Edbe GKJ

GOBIND KUMAR JHA 9874411552
Unit – I
Business Ethics [8 Marks]
INTRODUCTION:
Ethics is a branch of social science. It deals with moral principles and social values. It helps us to classifying, what is
good and what is bad? It tells us to do good things and avoid doing bad things. So, ethics separate, good and bad, right
and wrong, fair and unfair, moral and immoral and proper and improper human action. In short, ethics means a code
of conduct. It is like the 10 commandments of holy Bible. It tells a person how to behave with another person.
BUSINESS ETHICS
In short, business ethics means to conduct business with a human touch in order to give welfare to the society. So, the
businessmen must give a regular supply of good quality goods and services at reasonable prices to their consumers.
They must avoid indulging in unfair trade practices like adulteration, promoting misleading advertisements, cheating
in weights and measures, black marketing, etc.
SCOPE OF BUSINESS ETHICS:

Ethical problems and phenomena arise across all the functional areas of companies and at all levels within the
company.
1. Ethics in Compliance: Compliance is about obeying and adhering to rules and authority. The motivation for
being compliant could be to do the right thing out of the fear of being caught rather than a desire to be abiding
by the law. An ethical climate in an organization ensures that compliance with law is fuelled by a desire to
abide by the laws.
2. Ethics in Finance: The ethical issues in finance that companies and employees are confronted with include:
➢ In accounting – window dressing, misleading financial analysis.
➢ Related party transactions not at arm‘s length
➢ Insider trading, securities fraud leading to manipulation of the financial markets.
➢ Executive compensation.
➢ Bribery, kickbacks, over billing of expenses, facilitation payments.
3. Ethics in Human Resources: Human resource management (HRM) plays a decisive role in introducing and
implementing ethics. Ethics should be a pivotal issue for HR specialists. The ethics of human resource
management (HRM) covers those ethical issues arising around the employer-employee relationship, such as
the rights and duties owed between employer and employee.
4. Ethics in Marketing: Marketing ethics is the area of applied ethics which deals with the moral principles
behind the operation and regulation of marketing. The ethical issues confronted in this area include:
• Pricing, price fixing, price discrimination, price skimming.
• Anti-competitive practices like manipulation of supply, exclusive dealing arrangements, tying
arrangements etc.
• Misleading advertisements
• Content of advertisements.
5. Ethics of Production: This area of business ethics deals with the duties of a company to ensure that products
and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the
fact that there is usually a degree of danger in any product or production process and it is difficult to define a
degree of permissibility, or the degree of permissibility may depend on the changing state of preventative
technologies or changing social perceptions of acceptable risk.
TYPES OF ETHICS:
1. Descriptive Ethics:- Descriptive ethics deals with what people actually believe (or made to believe) to be
right or wrong, and accordingly holds up the human actions acceptable or not acceptable or punishable under
a custom or law.
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2. Normative Ethics:- Normative Ethics deals with ―norms‖ or set of considerations how one should act. Thus,
it‘s a study of “ethical action‖ and sets out the rightness or wrongness of the actions. It is also called
prescriptive ethics because it rests on the principles which determine whether an action is right or wrong.
3. Virtue ethics:- Virtue ethics focuses on one‘s character and the virtues for determining or evaluating ethical
behaviour. Plato, Aristotle and Thomas Aquinas were major advocates of Virtue ethics. Plato gave a scheme
of four cardinal virtues viz. prudence, justice, temperance and fortitude (courage). His disciple Aristotle
categorized the virtues as moral and intellectual. He identified some of the moral virtues including “wisdom”.
4. Deontological ethics:- Deontological ethics or duty ethics focuses on the rightness and wrongness of the
actions rather than the consequences of those actions. There are different deontological theories such as
categorical imperative, moral absolutism, divine command theory etc.
5. Consequentialism (Teleology):- Consequentialism or teleological ethics says that the morality of an action is
contingent with the outcome of that action. So, the morally right action would produce good outcome while
morally wrong action would produce bad outcome.
6. Meta Ethics:- Meta Ethics or ―analytical ethics‖ deals with the origin of the ethical concepts themselves. It
does not consider whether an action is good or bad, right or wrong. Rather, it questions – what goodness or
rightness or morality itself is? It is basically a highly abstract way of thinking about ethics. The key theories in
meta-ethics include naturalism, non-naturalism, emotivism and prescriptivism.
7. Applied Ethics:- Applied ethics deals with the philosophical examination, from a moral standpoint, of
particular issues in private and public life which are matters of moral judgment. This branch of ethics is most
important for professionals in different walks of life including doctors, teachers, administrators, rulers and so
on. There are six key domains of applied ethics viz. Decision ethics {ethical decision making process},
FEATURES OF BUSINESS ETHICS:

The characteristics or features of business ethics are:-
1. Code of conduct : Business ethics is a code of conduct. It tells what to do and what not to do for the welfare
of the society. All businessmen must follow this code of conduct.
2. Based on moral and social values : Business ethics is based on moral and social values. It contains moral
and social principles (rules) for doing business. This includes self-control, consumer protection and welfare,
service to society, fair treatment to social groups, not to exploit others, etc.
3. Gives protection to social groups : Business ethics give protection to different social groups such as
consumers, employees, small businessmen, government, shareholders, creditors, etc.
4. Provides basic framework : Business ethics provide a basic framework for doing business. It gives the social
cultural, economic, legal and other limits of business. Business must be conducted within these limits.
5. Voluntary: Business ethics must be voluntary: The businessmen must accept business ethics on their own.
Business ethics must be like self-discipline. It must not be enforced by law.
6. Requires education and guidance: Businessmen must be given proper education and guidance before
introducing business ethics. The businessmen must be motivated to use business ethics.
FACTORS INFLUENCING BUSINESS ETHICS:

1. Personal Code of Ethics: A man‘s personal code of ethics that is what one considers moral is the foremost
responsible factor influencing his behavior.
2. Legislation: It is already stated that the Government will intervene and enact laws only when the businessmen
become too unethical and selfish and totally ignore their responsibility to the society. No society can tolerate
such misbehavior continuously.
3. Government Rules and Regulations: Laws support Government regulations regarding the working
conditions, product safety, statutory warning etc. These provide some guidelines to the business managers in
determining what are acceptable or recognized standards and practices.
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4. Ethical Code of the Company: When a company grows larger, its standard of ethical conduct tends to rise.
Any unethical behavior or conduct on the part of the company shall endanger its established reputation, public
image and goodwill. Hence, most companies are very cautious in this respect.
5. Social Pressures: Social forces and pressures have considerable influence on ethics in business. If a company
supplies sub-standard products and get involved in unethical conducts, the consumers will become indifferent
towards the company.
6. Policies of the company: The policies of the company also influence the determination of ethical conduct.
Standards of behaviour in an industry are often influenced greatly by the dominant firms in that industry. The
authors of the company policy obviously have an effect that is decisive.
SIGNIFICANCE/ADVANTAGE/IMPORTANCE OF BUSINESS ETHICS:

1. Attracting and retaining talent: People aspire to join organizations that have high ethical values. Companies
are able to attract the best talent and an ethical company that is dedicated to taking care of its employees will
be rewarded with employees being equally dedicated in taking care of the organization. The ethical climate
matter to the employees. Ethical Organizations create an environment that is trustworthy, making employees
willing to rely, take decisions and act on the decisions and actions of the co-employees.
2. Investor Loyalty: Investors are concerned about ethics, social responsibility and reputation of the company in
which they invest. Investors are becoming more and more aware that an ethical climate provides a foundation
for efficiency, productivity and profits. Relationship with any stakeholder, including investors, based on
dependability, trust and commitment results in sustained loyalty.
3. Customer satisfaction: Customer satisfaction is a vital factor in successful business strategy. Repeat
purchases/orders and enduring relationship of mutual respect is essential for the success of the company. The
name of a company should evoke trust and respect among customers for enduring success.
4. Regulators: Regulators eye companies functioning ethically as responsible citizens. The regulator need not
always monitor the functioning of the ethically sound company. The company earns profits and reputational
gains if it acts within the confines of business ethics. To summaries, companies that are responsive to
employees‘ needs have lower turnover in staff.
ARGUMENTS FOR BUSINESS ETHICS:

1) Holistic approach: In the last two centuries, importance was given to production of goods and services and
the promotion of more and more of knowledge. In the present modern century, a lot of significance is attached
to the growth of values and ethical ideas.
2) Leadership: Business ethics in organizations requires value-based leadership from top management.
Openness and continuous effort to improve the organization‘s ethical performance are to be directed from the
leadership of the organization. The ability of a firm to plan and implement ethical business standards depends
on the involvement of the leader in these programmes.
3) Business is a co-operative effort: Since business is a co-operative activity, it requires ethics and good
practices. In a cooperative process there are many stakeholders like investors, suppliers, customers and
government. Some ethical standards are necessary for the solidarity of business and its operations. Lack of co-
operation is often due to the fall in ethical values and practices.
4) Higher profits: Since all the stakeholders can get good benefit from the comprehensive ethical practices,
there is a vast scope for higher and consistent profits. In the long run, ethical practices increase the size of
profit. Johnson and Johnson, Xerox, MTR (Bangalore), and TVS(India) are examples.
5) Changing mindset of stakeholders: Stakeholders apply their values and standards such as ideal working
conditions, consumers' rights, environmental issues and customer care. The stakeholders want the growth of
business organization on set patterns. The stakeholders provide resources for the success of the firm in the
long-run.
ARGUMENTS AGAINST BUSINESS ETHICS:

1. No need for ethics separately: If business firms are interested in doing their main job of business, there is no
need for teaching ethics in a separate way. A business has to prepare its business plan and execute it and
satisfy all the needs of stakeholders.
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2. Demand and supply forces: Any market which is the heart of any business is governed by the two market
forces, namely demand and supply. The price, output and many other decisions are based on these two market
forces. Hence the scope for business ethics is very much restricted in business.
3. Compliance of law: Any business has to be in compliance of the law of land. For example in India the
Competition Law encourages the growth of healthy competition. Apart from this, there are labour laws to
protect the working and service conditions of labour. Similarly there are legal provisions to take care of the
customers and customer welfare.
4. Conflicts of interest: Business promotes conflicts of interest such as conflict between employers and
employees, conflict between sellers and buyers, conflict between owners and governments as well as conflict
between the different competitors. In an atmosphere dominated by conflicts, the possibility of ethical
operations is limited.
5. Profit is the object of business: The object of any business is to make profit and indicates its progress. While
making profit through its various operations, a business has to follow different techniques and tactics. Most of
these business techniques are based on exploitation. Hence there may not be a good scope for business ethics
in modern days.
6. Poor moral standards of society: Even though high ethical values are spoken and written by a small section
of society, the moral standards of society have fallen down. Frauds are taking place in all areas of business
operations like accounting fraud, marketing fraud and consumer fraud.
CORPORATE SOCIAL RESPONSIBILITY:

Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking
responsibility for the impact of their activities on customers, employees, shareholders, communities and the
environment in all aspects of their operations. This obligation is seen to extend beyond the statutory obligation to
comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for
employees and their families as well as for the local community and society at large.
DIFFERENCE BETWEEN BUSINESS ETHICS AND SOCIAL RESPONSIBILITY:

Though business ethics and social responsibility seem to be overlapping, there has always been a contradiction
between the two. Companies, though they are committed to be socially responsible for their behaviour have been
found to be engaging in acts that cannot be called ethical. What is good for the society is sometimes not good for the
business, and what is good for the business is almost always not good for the society. If the society is conscious, it
responds in such a way that businesses are forced to behave responsibly. The same applies to the administration and
the judiciary of any country. Selling of liquor and tobacco in any society is not against business ethics though it may
be against the principles of social responsibility. The same applies to lotteries and gambling. But it is certainly against
business ethics as well as against social responsibility to entice minors to engage in smoking and drinking.
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Unit – II
Principles of Business Ethics [8 Marks]
INTRODUCTION:
In a general sense, ethics is the concern for good behaviour - doing the right thing. Business ethics refers to the
standards and principles which govern the business activities. It means doing business activities with rational thinking
and honesty. A business requires ethics for its success. Now a days availability of proper safety measures for
employees, satisfaction of consumers and protection of environment are modern business standards.
PRINCIPLES OF BUSINESS ETHICS:

a) Avoid Exploitation of Consumers − Do not cheat and exploit consumer with measures such as artificial
price rise and adulteration.
b) Avoid Profiteering − Unscrupulous business activities such as hoarding, black-marketing, selling banned or
harmful goods to earn exorbitant profits must be avoided.
c) Encourage Healthy Competition − A healthy competitive atmosphere that offers certain benefits to the
consumers must be encouraged.
d) Ensure Accuracy − Accuracy in weighing, packaging and quality of supplying goods to the consumers has to
be followed.
e) Pay Taxes Regularly − Taxes and other duties to the government must be honestly and regularly paid.
f) Get the Accounts Audited − Proper business records, accounts must be managed. All authorized persons and
authorities should have access to these details.
g) Fair Treatment to Employees − Fair wages or salaries, facilities and incentives must be provided to the
employees.
h) Keep the Investors Informed − The shareholders and investors must know about the financial and other
important decisions of the company.
i) Avoid Injustice and Discrimination − Avoid all types of injustice and partiality to employees.
Discrimination based on gender, race, religion, language, nationality, etc. should be avoided.
j) No Bribe and Corruption − Do not give expensive gifts, commissions and payoffs to people having
influence.
k) Discourage Secret Agreement − Making secret agreements with other business people to influence
production, distribution, pricing etc. are unethical.
l) Service before Profit − Accept the principle of "service first and profit next."
m) Practice Fair Business − Businesses should be fair, humane, efficient and dynamic to offer certain benefits to
consumers.
n) Avoid Monopoly − No private monopolies and concentration of economic power should be practiced.
o) Fulfil Customers‟ Expectations − Adjust your business activities as per the demands, needs and
expectations of the customers.
p) Respect Consumers Rights − Honour the basic rights of the consumers.
q) Accept Social Responsibilities − Honour responsibilities towards the society.
r) Satisfy Consumers‟ Wants − Satisfy the wants of the consumers as the main objective of the business is to
satisfy the consumer‘s wants. All business operations must have this aim.
s) Service Motive − Service and consumer's satisfaction should get more attention than profit-maximization.
t) Optimum Utilization of Resources − Ensure optimum utilization of resources to remove poverty and to
increase the standard of living of people.
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u) Intentions of Business − Use permitted legal and sacred means to do business. Avoid Illegal, unscrupulous
and evil means.
ELEMENTS OF BUSINESS ETHICS:

Following are the 6 elements of business ethics:
a) Identification: It means that businessmen should be competent enough to rank and identify the ethical issues
in order of importance.
b) Evaluation: It means that businessmen must develop the rules and regulations in order to evaluate the ethical
issues of the business.
c) Imagination: A businessman should be imaginative enough that he should think about the society before
taking any decision about the business. He must be aware of the areas towards which people are sensitive.
d) Tolerance: Businessmen must have the quality to tolerate ethical disagreement.
e) Obligations: Business decision taking process should be evaluate that it must fulfill the ethical obligations.
f) Competence: A businessman should be competent enough to integrate the business ethical issues with the
ethical issues of the society otherwise he has to pay the huge amount for the disagreement.
DEFINITION OF MORALS:
Morals are the social, cultural and religious beliefs or values of an individual or group which tells us what is right or
wrong. They are the rules and standards made by the society or culture which is to be followed
by us while deciding what is right. Some moral principles are: Do not cheat, Be loyal, Be patient, Always tell the
truth, Be generous. Morals refer to the beliefs what is not objectively right, but what is considered right for any
situation, so it can be said that what is morally correct may not be objectively correct.
DEFINITION OF ETHICS:
Ethics is a branch of philosophy that deals with the principles of conduct of an individual or group. It works as a
guiding principle as to decide what is good or bad. They are the standards which govern the life of a person. Ethics is
also known as moral philosophy. Some ethical principles are: Truthfulness, Honesty, Loyalty, Respect, Fairness,
Integrity.
KEY DIFFERENCES BETWEEN MORALS AND ETHICS:

The major differences between Morals and Ethics are as under:
a) Morals deal with what is ‘right or wrong‘. Ethics deals with what is ‘good or evil‘.
b) Morals are general guidelines framed by the society E.g. We should speak truth. Conversely, ethics are a
response to a particular situation, E.g. Is it ethical to state the truth in a particular situation?
c) The term morals is derived from a Greek word ‘mos‘ which refers to custom and the customs are determined
by group of individuals or some authority. On the other hand, ethics is originated from Greek word ‘ethikos‘
which refers to character and character is an attribute.
d) Morals are dictated by society, culture or religion while Ethics are chosen by the person himself which
governs his life.
e) Morals are concerned with principles of right and wrong. On the contrary, ethics stresses on right and wrong
conduct.
f) As morals are framed and designed by the group, there is no option to think and choose; the individual can
either accept or reject. Conversely, the people are free to think and choose the principles of his life in ethics.
g) Morals may vary from society to society and culture to culture. As opposed to Ethics, which remains same
regardless of any culture, religion or society.
h) Morals do not have any applicability to business, whereas Ethics is widely applicable in the business known
as business ethics.
i) Morals are expressed in the form of statements, but Ethics are not expressed in the form of statements.
EXAMPLES: If the son of a big politician has committed a crime and he uses his powers to free his son from legal
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consequences. Then this act is immoral because the politician is trying to save a culprit. A very close friend or relative
of an interviewer comes for an interview and without asking a single question, he selects him. This act is unethical
because the selection process must be transparent and unbiased.
A grocer sells adulterated products to his customers to earn more profit. This act is neither moral nor ethical because
he is cheating his customers and profession at the same time.
ETHICAL DILEMMA:
Ethical dilemma also known as a moral dilemmas, are situations in which there is a choice to be made between two
options, neither of which resolves the situation in an ethically acceptable fashion. In such cases, societal and personal
ethical guidelines can provide no satisfactory outcome for the chooser. Ethical dilemmas assume that the chooser will
abide by societal norms, such as codes of law or religious teachings, in order to make the choice ethically impossible.
ETHICAL DILEMMA SITUATIONS:

Personal Friendships: Michael had several friends including Roger and Daniel. Roger has recently met and started
dating a wonderful lady named Phyllis. He is convinced this is a long term relationship. Unknown to Roger, Michael
observed them at a restaurant several days ago and realized Phyllis is the wife of his other friend Daniel. Michael is
deciding whether to tell Roger that Phyllis is married when he receives a call from Daniel. Daniel suspects his wife is
having an affair and since they and Michael share many friends and contacts, he asks if Michael has heard anything
regarding an affair.
To whom does Michael owe greater friendship to in this situation? No matter who he tells, he is going to end up
hurting one, if not both friends. Does he remain silent and hope his knowledge is never discovered?
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Unit – III
Ethics in Management [8 Marks]
INTRODUCTION:
Ethics is a subject of social science that is related with moral principles and social values. 'Business Ethics' can be
termed as a study of proper business policies and practices regarding potentially controversial issues, such as corporate
governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
Businesses must abide by some basic principles. It should provide quality goods and services at reasonable prices to
their consumers. It must also avoid adulteration, misleading advertisements, and other unfair malpractices.
ETHICS IN HRM:
Human Resource Management (HRM) deals with work force management, manpower planning and other employee
related activities in an organization. Therefore, we can say that it is a special branch of management where ethics play
a crucial role. HRM concerns human issues, especially those related with compensation, development, industrial
relations, health and safety issues. However, there are sufficient disagreements in managing HRM issues that stem
from various quarters.
ETHICS AND MARKET SYSTEM:

Various types of market systems affect business and HR ethics differently and hence, business ethics becomes
negotiable. Occupations in which the market conditions do not favour the employees, it becomes necessary to have
government and labour union interventions for controlling the possible exploitation of employees.
➢ Free market systems empower employees and the employers equally; negotiations are used to create win-win
situations for both of these parties. Government or labour union interventions are often harmful in free market
systems because they stall the operations and create unnecessary hindrances.
➢ With the growth of globalization, the concept of globalizing labour has gained importance. Trade unions have
ceased to exist and the role of HR as such in issues like employee management, desirable policies and
practices has become debatable topics.
➢ Many people now have the opinion that HR is nothing but a part of the stakeholders, which initiates major
strategic and policy decisions to divulge the organization and gear it towards profit making.
IMPORTANT CLUSTERS OF HRM RELATED WITH ETHICS:

Some HRM issues are more important than the rest because we, as human beings, are more responsible for the
development and empowerment of the human resources involved in the operation and management of organizations.
Some of these issues are discussed below.
Cash and Compensation Plans
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There are some general ethical issues pertaining to the employee salaries, executive perquisites and compensations
and the annual incentive plans, etc. The HR department is often under pressure to increase the band of base salaries.
There is always an increased pressure upon the HR function to pay out more incentives to the top management and
provide justification for the same to retain them. Further, ethical issues arise when HR deals with long-term
compensation and incentive plans by consulting with the CEO or an external consultant. There is a pressure on the HR
managers on favouring the interests of the top management in comparison to that of the other employees and
stakeholders.
Race, Gender, and Disability
There are several examples of organizations where, until recently, the employees were treated differently based on the
race, gender, origin, and their disability. This is not the case anymore since the evolution of laws and a regulatory
framework standardized for the employee behaviour. In ethical organisations, the only factor of appraisal is
performance.
Employment Issues
Human resource managers face many dilemmas in hiring employees. One particular dilemma stems from the pressure
of hiring one, who has been recommended by a friend or someone from the family of a top executive. Another major
dilemma arises due to employees who are later found to have fake documents. Both of the issues are critical. In the
first case, the person may have been trained and filling the position is critical. In the second case, the person may be
efficient in his work and have the right kind of attitude. Both the situations are tough and HR managers face such
cases day in and day out.
Privacy Issues
All human beings working with any organization have their personal life. An employee needs the organization to
directly or indirectly protect his/her personal life. This personal life includes things like the religious, political and
social beliefs etc. There are many ethical issues in HR that are related to health and safety, restructuring and layoffs
and employee responsibilities. A debate is still going on whether some activities are ethically permitted and why some
are not. Layoffs, for example, are not considered unethical as they were thought of in the past.
Ethical Issues in Marketing
Ethical issues in marketing arise from the conflicts and lack of agreement on particular issues. Parties involved in
marketing transactions have a set of expectations about how the business relationships will take shape and howvarious
transactions need to be conducted. Each marketing concept has its own ethical issues, which we will discuss in this
chapter.
Emerging Ethical Problems in Market Research
Market research has experienced a resurgence with the widespread use of the Internet and the popularity of social
networking. It is easier than ever before for companies to connect directly with customers and collect individual
information that goes into a computer database to be matched with other pieces of data collected during unrelated
transactions. The way a company conducts its market research these days can have serious ethical repercussions,
affecting the lives of consumers in ways that have yet to be fully understood. Further, companies can be faced with a
public backlash if their market research practices are perceived as unethical.
Grouping the Market Audience
Unethical practices in marketing can result in grouping the audience into various segments. Selective marketing may
be used to discourage the demand arising from these so-called undesirable market segments or to disenfranchise them
totally.
ETHICS IN ADVERTISING AND PROMOTION:

In the early days of existence of corporations, especially during 1940s and 1950s, tobacco was advertised as a
substance that promotes health. Of late, an advertiser who does not meet the ethical standards is considered an
offender against morality by the law.
❖ Sexuality is a major point of discussion when ethical issues in advertising content are considered. Violence is
also an important ethical issue in advertising, especially where children should not be affected by the content.
❖ Some select types of advertising may strongly offend some groups of people even when they are of strong
interest to others. Female hygiene products as well as haemorrhoid and constipation medication are good
examples. The advertisements of condoms are important in the interest of AIDS-prevention, but are
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sometimes seen by some as a method of promoting promiscuity that is undesirable and strongly condemned in
various societies.
❖ A negative advertising policy lets the advertiser highlight various disadvantages of the competitors‘ products
rather than showing the inherent advantages of their own products or services. Such policies are rampant in
political advertising.
DELIVERY CHANNELS:
Direct marketing is one of the most controversial methods of advertising channels, especially when the approaches
included are unsolicited. Some common examples include TV and Telephonic commercials and the direct mail.
Electronic spam and telemarketing also push the limits of ethical standards and legality in a strong manner.
Deceptive Marketing Policies and Ethics
Deceptive marketing policies are not contained in a specific limit or to one target market, and it can sometimes go
unseen by the public. There are numerous methods of deceptive marketing. It can be presented to consumers in
various forms; one of the methods is one that is accomplished via the use of humour.
Anti-Competitive Practices
There are various methods that are anti-competitive. For example, bait and switch is a type of fraud where customers
are "baited" through the advertisements for some products or services that have a low price; however, the customers
find in reality that the advertised good is unavailable and they are "switched" towards a product that is costlier and
was not intended in the advertisements.
Pricing Ethics
There are various forms of unethical business practices related to pricing the products and services.
Bid rigging is a type of fraud in which a commercial contract is promised to one party, however, for the sake of
appearance several other parties also present a bid.
Predatory pricing is the practice of sale of a product or service at a negligible price, intending to throw competitors
out of the market, or to create barriers to entry.
ETHICS IN ACCOUNTING AND FINANCE:

Business Ethics - Finance
Organizations that provide financial services cannot afford to have its employees leave their morals on the front door
when they step inside. Finance usually depends on a very high level of ethics.
Finance Depends on Trust
Markets break down without trust. If financial markets are full of rogue traders, individuals will start to disengage
from it, thereby reducing the capacity to find investments and hence reducing the economic growth. A market with
strong ethics is more inclusive which helps it to be more liquid and offer cheaper financial options.
An Ethical Framework
The simplest ethical guide for finance professionals should have three objectives −
✓ The first is to have higher ethical standards and a more inclusive financial system.
✓ The second, we should be more conscious of moral choices, but morals should not be imposed upon people in
suffocating ways.
✓ The third objective is to keep things simple.
Final Consideration
The consequences of a financial transaction lead us to ask whether a transaction and its full implications are clear, and
whether they will be subject to scrutiny −
❖ If Yes, the moral responsibility of the market participants is lowered and they can concentrate on providing
ethical service. In these circumstances, people are in a better situation to take correct decisions.
❖ If No, the moral burden on the financier is greater. In these circumstances, a written justification for the record
would be a better option.
WORK ETHICS & WORKPLACE:

We often talk about work ethics and employee contribution towards the success of an organization. It is important to
understand what we mean by these issues. Why some organizations have better work culture than others?
What is Work Ethic?
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The dilemma of ‘work ethic‘ is ubiquitous, but it has come to the focus since the turn of the millennium as scandals
came up that have sunk the entire organizations, such as those associated with Enron and WorldCom. Ethics has now
become a compulsory subject in many professional courses. Still, people find it perplexing to face the challenges they
call ‘work ethic‘.
Something Bigger Than the Self
When an organization wants to talk about the issues around work ethic, they will first need to ask how the
organizational culture is contributing. People will only offer their best when they dedicate them to a cause which they
believe in. They must see something, which is bigger than they are. Organizations will need to understand this
unspoken need of employees for something bigger, if they really want to see people come to work and give their best
unconditionally. Hence, organizations need to define their vision, mission and strategies, which motivate the people. It
is known as the benevolent intent of the organization.
Conducting Personal Business during Office Time
Employees often spend most of their weekday hours on the office job. Sometimes, they often may be tempted to do
personal business during office hours. Such practices can include setting up doctor's appointments using company
phones, making tour-package bookings using their employer's computers or sometimes arranging calls for a side
freelance business during office time.
Taking Credit for Others' Work
Employees often have to work in teams to make up marketing campaigns, or develop new products for sale or fine-
tune creative services, yet everyone in a group do not contribute equally to the final product. If two members of a
three-person team did all the work, will this mean that, these two people need to demand to receive proper credit while
pointing out that the particular member did not do anything.
Harassing Behaviour
Employees often do not understand what they should do if they see one of their co-workers harassing another, either
mentally, sexually or physically. Employees have to worry for their jobs while attempting to report a superior for
harassment. They may fear that they might be labelled a troublemaker if they report inappropriate behavior.
Solutions to Workplace Dilemmas
Morality and value-based issues in the workplace are often difficult to handle when the employees need to choose
between the right and wrong by their own principles. Smart employers who know how to implement workplace ethics
policies are usually well prepared for the potential conflicts of interest of opinion, values and culture in the workforce.
However, managing ethical issues requires a steady and cautious approach to matters, which can potentially be
dangerous or illegal.
Step 1: Documenting the Issues

➢ Develop a workplace policy depending on your company‘s philosophy, mission statement and conduct
guidance.
➢ Incorporate the policy into your performance management program to hold employees accountable for their
actions.
➢ Alert the employees to their responsibilities to follow professional standards in their job performance and
interaction with peers and supervisors.
➢ Revise the employee handbook to include any missing policy and provide revised handbook to employees.
➢ Obtain written acknowledgement from employees that they have received and understood the workplace
ethics policy.
Step 2: Training and Guidance for Up-Keeping Values
➢ Provide ethics training to employees.
➢ Provide instructions in learning how to address and resolve ethical dilemmas.
➢ Experiential learning, or role-play, may be used as an effective way to facilitate workplace ethics training.
➢ Provide examples of workplace ethics simulations, such as misappropriation of company funds, improper
workplace relationships etc.
Step 3: Taking Effective Measures
➢ Designate an executive in-charge of handling employees‘ concerns pertaining to workplace ethics.
➢ Consider whether your organization also needs an ethics hotline, a confidential benefit service for employees
to contact whenever they need.
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➢ Confidential hotlines assure employees‘ anonymity, which is a concern for ―whistle blowing‖ actions.
Step 4: The Legal and Private Angle
➢ Research and apply federal, state and municipal labor and employment laws pertaining to whistle blowing.
➢ Refrain from making suspension, termination decisions, in connection with whistle blowing or when
employee‘s right is protected under whistle blowing laws or public policy.
➢ Look for legal advice for the employee reports of workplace ethics issues that may increase your
organization‘s legal liability.
Step 5: Keeping the Standard Intact
➢ Apply workplace policy consistently while addressing employee concerns about workplace ethics.
➢ Use the same standard in every circumstance, regardless of the perceived intention, seriousness or the position
of employees involved.
➢ Communicate the same rules for all employees – whether executive or front-line production roles.
➢ Approach every issue with equal interpretation of the company policy.
VALUE AND ETHICS:

Business Ethics - Employees & Morals
Employees often need to make various moral decisions in the workplace. While many of these workplace decisions
have to be made depending on moral obligations, some morally supportable decisions may require courage and need
to be performed beyond the generally accepted norms. While discussing workplace ethics, six predominant subjects
are of primary importance. These are −
• Obligations to the firm
• Abuse of one‘s position
• Bribery and kickbacks
• The obligations to third parties
• Whistle blowing
• Employee‘s self-interest
BASIC ATTRIBUTES OF ETHICAL WORKERS:

To be ethical in the workplace, the workers must have some common attributes. The most influential
attributes are the following –
• Dedication
• Integrity
• Accountability
• Collaboration
• Conduct
• Being a Better Worker
• Trusting Relationships
• Team Cohesiveness
• Value to Employers
CORE VALUES:
Wisdom and Knowledge
The talent to gather information and convert it to something useful is a great quality. Wisdom is capitalizing one‘s
experience to interpret information and being knowledgeable to produce wise decisions.
Self-Control
It is important to have the ability to avoid unethical temptations. The decision to take the ethical path needs enough
commitment to the value of good ethics. Ethical people usually say ―no‖ to the individual gain if it is irrelevant to
institutional benefit and goodwill.
Justice and Fair Guidance
Fair treatment of people is important. Justice is served when a fair return is gained in return for the energy and effort
expended. Certain individuals give special treatment without regard to objective criteria by which to judge fairness.
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Transcendence
It is the recognition of something beyond oneself more permanent and powerful than the self. When one lacks
transcendence, he may tend towards self-absorption.
Love and Kindness
The expression of love and kindness is always productive. Research shows that there are different types of ―love.‖ In
an organizational context, love means intense positive reaction to co-workers, groups and/or situations. An
organization ―with heart‖ allows love, compassion and kindness among and between people.
Courage and Integrity
It is important to have the courage to act ethically and with integrity. These values let us decide right from wrong and
acting accordingly. They impel one to act in the right manner without considering personal consequences, even when
it is tough and needs benevolence.
BUSINESS ETHICS – CYBER AGE:

Privacy Angle
"Central to dignity and individuality and personhood. Privacy is also indispensable to a sense of autonomy — to 'a
feeling that there is an area of an individual's life that is totally under his or her control, an area that is free from
outside intrusion.' The deprivation of privacy can even endanger a person's health."
Property Issues
The concept of property is an issue of ethical debate for a long time. Some people argue that the internet is based
around the concept of freedom of information. However, controversy over ownership has frequently occurred when
the property of information is infringed upon.
Security Concerns
Security, in business domains, has long been an issue of ethical debate. Is it important to protect the common good of
the community or we should safeguard the rights of the individual? There is a continual and growing dispute over the
boundaries of these two ideas. This raises the question whether making compromises are right.
Responsibility of Accuracy
The issue of accuracy is evident. We must ask questions like, who is responsible for the authenticity and fidelity of the
information available online. Ethically, the concept includes a debate over who can contribute content and who should
be held accountable when the content is erroneous or false. This also has a legal angle for compensation for the injured
party due to wrong information and loss of capital due to these accuracy defects.
Accessibility, Censorship, and Filtering
The arguments that apply to offline censorship and filtering apply to online censorship and filtering. Is it better to have
free access to information or should be protected from what is considered by a governing body as harmful, indecent or
illicit. The issue of access by minors is also a major concern.
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Unit – IV
Corporate Culture [8 Marks]
MEANING OF CORPORATE CULTURE:
Corporate culture refers to the beliefs and behaviors that determine how a company's employees and
management interact and handle outside business transactions. Often, corporate culture is implied, not
expressly defined, and develops organically over time from the cumulative traits of the people the company
hires.
ROLE & IMPACT OF CORPORATE CULTURE:

Corporate culture represents the professional values a company adopts that dictate how it interacts with
employees, vendors, partners and clients. The mission strategy of an organization is a summary of how the
company perceives its role and the beliefs it uses to achieve its goals. Because the corporate culture is a
driving force in how the company does business, it has an impact on developing business strategy.
Risk
The corporate culture dictates how much risk an organization is willing to take when it comes to research
and development, client interaction, investing in equipment and any other activity that involves risk. If the
corporate culture is one that promotes environmental responsibility, that will impact the risks that the
company will take when developing new products.
Employee Retention
When the company develops a policy of withholding information from employees, that can start to develop
a culture of distrust among the staff. The ability to retain employees can be weakened when the promises
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made by the company in regards to company growth and employee opportunity are compromised by a lack
of trust.
Incentive Pay
Incentive pay is something that employers use to improve productivity and maintain employee morale. But
incentive programs need to be monitored and administered carefully to avoid creating a culture of
expectation.
Focus
A corporate culture that each employee subscribes to helps to create focus among the staff. When employees
abide by the company's beliefs and values, it gives a unified impression to vendors, clients and partners.
FUNCTIONS OF CORPORATE CULTURE:

1) Cooperation - by providing shared values and assumptions, culture may enhance goodwill and
mutual trust, encouraging cooperation.
2) Decision Making - shared beliefs gives members a consistent set of basic assumptions which may
lead to a more efficient decision-making process due to fewer disagreements,
3) Control - control is provided by three mechanisms 1. Market control mechanism: relies on price. If
results fall short of goals, prices are adjusted to stimulate necessary change 2. Bureaucratic control
mechanism: relies on formal authority. The control process consists of adjusting rules and
regulations and issuing directives 3. Clan control mechanism: relies on shared beliefs and values.
Provide a map that members can rely on to choose appropriate course of action.
4) Communication - culture reduces communication problems in two ways:
➢ no need to communicate in matters for which shared assumptions already exist (things go
without saying)
➢ shared assumptions provide guidelines and cues to help interpret messages that are received
5) Commitment - strong cultures foster strong identification which causes commitment
6) Perception - what an individual sees is conditioned by what others sharing the same experience say
they are seeing
7) Justification of behavior - culture helps organization members make sense of their behavior by
providing justification for it.
GLOBALIZATION IN ETHICS:
Globalization ― Refers to the growing interdependence of countries resulting from the increasing business
on integration of trade , Finance , people , and ideas in one global marketplace . International trade and
cross-border investment flows are the main elements of this integration. Globalization started after world
war II but has accelerated since the mid 1980‘s , driven by two factors .Technological advances that have
lowered the cost of transportation , communication and computation to the extent that it is often
economically feasible for a firm to locate different phases of production in different countries .
WHY ETHICS REQUIRE:

In this present world there is a serious deterioration of values , practices ,corruption , egoism , violence and
pursuit of material wealth is everywhere . Everyone is in material race to earn more and more.
• Ethics correspond to basic human needs
• Ethics create credibility with the public
• Ethics give management credibility with employees
• Ethics help for sustainable business
• Ethics enable to make better decision making
• Ethics increase profitability
• Ethics can protect Society not laws
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CORPORATE CODE OF ETHICS:
Corporate ethical codes can be defined as the standards and beliefs of an organization. These standards and
beliefs are made by the managers of the organization. These ethical codes can be used to adjust the thinking
and attitude of the individuals in the organization. Ethics codes of organizations are different from the rules
of ethics. Ethical rules are the requirements according to which an individual acts.
ADVANTAGES OF A CODE OF ETHICS:

➢ Code of ethics can be used to handle outside pressure
➢ They can also be used in making overall strategic decisions
➢ These codes can be used to define and implement the policies of the organization and distribute work
between the employees. Code of ethics can be used to optimize the public image and confidence of
the organization. They can be used to increase the skills and knowledge of the individuals.
➢ Code of ethics can also be used to respond to the different issues of stakeholders. These codes of
ethics can be used to discourage improper requests from employees. They can also strengthen the
enterprise system.
Unit – V
Ethics & Corporate Governance [8 Marks]
CONCEPT OF CORPORATE GOVERNANCE:
Corporate Governance refers to the way a corporation is governed. It is the technique by which companies
are directed and managed. It means carrying the business as per the stakeholders‘ desires. It is actually
conducted by the board of Directors and the concerned committees for the company‘s stakeholder‘s benefit.
It is all about balancing individual and societal goals, as well as, economic and social goals.
SCOPE OF CORPORATE GOVERNANCE:

Corporate governance is the system of rules, practices and processes by which a firm is directed and
controlled. Corporate governance essentially involves balancing the interests of a company's many
stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the
community. Since corporate governance also provides the framework for attaining a company's objectives, it
encompasses practically every sphere of management, from action plans and internal controls to
performance measurement and corporate disclosure. Corporate Governance has a broad scope. It includes
both social and institutional aspects. Corporate Governance encourages a trustworthy, moral, as well as
ethical environment.
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REPORTS ON CORPORATE GOVERNANCE:
In the Corporate Governance Report, the Board of Directors annually informs the shareholders and the
capital market of the Corporate Governance in the company and how the Code of Corporate Governance
(the Code) is applied.
CORPORATE GOVERNANCE BENEFITS:

Benefits of Corporate Governance
a) Good corporate governance ensures corporate success and economic growth.
b) Strong corporate governance maintains investors‘ confidence, as a result of which, company can
raise capital efficiently and effectively.
c) It lowers the capital cost.
d) There is a positive impact on the share price.
e) It provides proper inducement to the owners as well as managers to achieve objectives that are in
interests of the shareholders and the organization.
f) Good corporate governance also minimizes wastages, corruption, risks and mismanagement.
g) It helps in brand formation and development.
h) It ensures organization in managed in a manner that fits the best interests of all.
CORPORATE GOVERNANCE LIMITATIONS:

1) Corporations Governed by Statutes: Corporations are governed by federal and state statutes. One
major reason business owners form corporations is to limit the owners' liability to the amount of their
investments. Another reason founders form corporations is because corporations are permitted to
raise capital by selling stock to investors and have a long legal and case history to support this.
2) Fiduciary Duty of Board: Officers and the board of directors have fiduciary duties to act in the best
interest of the corporation. If they breach those duties by not exercising honest and prudent care, they
can be held liable.
3) Increased Costs: Corporations have higher administrative costs because of greater administrative
requirements than those required of LLCs and limited partnerships. Corporate boards must either
meet or create resolutions to enter into financial arrangements or contractual arrangements.
4) Maintenance of Separation: Corporations, shareholders and board directors and officers must
follow all the corporate formalities, including keeping annual meeting minutes for both shareholders‘
meeting and board of directors‘ meetings, documenting major decisions as board-approved. Even
corporations owned and governed by one shareholder in multiple director roles must adhere to all
formalities.
5) Principal Agent Conflict: Conflicts arise when a corporation‘s shareholders do not actively
participate in the business and instead hire professional management to run the business. The
manager represents the shareholders but often has different goals and perspectives.
6) Ownership-Management Separation: The officers and directors who run the day-to-day affairs of
a corporation and make most of its policy decisions are not necessarily shareholders. This can
become a problem in large, publicly traded corporations.
CORPORATE GOVERNANCE AND BUSINESS ETHICS:

Corporate governance lies at the heart of the way businesses are run. Often defined as the ‘way businesses
are directed and controlled‘, it concerns the work of the board as the body which bears ultimate
responsibility for the business. Governance relates to how the board is constituted and how it performs its
role. It encompasses issues of board composition and structure, the board‘s remit and how it carried out and
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the framework of the board‘s accountability to its stakeholders. It also concerns how the board delegates
authority to manage the business throughout the organization.
ESSENTIALS OF GOOD CORPORATE GOVERNANCE:

➢ Participatory
➢ Consensus Oriented
➢ Accountable
➢ Transparent
➢ Responsive
➢ Effective and Efficient
➢ Equitable and Inclusive and
➢ Follows the Rule of Law
BUSINESS ETHICS:
❖ Business ethics is a kind of applied ethics. It is the application of moral or ethical norms to business.
❖ The term ethics has its origin from the Greek word ―ethos‖, which means character or custom-the
distinguishing character, sentiment, moral nature, or guiding beliefs of a person, group, or institution.
❖ Ethics is a set of principles or standards of human conduct that govern the behaviour of individuals
or organization.
❖ Ethics can be defined as the discipline dealing with moral duties and obligation, and explanation
what is good or not good for others and for us.
❖ Ethics is the study of moral decisions that are made by us in the course of performance of our duties.
❖ Ethics is the study of characteristics of morals and it also deals with the moral choices that are made
in relationship with others.
CORPORATE GOVERNANCE AND BUSINESS ETHICS:

➢ The national codes all emphasize the ethical nature of good corporate governance.
➢ Special emphasis is placed on the fact that good governance is based on a number of cardinal ethical
values.
➢ Topping the list of the values that should be adhered to in good governance are the values of
Transparency, accountability, responsibility and probability. These values should permeate all
aspects of governance and be displayed in all actions and decisions of the board.
➢ A well defined and enforced corporate governance provides a Structure that, at least in theory, works
for the benefit of everyone concerned by ensuring that the enterprises adheres to accepted ethical
standards and best practices as well as to formal laws.
➢ To that end, organizations have been formed at the regional, national and global level.
CORPORATE GOVERNANCE IN RECENT YEARS:

➢ In recent years, Corporate Governance has received increased attention because of high profile
scandals involving abuse of corporate power and, in some cases, alleged criminal activity by
corporate officers
➢ An Integral part of an effective Corporate Governance regime Includes provisions for civil or
criminal prosecution of individuals who conduct unethical or illegal acts in the name of
organizations.
➢ In all the national codes of corporate governance and in India for the need for actively managing the
ethical performance of companies is emphasized.
➢ The levels of detail with which these codes deal with the active management of ethics do, however,
differ drastically.
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➢ All the codes recommend that the board of directors should ensure that a code of ethics is developed
and that it is endorsed by the board.
➢ Most Corporate Governance codes also provide some guidance on the process of developing a code
of ethics by either making reference to issues or topics that typically should be addressed in a code or
by outlining a process that could be followed in the process of code design or review.
➢ Few codes go further to take the lead in venturing deeper into what the governing of ethical
performances entails beyond developing a code of ethics.
Unit – I
Introduction [10 Marks]
ENTREPRENEUR:
An entrepreneur is one who brings together the factors of production and combines them into a product‖. He made a
clear distinction between a capitalist and an entrepreneur. Capitalist is only a financier. Entrepreneur is the coordinator
and organizer of a business enterprise.
The word entrepreneur is derived from French word “Entreprendre” and the German word “Unternehmen”, both mean
“To undertake”.
ENTREPRENEURSHIP:
Entrepreneurship is the process of creating value by bringing together a unique package of resources to exploit an
opportunity.
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CHARACTERISTICS OF ENTREPRENEUR:
He has the following characteristics:
a) An entrepreneur brings about change in the society. He is a catalyst of change.
b) Entrepreneur is action-oriented, highly motivated individual who takes risk to achieve goals.
c) Entrepreneur accepts responsibilities with enthusiasm and endurance.
d) Entrepreneur is thinker and doer, planner and worker.
e) Entrepreneur can foresee the future, seize market with a salesman‘s persuasiveness, manipulate funds with
financial talent and smell error, frauds and deficiencies with an auditor‘s precisions.
f) Entrepreneur undertakes venture not for his personal gain alone but for the benefit of consumers, government
and the society as well.
g) Entrepreneur builds new enterprises. He possesses intense level of determination and a desire to overcome
hurdles and solves the problem and completes the job.
h) Entrepreneur finds the resources required to exploit opportunities.
i) Entrepreneur does extraordinary things as a function of vision, hard work, and passion. He challenges
assumptions and breaks rules.
j) Although many people come up with great business ideas, most of them never act on their ideas.
NATURE AND CHARACTERISTICS OF ENTREPRENEURSHIP:

a) It is a function of innovation.
b) It is a function of leadership.
c) It is an organization building function.
d) It is a function of high achievement.
e) It involves creation and operation of an enterprise.
f) It is concerned with unique combinations of resources that make existing methods or products obsolete.
g) It is concerned with employing, managing, and developing the factors of production.
h) It is a process of creating value for customers by exploiting untapped opportunities.
i) It is a strong and positive orientation towards growth in sales, income, assets, and employment.
NEED AND SCOPE OF ENTREPRENEURSHIP:

a) Demand driven market economy.
b) Exploiting opportunities in sunrise sectors.
c) Farm diversification for sustainable development.
d) Private extension and contract farming options.
e) Human resource utilization-labour intensive work.
f) Horticulture and related enterprises.
g) Precision agriculture for cost reduction on farms.
h) Gearing farmers to meet export potential.
i) Cereal growers continue to remain poor and poorer.
KEY ELEMENTS OF ENTREPRENEURSHIP:
Innovation
An entrepreneur is the key source of innovation and variation in an economy. It is actually one of the most important
tools of an entrepreneurs success. They use innovation to exploit opportunities available in the market and overcome
any threats.
Risk-Taking
Entrepreneurship and risk-taking go hand in hand. One of the most important features of entrepreneurship is that the
whole business is run and managed by one person. So there is no one to share the risks with.
Vision
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Vision or foresight is one of the main driving forces behind any entrepreneur. It is the energy that drives the business
forward by using the foresight of the entrepreneur. It is what gives the business an outline for the future – the tasks to
complete, the risks to take, the culture to establish etc.
Organization
In an entrepreneurship, it is essentially a one-man show. The entrepreneur bears all the risks and enjoys all the
rewards. And sure he has the help of employees and middle-level management, yet he must be the one in ultimate
control. This requires a lot of organization and impeccable organizational skills. An entrepreneur must be able to
manage and organize his finances, his employees, his resources etc. So his organizational abilities are one of the most
important elements of an entrepreneurship.
CREATIVE BEHAVIOR OF ENTREPRENEURSHIP:
➢ Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be
useful in solving problems, communicating with others, and entertaining ourselves and others.
➢ Creativity is the ability to come up with new ideas and to identify new and different ways of looking at a
problem and opportunities.
➢ A process of assembling ideas by recombining elements already known but wrongly assumed to be unrelated
to each other. This definition has several key elements that are worth considering:
❖ Process: Creativity is also a process (implying among other things, that it is more like a skill than an
attitude, and that you can get better at it with practice).
❖ Ideas: Creativity results in ideas that have potential value.
❖ Recombining: The creativity process is one of putting things together in unexpected ways.
THREE REASONS WHY PEOPLE ARE MOTIVATED TO BE CREATIVE:

1. Need for novel, varied, and complex stimulation.
2. Need to communicate ideas and values.
3. Need to solve problems.
STEPS IN CREATIVE PROCESS:

1. Opportunity or problem recognition: A person discovers that a new opportunity exists or a problem needs
resolution.
2. Immersion: The individual concentrates on the problem and becomes immersed in it. He or she will recall
and collect information that seems relevant, dreaming up alternatives without refining or evaluating them.
3. Incubation: The person keeps the assembled information in mind for: a while. He or she does not appear to
be working on the problem actively: however, the subconscious mind is still engaged. While the information
is simmering it is being arranged into meaningful new patterns.
4. Insight: The problem-conquering solution flashes into the person‘s mind at an unexpected time, such as on
the verge of sleep, during a shower, or while running. Insight is also called the Aha! or Eureka! Experience.
5. Verification and Application: The individual sets out to prove that the creative solution has merit.
Verification procedures include gathering supporting evidence, using logical persuasion, and experimenting
with new ideas.
PERONALITY TRAITS OF CREATIVE PEOPLE:

➢ Persistence
➢ Self-confidence
➢ Independence
➢ Attraction of complexity
➢ Intuitiveness
➢ Have broad interests
➢ Drive to achieve
➢ Love their work
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➢ Take risks
BARRIERS TO CREATIVITY:
➢ Excessive focus on extrinsic motivation
➢ Limits set by superiors
➢ Critical evaluation
➢ Close, controlling supervision
➢ Competition in a win-lose situation
➢ Control of decision making
➢ Control of information
➢ Blindly following the rules
➢ Constantly being practical
➢ Becoming overly specialized
➢ Fearing looking foolish
➢ Fearing mistakes and failure.
INNOVATION:
▪ Innovation is the implementation of new ideas at the individual, group or organizational level.
▪ A process of intentional change made to create value by meeting opportunity and seeking advantage.
• Process: Innovation is a process (implying, among other things, that it can be learned and managed)
• International: That process is carried out on purpose.
• Change: it results in some kind of change.
• Value: The whole point of the change is to create value in our economy, society and/or individual
lives.
• Opportunity: Entrepreneurial individuals enable tomorrow‘s value creation by exploring for it today:
having ideas, turning ideas marketable insights and seeking ways to meet opportunities.
• Advantage: At the same time, they also create value by exploiting the opportunities they have at
hand.
TYPES OF INNOVATIONS:
There are four distinct types of innovation, these are as follows:
➢ Invention – Described as the creation of a new product, service or process. Something that has not been tried
before.
➢ Extension – The expansion of an existing product, service or process. This would mean that the entrepreneur
takes an existing idea and applies it differently.
➢ Duplication – Copying (replicating) an existing product or service and then adding the entrepreneurs own
creative touch. In order to improve it.
➢ Synthesis – A combination of more than one existing products or services in to a new product, or services.
This means that several different ideas are combined in to one new product or services.
INNOVATION PROCESS:
1. Analytical planning: Carefully identifying the product or service features, design as well as the resources that
will be needed.
2. Resources organization: Obtaining the required resources, materials, technology, human or capital resources.
3. Implementation: Applying the resources in order to accomplish the plans
4. Commercial application: The provision of value to customers, rewards employees, and satisfy the stake
holders.
CREATIVITY, INNOVATION AND ENTREPRENEURS:
➢ Creativity is the ability to develop new ideas and to discover new ways of looking at problems and
opportunities.
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➢ Innovation is the ability to apply creative solutions to those problems and opportunities in order to enhance
people‘s lives or to enrich society.
Creativity – Thinking new things
Innovation – Doing new things
Entrepreneurship – Crating value in the marketplace
ENTREPRENEURSHIP = CREATIVITY + INNOVATION

➢ Entrepreneurship is the result of a disciplined, systematic process of applying creativity and innovation to
needs and opportunities in the marketplace.
➢ Entrepreneurs are those who marry their creative ideas with the purposeful action and structure of a
business.
Researchers believe that entrepreneurs succeed by thinking and doing new things or old things in new ways.
RISKS INVOLVED WITH ENTREPRENEURSHIP:

Entrepreneurship involves the following types of risks.
1) FINANCIAL RISK: The entrepreneurship has to invest money in the enterprise on the expectation of getting
in return sufficient profits along with the investment. He may get attractive income or he may get only limited
income. Sometimes he may incur losses.
2) PERSONAL RISK: Starting a new venture uses much of the entrepreneur‘s energy and time. He or she has
to sacrifice the pleasures attached to family and social life.
3) CARRIER RISK: This risk may be caused by a number of reasons such as leaving a successful career to start
a new business or the potential of failure causing damage to professional reputation.
4) PSYCHOLOGICAL RISK: Psychological risk is the mental agonies an entrepreneur bears while organizing
and running a business venturesome entrepreneurs who have suffered financial catastrophes have been unable
to bounce back.
BARRIERS TO ENTREPRENEURSHIP:
A: ENVIRONMENTAL BARRIERS:
Following are the important environmental barriers to entrepreneurship:
a) Non-Availability of Raw Material: - Non-availability of raw materials especially during peak season is one
of the obstacles inhibiting entrepreneurship. This leads to competition for raw material.
b) Lack of Skilled Labour: - This is the most important resource in any organization. Unfortunately, desired
manpower may not be available in an organization. This is either due to the lack of skilled labour or due to
lack of committed or loyal employees in the organization.
c) Lack of Good Machinery: - Good machines are required for the production of goods, because of rapid
technological developments, machines become obsolete very soon. Small entrepreneurs find it difficult to get
large amount of cash for installing modern machinery.
d) Lack of Infrastructure: - Lack of infrastructure facilities is a major barrier to the growth of entrepreneurship
particularly in under developed and developing economies. The infrastructural facilities include land and
building, adequate and cheap power, proper transportation, water and drainage facilities etc.
e) Lack of Fund: - There are various methods by which an entrepreneur arranges for funds, e.g., own savings,
borrowings from friends and relatives, banks and other financial institutions. Many peopledo not enter into
entrepreneurial activities because of lack of funds.
B: PERSONAL BARRIERS:
Personal barrier are those barriers that are caused by emotional blocks of an individual. Some of the
personal barriers may be outlined as below:
a) Unwillingness to Invest Money: - Even though people have money, still they do not come in
entrepreneurship. They are not willing to take the risk of investing money in business.
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b) Lack of Confidence: - Many people thing that they lack what it takes to become an entrepreneur. They feel
that they could not master all the skills. Thus most people are reluctant to become entrepreneurs.
c) Lack of Motivation: - When an individual starts a new venture, he is filled with enthusiasm and drive to
achieve success. But when he faces the challenges of real business or bears loss, or his ideas don‘t work, he
loses interest or motivation.
d) Lack of Patience: - The desire to achieve success in the first attempt or to become rich very soon is the prime
motivating factor of modern youth. When such dreams do not come true , they lose interest. This gradually
drives to fail in business.
e) Inability to Dream: - Entrepreneurs, who are short on vision or become satisfied with what they achieve,
sometimes lose interest in further expansion/growth of business.
C: SOCIAL BARRIERS:
The social attitude inhibits many people even from thinking of starting a business. The important social
barriers are as follows.
a) Low Status: - The society things that entrepreneurs are the people who exploit the society. Thus the attitude
of the society towards entrepreneurs is not positive.
b) Custom and Tradition of People: - Most people want a real job. Even parents who are entrepreneurs
wouldn‘t like their children to be entrepreneurs. Thus lack of support from society and family hinder the
growth of entrepreneurs.
FACTORS AFFECTING ENTREPRENEURIAL GROWTH:
PSYCHOLOGICAL FACTORS:
A. Need for Achievement: - Need for achievement means the drive to achieve a goal. People having need for
achievement will be so much self – confident that they do not believe in mere luck. If an individual has need
for achievement, he will become a successful entrepreneur.
B. Personal Motives: - These have been found to be one of the crucial factors responsible for entrepreneurship
amongst individuals. Bill Gates dreamt that one day he would become the richest person. His dream became a
reality later.
C. Recognition: - Many people become successful entrepreneurs just for getting recognition from others.
D. Need of Authority: - Need of authority‘ will inspire men to work. When they become entrepreneurs, they can
exercise authority over managers, employees etc.
CULTURAL FACTORS:
A. Culture: - Culture is closely related with accepted values and human behaviour. For e.g. some societies have
customs of polygamy and some have not.
B. Religious Belief: - According to Max Weber, entrepreneurism is a function of religious belief and the impact
of religion shapes the entrepreneurial culture. He emphasized that the entrepreneurial energies are exogenous
supplied by means of religious belief.
C. Minority Groups: - Hoselitz explained that the supply of entrepreneurship is governed by cultural factors,
and culturally minority groups are the spark plugs of entrepreneurial and economic development. Minority
groups like the Jews and Greeks in Medieval Europe, the Lebanese in West Africa, the Indians in East Africa
has important roles in promoting economic development.
D. Spirit of Capitalism: - It guides the entrepreneur to engage in activities that can bring more and more profits.
The profit motive character coupled with the attitude towards acquisition of money urges the individual to
start new venture.
SOCIAL FACTORS:
A. Legitimacy of Entrepreneurship: - System of norms and values within a socio – cultural setting is
responsible for the emergence of entrepreneurship. The degree of approval or disapproval granted to
entrepreneurial behaviour will influence its emergence and its characteristics if it does emerge.
B. Social Marginality: - Individuals or groups on the perimeter of a given social system or between two social
systems provide the personnel to assume the entrepreneurial roles. Social marginality is likely to promote
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entrepreneurship are largely determined by two factors, namely the legitimacy of entrepreneurship and social
mobility.
C. Family: - Role Models and Association with Similar Type of Individuals: - If an individual has a supportive
family, he or she is more likely to become an entrepreneur. Similarly, if an individual has role models who
have been successful in entrepreneurship, certainly, he may be motivated to start ventures. If a person is in
association with entrepreneurs, this may add to his or her desire of setting up a new venture. Reliance, Tata,
Birla etc. are the industries depend upon family based inheritance. Roberts (1991) has developed the idea of
the entrepreneurial heritage to describe the importance of the family background for the entrepreneur. This
heritage includes factors such as the father‘s occupation, the family work ethic and religion, family size and
the first born son, growing up experience and so on.
D. Caste System: - Certain religions and caste encourage the growth of entrepreneurial talent. Some religious
communities like the parsees, marwaris and sindhees seem to have an affinity for entrepreneurial activity. The
caste system in Hindu society has promoted to the growth of business and professional skills.
E. Occupation :- Those born in rich families with silver spoons in their mouth have not only an advantage of
having financial resources for carrying out business but also learn the business skill by continuous interaction
and contacts with parents, customers, employees and visitors in family shops, offices and homes.
F. Education and Technical Qualifications: - Education is the best means of developing man‘s resourcefulness
which encompasses different dimensions of entrepreneurship. It may be expected that the high level of
education may enable the entrepreneurs to exercise their entrepreneurial talent more efficiently and
effectively.
G. Social Status: - Every human being aspires for a high social status and once he achieves a reasonable level,
his aspirations and desires for its start getting multiplied. People work hard to maintain their status as it also
contributes to their entrepreneurial growth.
H. Social Responsibility: - It is the obligation to the society in which the business enterprise operates. An
entrepreneur generates employment for others besides helping himself.
ECONOMIC FACTORS:
A. Infrastructural Facilities: - Entrepreneurship development requires certain basic infrastructure like power,
transportation, communication, technical information etc. These provide external economies and improve the
efficiency of investments by entrepreneurs. These infrastructural facilities are scarce in less developed
countries. The entrepreneurs themselves have to procure these facilities at their own cost. They have to obtain
these facilities at higher costs. This will greatly discourage the entrepreneurship development. In advanced
countries, those who are desirous of starting an enterprise will find no difficulty in procuring the
infrastructural facilities at reasonable costs.
B. Financial Resources: - Finance is the life blood of business activity. Capital is required to obtain materials,
machinery, equipment, etc. and to undertake innovation. Capital is regarded as lubricant to the process of
production. The lack of financial resources discourages the youth and potential entrepreneurs to start new
ventures. Hence, the need for fixed and working capital should be adequately met if new entrepreneurs are to
come forward and grow.
C. Availability of Material and Know – How: - Entrepreneurship is encouraged only if there is an adequate
supply of materials and know-how. Easy availability of materials attracts more individuals towards
entrepreneurship. Technical know-how is essential for innovation. With technical knowledge, men discover
more and sophisticated techniques of production.
D. Labour Conditions: - The quality rather than quantity of labour is another factor which influences the
emergence and growth of entrepreneurship. The availability of cheep labour positively affects
entrepreneurship.
E. Market: - The size and composition of market influence entrepreneurship in their own ways. Practically,
monopoly in a particular product in a market becomes more influential for entrepreneurship than a
competitive market.
F. Support System: - Ability, initiative and support systems include financial and commercial institutions,
research, training, consultancy services, ancillary industry etc.
PERSONALITY FACTORS:
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A. Personality: - The entrepreneurial personality comprises of the person, his skills, styles and motives.
Impressive personality and individual skill help to develop entrepreneurship. These qualities are required for
entrepreneurs because they have to work with officers, managers, engineers, labourers, customers, investors,
govt. officers, ministers etc.
B. Independence:- Another personality factors which influences entrepreneurship is independence. An
entrepreneur works out plans on his own, searches and explores resources and experiences and uses inner urge
to make the enterprise a success instead of waiting for suggestions or directions from others.
C. Compulsion: - Certain compelling reasons also force the people to become entrepreneurs. These include:
a) Unemployment or dissatisfaction with existing job or occupation,
b) To use technical or professional knowledge and skills,
c) To put the idle funds to use. A large number of technically qualified people after gaining initial
experience and confidence and not being satisfied by their growth in the profession have a compulsive
reason to try entrepreneurship.
QUALITIES OF A SUCCESSFUL ENTREPRENEUR:

In order to organize and run it successfully, the entrepreneur must possess some qualities and traits. They
are as following:
1) Willingness to Make Sacrifices and Assume Risks: - A new venture is full of difficulties and unanticipated
problems. In such an inhospitable environment entrepreneur has to be prepared to sacrifice his time, energy
and resources in order to carry out the venture and make it success.
2) Hard Work: - Willingness to work hard distinguishes a successful entrepreneur from an unsuccessful one.
For example, Assim Premji (chairman of Wipro) works in his office fourteen hours every day. He is a
successful entrepreneur. He is one of the richest persons in India.
3) Optimism: - Successful entrepreneurs are not worried by the present problems that they face. They are
optimistic about the future. This enhances their confidence and drives them towards success. Some of the
world‘s greatest entrepreneurs failed before they finally succeeded
4) Self Confidence: - This is the greatest asset of a successful entrepreneur. He must have the confidence to
make choices alone and bounce back when he fails.
5) Leadership: - Successful entrepreneur generally has strong leadership qualities. He should be a good judge of
human nature and a good leader. He must be able to select, train and develop persons who can properly
manage and control the labour force. McClelland identified two main characteristics in an entrepreneur-
i. Doing things in a new and better manner.
ii. Decision making under uncertainty. A successful entrepreneur must be capable and well-informed, a
successful leader of men, a keen judge of things, courageous and prudent. Above all he must be gifted
with a large measure of practical common sense. There are not many Fords, Tatas, Birlas, Thapars and
Ambanis in the world.
TYPES OF ENTREPRENEURS:
A. ON THE BASIS OF TYPE OF BUSINESS:

Entrepreneurs are classified into different types. They are
1) Business Entrepreneur: He is an individual who discovers an idea to start a business and then builds a
business to give birth to his idea.
2) Trading Entrepreneur: He is an entrepreneur who undertakes trading activity i.e; buying and selling
manufactured goods.
3) Industrial Entrepreneur: He is an entrepreneur who undertakes manufacturing activities.
4) Corporate Entrepreneur: He is a person who demonstrates his innovative skill in organizing and managing
a corporate undertaking.
5) Agricultural Entrepreneur: They are entrepreneurs who undertake agricultural activities such as raising and
marketing of crops, fertilizers and other inputs of agriculture. They are called agripreneurs.
B. ON THE BASIS OF USE OF TECHNOLOGY:

Entrepreneurs are of the following types.
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1) Technical Entrepreneur: They are extremely task oriented. They are of craftsman type. They develop new
and improved quality goods because of their craftmanship. They concentrate more on production than on
marketing
2) Non-Technical Entrepreneur: These entrepreneurs are not concerned with the technical aspects of the
product. They develop marketing techniques and distribution strategies to promote their business. Thus they
concentrate more on marketing aspects.
3) Professional Entrepreneur: He is an entrepreneur who starts a business unit but does not carry on the
business for long period. He sells out the running business and starts another venture.
C. ON THE BASIS OF MOTIVATION:

Entrepreneurs are of the following types:
1) Pure Entrepreneur: They believe in their own performance while undertaking business activities. They
undertake business ventures for their personal satisfaction, status and ego. They are guided by the motive of
profit. For example, Dhirubhai Ambani of Reliance Group.
2) Induced Entrepreneur: He is induced to take up an entrepreneurial activity with a view to avail some
benefits from the government. These benefits are in the form of assistance, incentives, subsidies, concessions
and infrastructures.
3) Motivated Entrepreneur: These entrepreneurs are motivated by the desire to make use of their technical and
professional expertise and skills. They are motivated by the desire for self-fulfillment.
4) Spontaneous Entrepreneur: They are motivated by their desire for self-employment and to achieve or prove
their excellence in job performance. They are natural entrepreneurs.
D. ON THE BASIS OF STAGES OF DEVELOPMENT:

They may be classified into;
1) First Generation Entrepreneur: He is one who starts an industrial unit by means of his own innovative ideas
and skills. He is essentially an innovator. He is also called new entrepreneur.
2) Modern Entrepreneur: He is an entrepreneur who undertakes those ventures which suit the modern
marketing needs.
3) Classical Entrepreneur: He is one who develops a self supporting venture for the satisfaction of customers‘
needs. He is a stereo type or traditional entrepreneur.
E. CLASSIFICATION ON THE BASIS OF ENTREPRENEURIAL ACTIVITY:

They are classified as follows:
1) Novice: A novice is someone who has started his/her first entrepreneurial venture.
2) Serial Entrepreneur: A serial entrepreneur is someone who is devoted to one venture at a time but ultimately
starts many. He repeatedly starts businesses and grows them to a sustainable size and then sells them off.
3) Portfolio Entrepreneurs: A portfolio entrepreneur starts and runs a number of businesses at the same time. It
may be a strategy of spreading risk or it may be that the entrepreneur is simultaneously excited by a variety of
opportunities.
F. CLASSIFICATION BY CLARENCE DANHOF:

Clarence Danhof, On the basis of American agriculture, classified entrepreneurs in the following
categories:
1) Innovative Entrepreneurs: They are generally aggressive on experimentation and cleverly put attractive
possibilities into practice. An innovative entrepreneur, introduces new goods, inaugurates new methods of
production, discovers new markets and reorganizes the enterprise. Innovative entrepreneurs bring about a
transformation in lifestyle and are always interested in introducing innovations.
2) Adoptive Or Imitative Entrepreneurs: Imitative entrepreneurs do not innovate the changes themselves, they
only imitate techniques and technology innovated by others. They copy and learn from the innovating
entrepreneurs. While innovating entrepreneurs are creative, imitative entrepreneurs are adoptive.
3) Fabian Entrepreneurs: These entrepreneurs are traditionally bounded. They would be cautious. They neither
introduce new changes nor adopt new methods innovated by others entrepreneurs. They are shy and lazy.
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They try to follow the footsteps of their predecessors. They follow old customs, traditions, sentiments etc.
They take up new projects only when it is necessary to do so.
i. Drone Entrepreneurs: Drone entrepreneurs are those who refuse to adopt and use opportunities to
make changes in production. They would not change the method of production already introduced. They
follow the traditional method of production. They may even suffer losses but they are not ready to make
changes in their existing production methods. There is another classification of entrepreneurs. According
to this, entrepreneurs may be broadly classified into commercial entrepreneurs and social entrepreneurs.
ii. Commercial Entrepreneurs: They are those entrepreneurs who start business enterprises for their
personal gain. They undertake business ventures for the purpose of generating sales and profits. Most of
the entrepreneurs belong to this category.
iii. Social Entrepreneurs: They are those who identify, evaluate and exploit opportunities that create social
values and not personal wealth. Social values refer to the basic long standing needs of society. They
focus on the disadvantaged sections of the society. They play the role of change agents in the society. In
short, social entrepreneurs are those who start ventures not for making profits but for providing social
welfare.
COPRENEURS:
Copreneurs are entrepreneurial couples who work together as co-owners of their business. They are
creating a division of labour that is based on expertise as opposed to gender studies show that companies
co-owned by spouses represent one of the fastest growing business sectors.
INTRAPRENEURS:
These entrepreneurs become successful in their own ventures. Some of them caused a threat to the corporations they
left. This type if
entrepreneurs have come to be called Intrapreneurs. They believe strongly in their own talents. They have
desire to create something of their own. They want responsibility and have a strong drive for individual
expression and more freedom in their present.
ULTRAPRENEURS:
Now-a-days, new products and services are conceived, create, tested, produced and marketed very
quickly and with great speed. Therefore, today‘s entrepreneur needs to have a different mindset about
establishing and operating a business. This mind set is called ULTRAPRENEURING. An entrepreneur
with this mind set is known as Ultrapreneur.
FUNCTIONS OF AN ENTREPRENEUR:
1) Determining the objectives of the enterprise and revising the objectives in the light of changed circumstances.
2) Developing an organization including efficient relations with subordinates and all employees.
3) Securing adequate finance.
4) The requisition of efficient technological equipment.
5) Developing a market for the products and devising new products to meet customers demand.
6) Maintaining good relations with public authorities and with society.
ENTREPRENEURSHIP AND MICRO, SMALL AND MEDIUM ENTERPRISES:

Micro, Small and Medium Enterprises (MSMEs) are widely called the back-bone of the Indian economy. According
to the online official portal of MSME, this sector is the largest employment providing sector in India with
employing more than 600 lakhs persons in India‖. In recent years, it has emerged as the most dynamic sector
displaying phenomenal growth by contributing 10% of share in GDP of India, contributing 40% to total economy
exports, producing about 7500 items and involving in Technology Upgradation and implementation (55% of
MSMEs involved) in particular. This sector comprises of business units with varying sizes that range from tiny to
medium based on level of investment. Most of these also act as ancillary units for large scale industry.
Classification of Units on the Basis of Number of Employees
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Number of Employees Type of Unit
0 Self Employed
2 to 9 Micro Business
10 to 49 Small Business
50 to 249 Medium Sized Business
Definition of Micro, Small and Medium Enterprises

Investment in Plant and Investment in Type of unit
Machinery (Manufacturing) Equipment
(Service)
Does not exceed Rs. 25 lacs Does not exceed Rs. 10 lacs Micro business
Between Rs, 25 lacs and 5 crores Between Rs. 10 lacs and Small business
Rs. 2 crores
Between Rs 5 crores and 10 Between Rs 2 crore and Medium sized business
crores Rs. 5 crores
ANCILLARY UNITS:
These units provide inputs to other industries. These are engaged in the manufacture of parts,
components, light engineering products like cycles, sewing machines diesels engines, machine tools,
electrical application. The investment in plant and machinery should not exceed Rs. 5 crores.
EXPORT ORIENTED UNIT:

Export oriented units are those SSI units which export at least 30% of its annual production by the end of
the 3rd year of commencement of production.
CHARACTERISTICS OF MSMEs:
The important characteristics of MSMEs are summarized as follows:
a) They are generally organized and run by individual entrepreneurs.
b) They require less capital.
c) They are fundamentally labour-intensive units facilitating greater utilization of man power.
d) They involve the use of simple technology, intensive utilization of individual skill.
e) They cater the individual tastes and fashions and render personalized service to leading to professional
specialization consumers.
f) They are highly localized industries.
g) Using local resources MSMEs are decentralized and dispersed to rural areas.
OBJECTIVES OF MSMEs:
Following are the objectives of MSMEs:-
1. To provide increased employment opportunities.
2. To provide production of large variety of goods especially consumer goods through labour intensive methods.
3. To bring backward areas too in the mainstream of national development.
4. To improve the level of living of people in the country.
5. To create a climate for the development of self-employed experts, professionals and small entrepreneurs.
6. To ensure more equitable distribution of national income.
7. To ensure balanced regional development as regards industries.
8. To encourage the adoption of modern techniques in the unorganised traditional sector or the industry
ADVANTAGES OF MSMEs:
Following are the advantages of MSMEs:-
1. They are relatively more environmental friendly.
2. They are generally based on local resources.
3. They provide ample opportunities for creativity and experimentation.
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4. They facilitate equitable distribution of income and wealth.
5. MSME enjoys the government support and patronage.
6. These helps in the balanced regional development.
7. It is possible to make necessary changes as and when required.
8. These help in reducing prices.
9. There is a close and direct personal contact with the customer and employees.
10. They create more employment opportunities. They are labour intensive. They offer ample scope for self
employment.
DISADVANTAGES OF MSMEs:
The disadvantages of MSMEs are as follows:-
a. MSMEs suffer from lack of funds.
b. They are financially weak.
c. They suffer from lack of managerial and other skills.
d. They cannot employ highly paid officials.
e. MSMEs always face tough competition from large businesses.
f. They are not well equipped to make advantage of the latest technology and modern methods.
g. MSMEs cannot afford to spend large sums of money on research and experiments.
ROLE/IMPORTANCE OF MSMEs IN DEVELOPING COUNTRIES:

1) Large Employment Opportunities: MSMEs are generally labour-intensive. For every Rs. 1 lakh of fixed
investment, MSME sector provides employment for 26 persons as against 4 persons in the large scale sector.
Thus in a country like India where capital is scarce and labour is abundant, MSMEs are especially important
2) Economical Use of Capital: MSMEs need relatively small amount of capital. Hence it is suitable to a country
like India where capital is deficient.
3) Balanced Regional Development: Generally small enterprises are located in village and small towns.
Therefore it is possible to have a balanced regional growth of industries. India is a land of villages.
4) Equitable Distribution of Income and Wealth: It removes the drawbacks of capitalism, abnormal
profiteering, concentration of wealth and economic power in the hands of few etc.
5) Higher Standard of Living: MSMEs bring higher national income, higher purchasing power of people in
rural and semi-urban areas.
6) Mobilization of Locals Resources: The spreading of industries even in small towns and villages would
encourage the habit of thrift and investment among the people of rural areas.
7) Simple Technology: New but simple techniques of production can be adopted more easily by MSMEs
without much investment.
PROBLEMS OF MSMEs:
1) LACK OF MANAGERING EXPERIENCE: They may not be having specialised knowledge in the
different fields of management. At the time of initiating the project, they are not in a position to anticipate
correctly their financial requirements and the size of market for their products.
2) INADEQUATE FINANCE: Generally MSMEs are not in a position to arrange full finance from their own
sources. They obtain finance from unorganized finance sector at higher rate of interest.
3) LACK OF PROPER MACHINARY AND EQUIPMENT: Many MSMEs use inefficient and outdated
machinery and equipment. This affects the quality of production.
4) LACK OF TECHNICAL KNOW-HOW: Do not have the knowledge about different alternative
technologies and processes available for manufacturing their products to improve the quality of products and
reduce costs.
5) RUN ON TRADITIONAL LINES: They have not yet adopted modern methods and techniques of
production. They have not taken adequate interest in research and development efforts. Hence they cannot be
run efficiently.
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6) IRREGULAR SUPPLY OF RAW MATERIALS: The majority of MSMEs depends on local sources for
their raw material requirements. Small entrepreneurs are forced to pay high prices for materials because they
purchase materials in small quantity.
ROLE OF FAMILY BUSINESS IN INDIA:

How large is the family business sector in India?
In India the majority of businesses are in the dominant control of the families. It is estimated that 90% of the business
in India is controlled by families. From 'Mom and Pop' Kirana stores to large conglomerates and SME's one finds
family run businesses. Most of the big corporate business houses like Tatas, Ambanis, Birlas, Godrej, Wadias,
Munjals, Mahindra, Thapars, Mittals, Shaparji Paollonji, Jindals, Adanis, Anil Aggarwal – Vedanta, Bajaj, Ruias,
Ranbaxy, Times of India and many more are all controlled by families. The role of family and the family patriarch is
quite important in India.
What helps family firms in India survive for generations?

Most of the family businesses are still not very old businesses. A number of business activities led by families started
post-independence and gained momentum thereafter. Since families are concerned about their personal wealth
creation and preservation, the brand of their family names, family reputation and goodwill, the elements of self-
discipline and self-governance are high.
Are family businesses becoming the norm and more accepted as a successful business model?
In India traditionally the family business is the norm. The trend continues. However, there are certain business houses
where the professional teams are taking over to run the empires. These cases are also multiplying as the wealth is
growing at different levels. The recent cases are of Tata Group where a serious head hunting programme was done to
find a successor to Mr. Ratan Tata. Mr. Mistry was appointed to head the Tata Group. The famous IT company
Infosys has seen the change at the top level when Mr. Narayan Murthy has been successful in appointing the
well-known professional personality Mr. Vishal Sikka to head the business founded by him.
What are the key challenges facing family firms in India?

Inter family disputes, the patriarch acting as a control freak, lack of professional management and professional
participation, absence of family constitution on running of business and handling family wealth, lack of written
understanding to address any conflict, lack of communication amongst the family members, unsound and unfair
policies for the employees, lack of quality controls and to keep pace with the modern techniques and advancements
are the key challenges to any family firms in India.
Are family firms changing the way they are managed/governed?

The family firms are certainly changing the way they are managed and governed. The decision making ability in a
family run business is high, however, to manage the business professionally and to get the right talent to run the
business is always a challenge in even large business and corporate houses.
CONFLICT IN FAMILY BUSINESS AND IT’S RESOLUTION:
When two or more individuals must act upon or implement their needs, values, or interests, and they perceive others
are blocking or opposing them, conflict arises. In life, and especially in families and businesses where values and
interests are deeply held and tied to future happiness, conflict is inevitable and sometimes can even be positive.Rather
than mask or deny inevitable conflict, conflict resolution brings differences to the surface and creates a comfortable,
safe space and set of skills to successfully move forward while enhancing the relationships involved.
FAMILY CONFLICT RESOLUTION:

Husband/Wife, Parent/Child, Brother/Sister, etc. Family is all about togetherness, but togetherness is impossible
without differences… thus family conflict. Conflict resolution techniques use the positive emotional bonds of the
family to facilitate decisions and actions in the face of conflict that has persisted and poisoned the family and the
family business.
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CONFLICT RESOLUTION TRAINING:
Conflict resolution is a skill that can be learned and developed for use in multiple settings with employees, vendors,
and customers. Training uses the specific, real life conflicts inhibiting success and offers improved communication
skills to break through barriers and to speed and deepen learning
FAMILY COUNCIL:
Family Councils provide families with a vehicle to entertain family projects and resolve issues. Some of these include
developing Entry Criteria for new family members to enter the family business, chronicling the family history, and
ensuring that family fairness is considered in family business or wealth management decisions.
FAMILY MEETINGS:
Formal, scheduled family meetings provide family members with information about the status of the family and the
family business. Family members can re-connect with one another, and family issues can be discussed constructively
rather than left to fester into larger issues
FAMILY RETREATS:
Family retreats are conducted over two to four days at off site locations. They provide a neutral venue to discuss
family and family business.
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Unit – II
Public & Private System [10 Marks]
STIMULATION:
An action or thing that causes someone or something to become more active or enthusiastic, or to develop or operate:
SUPPORT & SUSTAINABILITY OF ENTREPRENEURSHIP:
Sustainability is the process of maintaining change in a balanced environment, in which the exploitation of resources,
the direction of investments, the orientation of technological development and institutional change are all in harmony
and enhance both current and future potential to meet human needs and aspirations.
Sustainability entrepreneurship acts at the interface of politics, business and civil society to mobilise new resources
and aim at a structural change towards socially and environmentally sound economic activities. With its innovative
business models, they develop new markets, generate new sources of income – particularly for socially disadvantaged
population groups – and contribute to a sustainable approach to economy (Green Economy).
REQUIREMENTS OF ENTREPRENEURSHIP:
1. The ability to manage money: Very simply, if you can‘t manage money, you can‘t manage a business. Do you
know where your money goes each month? Do you live off less than you earn? If the answer to these
questions is no, you‘ll struggle to manage a business budget as well.
2. The ability to raise money: Once you can manage money, can you get more? In order to get investment, you
need to not only understand where to get money, but how to convincingly make a case that your business is a
good risk as well.
3. The ability to relieve stress: Stress is no laughing matter. If you allow yourself to get frustrated and upset by
setbacks, you‘ll struggle as an entrepreneur. Learning how to use stress to your benefits essential.
4. The ability to be productive: This is a big topic, because there‘s no one right way to be productive that works
for everyone. Learn about your peak energy times, your routines, and the productivity tools that work for you
in order to create your own plan for success.
5. The ability to identify strengths and weaknesses: As a business owner, you don‘t need to be perfect at
everything. You do, however, have to understand where you‘re strong and where you‘re weak. Assessing this
will inform everything from the business decisions you make, to the partners you bring on, and to the
employees you hire.
6. The ability to hire effective people: Speaking of hiring, this is easily one of the most important skills any
entrepreneur could have. Having great people on your team will give you access to new strengths, while also
building a company culture that people want to be a part of. Hiring the right people is essential to get where
you want to go.
VARIOUS SOURCES OF FINANCE AVAILABLE TO AN ENTREPRENEUR:

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1) Personal investment:- When starting a business, your first investor should be yourself—either with your own
cash or with collateral on your assets. This proves to investors and bankers that you have a long-term
commitment to your project and that you are ready to take risks.
2. Love money:- This is money loaned by a spouse, parents, family or friends. Investors and bankers considers
this as "patient capital", which is money that will be repaid later as your business profits increase.
3. Venture capital:- The first thing to keep in mind is that venture capital is not necessarily for all
entrepreneurs. Right from the start, you should be aware that venture capitalists are looking for technology-
driven businesses and companies with high-growth potential in sectors such as information technology,
communications and biotechnology.Venture capitalists take an equity position in the company to help it carry
out a promising but higher risk project. This involves giving up some ownership or equity in your business to
an external party.
4. Angels:- Angels are generally wealthy individuals or retired company executives who invest directly in small
firms owned by others. They are often leaders in their own field who not only contribute their experience and
network of contacts but also their technical and/or management knowledge. Angels tend to finance the early
stages of the business with investments in the order of $25,000 to $100,000. Institutional venture capitalists
prefer larger investments, in the order of $1,000,000.
5. Business incubators:- Business incubators (or "accelerators") generally focus on the high-tech sector by
providing support for new businesses in various stages of development. However, there are also local
economic development incubators, which are focused on areas such as job creation, revitalization and hosting
and sharing services.
6. Government grants and subsidies:- Government agencies provide financing such as grants and subsidies
that may be available to your business.
7. Bank loans:- Bank loans are the most commonly used source of funding for small and medium-sized
businesses. Consider the fact that all banks offer different advantages, whether it's personalized service or
customized repayment. It's a good idea to shop around and find the bank that meets your specific needs.
ACCESS TO FINANCE:
Access to finance is the ability of individuals or enterprises to obtain financial services, including credit, deposit,
payment, insurance, and other risk management services. Those who involuntarily have no or only limited access to
financial services are referred to as the unbanked or under banked, respectively.
How does access to finance affect innovative entrepreneurship?
Access to finance is a key driver in the creation, survival and growth of innovative new ventures. Lack of finance
typically prevents new ventures from investing in innovative projects, improving their productivity, financing their
growth, covering working capital requirement and meeting market demand.
Research supports the relevance of access to finance as a key determinant of entrepreneurship and clearly identifies
a finance gap in many locations for new and small firms involved in the early stages of innovation, especially in the
market for high risk capital.
The importance of different types of finance varies across the stages of business development.
During the seed and start-up stages, technology-driven high-growth SMEs can obtain equity financing from
entrepreneurs or from family and friends. In earlier stages, self-financing is particularly important since innovative
entrepreneurs cannot overcome information asymmetry and therefore rarely find any lender or investors, even for
potentially profitable projects. Subsequently, financing may be supplemented by seed capital investment from
informal private investors (e.g. business angels) and, in a few cases, by seed financing funds and venture capitalists. In
the expansion stage, SMEs generally require increasing amounts of equity to maintain R&D and to expand marketing
and sales activities, amounts that are typically only available through other sources, such as initial public offerings on
stock exchange.
TECHNOLOGY FOR ENTREPRENEURS:
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A considerable number of new businesses and start-ups rely on the internet as either their entire marketplace – or a
significant part of their growth strategy. So, what happens if you know nothing about IT but have a world-class idea
that could underpin your life as an entrepreneur? The answer is; you need to get up to speed quickly.
Project management software:

So, you know the basics of IT including email, internet, creating documents, updating spreadsheets – but what about
using IT to make sure your projects and businesses are being managed appropriately. That is when pulling all of those
things together becomes difficult – you either keep a (very large!) project book on your desk, and reference all the
tools, documents and tasks that you are putting out to your team – or you get a project management tool.
Cloud collaboration platforms:

The cloud is not one place or one service. Instead, it is a way of describing how a service is delivered to your business.
Instead of installing an IT application into your office computers, your computers become something of a gateway to a
much larger computer system that‘s run by a service provider – some examples would be Microsoft and Google –
although the list includes many more well-known names. This means that you can effectively make anywhere your
office – from a coffee shop to a client site. What‘s more, it means that you do not have to send copies of files to
colleagues – instead, you can just share‘ a link to the location of the file – so, want someone to add to a spreadsheet?
Send them a link, and you can watch from the other side of the world (should you wish!) as they update it.
Networking infrastructure:
The world of networking is a complex one, and most entrepreneurs and startup businesses will turn to a managed
service provider to support them establishing and maintaining a network. With cloud services and mobile network
access becoming more required by businesses, you are likely to hear about hybrid networks‘ too – this is a type of
network that uses more than one connecting technology – for example, broadband and 4G internet access.
Bookkeeping/accounting software:
This is where IT can be a massive help. Bookkeeping systems and accountancy software like QuickBooks,
FreshBooks or Sage One can bring all your most frequently needed tasks into one application – meaning you and your
team can keep track of everything as it happens. Scan your receipts, categorise your bank account incomings and
outgoings, set up payroll – all done quickly and efficiently.
Outsourcing marketplaces:
Okay, so outsourcing isn’t IT tech as such. Instead, it is your gateway to IT skills that could take a lifetime to master
otherwise – and when you are starting out it is likely to be difficult, or perhaps even outright impossible to take on IT
professionals.
Marketing assistance required by entrepreneurs:

Without assistance, no business can survive. You require marketing to reach potential customers for the product and
services, and you need technology for both production and operational activities in the firm. And If you are associated
with micro, small and Medium scale businesses, then It becomes very crucial that you acquire the latest technology
and Have good marketing resources, But due to some financial constraints and resource limitation, small business find
it very hard to learn right technique and adequately market their products. To promote the Ease Of Doing Business
among the MSMEs units, The government of India has introduced Marketing Assistance And Technology
Upgradation Scheme In India.
Objectives of Marketing Assistant Scheme:

Following are some of the broad goals of this scheme.
➢ To increase the marketing and competitiveness of micro, small and medium industries. Demonstrate weakness
and strength by displaying their skills so that any industry can know their weaknesses and overcome them.
➢ How will the small-scale sectors affect their business due to the current market scenario, their activity, and
change? To make this situation known from time to time.
➢ Providing facilities for marketing of products and services produced by MSME.
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➢ Providing the platform to small industries for interaction with large institutional buyers.
➢ To enrich marketing skills in micro, small and medium enterprises.
➢ To disseminate the promotion of MSME and its products through various government programs.
Industrial accommodation required by entrepreneurs:
An industrial estate is a place where the required facilities and factory accommodation are provided by the
government to the entrepreneurs to establish their industries there.
TYPES OF INDUSTRIAL ESTATES:

Industrial Estates are classified on various bases:
I. On The Basis of Functions: On the basis of functions, industrial estates are broadly classified into two types:
a. General type industrial estates, and
b. Special type industrial estates.
II. On the basis of Organizational set-up: On this basis, industrial estates are classified into following four
types:
a. Government Industrial Estates,
b. Private Industrial Estates,
c. Co-operative Industrial Estates.
d. Municipal Industrial Estates
III. On the Basis of the Other Variants: On the basis of other variants, industrial estates are classified into
following three types:
a. Ancillary Industrial Estates: In such industrial estates, only those small- scale units are housed
which are ancillary to a particular large industry. Examples of such units are like one attached to the
HMT, Bangalore.
b. Functional Industrial Estates: Industrial units manufacturing the same product are usually housed in
these industrial estates. These Industrial estates also serve as a base for expansion of small units into
large units.
c. The Workshop -bay: Such types of industrial estates are constructed mainly for very small firms
engaged in repair work.
OBJECTIVES OF INDUSTRIAL ESTATES:

The main objectives of the establishment of industrial estates are to:
(a) Provide infrastructure and accommodation facilities to the entrepreneurs;
(b) Encourage the development of small-scale industries in the country;
(c) Decentralise industries to the rural and backward areas;
(d) Encourage ancillarisation in surroundings of major industrial units; and
(e) Develop entrepreneurship by creating a congenial climate to run the industries in these estates/area
/township, etc.
FEATURES OF INDUSTRIAL ESTATE:

Following are the important features of industrial estates:
a) It is a tract of land subdivided and developed into factory plots or sheds.
b) It is a planned clustering of industrial units.
c) It may be developed in urban, semi-urban or rural areas.
d) It may be large, medium or small.
e) It may be set up by the Government, or by co-operatives or even by private agencies.
f) It provides several common infrastructural facilities such as water, power, roads, training, banks, repairs and
maintenance etc.
ADVANTAGES OF INDUSTRIAL ESTATE:
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1) Economies of Scale: It arises because all the industrial units enjoy common infrastructural facilities like
water, roads, etc. As the size of the industrial units increases, the costs of estate development and
administration per unit of each facility decrease.
2) External Economies: Several industrial units are clustered together in an industrial estate. This enable them
to enjoy the benefits of agglomeration and external economies like improved transport facilities, availability
of trained labour, repair facilities, power and water etc.
3) Low Investment: Even a small entrepreneur can acquire an industrial plot or shed on rent or hire purchase
basis.
4) Less Risks: Since all units enjoy common facilities and low capital investment, risks are relatively low.
5) Mutual Co-Operation: All industrial units located in an industrial estate face common problems and seek to
achieve common objectives.
6) Balanced Regional Development: It is possible to secure a balanced regional development by developing
industrial estates in industrially backward areas.
7) Saving of Time and Effort: An individual entrepreneur is relieved of trouble of searching for suitable space.
BUSINESS INCUBATOR:
A business incubator is a company that helps new and startup companies to develop by providing services such as
management training or office space.
Most common incubator services are:
1. Help with business basics
2. Networking activities
3. Marketing assistance
4. Market Research
5. High-speed Internet access
6. Help with accounting/financial management
7. Access to bank loans, loan funds and guarantee programs
8. Help with presentation skills
9. Links to higher education resources
10. Links to strategic partners
11. Access to angel investors or venture capital
12. Comprehensive business training programs
13. Advisory boards and mentors
14. Management team identification
15. Help with business etiquette
16. Technology commercialization assistance
17. Help with regulatory compliance
18. Intellectual property management
TYPES OF BUSINESS INCUBATOR:

There are a number of business incubators that have focused on particular industries or on a particular business model,
earning them their own name.
Virtual business incubator - online business incubator
Kitchen incubator - a business incubator focused on the food industry
Public incubator - a business incubator focused on the public good
Seed accelerator - a business incubator focused on early startups
Corporate accelerator - a program of a larger company that acts akin to a seed accelerator
Startup studio - a business incubator with interacting portfolio companies
Hybrid Incubator - A business incubator that combines virtual incubator with on premise activities.
ANGEL INVESTORS:
An angel investor (also known as a business angel, informal investor, angel funder, private investor, or seed investor)
is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or
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ownership equity. A small but increasing number of angel investors invest online through equity crowd funding or
organize themselves into angel groups or angel networks to share investment capital, as well as to provide advice to
their portfolio companies.
VENTURE CAPITAL:
It is a private or institutional investment made into early-stage / start-up companies (new ventures). As defined,
ventures involve risk (having uncertain outcome) in the expectation of a sizeable gain. Venture Capital is money
invested in businesses that are small; or exist only as an initiative, but have huge potential to grow. The people who
invest this money are called venture capitalists (VCs). The venture capital investment is made when a venture
capitalist buys shares of such a company and becomes a financial partner in the business.
FEATURES OF VENTURE CAPITAL INVESTMENTS:

i. High Risk
ii. Lack of Liquidity
iii. Long term horizon
iv. Equity participation and capital gains
v. Venture capital investments are made in innovative projects
vi. Suppliers of venture capital participate in the management of the company
METHODS OF VENTURE CAPITAL FINANCING:

a) Equity
b) Participating debentures
c) conditional loan
The Venture Capital Funding Process Typically Involves Four Phases In The Company’s
Development:
i. Idea generation
ii. Start-up
iii. Ramp up
iv. Exit
PRIVATE EQUITY:
Private equity is a finance which is provided for medium to long term period to companies who have high growth
potential. These companies are those companies which are not listed companies on any exchange. This investment is
done in exchange of a certain percentage of equity of the investee. Sometimes this type of investment is done to gain
major or complete control of the company in anticipation of higher returns. Apart from making investments in private
companies at times PE investors buy out public companies resulting in their delisting.
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Unit – III
Sources of Business Ideas [10 Marks]
BUSINESS IDEAS:
A business idea is mostly an impulsive thought, which strikes and then never fades away. There are plenty of ideas
that people come up with before the one which gave them their ‘EUREKA!‘ moment. At the end of the day, it‘s not
just the idea or its uniqueness that attracts funding but the overall execution and feasibility instead. Thus, a business
idea undergoes considerable testing before finally being rolled out in the market as a full-fledged business.
Some methods and factors which can be kept in mind to test an idea:
Market research
Before investing in any business idea, it is vital to conduct a market research and survey. The analysis of the same will
reveal important information about consumer behavior and preferences. In the case of a survey, the questions
shouldn‘t be rigid or close ended as they fail to elicit all the facts. Multiple choices and open-ended questions help
dive deep into the customer‘s expectations from the business concept.
Industrial analysis
There might be many firms which do not directly operating on a business idea similar to yours but still end up
engaging your potential customer base. To understand the feasibility of your idea, it is important to identify such
competitors as well as those which compete directly with you.
Trend analysis
Trend analysis is another statistical tool which helps procure information about the changing customer preferences
using historical data. If the results are not convincing enough, retrospection of the business idea becomes important.
Financial goal clarity
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An idea needs to be unique to attract investors but it isn‘t sufficient enough to convince them to invest in it. If you
don‘t have the financial clarity on each stage of execution and the amount required to acquire a customer, it is a loud
and clear sign that you need to reconsider your business idea.
Sustainability
Business is never operated with a short term objective; several strategies are considered to make it profitable in long
run. Therefore, the feasibility of a business idea also depends on the long term sustainability of the business.
Profitable stakeholders
The ultimate aim of everyone associated with a business is to become profitable. Therefore, if the business affects any
of the stakeholders (shareholders, employees, creditors, government, suppliers, community) negatively, then it is a
clear indication that the business idea needs reconsideration.
SOURCES OF BUSINESS IDEAS:

➢ Interests and hobbies.
➢ Customer surveys.
➢ Brainstorming and dreams.
➢ Franchises.
➢ Mass media.
➢ Personal experience and talents.
➢ Trade fairs and exhibitions.
TESTS OF FEASIBILITY:
A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or
proposed venture, opportunities and threats present in the natural environment, the resources required to carry through,
and ultimately the prospects for success.
Operational feasibility – a measure of how well a solution meets the system requirements.
Cultural (or political) feasibility - a measure of how well a solution will be accepted in an organizational climate.
Technical feasibility – a measure of the practicality of a technical solution and the availability of technical resources
and expertise.
Schedule feasibility – a measure of how reasonable the project timetable is.
Economic feasibility - a measure of the cost-effectiveness of a project or solution.
Legal feasibility - a measure of how well a solution can be implemented within existing legal/contractual obligations.
BUSINESS PLAN:
In simple words, business plan is a written statement of what an entrepreneur proposes to take up. It is a kind of guide
frost or course of action what the entrepreneur hopes to achieve in his business and how is he going to achieve it.
Importance and Purpose of Business Plan and Project Report –
➢ It clarifies and shows direction to move forward; and allows you to understand what needs to be done for
future success.
➢ It can be used as a tool to attract investors, reliable vendors, and executive level employees into the new
Business.
➢ A project report shows the feasibility of the proposed project and the probability of achieving profit. Whether
a project is feasible in different business aspects like financial, economic, commercial, social, etc. can be
ascertained while preparing the report.
➢ It enables an entrepreneur to foresee his requirements in advance and helps him to take suitable decisions
accordingly.
➢ It will give clear view to business expenditures and manage budget with full visibility.
➢ What would be initial cost to get start?
➢ Determines target market & ways to reach.
➢ Gives you deep and clear market insights.
What I will get from this report?
❖ It will give you in depth information about particular business idea.
❖ It will give you knowledge on technical, commercial aspects of selected business.
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❖ It will give you information required budget, daily expenses and profitability.
❖ It will provide you market related information.
❖ It will give you all the information which is necessary to start-up.
CONTENTS OF BUSINESS PLAN/ PROJECT PROPOSAL:
A good project report or business plan should contain the following contents:
1) General Information: Information on product profile and product details.
2) Promoter: His/her name, educational qualification, work experience, project related experience.
3) Location: Exact location of the project, lease or freehold, locational advantages.
4) Land and Building: Land area, construction area, type of construction, cost of construction, detailed plan and
estimate along with plant layout.
5) Plant and Machinery: Details of machinery required, capacity, suppliers, cost, various alternatives available,
cost of miscellaneous assets.
6) Production Process: Description of production process, process chart, technical knowhow, technology
alternatives available, production programme.
7) Utilities: Water, power, steam, compressed air requirements, cost estimates, sources of utilities.
8) Transport and Communication: Mode, possibility of getting, costs.
9) Raw Material: List of raw material required by quality and quantity, sources of procurement, cost of raw
material, tie-up arrangements, if any, for procurement of raw material, alternative raw material, if any.
CHARACTERISTICS OF A PROJECT:
• It has a life cycle reflected by growth, maturity and decay
• It has a definite beginning and an end
• It is subjected to a lot of change.
• It has a fixed set of objectives.
• Every project has risk and uncertainty associated with it.
• It is concerned with production of goods and services.
• The objective of a project is to earn profit.
• A project involves investment of money and money‘s worth.
• A project is undertaken to achieve a purpose.
PROJECT LIFE CYCLE:

Project life cycle consists of the following three stages:
1) Pre-Investment Phase: It is concerned with formulation of objectives, demand forecasting, evaluation of
input characteristics, selection of strategy, projections of financial profile, cost benefit analysis and finally pre-
investment appraisal. Some expenditure has to be incurred in the form of conducting surveys, feasibility
studies etc.
2) Construction Phase: This stage consumes maximum expenditure. Construction phase consists of developing
the infrastructure for the project. The capital requirement includes cost on land, buildings, civil works,
machinery equipment, ancillaries etc.
3) Normalization Phase: The primary objective of this stage is to produce the goods and services for which the
project was established. The expenditure has to be incurred on raw materials, fuel, utilities, and administration
and operation maintenance, etc.
PHASES OF PROJECT MANAGEMENT:

It consists of the following stages:
1. Project Identification: It refers to identification of business/investment opportunities. It involves scanning of
the environment to find out investment opportunities.
2. Project Formulation: It is the translation of the idea into concrete project with scrutiny of its important
preliminary aspects.
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3. Project Appraisal: It involves searching, scrutiny, analysis and evaluation of market, technical, financial and
economic variables. It examines the viability of the project.
4. Project Selection: It is the process of choosing a project rationally in the light of objectives and inherent
constraints on the basis of appraisal.
5. Project Implementation: It is the stage of birth of an enterprise. At the end of this stage, the idea becomes a
reality.
6. Project Follow Up and Evaluation: It is the process of assessing the performance of the project after it
started functioning. Project evaluation simply means assessing the progress of the project.
OBJECTIVES OF PROJECT MANAGEMENT:

1) To achieve maximum productivity at minimum cost.
2) To maximize income and return.
3) To minimize risk and uncertainty.
4) To eliminate waste and improve efficiency.
5) To make the most efficient and effective use of resources- manpower, money, materials, technology etc.
ROLES AND RESPONSIBILITIES OF PROJECT MANAGER:

1) Managing personnel.
2) Satisfy government, customer, promoters and public.
3) Coordinating and integrating activities across multiple functional lines.
4) Defining and maintaining the integrity of the project.
5) Setting targets and development of systems and procedures for accomplishment of project objectives.
6) Developing project execution plan.
7) Coping with risk associated with project management.
8) Managing human interrelationships.
9) Maintaining the balance between technical and managerial project functions.
NEED OF PROJECT MANAGEMENT:

1) Complexity of Project: Project involve time, effort, money etc. If there is any fault in planning or
implementation of projects, the resources put in the projects would be a waste.
2) Achievement of Objectives: Unless projects are managed well, the objective for which the projects are
undertaken cannot be achieved.
3) Environmental Changes: A project should be well equipped to meet the environmental challenges. The
success of the project depends upon how the project is able to cope with the changing environment.
4) Competition: To face out the competition provision of a good or a service is not sufficient. It must provide a
package which meets an entire need rather than just part of that need.
5) Constraints: The constraints relate to time, materials, demand, labour etc. The success of a project depends
on how well it is possible to manage the so called constraints.
GENERATION OF PROJECT IDEAS:

It is the process of collection, compilation and analysis of economic data for the purpose of finding out possible
opportunities for investment and with the development of the characteristics of such opportunities.
Sources of Project Ideas:
(a) Our own needs
(b) Trade and professional journals.
(c) Project profiles.
(d) Trade fairs and exhibitions.
(e) Success stories of friends and relatives.
(f) Prospective consumers
(g) Research organisation.
(h) Utilisation of waste materials.
(i) Study of government policy.
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(j) Development of other nations.
(k) Items reserved for small scale units.
SCREENING OF PROJECT IDEAS:

The following factors need to be considered:
1) Cost of the Project: A study of the cost structure under material cost, labour cost, factory overheads etc., will
give a good idea regarding different types of costs.
2) Profitability: The project yielding higher return must be selected.
3) Marketing Facilities: Existing and potential demand in domestic and export market, nature of competitions,
sales and distribution system, consumption trends etc., should be assessed and evaluated before taking the
final decision.
4) Availability of Inputs: The resources and inputs required for the project must be reasonably assured. The
availability of skilled workers is to be ensured before launching an enterprise.
5) Consistency with Government Regulations and Priorities: The idea must suit the interest, personality and
resources of the entrepreneur. It should not be beyond his capacity.
TECHNICAL ANALYSIS:
Technical analysis of a project is essential to ensure that necessary physical facilities required for production will be
available and the best possible alternative is selected to procure them. The object of technical analysis is to assess the
technical soundness of the project. This is considered essential for the long term success of the project. Technical
analysis includes the study of the following:
1) MATERIAL INPUTS: It is essential to assess the availability of materials, inputs and utilities. Utilities
include power, water, steam, fuel, communication facilities, transport facilities etc.
2) MANUFACTURING PROCESS/TECHNOLOGY: Technologies simply refers to the tools, devices and
knowledge that help in the transformation of inputs into outputs. It is the application of knowledge,
encompassing the related concepts of science, innovation, invention and discovery. It is the application of
scientific knowledge to practical commercial purpose.
3) PLANT CAPACITY: It refers to the volume or number of units that can be manufactured during a given
period. Plant capacity is also called production capacity.
4) PLANT LOCATION: It refers to a fairly broad area where the enterprise is to be established like city,
industrial zone or coastal area. The success of a project depends on the location, to a certain extent.
5) SIZE OF THE PLANT: The efficiency and profitability of a project are very much influenced by its size.
Size of the plant depends on the manufacturing process, availability of raw materials, capital investment
needed and the size of the market.
6) PRODUCT MIX: Product mix or range is decided according to market requirement. It refers to the set of all
the products offered by a firm for sale.
7) FACTORY DESIGN: It refers to the plan for a particular type of building, arrangement of machinery and
equipment and provision of service facilities, lighting, heating etc. in the building. Factory design comprises
layout of building and layout of factory.
8) MACHINERIES AND EQUIPMENTS: The requirement of machinery and equipment is dependent on
production technology and plant capacity. It is also influenced by the type of project.
PROJECT APPRAISAL AND EVALUATION:

The project has to be appraised in relation to the feasibility of the technical, economic, financial, commercial,
managerial, social and other aspects of the project. It is defined as critical and careful second look at the project by a
person not associated with the project preparation. The objective of a project appraisal is to decide whether to accept
or reject an investment proposal.
ELEMENTS OF PROJECT APPRAISAL:

1) Technical Feasibility: - It includes detailed estimates of the goods and services needed for the project- land,
machineries and equipments, raw material, trained labour etc. Location of the project should be given special
attention in relevance to technical feasibility.
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2) Economic Viability: - It is a study on capital cost, working capital, operating cost and revenue, marketing,
profitability etc. It also includes an appraisal of anticipated demand and capacity utilization.
3) Commercial Viability: - The appraisal of commercial aspects of a project involves a study of the proposed
arrangements for the purchase of raw materials and sale of finished products etc.
4) Financial Feasibility: - It seeks to ascertain whether the project is financially viable regarding the cost of
project, cost of production and profitability, cash flow estimate and Performa balance sheet.
5) Managerial Competence: - Proper evaluation of managerial ability and talent is an essential part of appraisal
of a project. While evaluating the management, back ground of the entrepreneur and promoters, their
character and integrity, past record of promotion etc. are studied.
6) Social Consideration: - The social objective of a project are also considered keeping in view of the interests
of the public. The projects which offers large employment potential, which are located in backward areas or
projects which will stimulate small industries or growth of ancillary industries are given special consideration.
7) Ecological Analysis: - It is necessary to ensure whether the project causes pollution, whether it disturbs the
equilibrium of ecology and whether it fits into the environment.
8) Project Risk Analysis:- Project face a host of risk such as project completion risk, resource risk, price risk,
technology risk, political risk, interest rate risk etc.
PROJECT REPORT:
A project report may be defined as a document with respect to any investment proposal based on certain information
and factual data for the purpose of appraising the project. It states as to what business is intended to be undertaken by
the entrepreneur and whether it would be physically possible, financially viable, commercially profitable and socially
desirable to do such a business.
OBJECTIVES OF PROJECT REPORT:

1) It facilitates business planning and planning the future course of action.
2) It enables an entrepreneur to compare different investment proposals and select the most suitable project.
3) It provides a SWOT analysis, wherein the strengths, weaknesses, opportunities and threats involved in the
projects as shown.
4) The project report enables the entrepreneur to ensure that he is proceeding in the right direction.
5) In case of public sector projects this report would also enable the concerned authorities to take an objective
decision on the project.
6) It facilitates project appraisal.
7) It helps the financial institutions to make appraisal as regards financial, economic and technical feasibility.
IMPORTANCE OF PROJECT REPORT:

a) It enables an entrepreneur to know the inputs required and confirms that he is proceeding in the right
direction.
b) (b) It spells out the reasons of allocating resources of the firm for the production of goods and services during
a specific period.
c) (c) An important aspect of the project report lies in determining the profitability of the project with minimum
risks in the execution of the project.
d) (d) The important uses of P.R. are summarized as follows: It helps the entrepreneur in establishing techno-
economic viability of the project.
e) It helps in getting term loan from banks and financial institutions.
f) It helps in approaching bank for getting working capital loan.
g) It helps in securing supply of scarce raw materials also.
h) It gives a general idea of resource requirements and means of procuring them.
CONTENTS OF PROJECT REPORT:

1) Introduction: General information regarding the company and production description.
2) Background of the promoter: - Name, address, age, family background, educational qualification, work
experience, investment potential etc.
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3) Product: - Details of products to be produced, details of application of the product, proposed product mix,
product standard etc.
4) Market and marketing:- Market potential analysis, major buyers, area to be covered, trade practices, sales
promotion devices, trade practice and trade channels adopted by the competitors, demand analysis, proposed
market research etc.
5) Location: - Locational advantages, criteria for selecting the location, exact location of the project, other
choices.
6) Production process: - Details of technology, process flow chart, manufacturing process, production
programme etc.
7) Raw material: - List of raw material required in terms of quality and quantity, sources of requirement, cost of
raw material etc.
8) Utilities: -Water, power, steam-sources and costs, effluent disposal etc.
9) Transport and communication: - Method, possibility of getting and costs of transport.
10) Manpower requirement: - Requirement of skilled, semi skilled personnel, technical and non-technical
personnel, cost of procurement, capacity, and suppliers cost, alternatives available, cost of miscellaneous
assets.
11) Land and building: - Land area, construction area, cost of construction, detailed plan, plant lay out along
with cost.
12) Plant and machinery: - Details of machinery and equipment required.
13) Cost of project and sources of finance: - working capital required, preliminary and pre-operative expenses,
contingencies and arrangements for the meeting the cost of project.
14) Financial viability of the project: - Cost of production and profitability for the first years, break even
analysis, and analysis of cash flow and fund flow statements.
REQUISITES OF AN IDEAL PROJECT REPORT:

• Product demand, capital resources, raw material availability, labour resources etc must
• Project report is the means and not the end.
• Assumptions in the project report should avoid extremities.
• Project report should be prepared with the help of an expert team.
• The essentials of an ideal project report are as follows:
• Project report should be based on proper survey and systematic preliminary study of theestimated properly
after considering varied factors.
• Thorough discussions must be made with experts, various personnel of concerned project. Complete
satisfaction of the entrepreneur/promoter should be ensured before the report.
• The end result should be to receive finance and to get the project implemented.
• Departments before finalizing the report. is submitted to the financial institutions.
Unit – IV
Mobilizing Resources [10 Marks]
MOBILIZING RESOURCES FOR START-UP:

The term resource mobilization refers to all activities undertaken by a startup or an organization to secure new and
additional financial, human and material resources to advance its mission. Inherent in efforts to mobilize resources is
the drive for organizational sustainability. Resource mobilization is actually a process of raising different types of
support for your organization. As said above, it can include both cash and in-kind support. Resource mobilization can
also be called as the process of getting resource from resource provider, using different mechanisms, to implement the
organization‘s work for achieving the pre-determined organizational goals. It deals in acquiring the needed resources
in a timely-cost effective manner.
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TYPES OF RESOURCE MOBILIZATION FOR STARTUPS:
Any startup would need all of the following resources, though the financial resource may be considered most
important:
A. Financial Resource: Financial resources can be obtained from a variety of sources, the easiest being from:
a. The personal accounts of the company‘s founder.
b. Alternatively, loans and lines of credit may be granted from financial institutions,
c. Friends and relatives,
d. Private investors
Here is an overview of typical financing sources for a startup business:
a) Personal Investment: When borrowing, you invest some of your own money either in the form of cash or
collateral on your assets. This proves to your banker that you have a long- term commitment to your project.
b) Love Money: This is money loaned by a spouse, parents, family or friends. A banker considers this as patient
capital‖, which is money that will be repaid later as your business profits increase.
c) Venture Capital: Venture capitalists take an equity position in the company to help it carry out a promising
but higher risk project. This involves giving up some ownership or equity in your business to an external
party. Venture capitalists also expect a healthy return on their investment, often generated when the business
starts selling shares to the public. Be sure to look for investors who bring relevant experience and knowledge
to your business.
d) Angels: Angels are generally wealthy individuals or retired company executives who invest directly in small
firms owned by others. They are often leaders in their own field who not only contribute their experience and
network of contacts but also their technical and/or management knowledge.
e) Business Incubators: Business incubators or ―accelerators‖ generally focus on the high-tech sector by
providing support for new businesses in various stages of development. However, there are also local
economic development incubators, which are focused on areas such as job creation, revitalization and hosting
and sharing services.
f) Grants and Subsidies: You may have access to this funding to help cover expenses, such as research and
development, marketing, salaries, equipment and productivity improvement. Technically, a grant is a sum of
money conditionally given to your business that you do not have to repay.
B. Intellectual Resource: Intellectual resource is the intangible value of a business, covering its people, the
value inherent in its relationships, and everything that is left when the employees go home, of which
Intellectual property (IP) is but one component. It is the sum of everything everybody in a company knows
that gives it a competitive edge.
C. Human Resource: The success of an organization is heavily reliant on the talent and strength of its
employees. The hiring of experienced professionals with track records of excellence within their area of
expertise ensures that the mission and goals of the company will be carried out efficiently and with
competence.
D. Physical Resource: Whether a small home business or a retail operation with multiple locations, every
organization must have the appropriate physical resources to survive. This includes a proper workspace,
working telephone line, adequate information systems and effective marketing materials. This aspect of
business planning can be one of the costliest. As such, it is important for an entrepreneur to realistically assess
his needs before making any purchases.
E. Educational Resources: Perhaps the greatest thing an entrepreneur can do when establishing a new business
is to gain as much education possible. By understanding his/her competition and gaining an in-depth
knowledge of his/her industry, he/she will be better prepared to make smarter decisions regarding the
direction of his/her firm. Educational resources can be found through professional trade associations that are
geared toward his/her industry, local chamber of commerce as well as the Small Business Administration.
F. Emotional Resources: Starting a business can be an extremely stressful endeavour for an entrepreneur to
undertake. To maintain the sanity as well as stay motivated, it is important to have a support team that can
46
give inspirations and guidance as needed. This team may be composed of friends and family as well as a
mentor or professional group.
G. Moral Resources: Moral Resources include solidarity support, legitimacy and sympathetic support. These
resources can be easily retracted, making them less accessible than other resources.
H. Cultural Knowledge Resource: Cultural Knowledge resource has become widely necessary and universal.
Known Examples include how to accomplish specific tasks like enacting a protest event, holding a news
conference, running a meeting, forming an organization, initiating a festival, or surfing the web.
I. Relational Resource: It consists of such elements as customer relationships, supplier relationships,

trademarks and trade names, which have value only by virtue of customer relationships, licenses, and
franchises. In fact relational resource is separate from human and structural resource and therefore, it indicates
its immense importance to an organization‘s worth..
ACCOMMODATION:
After planning about the resource mobilisation, an entrepreneur needs to have a clear picture of accommodation
(space) and utilities of what business must have. Though, it is a tedious and time consuming task, but it essential and
deserves high attention. Following points should be considered in selecting the location (accommodation) of business
or office space:
• Style of operation (e.g. formal, casual, traditional retail store, kiosk, cart etc.)
• Consider who your customers are and how important their proximity to your location is.
• Monitor foot traffic
• Accessibility of parking
• Is your location/area business friendly?
• Is your area safe for business as well as for customers
• Proximity to other businesses and services
• Building infrastructure
• Utilities and their associated costs
• How close do you need to be your suppliers?
• Can you legally operate your business in this area?
• Possibilities of renovations or change in building (consider legal restrictions)
• Availability of labour, transport, fuel, power, raw material etc.
• Expansion possibilities
• Personal factors
UTILITIES:
Utilities (water, fuel, electricity etc.) are essential services that play a vital role in successful operation of any
enterprises. What utilities your business requires will depend on the nature of business and size of operation. Some
common utilities which should be obtained/acquired or hold by the start-up are given below:
• Water
• Sewage
• Trash services
• Telecommunication (i.e. telephone, internet, FAX machine, word processing software etc.)
• Electricity
• Parking
• Canteen
• Furniture
47
• Toilets (for basic health, welfare, privacy and dignity)
• Conference style speaker phone
MOBILIZING RESOURCES:
Resource mobilization refers to all activities involved in securing new and additional resources for your organization.
It also involves making better use of, and maximizing, existing resources. Resource mobilization is often referred to as
‘New Business Development‘.
Why is resource mobilization so important?
Resource mobilization is critical to any organization for the following reasons:
1. Ensures the continuation of your organization‘s service provision to clients
2. Supports organizational sustainability
3. Allows for improvement and scale-up of products and services the organization currently provides
4. Organizations, both in the public and private sector, must be in the business of generating new business to stay
in business.
SUSTAINABILITY:
Although sustainability is often identified with having sufficient funds to cover an organization‘s activities, it is
actually a broader concept. There are three fundamental streams of sustainability: institutional, financial and
programmatic. Each is vital to the survival of an organization.
Below are the definitions of these three areas of sustainability:
a) Programmatic sustainability: The organization delivers products and services that respond to clients‘ needs
and anticipates new areas of need. Its success enables expansion of its client base.
b) Institutional sustainability: The organization has a strong, yet flexible structure and accountable, transparent
governance practices. Its structure and good governance allows it to respond to the shifting priorities of its
supporters and to new responsibilities toward its clients, while creating a positive work climate for its staff.
c) Financial sustainability: The organization draws on various sources of revenue, allowing it to support its
ongoing efforts and to undertake new initiatives.
PRELIMINARY OR PRE-INCORPORATION CONTRACTS:

When the contract is agreed, on behalf of the company before its incorporation they are called the preliminary
Contract or pre-incorporation Contract. These contracts may relate either to the property, which the promoter wants to
purchase for the Company or the technical knowledge which is essential for the success of the company. These types
of contracts cannot bind the company until it is incorporated.
BASIC REQUIREMENTS FOR A CONTRACT:

Entering into a legal contract with another individual or party helps provide legal protection, as well as a specific
outline of the deal. When you enter into a contract with another party, it should meet a few requirements before it can
be considered a valid legal contract.
i. Specific Details: In order for a contract to be valid it has to feature the specific contract details. In the
contract, outline exactly what is being dealt with. If you are buying material from a dealer, it has to have the
legal description of the material, so that there is no question about which material is being conveyed.
ii. Consideration: A valid legal contract also must have consideration. Consideration is giving something of
value in return for something else. In this section, the factors associated with consideration should also be
included.
iii. Capacity to Contract: Before a valid legal contract is created, both parties must be able to prove that they
have the capacity required. This means that the individuals have to be of legal age, depending on state law and
they must be of sound mind.
iv. Legal: The agreement also has to have legal terms. If you enter into an agreement to perform an illegal act,
this would not constitute a legal contract. For example, if you enter into an agreement to launder money for an
illegal operation, that contract would not be enforceable by the law because you are involved in an illegal
activity.
48
v. Proper Form: A legal contract also must be in the proper form. Typically, this means that the contract must
be in writing. The proper form is determined by the type of contract that you are engaged in and the laws of
your state. In some cases, verbal contracts are binding and are perfectly acceptable.
BASIC STARTUP PROBLEMS:

i. Developing the Vision and Business Idea: Developing a business idea is usually the first challenge faced by
every entrepreneur when starting a business from scratch. Finding the right business opportunity or creatively
developing an idea is certainly not an easy task.
ii. Raising Capital for your Startup: After developing your idea, the next challenge you are going to face when
starting a business from scratch is that of raising capital. As an entrepreneur, you are the only one that knows
business your idea to the core. You are the only one that knows the story of your future.
iii. Business Model Failure: One of the most common causes of failure in the startup world is that entrepreneurs
are too optimistic about how easy it will be to acquire customers. They assume that because they will build an
interesting web site, product, or service, that customers will beat a path to their door.
iv. Poor Management Team: An incredibly common problem that causes startups to fail is a weak management
team. Weak management teams make mistakes in multiple areas such as strategy; building a product that no-
one wants to buy bad marketing strategies etc.
v. Liquidity or Cash Crunch: A fourth major reason that startups fail is because they ran out of cash. A key job
of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that
can lead to a successful financing, or to cash flow positive.
vi. Product Problems: Another reason that companies fail is, because they fail to develop a product that meets
the market need. This can either be due to simple execution. Or it can be a far more strategic problem, which
is a failure to achieve Product/Market fit. Most of the time the first product that a startup brings to market does
not meet the market need.
vii. Finding Good Employees: Business owners know how difficult it is to find a hardworking, trustworthy
employee. Most employees want to work less and get paid more. Finding a good employee who will be
passionate about delivering his or her services is quite difficult. Finding good employees is a minor task
compared to the business challenge of forging your hired employees into a team.
viii. Finding Good Customers: The next challenge you will face in the process of starting a small business from
scratch is finding good customers. In the process of building a business, you will come to find out that there
are good customers as well as bad customers. You must be on guard for bad customers. Good customers are
really hard to find.
METHODS TO SOLVE STARTUP PROBLEMS:

a) Define the Problem Clearly: Many executives like to jump into solution mode immediately, even before
they understand the issue. In some cases, a small problem can become a big one with inappropriate actions. In
all cases, real clarity will expedite the path ahead.
b) Pursue Alternate Paths: Remember, there are some things that you can do nothing about. They are not
problems; they are merely facts of life. Often, what appears to be a problem is actually an opportunity in
disguise. Even if it does not turn into an opportunity, the entrepreneur must take an alternative course.
c) Identify the Cause of the Problem: Find the root cause of the problem, rather than treating a symptom
because if the root cause is not understood, the problem will likely recur, perhaps with different symptoms.
d) Identify Multiple Possible Solutions: The more possible solutions you develop, the more likely you will
come up with the right one. The quality of the solution seems to be in direct proportion to the quantity of
solutions considered in problem-solving.
e) Make a Prompt Decision: Select a solution, any solution, and then decide on a course of action. The longer
you put off deciding on what to do, the higher the cost, and the larger the impact will be. Many start-ups take
too long to decide & that becomes a reason for the failure.
f) Acknowledge and Correct: Instead of getting offended or embarrassed when your product does not do well
or someone bad- mouths your brand in attempt to elevate their own, look at the problem as a direct route to
connect with your customers or competition. If your customers are unhappy, correct the problem.
g) Cut Costs In-House: Entrepreneurs should run the business as lean an operation as possible, in every process
from manufacturing to administrative functions efforts should be made to cut costs wisely. The start-ups
49
should involve employees in this endeavour as well so that they cut costs happily and understand the
entrepreneur‘s perspective.
h) Overcome Your Fears of Risk-Taking by confronting them Head-on: Being an entrepreneur is risky
business. Every decision you make could potentially hurt or help your company. Believe in trusting your
instincts, educating yourself about the pros and cons of your decisions, and getting a second opinion from
another entrepreneur in whom you confide.
i) Formulation of Strong Business Strategies: Without strategy, change is merely substitution, not evolution.
A solid strategy must be implemented in order to solve any problem. Many startups attempt to dissect a
problem rather than identify the strategy for change that lies within the problem itself.
50

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GOBIND KUMAR JHA 9874411552

SCOPE OF BUSINESS ETHICS:

FEATURES OF BUSINESS ETHICS:

FACTORS INFLUENCING BUSINESS ETHICS:

SIGNIFICANCE/ADVANTAGE/IMPORTANCE OF BUSINESS ETHICS:

ARGUMENTS FOR BUSINESS ETHICS:

ARGUMENTS AGAINST BUSINESS ETHICS:

CORPORATE SOCIAL RESPONSIBILITY:

DIFFERENCE BETWEEN BUSINESS ETHICS AND SOCIAL RESPONSIBILITY:

PRINCIPLES OF BUSINESS ETHICS:

ELEMENTS OF BUSINESS ETHICS:

KEY DIFFERENCES BETWEEN MORALS AND ETHICS:

ETHICAL DILEMMA SITUATIONS:

ETHICS AND MARKET SYSTEM:

IMPORTANT CLUSTERS OF HRM RELATED WITH ETHICS:

ETHICS IN ADVERTISING AND PROMOTION:

ETHICS IN ACCOUNTING AND FINANCE:

WORK ETHICS & WORKPLACE:

Step 1: Documenting the Issues

VALUE AND ETHICS:

BASIC ATTRIBUTES OF ETHICAL WORKERS:

BUSINESS ETHICS – CYBER AGE:

ROLE & IMPACT OF CORPORATE CULTURE:

FUNCTIONS OF CORPORATE CULTURE:

WHY ETHICS REQUIRE:

ADVANTAGES OF A CODE OF ETHICS:

SCOPE OF CORPORATE GOVERNANCE:

CORPORATE GOVERNANCE BENEFITS:

CORPORATE GOVERNANCE LIMITATIONS:

CORPORATE GOVERNANCE AND BUSINESS ETHICS:

ESSENTIALS OF GOOD CORPORATE GOVERNANCE:

CORPORATE GOVERNANCE AND BUSINESS ETHICS:

CORPORATE GOVERNANCE IN RECENT YEARS:

NATURE AND CHARACTERISTICS OF ENTREPRENEURSHIP:

NEED AND SCOPE OF ENTREPRENEURSHIP:

KEY ELEMENTS OF ENTREPRENEURSHIP:

CREATIVE BEHAVIOR OF ENTREPRENEURSHIP:

THREE REASONS WHY PEOPLE ARE MOTIVATED TO BE CREATIVE:

STEPS IN CREATIVE PROCESS:

PERONALITY TRAITS OF CREATIVE PEOPLE:

CREATIVITY, INNOVATION AND ENTREPRENEURS:

Innovation – Doing new things

Entrepreneurship – Crating value in the marketplace

ENTREPRENEURSHIP = CREATIVITY + INNOVATION

RISKS INVOLVED WITH ENTREPRENEURSHIP:

FACTORS AFFECTING ENTREPRENEURIAL GROWTH:

QUALITIES OF A SUCCESSFUL ENTREPRENEUR:

A. ON THE BASIS OF TYPE OF BUSINESS:

B. ON THE BASIS OF USE OF TECHNOLOGY:

C. ON THE BASIS OF MOTIVATION:

D. ON THE BASIS OF STAGES OF DEVELOPMENT:

E. CLASSIFICATION ON THE BASIS OF ENTREPRENEURIAL ACTIVITY:

F. CLASSIFICATION BY CLARENCE DANHOF:

ENTREPRENEURSHIP AND MICRO, SMALL AND MEDIUM ENTERPRISES:

Definition of Micro, Small and Medium Enterprises

EXPORT ORIENTED UNIT:

ROLE/IMPORTANCE OF MSMEs IN DEVELOPING COUNTRIES: