Entrepreneurship

Module 5Entrepreneurs in India: Family businesses, new generation entrepreneurs, women entrepreneurs.***********************************************************************WOMAN ENTREPRENEURS:When women move forward, the family moves, the village moves and the nation moves." —Pandit Jawaharlal Nehru

Women constitute around half of the total world population. So is in India also. They are, therefore, regarded as the better half of the society. In traditional societies, they were confined to the four walls of houses performing household activities. In modern societies, they have come out of the four walls to participate in all sorts of activities. The global evidences buttress that women have been performing exceedingly well in different spheres of activities like academics, politics, administration, social work and so on. Now, they have started plunging into industry also and running their enterprises successfully.

1. Define women entrepreneur (6 m)"A woman entrepreneur is a confident, innovative and creative woman capable of achieving self-economic independence individually or in collaboration, generates employment opportunities for others through initiating, establishing and running the enterprise by keeping pace with her personal, family and social life.”-Kamal Singh, Woman Entrepreneur from Rajasthan

2. Define women entrepreneurship (6m)

Accordingly, the Government of India (GOI 2006) has defined women entrepreneur as "an enterprise owned and controlled by a women having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of the employment generated in the enterprise to women." However, this definition is subject to criticism mainly on the condition of employing more than 50 per cent women workers in the enterprises owned and run by the women.In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organize and combine the factors of production, operate the enterprise and undertake risks and handle economic uncertainty involved in running a business enterprise.

3. What are the functions of women entrepreneur? (10m)

As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in establishing an enterprise. These include idea generation

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and screening, determination of objectives, project preparation, product analysis, and determination of forms of business organization, completion of promotional formalities, raising funds, procuring men, machine and materials, and operation of business.

Frederick Harbison (1956) has enumerated the following five functions of a woman entrepreneur:

1. Exploration of the prospects of starting a new business enterprise.2. Undertaking of risks and the handling of economic uncertainties involved

in business.3. Introduction of innovations or imitation of innovations.4. Coordination, administration and control.5. Supervision and leadership.The fact remains that, functions performed by an entrepreneur whether man

or women are the same . All these entrepreneurial functions can be classified broadly into three categories:

• Risk-bearing• Organisation• Innovations

4. Explain the importance of woman entrepreneurship(6m)

Employment for them Employing others A country needs to utilise its full human resources Very important from Human resources pt of view Raising the economic & social status of women in the society Govt should frame policies for the development of women entrepreneurs

5. What are the factors influencing women entrepreneurs?(6m) Economic independence Establishing their own creativity Establishing their own identity Achievement of excellence Building confidence Developing risk taking ability Motivation Equal status in society Greater freedom and mobility

6. Name few organisations providing Training & Finance to woman entrepreneurs (6M):

IRDP(Integrated Rural Development Programme)

PMRY(Prime Ministers Rozgar Yojana)

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SIDBI (Small Industries Development Bank of India)

START(Science & Technology Applied by Rural Transformation) by UNDP

7. Name the institutions supporting woman entrepreneurship(6M)(For detailed explanation refer attachment no 1)

CWEI

FWEI

FLO

WIT

Central Bank of India credit schemes (Cent Kalyani)

NABARD

DWCRA

SIDBI

SEWA

AWAKE

COWE

8. Name few women entrepreneurs in India(6m)(For detailed explanation refer attachment no 3)

Vidya Chabbria= Jumbo group

Anu Aga- Thermax group

Ranjana Kumar- Bank of India

Sullaja Firodia Motwani- Kinetic Engineering

Amrita Patel- NDDB

Priya Paul – Park Hotels

Swati Piramal- Nicholas Piramal

Ekta Kapoor

9. Name few Women’s organisation supporting women entrepreneurship(6m)(For detailed explanation refer attachment no 4)

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Sri Mahila Griha Udyog Lijjat Papad(Recognised by Khadi & Village Industries)

Sabala-an organisation for women empowerment

Co-operative women entrepreneurship- The Mahila Bunkar Sahakari Samithi

10.Give an account of the growth of women entrepreneurship in India(10m)

Women in India constitute around half of the country's population. Hence, they are regarded as the "better half of the society". In the official proclamation, they are at par with men. But, in real life, the truth prevails otherwise. Our society is still male-dominated and women are not treated as equal partners both inside and outside four walls of the house. In fact, they are treated as abla, i.e., weak and dependent on men. As such, the Indian women enjoy a disadvantageous status in the society. Let us give some facts about it. The low literacy rate (40%), low work participation rate 28%) and low urban population share (10%) of women as compared to 60%, 52% and 18% respectively of their male counterparts well confirm their disadvantageous position in the Indian society.

Our age old socio cultural traditions and taboos arresting the women within four walls of their houses also make their condtions more disadvantageous. These factors serve as non conducive conditions for the emergence and development of women entrepreneurship in the country

In India, women entry into business is a new phenomenon. Women entrepreneurship is traced as an extension of their kitchen activities mainly 3PS- PICKES, POWDER, PAPPAD. Women in India plugged into business for both push and pull factors.

Pull factors imply the factors which encourage women to start an occupation or venture with an urge to do something independently.

Push factor refers to those factors which compel women to take up their own business to tide over their economic difficulties and responsibilities.

With growing awareness and spread of education women shifted from 3P TO 3 modern E’s Electronics, Engineering & Energy under IRDP. Women entrepreneurs manufacturing solar cookers in Gujarat,

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small foundries in Maharashtra & TV capacitors in Odisha have proved that they are better than their male counterparts in business.

Sumati Morarji (Shipping Corporation), Yamutai Kirloskar ( Mahila Udyog Limited), Neena Malhotra(Exports), Kiran Majumdar Shaw(Bio technology) etc are some exemplary names of successful and accomplished women entrepreneurs in our country.In India Kerala is the state with highest literacy rate reflecting a congenial atmosphere for the development of women entrepreneurship in India. The proper education of women in Kerala coupled with the financial, marketing and trining assistance given by the state governments also helped motivate women to assume entrepreneurial career. Like Kerala, an increasing number of women are entering business in Maharashtra also.

11. What are the problems of women entrepreneurs?(10m)

i. Problem of finance & working capital: Finance is regarded as the life blood of any enterprise. Women entrepreneurs face shortage of funds due to two reasons. Firstly, women do not generally have property on their names to use as collateral security for obtaining funds from external sources . Secondly, banks also consider women as less credit worthy and discourage women borrowers on the belief that they can leave the business at any time

ii. Lack of Confidence: Women generally lack confidence in their own capabilities. Having accepted a subordinate status for long, even at home, members of their family do not appear to have total confidence in their abilities and on their decision-making. Society in general also lacks confidence in a women strength, traits, and competence. This is quite apparent in the family’s reluctance to finance a women’s venture, bankers are reluctant to take risks on projects set up by women, and individuals are unwilling to stand guarantee for loans to a women.

iii. Scarcity of Raw Material: Most of the women enterprises are plagued by scarcity of raw materials and necessary inputs. The failure of many women cooperatives in 1971 engaged in basket making is an example for how scarcity of raw materials causes winding up of businesses by women entrepreneurs

iv. Stiff competition: Women entrepreneurs do not have the organizational set up to pump in a lot of money for canvassing and advertisement. Thus they have to face stiff competition for marketing their products with both organized sector and male counterparts

v. Limited mobility: Unlike men, women mobility in India is highly

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limited due to various reasons. A single woman asking for room is still looked upon with suspicion in India

vi . Family Ties'. In India, it is mainly a women's duty to look after the children and other members of the family. Man plays a secondary role only. In case of married women, she has to strike a fine balance between her business and family. Her total involvement in family leaves little or no energy and time to devote for business. Support and approval of husbands seem necessary condition for women's entry into business. Accordingly, the educational level and family background of husbands positively influence women's entry into business activities.

vi i . Lack of Education: In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-economic problems. Due to the lack of education and that too qualitative education, women are not aware of business, technology and market knowledge. Also, lack of education causes low achievement motivation among women. Thus, lack of education creates one type or other problems for women in the setting up and running of business enterprises.

vi i i . Male-Dominated Society: Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality between sexes. But, in practice, women are looked upon as abla, i.e. weak in all respects. Women suffer from male reservations about a women's role, ability and capacity and are treated accordingly. In nutshell, in the male-dominated Indian society, women are not treated equal to men. This, in turn, serves as a barrier to women entry into business.

ix . Socio cultural barriers: A woman has to perform her family duties irrespective of her career as a working woman or an entrepreneur. In our society, more importance is given to educating the male child as compared to the female child. This results in lack of schooling and vo-cational training of women, their lack of attaining technical skills and thereby lack of awareness of opportunities available.

x. Production Problems: Production in a manufacturing enterprise involves coordination of a number of activities. While some of these activities are in the control of the entrepreneur, there are others over which she has little control. The inability of women entrepreneurs to keep pace with the latest advances in technology and lack of technical know-how results in high cost of technology acquisition and machinery utilisation. These problems result in increasing the cost of production and adversely affecting the profitability of the unit.

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xi. Inefficient Marketing Arrangements: Heavy competition in the market, and their lack of mobility makes the women entrepreneurs dependent on middlemen. For marketing their products, women entrepreneurs are at the mercy of middleman who pocket a major chunk of profit. Further, women entrepreneurs also find it difficult to capture the market and make their products popular. They lack information on the changing market. In addition, women entrepreneurs, face difficulty in collection of payments.

xi i . Low Risk-Bearing Ability: Women in India lead a protected life. They are less educated and economically not self-dependent. All these reduce their ability to bear risk involved in running an enterprise. Risk-bearing is an essential requisite of a successful entrepreneur.

In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost of production, social attitude, low need for achievement and socioeconomic constraints also hold the women back from entering into business.

12. What are the strategies for the development of women entrepreneurs?(10m)Domestic commitments and child-care support are the two main responsibilities of women. This, along with the still narrow outlook of society in accepting a woman as an entrepreneur makes her life more difficult. Some suggestions to meet these challenges and to encourage women entrepreneurship are given below.

To overcome the resistance from husband and members of the family at the time of setting up of their venture, prospective women entrepreneurs are advised to maintain their cool and persistently convince them, without confronting them, regarding the benefits of setting up of an enterprise. The woman requires to have a strong will power under the circumstances. The inflow of money will eventually solve this problem.

Shouldering the dual responsibilities of an entrepreneur and a homemaker can be effectively undertaken by a women entrepreneur through better time management.

The members of the family can also be involved in the business, which will help in sharing the burden of entrepreneurial work.

Moreover, the women entrepreneur must try to make her husband and children self-sufficient at home. With tact and diplomacy, she should solicit cooperation in running the enterprise from the family.

A women can set up a home-based business. By operating her business from home, a women can better coordinate her household and business responsibilities.

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A women can start her business when her children are grown up enough to 4 take care of their own small needs. This gives the women enough time enough to manage her enterprise.

Women must acquire education and go through confidence-building training to get rid of the traditional feeling that they are inferior to men and are dependent on men.

For marketing her products, a women entrepreneur must establish her credibility in terms of quality and competitiveness of product or service. She should acquire relevant techniques and skills to win customer’s loyalty. E- commerce businesses will also help greatly in this regard.

For publicity and advertisement, the women entrepreneur can work on alternatives like cable TV, pamphlets, leaflets, slides in cinema halls, banners at strategic locations, and so on.

Effective and efficient use of information technology like the Internet can help in assimilating information about the variety, range, and quality of say competing products, and publicity and marketing of products and services.

Workshop and seminars should be organised frequently for the officials of financial and support agencies and for women entrepreneurs to make their relations more cordial.

Procedures for financial assistance by banks and government organisations must be simplified. Women inspectors, if available, should be asked to inspect women enterprises.

It has been observed, that there is a tendency to project a higher value of sales, production, and profits in project reports to impress the bankers. Such a project profile is not appropriate from a financial management point of view. So, women entrepreneurs need to undertake training in various aspects of financial management to understand its implications

Since complicated and lengthy procedures make it difficult to acquire loans from government financial agencies and banks, it is suggested that women entrepreneurs search for non-formal sources of finance like private financiers, relatives, friends, and others

Banks and financial institutions must maintain a minimum target of loan to be disbursed to women entrepreneurs. Collateral security should be dispensed with in the case of women entrepreneurs because many women hardly have any property or other assets in their name to keep as guarantee.

Margin money for projects to be undertaken by women entrepreneurs should not exceed 10 per cent. Subsidies should also be given to women entrepreneurs at the initial stage itself.

Women entrepreneurs should acquire relevant training in technology and in details of their plant and machinery. They should be

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knowledgeable about the functioning of machines and processes. They should be more assertive with their employees. They should employ more women workers in their enterprises. They must undergo training in management skills to handle human resources as well as training in effective communication skills and practices and the legal aspects of running a business.

Group entrepreneurship is a viable option for the weaker sections of the society and it helps woman to overcome their poverty. It empowers women and provides the necessary confidence for entrepreneurship. Women's organizations, women’s cooperatives, and NGQs should be promoted to assist self- employment for poor women.

In the present scenario, due to modernization, urbanization, globalization and development of education, with increasing awareness, women are now seeking gainful employment in several fields.

.13. Discuss the role of SHGs in promoting grass-root woman entrepreneurship(10M)

SHG is a small economically homogeneous and affinity group of rural/urban poor, voluntarily formed to save and mutually agree to contribute to a common fund to be lent to its members as per group decisions

A typical rural women’s SHG is a good example of capacity building for prospective entrepreneurs. Its aims include enabling members with no educational or industrial or entrepreneurial background to become self-dependent and self-reliant, developing and enhancing the decision-making capacity of members, instilling in members the strength and confidence to solve their problems, and providing poor people a forum where they can learn about collectively mobilising and managing money and matters.In a SHG the women are organised into small groups. The group formation helps to generate peer group support and solidarity. The group meets regularly, initially for awareness generation. After selecting a specific project, some of the members of the group leave for training. Regular and timely attendance at meetings becomes very important at this stage and the quantum of weekly saving is decided upon. Each member is expected to contribute and participate. The initial contribution is made either by an NGO, or a funding agency or the government. Owing to the credit programme, the women have access to money. They decide on their own which issues are of concern. Some women may start a home-based business from the loan availed.

SHGs are directly helping women increase their income by providing loans for

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productive enterprises. There are other indirect ways in which SHGs can help increase income. The interest rate of moneylenders is avoided and women are equipped to face possible loss of assets like cattle and goats through insurance. However, self-help groups cannot be considered as a credit or savings group alone. Mobilisation and organisation of women into groups is equally important because these groups form the basis for solidarity, strength, and collective action. Organising such groups needs to go further in addressing not only economic but also other social and political issues. Such groups were first organised in many places as a savings group to overcome the lack of access to credit for women for entrepreneurial activities.

14.How do SHG’s work?(10m)

1.The group addresses a felt need and a common interest: When people share a common problem that can be addressed by group action, they are more likely to mobilise themselves and work with support agencies to change the situation than if the problem applies to only a few members. Social cohesion tends to break down as groups grow or spread over large areas and monitoring and behaviour of individuals becomes more difficult. For this reason, as groups expand, they either create subgroups or formalise regulations and delegate decision making to smaller working groups.2.The benefits of working together outweigh the costs: The benefits may be economic (cash savings, increased production, income and time savings), social capital formation (increased ability to collectively solve problems), increased individual capacity (knowledge and skills), psychological (sense of belonging and confidence), or political (greater access to authority, greater authority, and reduced conflict).3.The group is embedded in the local social organisation: Community organisations are most successful when based on existing relationships and groupings or when members share a common identity such as kinship, gender, age, caste, or livelihood.4.The group has the capability, leadership, knowledge and skills to manage the tasks: As noted above, special attention needs to be given to ensuring groups have the necessary capacities for the tasks at hand. Those in leadership positions need to be respected and honest in their dealings. In some cases, safeguards may need to be put in place to ensure that these leaders are accountable to the group members. 5.Thegroup owns and enforces its rules and regulations: Internalize rules and regulations that are known to its members characterize all successful groups and associations. Group members should be able to participate in determining the rules and the

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enforcement mechanisms

15. Explain the SHG System(10M)

Self-help Group is a collection of 20 members who form a group, facilitated by a non-governmental organisation (NGO) for its formation or by the Micro Finance Organisation (MFO) or a bank, or it may evolve from a traditional Rotating Savings and Credit Group (ROSCG) or other locally initiated grouping. The process of formal linkage to an MFO or a bank usually goes through the following stages, which takes a few months to years.

The SHG members decide to make regular savings contribution. These may be kept by their elected head, in cash or in kind or they may be banked.

The members start to borrow individually from the SHG, for various purposes on terms and interests rates decided by the group itself.

The SHG members open a savings account in the group’s name with the MFO or bank for funds that are not needed by members or in order to qualify for a loan from the bank.

The MFO or bank gives a loan to the SHG in the name of the group, that is then used by the group to supplement its own funds for lending to its members.

Married women between the ages of 25 and 50, to ensure a permanent address and thereby the security of the loans.

Recruitment of members from among themselves so that they are mutually accountable and understand the cooperative nature of

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the savings/loan plans. These voluntary SHGs are formed of women of different faiths and communities.

No alignment to any political parties or programmes. Politics is not allowed to be discussed at their bi-monthly meetings.

Readiness to be initiated into a 12- month small mutual savings plan, which works like an orientation for a bigger MFI/ICICI Bank micro-credit programme to follow. By this time members of SHG have demonstrated a proven ability to save funds and pay interest.

16. Give two examples of successful women entrepreneurs(10M)

Refer the case study material

Shahnaz Huzzain: A world famous woman entrepreneur

Kiran Majumdar Shaw-Biocon

17. Discuss any one of the institutions supporting woman entrepreneurship in detail (10M)AWAKE Association of Women Entrepreneurs of Karnataka (AWAKE)AWAKE was established in 1983 and has been recognised worldwide. It is an affiliate of Women’s World Banking, New York. It is one of India’s premier institutions for women totally devoted to entrepreneurship development.The vision of AWAKE is given below.

❖ To develop suitable membership programmes to increase member base and also to encourage members to be more active* To work as a team towards the shared objective of reaching a greater number of women through its programmes❖ To influence policy makers* To provide need-based quality programmes to its clients

The mission of AWAKE can be broadly described as “empowering women through entrepreneurship development to improve their economic condition”. AWAKE’S mission also includes the following.

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❖ To promote entrepreneurship among women and thereby empower them to join the economic mainstream❖ To enhance the status of women in society by creating a culture of entrepreneurship amongst women in both rural and urban areas4 To develop successful models of entrepreneurship for emulation worldwide. The following are the values that AWAKE seek to set.

OrganisationAWAKE is an ISO 9001-2000 accredited, not for profit registered Society. It is exempt from Income Tax under Sections 12A and 80 G of the Income Tax Act, India.

The Target Group• All women from urban, rural, national and international areas

aspiring to be socially and economically self reliant, irrespective of their academic, social and economic background.

• ALl women entrepreneurs seeking guidance to grow.• AWAKEs clientele comprises of 90% women, 60% rural, of which

50% belong to low income.

• NGO’s engaged in Income Generation Activities & Entrepreneurship Development.

Business counseling is an entry point to AWAKE. Aspiring women come to AWAKE for support to convert their ideas into a profitable business enterprise. One-to-one business counselling is done voluntarily by existing member entrepreneurs. Besides sharing their own practical experiences, the voluntary counsellors undergo training in professional counselling

AWAKE conducts general Entrepreneurship Development Programmes (EDPsX normally after every awareness pro gramme or at periodic intervals based on the need for one. EDPs are conducted by AWAKE’s core training faculty, along with a programme coordinator and member entrepreneurs who act as role models. The features of EDPs are as follows.

❖ Start-up enterprise training❖ Unique training module developed and practiced by AWAKE❖ Capacity building and preparation of client for business

development Sessions on empowerment, business, exposure visits, and interaction with successful entrepreneurs,

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government officials, and support agencies❖ Empowerment session including fear management, SWOT

Analysis, confidence building, problem-solving techniques, and so on

❖ Business session that includes selection of project, business plan, schemes and incentives, accessing resources, banking, production and quality control, marketing, book keeping and accounting, planning for growth and expansion

General Questions expected from this topic:i. The greatest problem of women entrepreneurs is that they

are women." Discuss.ii. What are the recent trends in the development of women

entrepreneurship in India?iii. Discuss the concept of women entrepreneurship in India

with the help of examples(refer attachment 3)iv. Discuss the role and functions of any three institutions

providing support to woman entrepreneurs(Refer attachment 1)

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FAMILY BUSINESSES:

1. Define family business(6M)

Family business or enterprise is meant to refer to the business which is owned and managed by the members of the family or by their successors. In other words, the enterprise which is developed on the basis of a person’s creative power or professional efficiency and is managed by the member or members as successors after his death is known as family venture or business.

It may be organized as a sole proprietorship, partnership, corporation, or limited liability company.

2. Name some of the famous family businesses in the world(6M)

Wal – Mart- Walton family

Samsung group- Lee Family

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Fiat Group- Agnelli family

The GAP- Fisher family

IKEA- Kamprad family

Tata Group – Tata Family

Grupo Modelo- Diez Fernandez family

Mccain Foods- Mccain Family

3. What are the types of family business?(6m)

Family-Owned Business: This is a family business in which a controlling size of ownership either in the form of shareholding or any other is owned either by the family or a member of the family member. Most of the family businesses especially when these are small in size fall into this type of family businesses.

Family-Owned and Managed Business : In this type of family business,a controlling size of ownership, be in the form of shares or other form of ownership, rests with the members of a single extended family or with a single member of the family but greatly influenced by other members of the family. One or more family members exercise the ultimate control over the management of the family business.

Family-Owned and Led Business: This type of family business is, to a great extent, similar to that of above i.e. 'Family-owned and managed' business. Nonetheless, it is different from above one in the sense that at least one member of the family is a member of the board of directors of the company / business. This enables him / her to exert influence over the business's direction, culture, and strategies.

4. Discuss the features of family business(10M)1. Formation: The method of formation of such venture is very easy

and simple. In order to develop such enterprises, no legal formalities are to be complied with.

2. Nature: From the viewpoint of nature, this type of business may be of two types:(a) (a)family business by inheritance, and (b) joint family business. The first type owned and managed by a single individual. After the death of the owner, by inheritance, the man of next generation becomes its owner. On the other hand, the joint family business is such a business in which all the members

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of the family have ownership but the task of management and control of business is delegated to the Karta or senior-most member of the family.

3. Creation: Sincerity, perseverance, skill and energy of an individual are involved in the formation of family business. Now the giant-sized businesses which have been running gloriously, were promoted at the initial stages as a contribution of one or more families.

4. Capital: The owner, Karta or the senior-most member of the family provides necessary capital for the business. If needed, the Karta at his own risk and responsibility or by procuring .family loan can increase the amount of capital.

5. Ownership: For the first type of business, either a single individual or sometimes more than one enjoys the ownership right. But in case of second type of business, i.e. in case of joint family business, all the members of the family enjoy the ownership right by birth.

6. Management: In case of inherited business, the main entrepreneur or his legal successor after his death enjoys the right to manage the business. But in case of joint family business, the task of management is delegated on the Karta or the senior-most member of the family

7. Stability: The first type of business lacks long stability. The stability of the business will last so long the entrepreneur remains alive. But after his death, if the suitable successor is available, the business is not closed down; but if the suitable successor is not available, the business will come to an end. On the other hand, for the second type of business, the stability is comparatively long; because, on the death of the Karta or of any member, the business is not abolished. But if the coparceners intend to share the ownership or if the Karta desires, the business will come to an end.

8. Profit sharing: In case of inherited business, the owner-entrepreneur is entitled to the full share of profit or loss. That is, in case of profit, he enjoys it along.The whole amount of profit and in case of incurring too, he has to bear the full amount of loss. In case of joint family business, profit is divided among the coparceners on the basis of share of ownership. In case of death of a member, other coparceners’ share will increase; similarly, if a new member is born, others’ share will reduce.

9. Extent of liability: The Karta or the entrepreneur has unlimited liability. But the liability of other members is limited up to the

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share of ownership. In other words, it can be said that the Karta or the senior-most member of the family will remain personally responsible to the third parties for debts and liabilities and the family as a whole will be jointly responsible.

5. What are the features of family business under Hindu law (Mitakshara law)?(10M)

Family business refers to such a business which is owned by the members of the family or managed by inheritance. In our country, the form of family venture means Hindu Family Business as per Mitakshara Law.Joint Family Business: Joint Family Business refers to such a business whose coparceners are the members of a family and which has not been apportioned. Only the Hindu law is applicable to such businesses, because coparcenery will be available on inheritance, not by means of contract.According to Mitakshara Law, the features of a Joint Family Business are stated below:1. Formation: No difficulty arises as to its formation. 2. Ownership: By virtue of birth right, the coparceners become the

owners of such businesses. For getting ownership, no capital is to be invested..

3. Management and contract: Though the coparceners become the owners of this business, the task of its management and control is generally vested with the senior-most member, who is known as Karta. He performs all functions relating to transaction of the business. But if the Karta becomes incapable of managing the business, a disorder arises in its management, and other coparceners collectively claim for partition of the business.

4. Legal status: In the eye of law, this business has no separate entity. The entity of the family and its business are inseparable.

5. Risk: The Karta of the family bears unlimited liability in this type of business. The liability of other coparceners is limited up to the share of their individual ownership rights.

6. Sharing of profits: In the joint family business, the coparceners enjoy the share of profit on the basis of ratio of ownership. But in case of birth of a new member, other members, share reduced. Similarly, in case of death of a member, others will get increased share. As such, there is no definiteness regarding getting the share of profit or dividend.

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7. Registration: This type of business does not require to be registered, since it is a non- statutory organisation.

8. Stability: In case of death of Karta, or of any coparcener, the business does not face any difficulty as regards its stability. In comparison to sole-proprietorship business, it is more stable

9. Position of Karta: The overall authority of management of this business is endowed with the Karta of the family Other coparceners have no right in this regard. He may borrow money for the business, if needed. For the interest of the business, he can sell or mortgage the property of the business; make contract with the third parties. But in no circumstances, he can condone the dues of the business. Thus, the Karta is the chief manager on one hand and agent and trustee of the coparceners on the other.

10. Position of a minor: In this type of business, with the birth of a member, he gets the share of ownership. So, there is no question of minor or major.

11. Retirement: If anyone intends to take retirement from the business, he is required to make partition of properties including the business. Thus after retirement, no coparcener can demand for an account of profit or loss of the past years.

12. Dissolution: In case of death of one or a few coparceners, this business does not dissolve. No coparcener can serve any notice for the dissolution of the business. When all the coparceners claim for partition, it gets dissolved.

13. Position of woman: Only the male members can become the coparcener in this business. No woman can claim for its ownership right. But with the enactment of Hindu Inheritance Act, 1956, women have been given the right of ownership in the property.

6. What are the advantages of family business?(10 M)1. Easy formation:.

2. Common Values: Entrepreneur and his / her family are likely to share the same ethos and beliefs on how things should be done. This will give entrepreneur an extra sense of purpose and pride - and a competitive edge for his/her business.

3. Strong Commitment: Building a lasting family enterprise means entrepreneur is more likely to put in the extra hours and effort needed to make the business a success. At the same time, his/her family is more likely to understand that he / she needs to take a more flexible approach to his/ her working hours.

4. Loyalty: Strong personal bonds, called loyalty, means

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Entrepreneurship

entrepreneur and family members are likely to stick together in hard times and show the determination needed for business success. Loyalty leads to commitment which gets translated into hard work and perseverance which are the prerequisites of success in any endeavour including business.

5. Stability: 6. Decreased Costs: Unlike non-family businesses, members of family

business may be more willing to make financial sacrifices for the sake of the business. For example, accepting lower pay than they would get elsewhere to help the business in the long term, or deferring wages during a cash flow crisis. The family business can also hold down the costs of governance, in terms of special accounting systems, security systems, policy manuals, legal documents and other mechanisms to reduce theft and monitor employees' work habits. This is possible because employees and managers of business are well related and have trust and confidence on each other.

7. Selfless activities: In such business, all the coparceners can perform their works in association with each other. In view of having such an outlook, each one works for others.

8. Source of income: Whatever is done by the coparceners, each one gets some amount of income or otherwise from the business. This leads to make them free from anxiety as to their maintenance.

9. Business experience: This may be called the primary centre for business experience. Though the Karta manages the business, but other coparceners can participate in it and thus they can gain business experience. With such business experience, they can promote separate business in future.

10. Division of labour: All the members of the family can undertake the responsibility for various activities on the basis of their own capacity and experience. Thus, the business is benefited for the division of labour.

11. Efficiency in management: The overall responsibility for management and control of the business is rested with the Karta, who is generally old and senior-most in age. As such, his managerial functions naturally become efficient and fruitful.

12. Birthright: The membership of this business is acquired by virtue of birthright. It does not require any money or labour to get its membership. Becoming owner of a business is an opportunity in human life.

13. Limited liability: The liability of the members of this business is

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limited. The members have no liability in excess of his share of ownership. Here, the members cannot individually sue or be sued.

14. Increase in confidence of joint family system: The scheme of financing for such business becomes easy and smooth. The foundation of joint family system becomes sound and strong.

Example:Following is an example of Bajaj family business confirming how

family business proves cost-effective:We may run businesses of different sizes but we have the same standard of living,' says Neeraj Bajaj. 'Rahul runs the 2500 crore Bajaj Auto and Shekhar runs the 200 crore Bajaj Electricals, but they get equal salaries and equal pocket money. Splits take place when there is visible inequality. We take pains to observe absolute equality, and our 15 rules keep us honest. We travel in the same types of cars; we are allowed the same class of air travel; we usually vacation together; thus, we minimise differences and comparisons.'Every year at Diwali the family members get together and we review the 15 rules by which we run our joint family. These rules relate to what each family member gets as pocket money, vacation allowance, what women spend on jewellery, and so on. Each year the family members update their allowances under the leadership of Rahul, who is presently the head of the household after my father Ramakrishna's death. And we meticulously stick to our pocket money. No exceptions! And I should know because I am currently the treasurer of the family, responsible for managing the family wealth, disbursing funds, filing tax returns and looking after the family affairs

6. What are the disadvantages of family business?(10M)

1. Indulgence in idleness: This business exhibits that without doing any work, the coparceners enjoy share of profit. As a result, they have no eagerness to work. They become very often indolent. Sometimes, they are also involved in anti-social activities.2. Dictatorship management: In this business, the management and controlling power have been rested with the Karta. If he is a well-efficient and wise man, then there is nothing to be anxious. But if he is eccentric or incompetent or corrupted, then the business will face

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bad days. Moreover, if he exercises dictatorship in management of the business, other coparceners will lose the inspiration.3. Absence of definite share: A coparcener may not have a definite

share all along in the business. If a new member is born, each one’s share will reduce. Then there is no certainty about the definite share of each coparcener.

4. Family chaos: Without doing any work, each coparcener enjoys a fixed income. This puts them in beneficial condition as regards their security. But it cannot be denied that money is the root of all evils. A conflict and dispute may arise among the coparceners in relation to profit or loss or authority in management of the business. This may disrupt the family peace.

5. Want of encouragement: Here, there is no scope of reward for the works done by enterprising persons. As such, the members may have want of encouragement about the activities of the business.

6. Heavy burden on Karta: The whole responsibility is cast on the senior-most person or Karta. On account of such heavy responsibility, he has no end of anxiety. Again, it may not be possible for one person to keep watch equally on everything; some aspects may be neglected or overlooked.

7. Want of coparcenery right to woman: The women of the family have no right to enjoyment. They are deprived of ownership right of the business. So, this system is not justified from the viewpoint of the society.

8. Difficulties in government control: This type of business does not require to comply with government rules and regulations. Hence, government has little contact with them; it cannot interfere the family secrecy. Therefore, various types of unsocial practices, viz., tax-evasion, black marketing, etc. will evolve out.

9. Inability for Shareholders to Cash Out of the Family Business: Mostly family businesses lack the financial ability to fund the redemption of stock from one major shareholder. Funds are typically not available, and most owners will refuse to go to the bank for a loan as it might put the company in a poor financial position. Thus, the minority shareholder wanting to cash out either cannot do it or must follow certain company policy, which normally discusses the conditions and timing of a stock redemption

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10. Explain the challenges in Family Business(10M)Family businesses go through various stages of growth and development over time. Many of these challenges will be found once the second and subsequent generations enter the business.A famous saying about family owned business in Mexico is “Father, founder of the company, son rich, and grandson poor”. The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and empty bank account.

Few challenges of family businesses are as follows:1. Emotions: Family problems will affect the business. Divorce,

separations, health or financial problems also create difficult political situations for the family members.

2. Informality: Absence of clear policies and business norms for family members’ tunnel vision. Lack of outside opinions and diversity on how to operate the business. Lack of written strategy. No documented plan or long-term planning.

3. Compensation: Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified. Role confusion. Roles and responsibilities must be clearly defined.

4. Lack of talent: Hiring family members who are not qualified or lack the skills and abilities for the organization. Inability to fire them when it is clear they are not working efficiently.

5. High turnover of non-family members-. When employees feel that the family “mafia” will always advance over outsiders and when employees realize that management is incompetent, they prefer to leave the organisation.

6. Succession planning. Most family organizations do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions.

7. Retirement and estate planning: Long-term planning to cover the necessities and realities of older members when they leave the company.

8. Training: 1 here should be a specific training program when you integrate family members into the company. This should provide specific information that related to the goals, expectations and obligations of the position.

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9. Paternalistic: Control is centralized and influenced by tradition instead of good management practices.

10. Overly Conservative: Older family members try to preserve the status quo and resist change. Especially resistance to ideas and change proposed by the younger generation.

11. Communication problems: Provoked by role confusion, emotions (envy, fear, anger), political divisions or other relationship problems.

12. Systematic thinking: Decisions are made day-to-day in response to problems. No longterm planning or strategic planning.

13. Exit strategy: No clear plan on how to sell, close or walk away from the business.

14. Business valuation: No knowledge is of the worth of the business, and the factors that make it valuable or decrease its value.

15. Growth: Problems due to lack of capital and new investment or resistance to reinvestment in the business.

16. Vision: Each family member has a different vision of the business and different goals.

17. Control of operations: Difficult to control other members of the family. Lack of participation in the day-to-day work and supervision required.

11. Give a real life example of sibling rivalry in family business(10 M)Refer attachment no 2 (Ambanis)

12. Which are the seven deadly sins in family business?(6m)Sins Consequences

1. It's the same old song. Family members' childhood behaviour and beliefs follow them into the business.2. We're one big, happy

family.The failure to recognize that running a business requires different practices than running a family.

3. They may have become adults, but they'll always be

my children.

The parents are unable to accept and treat their grown children as adults.

4. You're not loyal to this family if you insist on being selfish.

The failure is to acknowledge and treat family members as individuals.

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5. Father knows best. Founders usually possess dominating personalities and may be totally consumed by the business.

6. May be it will go away if we ignore it.

Ignoring problems only adds to their destructive potential.

7. Tell me about your childhood.

Children often enter the business before resolving childhood issues, which can affect the way that may work.13. Suggest a model to Improve/ sustain Performance of Family Business?

(10M)Several years ago, researchers David Sirmon and Michael Hitt examined the strategies behind successful family businesses. They found that success is tied directly to how well a company manages the five unique resources every family business possesses:

1. Human capital: The first resource is the family’s human capital, or “inner circle.” When the skill sets of different family members are coordinated as a complementary cache of knowledge, with a clear division of labor, the likelihood of success improves significantly.

2. Social capital: The family members bring valuable social capital to the business in the form of networking and other external relationships that complement the insiders’ skill sets.

3. Patient financial capital: The family firm typically has patient financial capital in the form of both equity and debt financing from family members. The family relationship between the investors and the managers reduces the threat of liquidation.

4. Survivability capital: The family company must manage its

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survivability capital—family members’ willingness to provide free labor or emergency loans so the venture doesn’t fail.

5. Lower Costs of Governance: The family business must manage its ability to hold down the costs of governance. In non-family firms, these include costs for things such as special accounting systems, security systems, policy manuals, legal documents and other mechanisms to reduce theft and monitor employees' work habits. But, a family^ business can minimize or eliminate these costs significantly because employees and managers of business are well related and have trust and confidence on each other.

If these family resources are clearly delineated and judiciously leveraged into a well-coordinated management strategy, the chances for success of family business greatly improve

14. Explain the TEN COMMANDMENTS of family business(6m) Compensation & reward for family Succession planning Family vision, strategy & governance Business vision, strategy & governance Conflict resolution mechanism’ Preserving wealth Ownership structure Induction & grooming Retirement & estate planning Recruitment & reward of non family professionals

15. What is business succession planning?(10M)

Business succession planning seeks to address and manage these vital issues involved in family business by setting up a smooth transition between their owner and the successor.

Succession planning means planning for succession or making preparations on who will succeed the owner- leader of the business.

Succession planning is a process for identifying and developing family members with the potential to succeed the key role of owner- leader in the business Leader and

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the future one of the family business.

In nutshell, business succession planning needs to be done with serious thinking. Following are some of the important steps involved in making a successful succession planning for a family business

While planning for management succession, entrepreneur should keep six factors into consideration: (z) the role of the owner during the transition; (ii) family dynamics; (iii) income for family members employed in the business and shareholders; ( iv) business conditions during transition; (u) treatment of long-term and loyal employees; and (vi) tax consequences

1. Make a Solid Case for Succession Planning: Remember people do not resist changing, they resist to be changed. Therefore, if one wants to influence family members' opinions about business succession, he/she wants first to make a strong case for succession planning. Convince the family members, with real life examples, the need for and significance of having succession planning for ensuring the smooth and effective running of family business generation after generation.. The fact remains that having a solid succession plan is like having a good insurance policy for the perpetual continuity of family business through generations. Educate and help family members understand the value of putting a succession plan into place well in time: "Change when you are still strong and when change appears unnecessary - do not wait for the day when you have no option but to change."

2. Prepare an Exit Plan: Clarify in advance under what circumstances the succession plan will take effect: whether on retirement or unplanned departure or changing financial situations. These questions help determine what the succession plan should detail most. Keep in mind that both early-exit and late- exist of the owner-leader have advantages as well as disadvantages for family business.

3. Identify the Successor : Identifying the right successor is one of the most significant steps in succession planning. The business successor should be identified by competence, not by any other considerations and compulsions. One way to do so is to first identify the qualities or attributes a successor must possess to succeed the business. The family member who possesses the maximum of so identified attributes should be selected for business succession.

4. Grooming and Developing the Successor : Once a successor is identified, he/she needs to be groomed and developed to assume the

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headship of the business. It can be done through various ways like giving on-the-job framing, working under mentors and advisors, and delegating some authority to the successor much before the actual passing on of the baton takes place. Of course, grooming more than one member to become the successor of business is not a bad idea, but at times it may create confusions and complexities leading to strenuous succession battles. Business history is replete with evidences, like the recent one of Ambani brothers, that extreme succession battle may cause a split in the family business. Yes, some may not consider the split as a bad thing considering the fact that the split between Ambani brothers led to a dramatic increase in the value of their individual holdings in the erstwhile family business.

16. How can you make family business more effective?(10m)• Focusing on Business, not Family Needs: Although a family

business entrepreneur may feel obligations to take care of family problems of one type or other. He/She should not use business as employment agency for family members. Neither he/she should use business funds for family purposes .Ultimate focus of running family business should be family as business, not business as family.

• Ploughing Back of Profits in the Business: Profits earned by family business should not be used for meeting family requirement, but should be reinvested in the business to further strengthen and sustain it in the market place.

• Using Caution with Family: Be cautious about the implications of hiring family members in the business to avoid likely conflicts and confrontations among the family members.

• Delegating Authority or Decision Taking: A family business entrepreneur should delegate decision taking to those who are competent and capable of making right decisions. This gives more time to entrepreneur to concentrate on business issues involving more serious thinking and visioning. The family entrepreneur who makes all decisions by himself and does not delegate to others is viewed as control freak. Such entrepreneur does not get wholehearted and willing cooperation and support from others.

• Viewing Big and Broader Picture : Family business entrepreneur should view big and broad, that is, he/she should consider others' interests as well while running the business. In other words, the entrepreneur while running business should strike a fine balance among three broad perspectives of family

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business: family, ownership, and management, also lumped together as the '3-Circle Model' of family business.

• Planning for Management Succession: Because family business runs for a long period of time, hence there is always a need to have a good management succession plan in place to carry on the business effectively.

• Prepare the Family Constitution: The family constitution also called 'family rules/ in simple sense, refers to do's and don't do's in the business. It elaborates about the good governance practices to be practiced in the family business.

.17. What are the pitfalls in family business?(6m)

An inability to separate the family’s business from the interest of the consumer

Short term approach to business

Leading to an absence of investment in employees and in product development

Insensitivity to the customer

Causes of pitfalls

Lack of focus & strategy

Nepotism in family(favouritism o one of the family members)

Lack of professionalism

Inability to separate the family’s interest from the interest of the business

Sibling rivalry

18. How to control sibling rivalry?(6M)

Open communicataions

Clarity of roles

A sense of humour

Family should spent Time away from the business

General Questions expected from this topic

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1. Explain two Indian family business and their contribution(Refer case study material- Murugappa, Ambanis, Wadia)

2. Sibling rivalry- good/ bad for the business . Comment

NEW GENERATION ENTREPRENEURS:1. Explain with examples the concept of new generation

entrepreneurship(10M) 10 Syed Balkhi, 21

Syed Balkhi used to get online at three o’clock in the morning to trade stones for a game called Neopets.When he was 12, his cousin pointed out that he could do the same thing with domain names – all while making handsome profit. Soon he was developing websites, designing them, and running a paid domain name directory.Along with a handful of college friends (Amanda Roberts, David Pegg, and Mohammed Karim), Syed has started a successful web service company called Uzzz Productions. His blog for WordPress beginners, WPBeginner, has been up since July 2009 and already attracts an incredible 145,000 unique visitors each month.

Flipkart(Sachin Bansal and Binny Bansal)

Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka. It was founded by Sachin Bansal and Binny Bansal in 2007. In its initial years, Flipkart focused on online sales of books, but later it expanded to electronic goods and a variety of other products. As of today, Flipkart is amongst the popular sites for online marketing business. Flipkart offers multiple payment methods like credit card, debit card, net banking, e-gift voucher, Cash on Delivery and Card Swipe on Delivery

Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked for Amazon.com before quitting and founding their own company. The first book the company sold was John Woods' Leaving Microsoft to Change the World. Today, Flipkart is amongst the top 20 Indian Web sites and has been credited with being India's largest online bookseller with over 11 million titles on offer. Further in 2012, Flipkart added A.C, air coolers, stationery supplies & life style products to its product portfolio. As of today, Flipkart employs more than 4,500 people.

Initially funded by the Bansals themselves with 400,000, Flipkart has raised funding from venture capital funds Accel India (US$1 million in 2009) and Tiger Global (US$10 million in 2010 and US$20 million in June 2011).

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Flipkart.com, on 24 August 2012, announced the completion of its 4th round of $150 million funding from MIH (part of Naspers Group) and ICONIQ Capital. The company announced, on 10 July 2013, that it has raised an additional $200 million from existing investors including Tiger Global, Naspers, Accel Partners and Iconiq Capital.

Acquisition by Flipkart

2010: WeRead, a social book discovery tool. 2011: Mime360, a digital content platform company. 2011: Chakpak.com is a Bollywood news site that offers updates, news,

photos and videos. Flipkart acquired the rights to Chakpak’s digital catalogue which includes 40,000 filmographies, 10,000 movies and close to 50,000 ratings. Flipkart has categorically said that it will not be involved with the original site and will not use the brand name.

2012: Letsbuy.com is India's second largest e-retailer in electronics. Flipkart has bought the company for an estimated US$25 million. Letsbuy.com had been closed down and all the traffic of Letsbuy is diverted to Flipkart.

Flipkart's reported sales were 40 million in FY 2008–2009, 200 million in FY 2009–2010 and 750 million for FY 2010–2011. In FY 2011–2012, Flipkart is set to cross the 5 billion (US$100 million) mark as Internet usage in the country increases and people get accustomed to making purchases online. Flipkart projects its sales to reach 10 billion by year 2014. On average, Flipkart sells nearly 20 products per minute and is aiming at generating a revenue of 50 billion (US$1 billion) by 2015.

Farrhad Acidwalla, 18His first step at entrepreneurship started with his borrowing $10 from his parents to buy his first domain name. He began building a web community devoted to aviation and aero-modeling. The website was a success; he sold it for a lot more money than his initial investment, and moved on with other similar ventures. Each took his achievement to another level and the appreciations left him humble. This motivated him to offer his work under the name of his company.

Farrhad has launched Rockstah Media, a cutting-edge company devoted to web development, marketing, advertisement, and branding.  It is just over a year old but it has clients and a full fledged team of developers, designers and market strategists spread across the globe.As the CEO and founder, Farrhad is behind the wheels of the company taking care of the clients and guiding the creative team to success.

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2. Who is known as internet entrepreneur?(10M)

Mark Elliot Zuckerberg (born May 14, 1984) is an American computer programmer and internet entrepreneur. He is best known as one of five co-founders of the social networking website Facebook. As of April 2013, Zuckerberg is t fhe chairman and chief executive of Facebook, Inc. and in 2013 his personal wealth was estimated to be US$16.8 billion.

Together with his college roommates and fellow Harvard University students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes, Zuckerberg launched Facebook from Harvard's dormitory rooms. The group then introduced Facebook onto other campuses nationwide and moved to Palo Alto, California, United States (U.S.) shortly afterwards. In 2007, at the age of 23, Zuckerberg became a billionaire as a result of Facebook and the number of Facebook users worldwide reached a total of one billion in 2012. Zuckerberg was involved in various legal disputes that were initiated by others in the group, who claimed a share of the company based upon their involvent during the development phase of Facebook.

In 2010, Zuckerberg has been named among the 100 wealthiest and most influential people in the world by Time magazine as a part of its Person of the Year distinction In 2011, Zuckerberg ranked first on the list of the "Most Influential Jews in the World" by The Jerusalem Post and has since consistently topped the list every year as of 2013.He was played by actor Jesse Eisenberg in the 2010 Hollywood film The Social Network in which the rise of Facebook is portrayed.

3. Give examples for some new generation women entrepreneurs (10M)

1. JESSIE PAUL (CEO- Paul Writer)

Jessie Paul was not yet 35 when she became Chief Marketing Officer (CMO) of IT major Wipro Technologies. Five years on Paul, quit her high flying corporate career to start her own business. She set up a marketing advisory firm, Paul Writer and thereby joined a growing band of women entrepreneurs creating high growth business ventures.

2. RADHA RANGARAJAN

Co-founder and CEO, Vitas Pharma

After stints in Harvard School of Public Health and Dr Reddy's Laboratories,

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Rangarajan set up Vitas Pharma, which is engaged in developing new anti-infective therapies, in 2010

3. RESHMA ANAND, Founder and CEO, Earthy Goods

The firm, set up in 2007, procures packages and markets natural handcrafted products. Anand, an IIM-Bangalore alumnus, sources the products from rural NGOs and producer units.

4. SURUCHI WAGH, Co-founder and COO, YourNextLeap

The virtual career counselor, started in 2010, uses psychometric evaluations and math models on past admission patterns to help students make an informed higher education choice.

5. VINITA ANANTH, Founder and CEO, Vangal

The start-up, launched in 2010, uses social media analysis technology to provide insights to brands on customer segmentation, impact of advertising campaigns and brand image in social media users' mind.

ALL THE BEST!!!

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