CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA

Entrepreneurship developed only in the beginning of the 19th century and though the base for industrialization had been laid a century ago. The following be the main reasons, which could be responsible for lack of initiative and entrepreneurial spirit among the Indians.

1. Caste System: - This decided occupation for members from each caste. The altitudes were restrictive and therefore there were no changes of accumulating wealth and promoting production.

2. Agriculture: - Agriculture was the main occupation. Farmers and cultivators were always in the clutches of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on enjoyment and luxury and never risked money in industry. Banking and commercial system was also absent so even if there were savings, they could not be utilized for productive use.

3. Educational System: - Talented young men were prepared to take white collared jobs or join government or professional services. Many were attracted towards politics. The result was that very few young men got attracted towards becoming efficient, industrialists, technicians, managers etc.

4. Colonial Rules: - The British rulers adopted discriminatory policy Rich

Indian businessman had special connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking services catered to the needs of some rich Indian businessman, Britishers in India did also not encourage Industrialization.

5. Managing Agents: - There were just a handful of people who were known to be having managerial skills. On common basis, these agents would lend their skills to some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filled their pockets with big chunks of the companies’ profits and took full advantage of Indian industrialists till the managing agency system was abolished in 1970.

6. Joint Family System: - Younger members of the family always depended on the Head who never gave any kind of independence or encouraged units other than family business ones. A number of young men were discouraged from diversifying from family business and doing something new and different.

7. Religious attitude: - Indians were very religious mi9nded. They gave more time to religion than to earning material wealth. Religion got priority over business. Some religions even condemned excess earnings and indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious Indians.

8. Mindset: - The mindset of the average Indian was never entrepreneurial. Our religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial activities.

9. Recognition by the society: - In earlier days, the heroes India were the social reformers and the politicians. Now it is the era of sportsmen, models and film stars. It is sad that successful or the struggling entrepreneurs have never been recognized as heroes. Entrepreneurial activity did not get due importance in the Indian society.

10. Family Background: - Empirical studies have shown that a good number of entrepreneurs come from families with industrial backgrounds. Unfortunately, only a few entrepreneurial communities in India made entrepreneurial contribution. These communities could also not make headway in the entrepreneurial field on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development could only take place after independence in India.

COMMUNITIES THAT PROMOTED ENTREPRENEURSHIP IN INDIA

1. THE PARSIS:

Parsis migrated from Persia in the century. They performed artisans, carpenters, weavers etc, in the 17th century. By 18th century, they became wellknown shipbuilders; they had set merchant houses in Bombay, Burma, China and London. Their chief overseas trade comprised of yarn and opium.

They acted as brokers for the European traders at Bombay and Surat. They were regarded as merchants and traders of repute. They emerged as the most prominent trading and financing community or Bombay and Gujarat. Parsees and Gujarat trading castes that controlled even foreign trade become the wealthiest Indian communities by the 19th century.

2. TRADERS FROMSOUTH INDIA:

The trading castes of South India were the chettis. They were dividing into various groups such as the Telugu komatia, the Tamil, Nattukottai Chettis, and Beri- Chettis etc. The Komatia were the chief traders not only in the Telugu districts but also in Mysore, Coimbatore, Canara and other places. The chief financiers are bankers of South India were the Nattukottai Chettis. Trading in drugs grain and cloth was done by the Beri-Chettis. In the early 19th century they were known to be respectable peddlers who traveled in caravans. The communities that traded had trade relations with South- East Asian countries like Burma, Ceylon, and Malaya, Singapore etc. The chettiars established connections with reputed Indian business firms and also made good investments in and property. They became important suppliers of rural credit. The Nattukottai Chettiars were a well- known business community in Burma. Their working funds invested abroad were mainly employed in Burma.

Trading was done by Syrian Christians called Nazrani Mappilas and Mohammedan merchants known as Moplahs on the West coast in South

India. The Nazrani Mappilas financed internal trading activities of Travancore and Cochin. Moplahs traded in Malabar and Canara. They shared the functions of trade with the koknies who conducted banking business in the country.

When the monopoly of the East India Company ended in 1857, a period of boom began for the Christians who prospered as merchants. They played the role of private bankers. The Syrian and Chaldean Christians were active in promoting Joint Stock Banks at the end of the 19th century.

3. THE MARWARI COMMUNITY:

This important and fairly developed business community came from Marwari in Rajasthan. The trading and money lending cases got tremendous development in Gujarat and Rajputana on account of the famous route from Gujarat ports to the historical center of the Great Mughal state.

Rajputana was torn by feudal strife during the first half of the 19th century. It was not the place for large scale trading and money lending operations. Though the local trade was good, it provided a limited scope for development. Trade remained fairly constant and it was because of this that investment crossed the borders of Rajputana. Trade spread in towns throughout the north, east and west of India, especially to the commercial centers of Bombay and Calcutta.

With the rise of British commerce, these traders gradually replaced the Bengalis who served as British agents in Calcutta. The Brahmins and the Kayasthas of Bengal who operated as the British agents started tuning their attention to investments in land. They even got into 9 professions and administrative services. But the Subarna Banika, a Bengal trading community filled the void created by such an occurrence. But Bengal soon became the center for political revolution. The Britishers both rulers and traders did not approve of this. Wherever possible, they tried to replace a Bengali by someone who proved to be more dependable. The Rajasthani traders tried to be more co-operative than the Bengali Commercial castes. It is because of this that the Bengali names in business are relatively un important and where they occur; they mostly represent the professional agent class and not the indigenous trading class.

 Besides the above trading, money- lending communities that could be regarded as the source of entrepreneurs in India. There were the Bhatia’s and Lohanas. These communities carried out local trade and were spread all over the country. The “Khatris’ a community that trade not only in Punjab but also in Afghanistan, Central Asia etc. has also been a source of entrepreneurs. In Maharashtra the contribution of Yajurvedi Brahmins and the Chitapavan Brahmans who took active part in trading, money lending ad indigenous banking cannot be forgotten.

FACTORS INFLUENCING ENTERPRENURESHIP

The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and economic factors.

v FAMILY TRADITION:

Individuals who for some reason, initiate, establish maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of their families and society and accept certain values and norms from these sources.

v RELIGIOUS, SOCIAL AND CULTURAL FACTORS:

Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of entrepreneurship.

v PSYCHOLOGICAL FACTORS:

The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship among individuals. On the other hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship.

v POLITICAL FACTORS:

The political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes free market, individual freedom and private enterprise, will promote entrepreneurship.

v ECONOMIC POLICIES:

The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct influence on entrepreneurship. In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw materials, transportation cost etc.

THE CONCEPT OF ENTREPRENEURSHIP

ENTREPRENEURSHIP DEFINED:

Entrepreneurship is an elusive concept.

“Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions.”

-Schumpeter

In the above definition, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is thus, process of giving birth to a new enterprise. Entrepreneurship is composite skill, the resultant of a mix of many qualities and traits- these include tangible factors as imagination, readiness to take risks, ability to bring together and put to use other factors of production, capital, labour, land, as also tangible factors such as the ability to mobilize scientific and technological advances. A practical approach is necessary to implement and mange a project by securing the required licenses, approvals and finance from governmental and financial agencies. The personal incentive is to make profits from the successful management of the project. A sense of cost consciousness is even more necessary for the long term success of the enterprise. However, both are different sides of the same coin. Entrepreneurship lies more in the ability to minimize the use of resources and put them to maximum advantage. Without any awareness of quality and desire for excellence, consumer acceptance cannot be achieved and sustained. Above all, entrepreneurship today is the product of teamwork and the ability to create, build and work as a team. The entrepreneur is the maestro of the business orchestra, wielding his baton to which the band is played.

The basic two elements involved in entrepreneurship are as follows;-

INNOVATION

Innovation, i.e. doing something new or something different is a necessary condition to be called a person as an entrepreneur. The entrepreneurs are constantly on the look out to do something different and unique to meet the requirements of the customers. They may or may not be inventors of new products or new methods f production but they possess the ability to foresee the possibility of making use of the inventions for their enterprises. In order to satisfy the changing preference of customers nowadays many enterprises have adopted the technique of innovation. For instance, pidilite industries innovated the new 5.rs pack of fevi quick which was accepted by the customers as it was easy to use when it was needed. Other example would be of the mobile enterprise which came up with the scheme for the customers of refill pack of 999.rs which says “Zindagi bhar mobile raho” which was accepted bye the customers. Since customers taste and preferences always keep on changing, hence the entrepreneur needs to apply invention on a continuous basis to meet the customers changing demand for products.

RISK- BEARING

Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or Industrial objective. The capacity to take risk independently and individually with a view to making profits and seizing the opportunity to make more earnings in the market- oriented economy is the dominant characteristic of modern entrepreneurship.

In fact he needs to be a risk taker, not risk avoider. His risk bearing ability enables him even if he fails in one succeed. The Japanese proverb says “Fall seven times, stand up eight”. Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different.

The relationship between the two is just like the two sides of the same coin.

Thus, entrepreneurship is concerned with the performance and co-ordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.

NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has accepted the fact that small firms have a crucial role to play in the economic development of the country. Small businesses are an essential part of our future economic prosperity because of the following reasons-

EMPLOYMENT GENERATION:

Entrepreneurial development is looked at as a vehicle for employment generation through promotion of small business. India, being far more developed and forward looking country than some of the third world countries, can provide lead to entrepreneurial development activities. However, India can benefit from the well- documented success experiences of developed countries like USA, Japan and UK in the field of employment generation and small business promotion. Steady growth in consumer spending, expanding retail sales, a strong housing market, continued expansion of the service sector, low rates of inflation and of labour cost increases and failing interest rates contributed to a healthy environment for small business.

In India, the government policies, political and economic environment greatly encourage the establishment of new and small enterprises. Self- employment and small scale industry schemes have been further liberalized during the last decade. The employment in the small-sector increased from 9.00 million people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in employment in this sector.

SMALL BUSINESS DYNAMISM:

Great dynamism is one of the qualities of the small and medium enterprises.

This quality of dynamism originates in the inherent nature of the small business. The structure of small and medium enterprises is less complex than that of large enterprises and therefore facilitates quicker and smoother communication and decision- making. This allows for the greater flexibility and mobility of small business management. Also, small enterprises, more often make it possible for owners, who have a stronger entrepreneurial spirit than employed mangers, to undertake risk and challenges.

BALANCED ECONOMIC DEVELOPMENT:

Small business promotion needs relatively low investment and therefore can be easily undertaken in rural and semi-urban areas. This in turn creates additional employment in these areas and prevents migration of people from rural to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts should be directed towards this sector. Small enterprises use local resources and are best suited to rural and underdeveloped sector. This in turn will also lead to dispersal of industries, reduction in concentration of economic power and balanced regional development.

INNOVATIONS IN ENTERPRISES:

Business enterprises need to be innovative for survival and better performance. It is believed that smaller firms have a relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate. Entrepreneurship development is accelerating the pace of small firm’s growth in India. An increased number of small firms are expected to result in more innovations and make the Indian industry compete in the international market.

The Advertising Plan

Advertising planning and decision making depends on internal and external factors. Internal factors are situation analysis, the marketing program, and the advertising plan.

The three legs of advertising planning concern are the

• Objective setting and target market identification,
• Message strategy and tactics, and
• Media strategy and tactics.

As pointed out earlier, advertising plan and decision making focus on three crucial areas; objectives and target selection, message strategy and tactics, and media strategy and tactics. Let us elaborate on these points:

1. Objectives and Target Selection

Objectives in advertising can be understood in many ways. An important part of the objective is the development of a precise, disciplined description of the target audience. It is often tempting to direct advertising at a broad audience; but everyone is a potential customer. It is best to consider directing the advertising to more selected groups to develop stimulating copy. It is quite possible to develop several campaigns, each directed at different segments of the market, or to develop one campaign based on multiple objectives.

2. Message Strategy and Tactics

Messages strategy must decide what the advertising is meant to communicate – by way of benefits, feelings, brand personality, or action content. Once the content of the campaign has been decided, decisions must be made on the best-most effective-ways of communicating that content. The decisions, such as the choice of a spokesperson, the use of humor or fear or other tones, and the selection of particular copy, visuals, and layout, are what we call “message tactics”

3. Media Strategy and Tactics

Message strategy is concerned with decisions about how much is to be allocated to create and test advertising copy, media strategy concerns decisions on how many media rupees to spend on an advertising campaign. Media tactics comprise the decisions on which specific media (television, radio magazines, etc.) or media vehicles (Reader’s Digest, etc.) to spend these dollars.

Advetising Planning Framework

The advertising plan should be developed in response to a situation analysis, based on research. Once developed, the advertising plan has to be implemented as an advertising campaign, in the context of social and legal constraints and with the involvement of various facilitating agencies. Let us discuss these factors one after another.

1. Situation Analysis

It involves an analysis of all important factors operating in a particular situation. This means that new research studies will be undertaken on company history and experience.

AT&T, for example, developed a new strategy for its long-distance telephone services – based on five year of research. The research encompassed market segmentation studies, concept testing, and a field experiment. The field experiment increased on testing a new advertising campaign called “Cost of Visit”. An existing “Reach Out” campaign although successful, did not appear to get through to a large group of people who had reasons to call but were limiting their calls because of cost. Research based on annual surveys of 3,000 residential telephone users showed that most did not know the cost of a long-distance call or that it was possible to make less expensive calls in off-peak periods.

Five copy alternatives were subsequently developed and tested, from which

“Cost of Visit” was chosen. This campaign was credited with persuading customers to call during times that were both cheaper for them and more profitable for AT&T and, overall, was more effective that the “Reach Out” campaign. One estimate was that by switching 530 million in advertising from “Reach Out” to “Cost of Visit”, an incremental gain in revenue of $22 million would result in the first year and would top $100 million over five years.

This example highlights that a complete situation analysis will cover all

marketing components and involve finding answers to many questions about the nature and extent of demand, competition, environmental factors, product, costs, distribution, and the skills and financial resources of the from.

2. Consumer and Market Analysis.

Situation analysis begins by looking at the aggregate market for the product, service, or cause being advertised, the size of the market, its growth rate, seasonality, geographical distribution. Whereas Consumer and Market analysis is concerned with the following factors:

* Nature of demand

- How do buyers (consumer and industrial) currently go about buying existing products or services?

- Can the market be meaningfully segmented or broken into several homogeneous groups with in respect to “what they want” and “how they buy”?

* Extent of demand

- What is the size of the market (units and dollars) now, and what will the future hold?

- What are the current market shares, and what are the selective demand trends?

- Is it best to analyze the market on an aggregate or on a segmented basis?

* Name of competition

- What is the present and future structure of competition?

- What are the current marketing programs of established competitors?

- Why are they successful of unsuccessful?

- Is there is opportunity for another competitor? Why?

- What are the anticipated retaliatory moves of competitors?

- Can they neutralize different marketing programs we might develop?

* Environmental climate

- What are the relevant social, political, economic, and technological trends?

- How do you evaluate these trends? Do they represent opportunities or problem?

* Stage of product life cycle

- In what stage of the life cycle is the product category?

- What market characteristics support your stage-of –life-cycle evaluation?

* Cost structure of the industry

- What is the amount and composition of the marginal or additional cost of supplying increased output?

*Skills of the firm

- Do we have the skills and experience to perform the functions necessary to be in the business?

- How do our skills compare with those of competitors?

* Financial resources of the firm

- Do we have the funds to support an effective marketing program?

- Where are the funds coming from, and when will they be available?

3. Competitive Analysis:

Advertising planning and decision making are affected by competition and the competitive situation facing the advertiser. Competition is such a pervasive factor that it will occur as a consideration in all phases of the advertising planning and decision making process. It should include an analysis of what current share the brand now has, what shares its competitors have, what share of a market is possible, from which competitors the increased share of a market is possible? The planner also has to be aware of the relative strengths and weaknesses of the different competing companies and their objectives in the product category. It is important to look at competition as a precursor to the planning process.