environment
It is also possible to create or craft
business opportunity.
10

Sources of Ideas for business

opportunities

Natural resources
Existing products or services
Market-driven or demanddriven ideas
Trading related ideas
Service sector ideas
11

Creating Efforts for Business

Opportunity
Develop a new product or service.
Improve an existing product or service.
Find a new process or resource for
manufacturing a product.
Find a new use for a product or service.
Find new markets for existing products
or services.

12

SWOT Analysis

Strengths
Weakness
The Pickle can be made Seasonality of raw
tasty
materials (needing large
stocks)
Low investment
Product is perishable
Skills easily available
Licensing formalities are
Simple technology
cumbersome

Opportunity
Threats
Large Market
Large no. of competitors
Brand selling possible
Establishing brand is
Variety could be made to difficult
suit customers Tastes Customer tastes may
change
13

FOOD PROCESSING BUSINESS

To be self-employed in food processing, you should know and
needs to do.

First
Where one could get trained in food processing
Where one could get training in business
management.
Where one could get awareness on business
aspects of the project.
Second
Raw materials
Availability of raw material in local market
Availability of the raw material outside local
market
Price
Transport
Equipment
14

FOOD PROCESSING BUSINESS

Third
Packaging
Type of packaging
Attractive labelling
Fourth
Storage
Preservatives
Space
Fifth
Marketing the Product
Distribution
Publicity
Sixth
Preparation of Project Report
Arranging Finance

15

Entrepreneurship
Entrepreneurship is the quality and skill
required to become an entrepreneur.
It refers to identifying and innovating
ideas and services; mobilizing
resources; organizing production and
services; and finally marketing them,
covering the risk by constantly trying
for growth and development.
16

What is Required to Be an
Entrepreneur?
Once you are motivated you will
start your business- in order to
start a business you need to have
three things:
Knowledge - processes, kind of
fruits, season,
Skills - using of machinery
Attitude - right mind set and
willingness
17

Entrepreneurial skills
The ability and the capability of
an entrepreneur to initiate,
launch and sustain the process of
enterprise building.
These skills are not necessarily
born but can be developed.
However, these entrepreneurial
skills are the result of certain set
of
values,
attitudes
and
motivation.

18

Values
Ones own belief towards life in
general.
Helps an individual to focus towards
goal.

Innovativeness
Independence
Seeking perfection, and
Respect for work
19

Attitudes
Tendency to think and act in a particular
way.

Use imagination/intuition
Take moderate risk
Enjoy freedom of expression & action
Look for economic opportunities
Find satisfaction from successful completion of
tasks
Believe that one can change the environment
Take initiative
Analyse situation & plan action
Involve in work
20

Motivation

Driving force towards the attainment

of the goal.
Motivation developed because of
certain values and attitudes
Attaining certain standard of excellence.
Set some standard and to excel it.
Excel the standard already set by others.
Achieving something unique.
Achieving long-term career goals.
Need to influence environment, individuals
& situation for achieving set goals.
21

Entrepreneurial skills
Positive self concept
Creativity and innovation
Risk taking
Using feedback
Opportunity seeking
Information seeking
Concern for standard/quality of work
Problem solving orientation
Faith in planning
Persuasive and influencing quality
Long term commitment
Coping with stress
22

Developing Entrepreneurial Skill

Right mindset
appropriate knowledge
required skill

23

Strategy to develop right mind set

up
To Know What You Are?- Ideal SelfReal Self
To Know Your Destination
To Believe that You Are The Master of
Your Own Destiny
To Develop a Positive Self Image

24

chievement Planning and Business Goal

Through planning, you will be able
to clearly specify your goals,
identify various activities
anticipate obstacles
enlist resources
anticipate consequences
Therefore, to be a successful
entrepreneur, you need to develop
skill and insight in planning and firm
faith that planning is a must to ensure
success in accomplishing goal.
25

How to Plan
it involves nine steps:
Analysis of Situation;
Goal Setting;
Enlisting Activities;
Anticipation of Potential
Obstacles;
Location of resources;
Generating alternatives;
Anticipation of consequences;
and
Action Planning.
26

Business, Business
Ideas, Business Plan
and
Project Repot

27

Business
Business is an institution organized
and operated to provide goods and
services to society under the incentive
of private gain. (B.O. Wheeler)
Business is any trade, commerce or
manufacture or any venture in the
nature of trade, commerce or
manufacture. (Income Tax Act, 1961)
28

Features of business
1.Economic activity
2.Profit motive
3.Goods or services: Consumer Goods
and Producer Goods
4.Production of goods and services
5.Distribution of goods and services
6.Risk
7.Sale, transfer and exchange
29

Forms of business activities ......

Agricultural activities growing
of crops, preparing harvest for the
market, preservation etc.
Manufacturing activities
manufacture of pickles, jams,
papads, biscuits, chutneys, spices,
sauces, pump sets, agricultural
implements, spare parts etc.
Trading activities buying and
selling in wholesale, retail or barter
30

Forms of business activities

Service activities transportation,
warehousing, insurance etc.
Reproducing and multiplying
activities nurseries which multiply
and sell plants, plant materials
Mining activities exploration,
extraction of minerals, iron ores, gold,
diamonds etc.
Constructing activities construction
of buildings, warehouses, cold storages,
silos, etc.
31

Business Opportunity
Identification
If there are unsatisfied needs and
wants, there are opportunities.
Identification of such opportunities
requires imagination, sensitivity and
realistic assessment of what a
businessman can do.

32

Opportunity assessment
To choose the relevant opportunities
To evaluate the sales potential of
each opportunity
To evaluate the financial aspect of
each opportunity
To evaluate the technical aspect of
each opportunity
To evaluate the marketing aspect of
each opportunity
33

Sources of Business Idea

1. Customers
2. Researchers
3. Competitors
4. Salesmen
5. Owners
6. Government publications
7. Business journals and financial newspapers
8. Financial institutions
9. Market research agencies
10.Trade fairs and trade exhibitions
11.Dealers and suppliers
12.Performance of existing industries
34

Generation of Business Idea

Product imitation
Manufacturing of a new product (Product
innovation)
Manufacturing of an existing product but after
adding more value to it or improving it
Manufacturing of a product after listening to the
needs and wants of the customers
Finding new uses for an old product
Own problems and use of hobby
Untapped natural resources
Latest fashion and changing life styles
Research and development programmes
Consumption in foreign countries
35

Evaluation of Business Idea

Evaluate one-self
Collection of information
Reviewing the limitations
Detailed investigations- capital requirement, location,
source of raw materials &labour, availability of
techniques, machinery, power
Consistency with government priorities
Cost reasonableness
Adequacy of the market
Assessment of risks
Scale of operation
Form of business ownership
Compliance with legal formalities
36

BUSINESS PLAN
A business plan involves step by step
investigation and development of a sound
business idea.
It is comprehensive course of action with
guidelines for a new venture.
Covers the full range of business planning
activities.
Helps the entrepreneur to make better decisions.
Also called feasibility plan. It is the systematic
development of a project idea for the eventual
purpose of arriving at an investment decision.
37

Why a business plan is needed

Provides framework
Initiates development
Helps in arranging financial
assistance
Helps in selecting appropriate
technology
Helps in securing clearances from the
government
Provides knowledge about
government regulations

38

Features of an Ideal
Business Plan
It should be written in simple language.
It should be informative.
It should clearly identify the products,
services, markets and promoters of the
business.
It should be complete and accurate.
It should be convincing so that the bankers
are able to sanction loans.
It should be dynamic in nature.
It should have a pragmatic approach.
39

Inputs Required for a Business

Plan

Information
Information
Information
Information
Information
Information
Information

about
about
about
about
about
about
about

the Industry
the Enterprise
Product/Service
Market Research
Market Plan
Operation Plans
Finance
40

Project report
A project report is a formal version of
a business plan.
It gives a complete analysis of inputs
and outputs of the project.
It enables the entrepreneur to
understand at the initial stage
whether the project is sound on
technical, commercial, financial and
economic parameters.
41

Aspects of a Project Report

Economic
aspect

Ecological
aspect

Marketing
aspect

Technical
aspect

Financial
aspect

Managerial
aspect

42

Contents of the Project

Report ......

General details about the industrial

concern, project and financial assistance
applied for
Bio-data of promoters
Particulars of the industrial concern
Particulars of the project
Cost of the Project
Means of Financing.
Marketing and selling arrangement.
Government consents.
Requirement of raw material.
Particulars of machinery to be imported.

43

Contents of the Project

Report ......
Margin money for working capital.
Source of funds in respect of expenditure
already incurred.
Cash Flow Statement.
Projected Balance Sheet.
Projected Income Statement.
Calculation of wages and salaries at
maximum production.
Unit cost of production.

Declaration
44

Project appraisal
Assessment of a project by a
bank/term-lending institution
Economic viability
Ecological viability
Technical viability
Marketing viability
Managerial viability
Financial viability
45

Financial viability
Cost of project
Sources of finance
Projected income statement : Net sales figures and
details of direct expenses, Profit & loss
Projected balance sheet: assets and liabilities of the
business unit
Break-even analysis
Financial ratios: To apprise the liquidity position,
solvency position
Projected cash flow statement: cash inflows and cash
outflows
Pay back period
Discounted cash flows
Internal rate of return
46

Financial and Marketing

Management

47

ARRANGING THE INPUTS

Five Ms
Money
Material
Men
Methods
Machines

48

Finance
To start a business;
To expand, renovate and modernize the
business.
Types of Capital
Fixed capital
Working capital

Types of Finance
Long term finance
Short term finance
49

Sources of Finance .......

Owned capital; and
Borrowed capital.
Sources for Long Term Finance
Owned capital
Retained Profits
Funds borrowed from friends and relatives.
Loans from Commercial banks
Loans from National-level Financial Institutions
Loans from various State-level Financial Institutions
50

Sources of Finance .......

Short Term Sources of Finance
Bank Overdraft
Cash Credit
Discounting of Bills of Exchange
Short term loans
Trade Credit from suppliers
Accounts Payable
Advances from customers
Accruals
Factoring
Co-operative Credit Societies
Indigenous Bankers
51

Evaluation of the sources of

finance ...
Advantages of Owned Capital
Supply of long term capital
Control
No charge on assets
No repayment of liability
No fixed cost

52

Evaluation of the sources of

finance....
Disadvantages of Owned Capital
Investment of the personal savings
Limited scope of expansion
Danger of over-capitalisation

53

Evaluation of the sources of

finance....
Advantages of Borrowed Capital
Availability of funds
Long term source
Scope for expansion
Tax Benefit
Non-interference in the management

54

Evaluation of the sources of

finance....
Disadvantages of Borrowed
Capital
Financial burden
Charge on assets
Borrowing capacity

55

Factors Affecting the Choice of

the Source of Loan

Rate of interest
Repayment period
Margin requirement
Processing charges
Time-period involved in sanctioning
the loan

56

Material procurement
Principles of Purchasing
Right Source
Location of the supplier
Financial position of the supplier
Terms of Supply
Production facilities at suppliers end

Right
Right
Right
Right

Quantity
Quality
Price
Time
57

Purchase Procedure

Purchase requisition
Inviting quotations
Purchase order
Receiving of material
Initiating payment

58

Marketing

59

Concept of Marketing .
Needs, Wants, Products, and Exchange
Need: a state of felt deprivation of some
generic satisfaction arising in the human
conditions.
Want: Wants are desires for specific satisfiers
of the ultimate needs.
Product: Any object, service, activity or place
through which a need or a want may be
satisfied.
60

Concept of Marketing .
Exchange process: The product can be
made available to any person
through the process of exchange.
Barter system
Money

61

Concept of Marketing .
Market :The word market has its origin in the Latin
word Marcatus. It means merchandise, ware or trade.

It is the set of all actual and potential buyers of a

product. Whenever there is a need or a want and the
wanted product is available for sale or exchange - a
potential for trade: there is a market.
Marketing: Social process by which individuals and
groups obtain what they want through creating,
offering and freely exchanging products and services of
value with others. (Philip Kotler)
62

How to Assess Market for any

Business Idea .......
To Know Your Interest
- Personal, physical, mental,
education & training, tackling
customers, competition oriented
qualities, moral, managerial qualities.
To Know the Type of Target Market
- Producer and Consumer
To Know the Suppliers
- Money, manpower, material,
machines, information
63

How to Assess Market for any

Business Idea .......
To Know the Marketing
Intermediaries
- Merchant middlemen, Agent and
Facilitator
To Know the Competitors
- Number of firms, market share,
homogeneity and differentiation in
product, entry barriers, substitutes,
policies
To Know the Customers
- What do, when do consumers buy,

64

What Constitutes the Market for

Your Business Idea
Consumers
Consumers are heterogeneous in nature
They may differ in age, geographical
location, income, education level, taste,
product requirements, buying attitudes
etc.
The heterogeneous market can be
broken down into a number of
homogeneous units.
65

Market segmentation
Can not serve all customers
Widely scattered too many customers
some competitors will be in a better position
to serve the customers in the market.
If the resources are limited, then the
business unit should try to identify those
market segments that it can best serve in
terms of segment preferences, patterns of
competition and the strength of the
business.
66

Ways of Market Segmentation

Geographical segmentation
(Geographical markets)
Demographic segmentation
Buying behaviour segmentation
Benefit segmentation
Volume segmentation
Economic segmentation
Psychographic segmentation
67

Market targeting
Market segmentation leads to market targeting.
Market targeting is the process of fixing target
market.
Market targeting is the act of evaluating and
comparing different identified groups.
After
evaluation
and
comparison
the
businessman may select one or more of the
identified groups as the prospective customers
with the highest potential.
Thereafter a suitable marketing mix may be
devised that will give the best return on sales.
68

Market Size for Your Business Idea

Market size means the actual volume that is
currently being purchased by the
customers.
It can be measured in terms of rupees or
units and It is always smaller than the total
market potential.
Assessment of market size
1. Market demand: - demand forecasting
Survey methodLeading indicator methodStatistical methods
2. Price: size of market vary with price

69

Marketing functions- Utilities

Form utility- Goods are to be processed
into different forms to suit the needs of
the consumers.
Place utility- Goods are required to be
transported from the place of production
to the place of consumption.
Time utility -Surplus goods are also
required to be stored in warehouses for
deferred consumption.
Possession utility- Sale and transfer of
goods create.
70

Classification of marketing
functions
I)Functions of Exchange:
activities performed in the transfer
of ownership from sellers to buyers.
II)Functions of Physical Supplyactivities involved in the physical
movement of the goods.
III)Facilitating Functionsactivities involved in helping the
process of exchange.
71

Functions of exchange
Buying, Assembling and
Selling

Buying function:
Transfer of ownership of the product
from
seller
to
buyer.
E.g.
manufacturer buys raw material from
the suppliers.
Five Rs of best buyRight source, Right quantity, Right
quality, Right price, Right time
72

2. Assembly function:
Gathering of products purchased from
different producers/manufacturers at
some central place.
Some times firms assemble goods in big lots,
grade them and give their own brand name
after packing the goods.

3. Selling function:
Effecting transfer of ownership in
goods by the seller to the buyer in
exchange for money. Involves locating buyers, finding their
preferences, persuading them to buy,
negotiating the terms of sale, receiving

73

Functions of physical supply

1. Transportation- Physical movement of

material and goods from one place to another.
It includes decisions like: mode of transport,
Routing, Freight, Vehicle scheduling
2. Storage (i.e. warehousing)- making of
proper arrangements for retaining the goods in
a perfect state till the time consumers need
them for consumption. Goods get protected
from the fire, theft, leakage, pests, rodents and
insects, weather changes, moisture etc.
3. Inventory management- The firm needs to
maintain a particular level of stock to ensure
product availability as and when customers
demand.
4. Order processing- Receipt of order,
Acknowledgement to the customer, customer
74
credit check, inventory scheduling i.e.

Facilitating functions

Marketing research
Standardisation and Grading
Financing
Risk taking

75

Marketing Research
gathering, recording and analysing of all
facts about any problem relating to the
transfer and sale of goods and services
from the producer to consumer.
Uses of marketing research
To recognise the needs of the customers
To understand the buying motives
To decide the brand name, size of the
package, method of advertisement
76

Classification of marketing
research problems

Product
Markets
Consumers
Advertising and Promotion,
Distribution
Pricing
Sales Methods
Competition
77

Steps involved in marketing

research
1.
2.
3.
4.
5.

Defining and Analysing the

problem
Developing a research design
Collection of data
To analyse the data collected:
Report preparation and
implementation

78

Standardisation and
Grading
Standardisation: Standardisation
means production of such goods as
will be uniformly of the same
specifications with regard to shape,
size, colour, material, performance
etc.
Grading: Grading is division of
product into classes made of units
possessing similar features of size,

79

Financing
Finance is required for marketing the various
goods and services. It may be for short-term
purposes or long-term purposes.
The various sources of finance are:
Own Capital
Friends and relatives
Commercial banks
Co-operative banks
Agricultural credit societies
Government agencies etc.
80

Risk taking
Business risks refer to the possibility of inadequate profit
or even losses due to unexpected events, which are
beyond control.
Some of the examples :
Risk due to fire
Risk due to theft and negligence
Accidents
Change in government policies
Drought, famine, lightning and earthquakes
Wrong estimation
Change in tastes and fashion
Technology changes
Trade cycle risks etc.
81

MARKETING MIX
The business firm usually develops a
marketing plan to achieve its various
marketing objectives.
Marketing mix is a plan designed to
analyse the marketing problems.
Marketing mix is the ingredients or
variables, which the marketer mixes
in order to interact with a particular
market.
82

Marketing Mix Variables

Product
Place
(Distribution)

Goods, services, or ideas that satisfy

customer needs
The ready, convenient, and timely
availability of products

Promotion

Activities that inform customers about

the organization and its products

Pricing

Decisions and actions that establish

pricing objectives and policies and set
product prices
83

Marketing Mix - Product

A combination of various features
relating to the product or service to be
offered for sale. It also refers to total
number of products and items a
businessman offers to the market.

84

Sub-elements of product mix

1. Nature of product
Product Line : Group of products- butter, ice-cream
Product width: Number of product line
Product length: number of items in the product line

2. Features of a product - Size, Colour, Flavour, Weight,

Durability, Shape

3. Branding - Brand Name, Brand Mark, Trade Mark.

4. Packaging- all the activities involved in designing and

producing the containers or wrappers for a product. Material

used in packaging -wooden boxes, metal containers, plastic,
glass bottle, etc.

5. Labelling - putting labels on the package or the product.

small slip to provide information to the customers

85

MARKETING MIX PRICE

Price is the exchange value of a
product.
Most important decision-area of
marketing, area from where revenue is
earned, crucial to profit.

86

Factors influencing pricing policy

Consistency
Public image
Purchasing power
of the consumers
Price control
measures
Pricing policy of the
competitors

Availability of
substitutes
Ability to postpone
purchase
Cost of production
Demand and
Supply
Current fashion
and tastes etc.
87

Marketing Mix- Price

Decisions
Decisions
regarding
regarding terms
discounts and
of sale
rebates
Ex-works price
Trade discount
Ex-warehouse price Cash discount
Cash sale price
Off-season rebate
Credit sale price
Festival rebate
Instalment facility
Rebate for cash
etc.
down purchase etc.
88

Marketing MixPromotion
Effective communication flow between
the business firm and the consumer.
Involves informing the potential
customers about the availability of
product and stimulating them to buy it.
Advertising
Sales promotion
Personal selling
Publicity
89

Marketing MixPromotion ....

Advertising- It is any paid form of
non-personal
presentation
and
promotion of ideas, goods or services
by an identified sponsor.
Sales promotion- Sales promotion is
an effort to stimulate consumers to
purchase more and more of a
particular commodity. It draws quick
response from the target audience.
90

Marketing MixPromotion .....

Personal selling- It is the oldest
method of selling a product. It means
selling personally. It is oral, face-toface interaction between a seller and
prospective
customers
for
the
purpose of making sales.
Publicity- to build a favourable and
positive public image of the firm.
91

Marketing Mix- Place

(Distribution)
Place mix involves decisions to be
taken in order to make the product
available to the customers.
1) Development of channels of
distribution
2) Physical distribution of product

92

Competitors present in the

Market ....
Market leader- A market leader is
the one, who has reached the place
where others want to reach.
maximum share
Market challenger- The firm that
occupies a place next to the market
leader There may be one or more
challenger or runner-up.
Market followers- Usually small
sized firms. lower market share. They
are actively trying to expand their
share through highly aggressive

93

Competitors present in the

Market ....
New entrants- who has just
stepped into that industry. direct
competition to the already in the
business form.
Very small firms - These firms are
very small in size. They cannot
attack the larger firms.
Powerful suppliers
Powerful buyers
Substitute products
94

Marketing Strategies vis--vis

Competitors
1. Innovations
2. Prices
3. Promotional
strategies
4. Quality strategies
5. Product size
6. New brand

7. Heavy advertisement
8. Competent sales
force
9. Manufacturing
efficiency
10. Efficient and
extensive dealership
system
11. Credit policy
12. Better after-sales
services
95

Thank You

96