Unit - V: Setting Small Scale Industries

Unit - V
Setting Small Scale Industries

Location of Enterprise
Location consideration for the establishment of manufacturing
plant is critical to the operation of the setup in an uninterrupted
and least resistant manner.
Steps in enterprise location

1. Selection of the region
2. Selection of locality
3. Selection of the exact site
4. Selection of an optimum site
Factors affecting location of an enterprise
• Raw materials
• Market
• Power and fuel
• Transport
• Climate
• Government policy
• Competition
• Labour
• Finance and research facilities
• Water
• Local taxes and restrictions
• Banking
• Communication
• Culture
• Education
• Political factors
• Soil
• Waste disposal
• Price of land
• Expansion
• Health care
• Flood and drought
• Nature
• Attitude of local people
• State assistance
Steps in setting SSI Unit
1. Analyze yourself and your objectives
2. Update yourself with newer ideas
3. Consult publications and agencies
4. Discuss with all around you and with SISI & DI office
5. Date with yourself for a decision
6. Choose a line
7. Decide on form of ownership
8. Decide whether to purchase a going concern or to start a new one
9. Obtain the project report from SISI or others
10. Decide on location and site
11. Arrange the work shed with facilities
12. What laws will affect you – make sure
13. Obtain clearance from state, central & local authorities and SISI reg.
No.
14. Plan finance
15. Plan sources of machinery
16. Plan order for machinery
17. Apply for materials
18. Plan buying
19. Install machinery
20. Procure materials
21. Recruit personnel
22. Trial run
23. Decide on pricing policy
24. Organise marketing
25. Plan out record keeping
26. Produce
27. Sell
28. Keep up to date
29. Plough back profits
30. Diversification
31. Modernisation
32. Compete with others
33. Grow bigger
34. Ancillary development
Problems of Entrepreneurs
Internal
– Choice of an idea
– Feeble structure
– Faculty planning
– Poor project implementation
– Poor Management
– Poor production, quality
– Marketing, labour problem
– Financial crunch
– Capacity utilisation
– Lack of integration
– Lack of strategies, Vision
– Inadequate training
– Lack of motivation
External
– Infrastructure
• Location
• Power, water
• Communication
– Financial
• Capital , Working capital
• Long term funds
– Marketing
– Taxation
– Raw materials
– Regulations
– Inspections
– Technology
– Govt. policy
– Competition
Problems of women entrepreneurs
1. Need for achievement, economic independence and
autonomy are absent
2. No risk bearing
3. Lack of education
4. Family involvement
5. Male dominated society
6. Lack of information and expertise
7. Liquidity and easy availability of finance
Sickness in small scale industries
A sick industrial unit may be defined as one when it fails to
generate surplus on a continuous basis and depends on frequent
infusion of external funds for survival
Causes of Sickness
-Internal
-External
Internal Causes External Causes
1. Planning 1. Infrastructural bottlenecks
• Technical feasibility 2. Financial bottlenecks
• Economic viability
3. Govt. controls and polices
2. Implementation
4. Market constraints
3. Production
5. Extraneous factors
• Production Management
• Labour Management
• Marketing Management
• Financial Management
• Administrative Management
Remedial Measures
1. Early deduction of sickness
2. Corrective action from financial institutions and banks
3. Restore financial health – make attempts
4. Training of employees
5. Incentives should be provided to sick units
6. Special institution – the Board for financial and industrial
reconstruction
7. Take over by other companies
Incentives and Subsidies
The term incentive means encouraging productivity. It is a
motivational force which makes an entrepreneur take a right
decision and act upon it.
Subsidy denotes a single lump-sum which is given by a govt to

an entrepreneur to cover the cost.
Need for incentives

1. To correct regional imbalances in development
2. To promote entrepreneurship by removing economic
constraints
Advantages of Incentives and Subsidies
1. Motivational force
2. Industries in backward areas
3. Uniform development
4. Develop more new entrepreneurs
5. Encourage confidence in entrepreneurs
6. Reduce problems of small scale entrepreneurs
Problems of Incentives and Subsidies

1. Misuse
2. Dishonesty
3. Corruption
4. Unethical business practices
5. The real objective not achieved
Evaluating entrepreneur performance
Entrepreneurial Performance refers to measure of business
success and the rewards may refer to the recompense – financial
or psychic accuring to the entrepreneur .
Measures – Longevity of survival, sales growth, growth in

market share, growth in market scope, growth in investment,
additional units created, diversification, growth in number of
employees, profit and so on..
Customer satisfaction, employees satisfaction, image , credit

rating, stock price, EPS etc.,
Rural Entrepreneurship
Khadi and Village Industries Commission (KVIC ) – village or
rural industry means any industry located in rural area,
population of which doesn't exceed 10,000 or such other amount,
which produces any goods or renders any services with or
without use of power and in which the fixed capital per head of a
worker does not exceed Rs.1000/-
Recently modified –Population – 20,000

Investment – 3 crores
Village industries
1. Mineral – based industry
2. Forest – based industry
3. Agro – based industry
4. Polymer & Chemical – based industry
5. Engineering and non conventional industry
6. Textile industry
7. Service industry
Need for Rural Entrepreneurship
1. Employment generation
2. Income generation
3. Balanced regional development
4. Build up village republic
5. Promotes art and creativity
6. Economic development in rural areas
7. Environment friendly
Problems of Rural Entrepreneurship
• Financial constraints
• Lack of technical know – how
• Lack of training and extension services
• Lack of quality control
• Lack of communication and market information
• Lack of storage and warehousing facilities
• Lack of promotional strategy
• Obsolete & primitive technology
To develop Rural Entrepreneurship
• Strengthen the raw material base in rural areas
• Provide easy credit and term loans
• Marketing assistance
• Develop entrepreneurial attitude and competency through
EDP & Training
• Entrepreneurial education in schools, colleges and universities
• Disseminate information and create awareness
Women Entrepreneurs
An enterprise owned and controlled by a women having a
minimum financial interest of 51% of the capital and giving at
least 51% of the employment generated in the enterprise to
women.
Functions of Women Entrepreneur

– Exploration of the prospects of starting a new business
enterprise
– Undertaking risk
– Introduction of innovation
– Co-ordination, administration and control
– Supervision and leadership
Problems of Women Entrepreneur
• Problem of finance
• Scarcity of Raw material
• Stiff competition
• Limited mobility
• Family ties
• Lack of education
• Male dominated society
• Low risk bearing ability
Develop Women Entrepreneurs
• Treat women as specific target groups
• Vocational training facilities for women
• Promote appropriate technologies
• Assistance for marketing their products
• Involve women in decision making process.
End of Unit - V

Unit - V: Setting Small Scale Industries

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Unit - V

Setting Small Scale Industries

Steps in enterprise location

Subsidy denotes a single lump-sum which is given by a govt to

Need for incentives

Problems of Incentives and Subsidies

Measures – Longevity of survival, sales growth, growth in

Customer satisfaction, employees satisfaction, image , credit

Recently modified –Population – 20,000

Functions of Women Entrepreneur

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