ME Lecture Notes

MANAGEMENT & ENTREPRENEURSHIP
UNIT-I
Principles of Management
Organization
Organizations can be defined as group of people working together to
create a surplus.
In business organizations, this surplus is profit.
In nonprofit organizations, such as charitable organizations, it
may be the satisfaction of needs.
Management
Management is the process of designing & maintaining an environment
in which individuals, working together in groups, efficiently accomplish
selected aims
Functions of management
Management is essential for any organization. Management involves the
act of achieving organizations objectives. Management can be broken
down into 4 managerial functions .
Planning: thinking of their actions in advance
Organizing : managers coordinate human and material resources of the
organization
Actuating : managers motivate and direct subordinates

Controlling : mangers attempt to ensure that there is no deviation from
the norm or plan
Roles Of Manager
Amutha S , Associate Prof., Dept. of CSE, DSCE
Interpersonal Role :
Figure head: performs duties of ceremonial nature such as greeting the

touring dignitaries, attending the wedding of an employee etc.
Leader: every manager must motivate and encourage their employees, try
to reconcile their individual needs with the goals of the organization.
Liaison: in this role, every manager must develop contacts outside the
vertical chain of command to collect information useful for the organization.
Informational Role:
Monitor: must perpetually scan his environment for information interrogate

his liaison and subordinates to get any solicited information useful for the
organization.
Disseminator: manager passes the privileged information directly to the
subordinates who otherwise would not have access to it.
Spokesman: may require to spend a part of the time in representing the
organization before various outside groups having some stake in the
organization such as government officials, labor unions, financial
institutions.
Decisional Role:
Entrepreneaur: In this role the manager proactively looks out for
innovation to improve the organization by means of means creating new
ideas, development of new products or services or finding new uses for the
old ones.
Disturbance handler: must act like a firefighter to seek solutions to various
unanticipated problems
Resource allocator: must divide work and delegate authority among his
subordinates.
Negotiator: must spend considerable time in negotiations. Example: the
foreman negotiating with the workers for the grievance problems
Skills of Management
Conceptual skills deals with ideas

Technical skills deals with things
Human skills deals with people
Conceptual skill: It deals with the ability of manager to take a broad view of
organization and its future, ability to think in abstract, ability to analyze the forces
working in a particular situation.
Technical skill: Refers to the persons(people working with him) knowledge and
proficiency in any type of process or technique.
Human relations skill: It is the ability to interact effectively with people at all
levels
(a) to recognize the feelings and sentiments of others.
(b)to judge the possible reactions to and the outcomes of various courses of action
he may undertake
(c) to examine his own concepts and values which may enable to more useful
attitudes and about himself.
Levels of Management
Levels of management: In any organization, there are three levels of
management . From the bottom
First level managers
Middle level managers
Top level managers.
First-line management: It consists of foreman and white collared
supervisors.
Middle management: It consists of diversified group as plant
managers, personnel managers and department heads.
Top management: It consists of board chairman, the company

presidents, and the executive vice-presidents.
Functions of Supervisory Management :
To plan day-to-day production within the goals laid down by
higher authorities.
To assign jobs to workers to make arrangements for their
training & development.
To supervise & control workers & maintain personal contact
with charge hands.
To arrange materials & tools & to maintain machinery.
To advise & assist workers by explaining work procedures,
solving their problems, etc
Functions of Middle Management:
To interpret & explain the policies framed by top management
To compile & issue detailed instructions regarding operations.
To maintain close contacts with operating results so as to
evaluate performance.
To cooperate among themselves so as to integrate or
coordinate various parts of a division or a department
Functions of Top Management :
To analyze, evaluate & deal with the external environmental

forces
To establish overall long-term goals strategy & policies of the
company including the master budget to allocate resources.
To create an organizational framework consisting of authority
responsibility relationships.
To appoint departmental & other key executives.
To provide overall leadership to the company.
Difference between administration & management
Basis of
difference
Administration
Management
1 Level in
organization
Top level
Middle & lower
2 Major focus
Policy formulation &

objective determination
Policy execution for objective

achievement
3 Nature of
functions
Determinative
Executive
4 Scope of
functions
Broad & conceptual
Narrow & operational
5 Factors affecting Mostly external

decisions
Mostly internal
6 Employeremployee
relation
Employees
Entrepreneurs & owners
7 Qualities
required
Administrative
Technical
Functions of Board of Directors:

A board is elected by the owners (shareholders) & is responsible
to them as their agent for managing the affairs of the
organization.
Board has authority to manage subject to the limitations imposed
by the Memorandum of Association & Articles of Association of
the company as well as the provisions of the Companies Act
Management science or Art:
Science is not the labs and test tube only. We can call a discipline scientific
if
The methods of the inquiry are systematic and empirical(practical)
If the information can be ordered and analyzed and
Results are cumulative and communicable
Science used to denote two types of systematic knowledge
Natural or exact physics , chemistry etc.
Behavioral or inexact- Management which tells about tendencies and
probabilities
Management can be put in the category of a behavioral science
Management as an Art:
Art is how a particular work can be accomplished
Management is the Art of getting things done through others

Art of management is his own skill
Thus we may conclude that management involves both the elements those of
an art and those of science where in certain aspects of management make it
as a science, certain others which involves the application of skill makes it
an art.
Management as profession:
The following are the characteristics of Profession
Existence of an organized systematic knowledge
Formalized method of acquiring training & experience
Existence of an association with professionalization as goal
Does not have fixed norms of managerial behavior
No uniform code of conduct or licensing of managers
Entry of managerial jobs are not restricted to individuals with a special
academic degree only and hence management cannot be called a profession
Management Thoughts
Three main types of approach
Early Classical approach
Scientific Management
Administrative Management
Bureaucracy management
Neo Classical approach
Human Relations Movement
Behavioral approach
Modern approaches
quantitative approach
System approach
Contingency approach
Scientific Management :
Frederick Winslow Taylor is the father of Scientific management.
Important contributions are classified as
Time and Motion Study

Differential Payment
Drastic reorganization of supervision
Scientific recruitment and training
Intimate friendly cooperation between the management & workers
Time and motion study: Each motion of job was timed out with the help of stop
watch of doing job was found and shorter and fewer motions were developed and
amongst these the best job was found which replaced the old rule of thumb
knowledge of the workman.
Differential payment: new payment plan called the differential piece work was
introduced which was linked incentives with production. Under this plan a worker
received low piece rate if he produced the standard number of pieces and high rate
if he surpassed the standard which would motivate the workers to increase
production
3) Drastic reorganization and supervision: Separation of planning and doing.
Taylor suggested that the work should be planned by the foreman and not by the
worker .Each of these foreman should give orders to the worker on his specialty.
4) Scientific recruitment and training: Taylor emphasized the need for scientific
selection and development of the worker. He says that management should
develop and train every worker to bring out his best facilities and enable him to do
a higher, more interesting and more profitable class of work than he has done in
past.
5) Intimate and friendly cooperation between the management and the
workers: Taylor argued that both the management and the workers should try to
increase production rather than quarrel over profits which would increase the
profits to such an extent that labor and management would no longer have to
compete for them and should show common interest in increasing productivity.
Limitations of Scientific Management
Taylors belief that economic incentives are strong enough to motivate
workers for increased production proved wrong mans behavior is not
always dictated by his financial needs.
Taylors Time & motion study is not accepted because no two individuals
are expected to do work in the same way.
Separation of planning & doing results in confusion & increases the cost
overhead
Advances in tools & machines eliminated workers which caused
resentment among them
Fayols Administrative management:
Henry Fayol is considered as the father of administrative management where the
focus is on development of broad administrative principles.
1)Division of work: In the management process ,better work cannot be performed

efficiently by a single proprietor. So a group of directors who are specialists in
various fields are necessary.
2) Authority and responsibility: Implies that the manager should have the
right to give orders and power to exact obedience .
3) Discipline: Absolutely essential for smooth running of the business ,
observance of rules and norms of performance, respect for agreements, sincere
efforts of completing the given job, respect for superiors.
4) Unity of command: This principle requires that each employee
should receive instructions about a particular work from one superior only,
if reported to more than one superior would result in confusion and conflict
of instructions.
5) Unity of direction: Means that there should be complete identity between
organizational goals and the departmental goals and both should not pull
in different directions.
6) Subordination of individual interest to general interest: In a business
concern, an individual is always interested in maximizing his own
satisfaction through more money, recognition, status etc. which is against
the general interest.
7) Remuneration: Remuneration paid to the personnel of the firm should
be based on general business conditions such as cost of living,
productivity of the concerned employees and the capacity of the firm to pay
fair remuneration increases workers efficiency and morale and fosters
good relations between them and management.
8) Centralization: The degree of centralization or decentralization of
authority must be decided on the basis of nature of the circumstances,
size of the undertaking, the type of activities and the nature of organizational
structure.
9) Scalar chain: Scalar chain means the hierarchy of authority from the highest
executive to the lowest ones for the purpose of communication.
10) Order: Putting things in order needs effort and the management
should obtain orderliness in work through suitable organization of men and
materials.
11) Equity: Equality of fair treatment which results from a combination

of kindness and justice .Employees expect management to be equal to every
body which requires managers to be free from all prejudices, personal likes etc.
12)Stability of tenure of personnel: Is necessary to motivate workers to do more
and better work and they should be assured security of job by management. If
not provided they have fear of insecurity of job, their morale will be low and they
cannot give more and better work.
13) Initiative: Freedom to think out and execute a plan which when provided
to the employees leads to innovation which is the landmark of technological
progress. Initiative is one of the keenest satisfactions for an intelligent man to
experience and hence mangers are required to give sufficient scope to show their
initiative.
14) Esprit de corps: Team spirit which should be created by the
management among the employees and is possible only when all the employees
pull together as a team. There should be harmony and unity among the staff which
is a great source of strength.
Limitations of Administrative management:

It leads to formation of small work groups and doesnt care how each
individuals job fits into the entire picture.
It results in increase in the overhead cost because of lot of coordination
necessary among employees.
It develops an orientation towards their own particular department than towards

whole organization.
The principles are based on few case studies not tested empirically
Bureaucracy Management
Max Weber German sociologist is the father of Bureaucracy
Features of Bureaucracy
Insistence on Standard Rules authority in an organization should not be
governed by personal preferences but by standard rules
Systematic division of work increase the efficiency
Principle of hierarchy followed -Administrative Acts , rules recorded in writing
Rational Personnel Administration-people selected based on merit and paid acc

to position. Promotions made systematically
Limitations of Bureaucracy Management

Over conformity to rules
Buck passing
Categorization of queries
Displacement of goals
No real right of appeal
Neglect of informal groups
Rigid structure
Inability to satisfy the needs of mature individuals
Modern approaches
Quantitative approach
Systems approach
Contingency approach
Quantitative approach: It is called the management science approach.

Solving problems in the industry using Operation Research techniques
A mixed team of specialists from relevant disciplines are called to analyze the
problem and to propose a course of action to the management.
The team constructs the mathematical model , simulate the problem.
By changing the values of the variables in the model generally with a
computer and the team can determine the effect of each change.
This approach facilitates disciplined thinking, precision and perfection by

expressing relationships in quantitative terms which has been widely used in
planning and control activities where problems can be precisely indentified and
defined in quantitative terms.
Systems approach: Provides integrated approach to management problems. The

key concepts of systems approach are
A system is a set of independent parts
A system can be either open or closed
Every system has a boundary
Structure subsystem: refers to the formal division of authority and responsibility,

communication channels and workflow.
People subsystem: refers to the employees with their motives, attitudes and values
and the informal organization.
Technology subsystem: refers to the tools and equipment as well as techniques
which are used by the organization to perform the task.
Contingency approach: Approach suggests that the task of managers is to identify

which technique best contribute to the attainment of management goals. It attempts
to integrate all previous approaches. Contingency views are applicable in designing
organizational structure, in deciding the degree of decentralization, in planning
information decision systems in motivational and leadership approaches ,in
establishing communication and control systems ,in solving conflicts and managing
change in establishing and control systems.
UNIT-II
Planning:
Planning is the beginning of the process management .A manager must
plan before he can possibly organize, staff, direct or control. Planning
sets all other functions into action, it can be seen as the most basic
function of management. Without planning other functions become
mere activity.
Nature of Planning
Planning is the beginning of the process of management
Planning is an intellectual process
Planning is a continuous process
A plan must be flexible, the ability to change direction to adopt
to changing situations without undue cost .
Planning is an all pervasive function . Common to all level of
managers. The differences in each level are the time period
covered and the time spend on planning .
Importance of Planning
Minimizes risk and uncertainty
Leads to success
Focuses attention on the organizations goal
Facilities control
Trains executives
Forms of Planning
Strategic Planning
Tactical Planning
Strategic Planning
It decides the major goals & policies of allocation of resources to
achieve goals
Done at the higher level
Long term
More uncertain
Less detailed
Tactical Planning
Detailed use of resources for achieving each goal
Lower level of management
Short term
Less uncertain
More detailed because of day to day operation
Single use plans and standing plans.
Single use plans are developed to achieve a specific end. when
the end is reached the plan is dissolved. The two major types of
single use plans are programs and budgets.
Programs
Programs are precise plans or definite steps in proper sequence to
discharge a given task, two ingredients of program are time
phasing and budgeting.
Budget
It is a financial quantitative statement prepared prior to a definite
period of time. The important budgets are sales budget,

production budget, cash budget and expense budget.
Standing plans on the other hand are designed for situations that
recur often to justify the standardized approach. For example, it
would be inefficient for a bnak to develop a single use plan for
processing a loan application for each new client. instead it uses
one standing plan that anticipates in advance whether to approve
or turn down the request based on the information furnished,
credit rating, etc. the major types of plans are policies,
procedures methods and rules
Policy A policy is a general guideline for decision making
Types of policies
Classification on the basis of sources
Classification on the basis of functions
Classification based on the organizational level
Procedure Policies are carried out by means of more detailed
guidelines called procedures.
Difference between policy & Procedure
Policies are guides to think & action of people at higher levels.
Procedures are guides to action only for people at lower levels
Policies help in fulfilling the objectives of the enterprise .
Procedures show the way to implement policies.
Policies are broad and allow some latitude in decision making.
Procedures do not allow latitude.
Method
A method is a prescribed way in which one step of a procedure is
to be performed. Method help in increasing the effectiveness and
usefulness of the procedure.

Rules
Detailed and recorded instructions that a specific action must or
must not be performed. A rule is different from a policy ,
procedure or method
Characteristics of Objectives
Objectives are multiple in number
Objectives are tangible or intangible
Objectives have a priority
Objectives are generally arranged in a hierarchy
Objectives sometimes clash with each other
Decision Making
The Process of choosing best alternative among available
alternatives.
Types of decision:
Pragmatic & non pragmatic decisions
Individual & collective decisions
Minor & major decisions
strategic & routine decisions
simple & complex decisions
temporary & permanent decisions
Individual decisions:
These are the decisions taken by a single person.
These decisions are taken where the problem is of routine nature,
and definite rules & procedure exists.
Collective decisions:
Decisions taken by a group of people or committee.
Interdepartmental & important strategic decisions are taken by

group.
Advantages of collective decisions:
Better communication.
Increased acceptance.
Better coordination.
Disadvantages:
Delay in arriving at decisions.
group may be indecisive.
UNIT-III ORGANIZING & STAFFING
Nature and purpose of organization

Principles of organization
Types of organization
Departmentation
Committees
Centralization Vs decentralization
Organization levels and span of control
Organization is a system of co-operated activities of two or more
persons. It is a form of human associations for the attainment of
a common purpose. Organization involves the grouping of
activities necessary to accomplish goals and plans, assignment of
these activities to appropriate departments and positions for
authority, delegation and coordination.
There are 2 types of organizations

1. Formal organization
2. Informal organization
FORMAL ORGANIZATION
Formal organization must be flexible and there should be room
for discretion, for taking advantage of creative talents.
If the manager is to organize well, the structure must furnish an
environment, in which individual performance contribute most
effectively to group goals.
INFORMAL ORGANIZATION
Informal organization is any joint personal activity without
conscious joint purpose, even though possibly contributing to joint
results.
Managers must be aware of the informal organization and avoid
antagonizing it, they will find it advantageous to use it as they
manage subordinates.
PURPOSE OF AN ORGANIZATION
The basic purpose of having organization is to formulate a frame or
structure of an enterprise with a view to fulfill the enterprise tasks.
The purposes are:
i)To establish the pattern of relationship by giving duties and
responsibilities to an individual or group.
ii)to demarcate the authority, responsibility and duties of each
individual or group.
iii)To provide adequate communication.
iv)To coordinate and control the activities of individuals or
groups to achieve common objectives.
v)To tell each manager where his accountability lies and,
who (below him) are in his sphere of demand.
PRINCIPLES OF ORGANIZATION
The success of a business organization can be ensured if the basic
principles are used. They are as follows:
1. Objectives : The objectives of the enterprise influence the
organization structure and hence the objectives of the enterprise
should first be clearly defined.
2. Specialization : The activities of the enterprise should be divided
according to functions and assigned to persons according to their
specialization.
3. Span of Control : The span of control should be minimum as far
as possible, the minimum, that means an executive should be
asked to supervise a reasonable number of subordinates, say only
six.
4. Scalar principle : Also known as chain of command. The line
of authority from the chief executive at the top to the front-line
supervisor at the bottom, must be clearly defined.
5. Unity of Command : Each subordinate should have only one
supervisor whose command he has to obey. Dual subordination
must be avoided to avoid uneasiness, disorder, indiscipline etc.
6. Delegation : Proper authority should be delegated at the lower

level of organization also to carryout the work effectively.
7. Efficiency : The organization structure should help enterprise to
function efficiently to accomplish the objectives at lowest cost.
8. Unity of direction : There should be one objective and one plan
for a group of activities having same objectives.
9. Personal Ability : As people constitute an organization, there is
need for proper selection, placement and training of staff.
Organization structure must ensure optimum use of human
resources and encourage management development programme.
TYPES OF ORGANIZATION
1. Line organization
2. Functional or staff organization
3. Line and staff organization
4. Committee organization
5. Matrix organization
DEPARTMENTATION
Horizontal differentiation of tasks or activities into discrete
segments is called departmentation.
There are several bases for departmentation:
1. Departmentation based on products
This is more suitable for a large organization that
manufactures a large variety of products.
Under this separate departments are created and each
department is controlled by a manager who will be responsible
for all the activities of that sub group.
Each subgroup will have its own facilities required
for manufacture, purchase, marketing and accounting etc.
2. Departmentation based on functions Based on each major function of the organization.
Depending on the nature of organization the various functions
are as follows:
. Marketing
. Engineering
. Production
. Finance
. Personnel
Purchase etc.
3. Departmentation based on time One of the oldest forms of departmentation.
Generally used at lower levels of an organization.
Is the grouping of activities on the basis of time.
COMMITTEES
A committee consists of a group of people specially designated
to perform some administrative acts. Functions as a group and
requires free interchange of ideas among its members.
TYPES OF COMMITTEES1. STANDING OR PERMANENT COMMITTEE:
EX- Govt. enterprise like Railway Boards, Board of Revenue,
Planning Committees etc.
2. TEMPORARY COMMITTEE :
It is formed to solve the problems arising occasionally.
3. GENERAL ADVISORY COMMITTEE:
EX- Business enterprise, board of directors, executive
committee.
4. ACADEMIC COMMITTEE:
EX- Institutions like university councils, board of studies etc.
Unit-V
ENTREPRENEURSHIP
According to Coles definition :It is a purposeful activity of an
individual or a group of associated individuals undertaken to
initiate , maintain profit by production or distributing of
economic goods and services results in :
1 . New organizations and businesses.
2 . Revitalizing mature organizations .
According to Joseph Schumpeter
An entrepreneur in an advanced economy is an individual
who introduces something new in the economy a method of
production not yet tested by experience in the branch of
manufacture concerned, a product with which consumers are
not yet familiar, a new source of raw materials or of new
markets and the life.
Characteristics of Entrepreneur
Action-oriented, highly motivated and ready to take risk at all
levels to accomplish the goal.
Should have unwavering determination and commitment.
Creative and result oriented, hard working.
Accepts responsibility with enthusiasm.
Self confident, dedicated and self disciplined.
Both thinker and doer, planner and worker.
Future vision, intelligent, imaginative and self-directed.
Qualities of Entrepreneur:
Success and achievement : They are self directed to
accomplish goals.
Risk bearer: He accepts, understands and manages risk.
Opportunity explorer : Identifies opportunities and explores
them.
Planner : He makes plans and follows the plans.
Stress taker : Accepts and bears any amount of the stress.
Facing uncertainties : They should face the uncertainties and
unexpected outcomes and accept them.
Independent : An independent person who likes to be his own
master.
Flexible : Open minded person, flexible to adopt to
demanding situational changes.
Self confident : Directs his abilities towards the
accomplishment of goals.
Motivator : initiates and influences People.
FUNCTIONS OF AN ENTREPRENEUR:
Classified into three groups
1 . Primary functions
a. planning
b . Organization
c . Decision making
d . Management
e . Innovation
f . Risk bearing
2 . Other functions
a . Diversification of production
b . Expansion of enterprise etc ..
3 . Functions important for developing countries.
a . Management of scarce resources
b. marketing etc..
TYPES OF ENTREPRENEUR:
Classified according to
1 . Type of business
2 . Use of technology
3 . Motivation
4 . Stages of development
5 . Others
ENTREPRENEURS ACCORDING TO THE TYPE OF
BUSINESS
1. Business entrepreneurs- production & sales
2 . Trading entrepreneurs-only sales
3 . Industrial entrepreneurs-only production
4 . Corporate entrepreneurs5 . Agricultural entrepreneur business with crops
ENTREPRENEURS ACCORDING TO TECHNOLOGY
1. Technical entrepreneur
2 . NonTechnical entrepreneur
3 . Professional entrepreneur
ENTREPRENEURS ACCORDING TO MOTIVATION
1. Pure entrepreneur-motivated towards some idea not fully
based on profitability only
2 . Induced entrepreneur- due to financial support by bank or due
to any govt. support.
3 . Motivated entrepreneur
4 . Spontaneous entrepreneur
ACCORDING TO STAGES OF DEVELOPMENT
1. First generation entrepreneur
2 . Modern entrepreneur
3 . Classical entrepreneur
1. Planning of the project: He is the organizer to conceive the
idea of launching the project and to Program to structure of the
business
2. Management: The entrepreneur is also responsible for the

management of business. He tries to have a least cost
combination of factors of production. 3. To Face Risks: He faces
uncertainly and bears risks in his business uncertainly comprising
those risks against which it is not possible to insure. He also faces
the risk of other producers may enter the market 4. Distribution
of Rewards: He is responsible of distributing the rewards to all
factors of production. He pays the reward in the shape of rent,
wage, and interest and bears the risk of profit or loss himself 5.
Sale of Products: An entrepreneur is also responsible of
marketing, advertising. He wants to maximize his profits by
selling his product in the market. 6. Scale of Production: He
decided the scale of business in according with the provision of
capital. Then, he takes the decision of what where and how to
produce goods.
7. Joint stock Organization: In a partnership, the entrepreneurial
functions are divided between the partners. But in public limited
company, the board of directors takes this responsibility with
nationalized enterprise; the entrepreneurial decisions are left to
the government or a body to which government has delegated its
powers. Types of entrepreneurs: The entrepreneurs have been
broadly classified according to the type of business, use of
professional skills, motivation, growth and stages of
development. The various types of entrepreneurs are as described
below.
Type of entrepreneurs
1)According to the type of business
i)Business entrepreneur ii)trading entrepreneur ii)industrial
entrepreneur (a)Large (b)medium (c)small and (d)tiny
iv)corporate entrepreneur v)agricultural entrepreneur (vi)Retail
entrepreneur vii)service entrepreneur
2)According to the use of technology
i)technical ii)non technical (iii)professional iv)high tech v)low
tech
3)According to the motivation
i)pure ii)induced iii)motivated iv)spontaneous

4)According to growth
i)growth ii)super growth
5)According to stages of development
i)modern ii)classical iii)urban
6)According to the area
i)urban ii)rural
7)According to the gender and age
i)men ii)women
8)According to the sale of operation
i)small ii)large
9)Others or unclassified
i)professional ii)non-professional iii)modern iv)traditional
v)skilled vi)nonskilled vii)imitating viii)inherited ix)forced
x)national international xii)bureaucratic xiiii)intrapreneur
xiv)immigrant
1) Entrepreneurs according to the type of business: i) Business
entrepreneurs: are individuals who conceive an idea for a new
product or service and then create a business to materialize their
idea into reality. Called small business entrepreneurs when found
in small business (printing press, textile processing house, ad
agency, readymade garments, confectioneries etc) ii) Trading
partner Trading entrepreneur undertakes trading activities not
concerned with manufacturing work. Identifies potential markets,
stimulates demand for his product line and creates interest and
desire among buyers to go for his product. iii) Industrial
entrepreneur: is essentially a manufacturer who identifies the
potential needs of the customers and tailors a product according
to the needs of the customers. Starts an industrial unit to make
new product. Has the ability to convert economic resources and
technology into a profitable venture. ex(electronics industry,
textile units etc) iv) Corporate entrepreneur :Corporate
entrepreneur is an individual who demonstrates his innovative
skill in organizing and managing a corporate undertaking. is an
individual who plans develops and manages a corporate body
which is form of business organization registered under the trust

act. v) Agricultural entrepreneur :Are those who undertake
agricultural activities as raising and marketing of crops, fertilizers
and other inputs of agriculture Raise agriculture through
mechanization, irrigation and application of technologies of dry
land agricultural products and covers a broad spectrum of
agricultural sector. 2)Entrepreneurs in technology classified as
1)Technical:
Concentrates more on production than through sales and
marketing through the demonstration of his innovative abilities in
matter of production of goods and rendering of services and skills
in production techniques.
2) Non-technical:
Not concerned with technical aspects of the product and are
concerned only with the alternative distribution and marketing
strategies to promote their business.
3) Professional entrepreneur:
3)Entrepreneurs and motivation:
Are those entrepreneurs who use the motivated as a force to
achieve their objectives classified as
(i) Pure: Is an individual who is motivated by the cycological and
economic rewards. And undertakes an entrepreneurial activity out
of personal satisfaction, ego and status.
(ii) Induced: Is one who is induced to take up entrepreneurship
task due to the policy measures of the government which
provides assistance, incentives, concessions and necessary
overhead facilities to star new venture.
(iii) Motivated entrepreneurs: Are motivated by the desire of self
fulfillment. They come into being because of the making and
marketing of the new product for the use of customers who is
further motivated by the reward in terms of profit.
(iii) Spontaneous entrepreneur: Start their business by their
natural talents are the persons who take initiative, are bold
confidence and have strong conviction in their inborn ability.
4) Growth and entrepreneurs:
Growth: Are those entrepreneurs who take a high growth industry

which has substantial growth prospectus.
Super growth entrepreneurs: Are those who have shown
enormous growth of performance in their venture and Identified
by liquidity of funds, profitability and gearing.
5) Entrepreneurs and stages of development:
(i)First generation: One who starts an industrial unit by his
innovative skill who essentially an innovator who combines
different technologies to produce a marketable product or service.
(ii)Modern: Undertaking those ventures which suit to the
changing and current demands in the market.
(iii)Classical: Is one who is concerned with the customers an
marketing needs through the development of a self-supporting
venture and is a stereotype entrepreneur whose aim is to
maximize the his returns at a consistent level with the survival of
the firm.
Others
i) Innovative: Are those who exhibit their cleverness in putting
attractive possibilities into practice. Are often involved in
changing the utility, value, economic characteristics of old
established products into something new, attractive and utility
and Are commonly found in developed countries ii)Imitative: Are
those characterized by the readiness to adopt successful
innovations by entrepreneurs who imitate techniques and
technology innovated by others , and are more adoptive and
flexible. Are also revolutionary and important who exploit
possibilities and are often involved in subjective innovation
which means the ability to do the things which have not been
done by a particular industrialist before.
OTHERS
1 . Innovative entrepreneur
2 . Initiative entrepreneur
Intrapreneurship: It is the entrepreneurship with in an

existing business structure. It is used to bridge the gap between

science and market place. The differences in the entrepreneurial
and managerial domains have contributed towards an increased
need for intrapreneurship.
ELEMENTS OF INTRAPRENEURSHIP
New business venturing :
This includes redefining the companys products or
services, development of new market segment or formation of
new corporate ventures .
Innovations :
This involves the development of new products,
improvement of existing products , development of improved
and simplified production methods and procedures .
Self-renewal :
This is the transformation of an organization through the
renewal of main ideas which includes redefinition of a business
concept, reorganization or modifications in the system with an
aim to initiate innovating.
Proactiveness :
This includes initiative and risk taking, competitiveness and
dashing to take new challenges.
EVOLUTION OF ENTREPRENEURSHIP
EARLY PERIOD:
An early example of entrepreneurship is known to be the
example of Marco Polo who tried to trade routes to the Far East. He
used to sign a contract with a venture capitalist to sell his goods.
MIDDLE AGES:
In the middle ages , the term entrepreneurship was referred to a
person who was managing large projects. He was not taking any risk
but was managing the projects using the resources provided.
Ex: The cleric who used to be in charge of big architectural

works like castles, cathedrals etc.
17th CENTURY:
During 17th century , an amalgamation of risk with
entrepreneurship had evolved. A person (entrepreneur) used to enter
into a contractual agreement with government to perform a service or
to supply some goods. This involved some risk since the contract price
was fixed and the profit or loss was borne by the entrepreneur.
18th AND 19th CENTURY:
As a result of industrialization during 18th century the person with
capital(capitalist) is differentiated from the person who needs capital
(entrepreneur).
Many of the technical inventors did not have money to turn their
inventions into products. Hence some capitalists had to finance them.
STAGES IN ENTREPRENEURIAL PROCESS
The process of starting a new venture is the main theme of
entrepreneurial process which involves more than just problem solving
in any typical management position.
This process has 5 important stages:
i. Identification of an opportunity
ii. Evaluation of an opportunity
iii. Preparation of the business plan
iv. Determination and organizing the resources
Management of the enterprise.
i.
Identification of opportunity:
The first step in the entrepreneurial process is the identification
of opportunity. This may be from his own idea or from external
sources like consumers and business associates, members of
distribution system, independent technical organizations, consultants,
etc.
Some individuals are highly technical oriented and are not

interested in any entrepreneurship. Such people conceptualize new
business opportunities that can be given to the interested. Some
government organizations and R & D centers also provide new ideas.
ii, Evaluation of the opportunity:
The opportunity identified by using either input from consumers,
business associates, channel members or technical people, must
be carefully screened and evaluated.
This evaluation is perhaps the most critical element of the
entrepreneurial process as it allows the entrepreneur to assess
whether the specific product or service provides sufficient return
on investment.
An over all opportunity assessment plan is prepared to evaluate
the opportunity. This plan includes:
Description of product or service
Agreement of opportunity
Assessment of the entrepreneur and his team
Resources needed
Amount and source of capital needed
Rewards and profit expected
iii, Development of a business plan:
To achieve the proposed business opportunity, a well
defined business plan need to be developed. This is a tedious and
time consuming activity of the entrepreneurial process. The
business plan should contain the following in order:
Title of project, table of contents and executive
summary.
Description of business and industry.
Technology plan.
Financial plan.
Organization plan.
Production and operation plan.
Marketing and distribution plan.
Summary of plan.
iv, Determination and organizing the resources:
This process begins with the assessment of present resources.
Enough care must be taken not to underestimate the amount and
nature of resources required.
The risk involved with insufficient or incorrect resources should
be calculated.
Organizing the required resources at the appropriate time is
another important aspect of entrepreneurial process.
Alternative sources of supply, process of manufacture etc., are to
be planned.
v, Management of enterprise:
After resources are acquired, the entrepreneur must use them to
implement the business plan.
The operational problems of the growing enterprise must also be
examined.
This calls for a management with all functions like planning,
organizing, staffing, directing and controlling.
UNIT-VI
Small Scale Industries
SSI has been defined in 3 ways:
i. Conventional definition
ii. Operational definition
iii. National income accounting
A small scale industry is defined as A unit engaged in manufacturing,
servicing, and preservation of goods having investment in plant and
machinery, at an original cost not exceeding Rs.60 lakhs
CHARACTERISTICS OF SSI
Capital investment is small and most of them have a small
number of workers
Generally owned by a single or at the most 2 persons engaged in

production of small goods
Most of them are family owned industries
Workers are not well recognized and they may do different types
of work as need arises
Funded by owners savings or short term loans
Small-scale industrial activity is mainly dependent on owners
entrepreneurship
Exploitation of natural resources and human resources
Generally management and organization are very poor in SSIs
Incidents of early closure are of highest order
Profit margins are less due to competition
Innovation and risk bearing are high in SSIs
Faces cut throat competition
Few of them may grow as medium scale industries
Technology has become obsolete, resulting in closure of SSIs
Generally found in urban or semi urban areas
NEED OF SSIs
The following are some of the points which stress the need of SSIs
Innovative
Self satisfaction
Caters to individual taste and styles
Small in operation
Strength of nation
Spread over wide areas
OBJECTIVES OF SSIs
Creation of employment opportunities
Improvement of output, income and better standard of living
Elimination of economic backwardness of rural and under
developed areas
To reduce regional imbalances

To provide employment and means of regular source of
income
To improve the quality of industrial products produced in
cottage industries and increase production and profits
To facilitate import substitution
To encourage entrepreneurship and self-reliance
To mobilize regional resources of capital
Liberalization, Privatization, Globalization(LPG)
Started in July 1991

Foreign direct investment and new business areas started
Indian economy to grow new heights.
Past 3 decades Indian economy is growing at a rate of 5 % per
capita income. (GDP divided by the total population)
Exports have increased.
Liberalization
Import of scarce and non-available raw material becomes easy

This has led to many new openings
New entrepreneurs have started many SSIs
Liberalisation helped getting unavailable raw materials from
abroad.
o Eg. Electronic and computer industries.
Privatization
Helped the growth of SSIs in a big way
Earlier certain products / services were produced only by
Government organizations, no competition existed.
Privatization threw open to many challenging entrepreneurs to
produce similar goods and service with much competitive price

and quality.
Eg. Producing telephones, Insurance
Globalization
Helped in setting many SSI
It made possible export of goods produced in SSI.
Indian entrepreneurs in Pharma sector, I.T sector, steel sector
have gone to many countries to start new ventures.
Eg. Growth in BPO Business process outsourcing. Transport,
entertainment sectors.
GOVERNMENT POLICY TOWARDS SSI
SSIs have been given importance in 5 year plans by Government
of India.Government has announced several objectives and
intentions towards SSI through Industrial Policy
Resolutions(IPR)
IPR 1948
Importance of SSIs in the overall industrial development of the
country was accepted for the first time in 1948.
Main objective was to provide protection to SSIs.
It was recognized that SSIs are suited for using the local
resources and to create employment for people in rural areas.
IPR 1956
It aimed at Protection and Development and initiated the
modern SSI in India
It provided continuing policy support to the small sector and
aimed to ensure that decentralized sector gained self support
About 128 items were reserved for exclusive production in SSIs
During third 5 year plan period projects like Rural Industries
Project and Industrial Estate Projects were started to strengthen
SSIs
IPR 1977
Main objective was to promote cottage and SSIs in rural and

urban areas
It classified small sector into 3 categories
Cottage and household industries
Tiny sector
Small scale industries
504 items were reserved for exclusive production in SSIs
Proposal to set up agency called District Industry Centre (DIC) in
each district
IPR 1980
Main objective was to facilitate an increase in industrial
production through optimum utilization of installed capacity and
expansion of industry.
DICs were replaced with concept of Nucleus Plants in each
industrially backward district with an idea to promote SSIs
Also emphasized the promotion of village and rural industries to
generate economy
IPR 1990
Gave lot of scope and importance for SSIs to generate wage and
self employment opportunities in the country
Salient points to increase the development of SSI:
Investment in tiny sector increased to 5lakhs,provided it is
situated in area having population less than 50,000
Investment in SSIs increased to 60lakhs
Implemented scheme of central investment subsidy for SSIs in
rural areas
Technology up gradation programs
836 items were reserved for production in SSIs

Small Scale Industries Bank of India(SSDBI)was established to
ensure timely and adequate flow of credit to SSIs
NEW SMALL ENTERPRISE POLICY 1991
New policy titled Policy measures for promoting ,
strengthening and supplementing small, tiny and village
enterprises was issued
Main idea was to improve growth rate of sector which in turn
contributes to growth of economy
Some of the features of this policy are:
Investment in tiny sector increased to 5lakhs irrespective of the
location of the enterprise
Priority was given to small and tiny sectors in allocation of
indigenous raw material
Technology development cell
Export development centre
Limited partnership act
IPR 2000
Main focus of this policy was:

Exemption for excise duty limit raised from 50lakh to 1 crore to
improve competition
Investment in industry and business enterprises increased to
10lakhs
Rs 75,000 was granted to each SSIs to obtain ISO 9000
certification
Family income eligibility limit was raised from Rs 24,000 to Rs
40,000 per annum
IPR 2001-02
Main focus of this policy was
Investment limit was increased to 5 crore

14 items were de-reserved related to leather goods,shoes and toys
Market development assistance scheme was launched for SSI
sectors
IPR 2003-04

73 items were de-reserved related to chemical products, leather
products, lab reagents
Investment in plant and machinery was increased from 1crore to
5 crores
Composite loan limit was increased from 25lakh to 50lakh
Specialized bank branches were made operational for SSIs
IPR 2005-06
180 items were de-reserved
Tax concessions
Technological facilities increased
Measures to improve infrastructure facilities and promote
marketing of products
UNIT-VIII
Preparation of project
Meaning of project:
It is a scientifically evolved work plan devised to achieve a

specific objective within specific period of time.
Projects differ in size, aim, time, but have 3 basic attributes
A course of action
Specific objective
Definite time duration
Classification of project:
1.Quantifiable & non-quantifiable project
Quantitative assessment of benefit can be made.
2.Sectoral projects
Automobile, Agricultural, Power, health, education, transport,
food ,Mining, irrigation etc.
3.Techno economic projects
Factor Intensity-oriented classification
Capital intensive or labour intensive
Large investment made in plant and machinery called capital
intensive. If the project involves more human resource called
labor intensive.
4. Cause oriented classification- Demand based or raw material
based
5. Magnitude oriented classification- Large scale , medium
scale, small scale
Project is identified from the following ways
Observation- The scarcity of a particular product or service. The
availability of raw material or skill
Trade and professional magazines
It keeps a person in touch with latest development & trends
Bulletins of research institutions-summary of news through
research
Government sources-various department of government provide
useful information.
Project selection
Starts from ending of project identification
SWOT or SCOT (c-constraints) analysis
Technology
Equipment
Investment size
Location
Marketing
PROJECT APPRAISAL
Project appraisal means the assessment of the project in terms of
its economical, social and financial liability.
This makes it necessary to recognize the interrelationship of
various aspects of project.
Financial institutions carry out project appraisal to assess its
creditworthiness before giving finance to a project.
METHODS OF PROJECT APPRAISAL

Economic analysis
Financial analysis
Technical analysis
Managerial competence
Market analysis
Economic analysis:
This is the fundamental one. It includes requirement for raw
materials level of capability utilization, expected sales, expected
expenses and expected profits.
Financial analysis:
It includes assessment of financial requirements like fixed
capital and working capital, land and building ,and plant and
machinery are some examples of fixed capital. working capital is
that amount of funds which is needed in day-to-day business
operation.
Technicalfeasibility:
It means that the adequacy of the proposed plant and equipment
to produce the product at proposed technology.
Managerial competence:
It plays an important role in making the enterprise a great
success. In its absence a technically and financially viable project
may fail. Also good managerial ability may bring a bad project to
an efficient one.
Market analysis:
Before the actual start of production, there is a need to study
the market with respect to demand, target customers, when and
where the products are to be sold.
Methods to estimate demand
Opinion pool
Market survey
Life cycle analysis
Desk survey
Dealers opinion etc
NETWORK ANALYSIS
Network is a set of symbols connected with each other with a
sequential relationship with each step making the completion of
project/event.
A number of networking techniques have been developed for
project scheduling. They are
(i)Program Evaluation and Review techniques(PERT)
(ii)Critical Path Method(CPM)
(iii)Graphical Evaluation and Review Techniques(GERT)
(iv)Line of Balance(LOB)
(V)Work shop Analysis and Scheduling Program(WASP)
Importance of Network Analysis
The network analysis helps in identifying the hidden stages
involved in project estimates.
The following are the points that shows about the importance of
network analysis
(i)The events should be considered as different branches of
operations.
(ii)The different segments of the project are treated as separate
network which are finally integrated to the overall network.
(iii)Cost estimates would depend on the project time estimates
and the charge of prices of different factors of production.

Program Evaluation and Review Techniques(PERT):
PERT was first developed as a management aid for completing
Polaris Ballistic missile project in USA during 1958.
Steps involved in PERT:
(i)The various activities involved in the project are drawn up in a
sequential relationships to show which activity follows what.
(ii)The time required for completing each activity of the project
is estimated and noted on network.
(iii)The critical activities of the project are determined.
(iv)The variability of the project duration and probability of the
project completion in a given time period are calculated.
Advantages of PERT:
(i)It determines the expected time required for completing each
activity.
(ii)It helps completion of project duration with in expected time
period.
(iii)It enables detailed planning of activities.
Limitations of PERT:
(i)Difficult to provide realistic/correct time estimates for new
activities.
(ii)There is no provision in this techniques about requirement of
resource at various activities.
Critical Path Method(CPM)
CPM was first developed in USA during 1956 for periodic
overhauling and maintenance of a chemical plant.
CPM differentiates between planning and scheduling of the
project.
The duration of different activities in CPM are deterministic.
Advantages of CPM:
(i)It makes control easy for management.
(ii)It makes room for detailed and better planning.
Limitations of CPM:
(i)CPM estimates are not based on any statical analysis.
(ii)CPM operates on the assumption that there is a precise known
time that each activity in the project will take.

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MANAGEMENT & ENTREPRENEURSHIP

Actuating : managers motivate and direct subordinates

MANAGEMENT & ENTREPRENEURSHIP

Figure head: performs duties of ceremonial nature such as greeting the

Monitor: must perpetually scan his environment for information interrogate

MANAGEMENT & ENTREPRENEURSHIP

Conceptual skills deals with ideas

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

Top management: It consists of board chairman, the company

Functions of Top Management :

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

To analyze, evaluate & deal with the external environmental

Middle & lower

Policy formulation &

Policy execution for objective

Broad & conceptual

Narrow & operational

5 Factors affecting Mostly external

Entrepreneurs & owners

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

Functions of Board of Directors:

MANAGEMENT & ENTREPRENEURSHIP

Management is the Art of getting things done through others

MANAGEMENT & ENTREPRENEURSHIP

Time and Motion Study

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

1)Division of work: In the management process ,better work cannot be performed

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

11) Equity: Equality of fair treatment which results from a combination

Limitations of Administrative management:

It develops an orientation towards their own particular department than towards

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

Principle of hierarchy followed -Administrative Acts , rules recorded in writing

Rational Personnel Administration-people selected based on merit and paid acc

Limitations of Bureaucracy Management

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

Quantitative approach: It is called the management science approach.

This approach facilitates disciplined thinking, precision and perfection by

Systems approach: Provides integrated approach to management problems. The

Structure subsystem: refers to the formal division of authority and responsibility,

MANAGEMENT & ENTREPRENEURSHIP

which are used by the organization to perform the task.

Contingency approach: Approach suggests that the task of managers is to identify

MANAGEMENT & ENTREPRENEURSHIP

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

period of time. The important budgets are sales budget,

MANAGEMENT & ENTREPRENEURSHIP

usefulness of the procedure.

MANAGEMENT & ENTREPRENEURSHIP

Interdepartmental & important strategic decisions are taken by

Amutha S , Associate Prof., Dept. of CSE, DSCE

MANAGEMENT & ENTREPRENEURSHIP

UNIT-III ORGANIZING & STAFFING