Assignment Code: MTTM 8/ MTM-8/ TMA/2022

Course Code: MTTM 8/MTM-8

Assignment Name: Managing Entrepreneurship and Small Business in Tourism

Year: 2022

Verification Status: Verified by Professor

1. What do you understand by entrepreneurship? Discuss the role of entrepreneurship in SSE and economic development. 20

Ans) Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit. The most prominent example of entrepreneurship is the starting of new businesses.

The entrepreneur is defined as someone who has the ability and desire to establish, administer and succeed in a start-up venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. The entrepreneurs are often known as a source of innovative ideas or innovators and bring innovative ideas in the market by replacing old with a new invention.

Role of Entrepreneurship in SSE and Economic Development

The administrative and entrepreneurial skills of those working for a small business determine its effectiveness. A tiny business needs a particular management strategy due to its size and distinct operating characteristics. Small businesses are typically run in a specialised manner. Up until a certain point in the company's growth, the owner also serves as the manager. There is typically no sharing of the decision-making process, and they are involved in every area of running the company. Small businesses often cater to a local or regional market rather than a national or worldwide one in terms of their scope and scale of operations. Additionally, they frequently have a tiny market share. Therefore, it is necessary to consider these unique qualities while planning for the national development of small businesses.

Wide Ranging Contribution

Entrepreneurs and entrepreneurship have a wide range of substantial contributions they can make to the development process. They consist of the following:

1. Productivity is increased by entrepreneurship through technological and other types of innovation.

2. Creating businesses is a wonderful way to create jobs.

3. Technology transfer is facilitated through entrepreneurship.

4. In the strategic commercialization of new innovations and goods, entrepreneurs play a key role.

5. Entrepreneurs are essential to the reorganisation and development of the economy.

6. Entrepreneurs contribute to lessening the concentration of economic power and the ossification of established social structures.

7. Large firms and governmental operations can be given new life through entrepreneurship and entrepreneurial behaviour.

8. By increasing market competition, entrepreneurs lower both static and dynamic market inefficiency.

9. When governments and their policies impede economic progress, microentrepreneurs operating in the informal sector subvert established governmental authority.

10. Entrepreneurs encourage a transfer of wealth, income, and political power in societies in ways that are economically advantageous and avoid being disruptive from a political standpoint.

11. The social welfare of a nation is enhanced by entrepreneurs by utilising latent, previously untapped talent.

12. Entrepreneurs help businesses grow internationally and open up new markets.

Cost-Saving Technique

Because it is a low-cost method for economic development, technological advancement, and job creation, entrepreneurship has a superior quality. Other change agents may succeed in achieving the same objectives, but not as successfully as entrepreneurs. And this is made possible by first starting small-scale firms. Entrepreneurs are those who assume the costs and risks involved in launching a new company, developing a novel product or service, commercialising a breakthrough idea, altering technology, and opening up a brand-new market. Their "sweat equity" generates substantially more value even when they receive government assistance in the form of subsidised training or low-interest loans.

Risks are taken by entrepreneurs, who either succeed and advance society or fail and disappear from the market. Incompetence, a lack of commitment, laziness, or inaccurate judgments of business chances are not tolerated well in the market where the entrepreneurs compete. Entrepreneurs find resources and fill up gaps in the market that larger, more bureaucratic organisations might miss.

2. Write short notes on: 4x5=20

a) Entrepreneurial Competencies

Ans) In a small business, the project's promoter, or the entrepreneur, does the majority of the project's planning, implementation, and management tasks. If the project is large enough to require hiring experienced managers, the entrepreneur is the one who propels the completion of these three preeminent responsibilities. An entrepreneur needs specific knowledge, talents, and the right personality type to plan a project correctly, carry it out meticulously, and manage it successfully.

In order to determine what it takes to be a successful entrepreneur; the Entrepreneurship Development Institute of India undertook the research project. The research project's product has been the identification of a group of entrepreneurial skills or traits that promote outstanding performance. The research project's key discovery was the validity of the aforementioned competences across cultures.

The idea of entrepreneurial abilities will be explained.

Competence

A person's fundamental qualities, or competency, are what enable them to perform their work effectively and/or better than others. Insofar as it can be a person's motivation, attributes, talents, a component of their self-image, or a body of information that they employ, a person's work competence is one of their underlying characteristics. The person may or may not be aware of the existence of these traits. In this regard, the traits could be unconsciously present elements of the person. Simply said, competence is the combination of a person's body of knowledge, skill set, and group of suitable motivations or attributes that enable them to carry out a specific work. so that you can learn more about competencies.

b) SIDBI

Ans) SSI firms receive assistance from the Small Industries Development Bank of India, the apex bank for small scale industries, through a number of programmes.

Key functions of SIDBI

1. Aid financial institutions (cooperation and commercial banks) lending to small-scale industries in the Small and Medium Enterprises (MSME) sector to ensure their financial health.

2. Offer SIBDI direct loans to companies categorised in the Small and Medium Enterprises (MSME) sector.

3. Carry out marketing initiatives for small-scale industries on a global scale.

4. Offer venture funding possibilities for industries in the Small and Medium Enterprises (MSME) sector.

5. Promotion of employment and upgradation of technology in the sector.

6. Loan offers for development and maintenance of small-scale industries in the country.

7. Marketing of small-scale industries on a global scale.

8. Promotion of employment-oriented industries in the small-scale industry sector.

9. Ensure technology upgradation in the small-scale industry.

10. Ensures the financial health of cooperation banks and commercial banks' lending to small-scale industries.

11. Promotion of venture funds.

c) SSE

Ans) Small-scale businesses (SSEs) make up a significant and vital portion of the industry sector. Nearly 35 percent of all direct exports and 40 percent of all industrial production come from this industry. SSEs play significant economic, social, and political roles in employment creation, resource utilisation, and revenue generation as a result of distinctive economic and organisational characteristics. For the first time, the industrial revolution brought attention to the importance of the person in the development of SSE.

However, efforts to include SSEs in national development plans have just recently—within the past thirty years—been initiated. India was one of the first few developing nations to recognise the importance of SSEs in economic development, even in the initial five-year plan. Small Scale Enterprises (SSEs) typically require more labour than larger businesses. Small but comparatively contemporary industrial industries organised non-manufacturing activity, such as transportation and trade, and traditional or "informal" activity are all examples of SSEs.

d) Break Even Analysis

Ans) A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs. At that point, you will have neither lost money nor made a profit.

A break-even analysis is a financial calculation used to determine a company’s break-even point (BEP). It is an internal management tool, not a computation, which is normally shared with outsiders such as investors or regulators. However, financial institutions may ask for it as part of your financial projections on a bank loan application. The formula takes into account both fixed and variable costs relative to unit price and profit. Fixed costs are those that remain the same no matter how much product or service is sold.

3. What do you understand by Family Business? What issues arise in a family business? 20

Ans) An enterprise in which a family or group of families has committed a sizeable portion of capital is often referred to as a family business. This definition was not deemed enough because it lacked a clear explanation of important concepts like ownership, control, and management of a corporation. Family firms are those that are "closely connected with at least two generations of a family and where this association has had a mutual influence on company policy and on the goals and objectives of the family," according to Donnelley.

Issues and Problems in Family Business

Business vs. Family

Family businesses frequently confront the difficult decision of choosing between options that are beneficial for the firm versus family norms. When faced with this option, choices are frequently made in the best interests of the family rather than the business. The family's values, norms, and ideals are incompatible with those of business. As a result, the family company must deal with normative uncertainty. Due to this dispute, human resources and growth potential are negatively impacted. Due to its responsibility to the family, family management chooses, promotes, and pays family members and relatives while placing a high priority on closeness and kinship. Numerous opportunities for growth are wasted as a result of particular family rules or ideals. Family values include keeping strangers out of family matters. This can have unfavourable outcomes.

Rivalry among Relatives

The family business is run by a number of relatives of various ages and relationships. Due to conflicts of interest, they frequently run into one other. Communication breaks broken as a result, and organisational integrity is compromised. Top positions in the family firm are held by the founder's relatives. The competition begins between father and son and quickly expands to brothers and other family members. In family enterprises, brotherly rivalry is just as fierce.

Their need to establish their superiority over one another fuels the competition. Rivalry amongst family members frequently causes factional decisions to emerge in the organisation as non-relatives start selecting family members with whom they want to associate themselves. Non-family members frequently don't want to become involved in a family argument until it's over. This may cause the organization's operations to stall.

Problem of Continuity

The issue of continuity or succession arises in every family business when the original founder leaves or passes away. To ensure that the firm is passed down to the next generation, someone needs to take over management. Even the most prosperous companies have reportedly experienced setbacks because of inappropriate succession or a lack of capable successors. The company's founder views it as his or her personal "baby."

The person continues to hold on to the reins, refuses to delegate authority, and makes crucial decisions even if they are aware of the necessity to pass the torch to the next generation. The replacement feels disgruntled and overshadowed as a result. If not managed properly, the business becomes paralysed due to a lack of appropriate resolution. Since family relation and not professionalism is the only requirement, the successors frequently lack trust in the organisation. Workers frequently challenge their authority. Effective and dependable workers begin leaving the company because they feel threatened.

Professionalisation in Family Business

Family enterprises frequently are unable to adjust to the demands of contemporary industry and technological advancements. The implementation of professional management in family businesses is required by the demands of expansion and modernization. A group of managers who work professionally are those whose main responsibility is to provide management services without holding a sizable ownership share. Every family firm must decide whether to use professional management or not while considering the necessity for professional abilities to handle expansion.

4. What is Market Demand Analysis and why is it important for an entrepreneur?

Ans) Whether there will be enough demand for the product or service an entrepreneur wants to give the market is one of the trickiest problems that plagues an entrepreneur. Proper demand analysis and forecasts aid in creating marketing strategies that work. For instance, a product's price, the advertising budget allotted for its promotion, and the instruments used to promote sales will all be dependent, at least in part, on an evaluation of the product's demand. Many decisions relating to marketing, inventory management, purchasing, production, hiring, and finance become incredibly easy if a company can accurately predict the degree of demand for its goods or services.

The reality, however, is more complicated. The majority of goods and services have an extremely complicated and unstable demand landscape. Demand forecasting is still a murky issue, despite significant advancements in the realm of marketing. Any exercise in demand estimation involves a sizable number of assumptions and factors. Many variables that affect consumer demand for a product are beyond of the company's control and hence uncontrollable.

Despite these difficulties, prospective investors will want to see proof—and rightfully so—that there is a chance of successfully marketing the results of their initiative. Rightfully so, as establishing a new business is not the time for self-deception and asking some tough questions up front could end up saving you a lot of money and hassle overall. One must be able to respond satisfactorily to inquiries such as: Who would purchase the product? Why could they purchase it? How many people would buy it? These questions will be answered in part by the market demand analysis exercise.

Market Demand

A company has its own market or area of operations and is often concerned with the demand for the product there. As a result, we specify specific limitations to our definition of demand and focus on what is known as "market demand."

Take into consideration Philip Kotler's definition, which is as follows:

The total amount that would be purchased by a specified client segment in a specified geographic area within a specified time frame in a specified marketing environment as part of a specified marketing programme is the market demand for that product.

By this point, it must be plainly evident that conducting a market demand study is a challenging task. There are very few goods or services that are straightforward to forecast. Numerous elements must be taken into account in order to produce a reliable and precise forecast, making the cost exorbitant. Fortunately, a small business owner can get by with lower sophistication and lower expenses. His or her main concern throughout the project planning phase is if there is enough demand for the good or service they want to offer. A seasoned businessperson must say the following on the demand analysis procedure:

If we are thinking about producing something on a modest scale, we need make sure it is already selling well enough in the market we have decided to target. We do not need to worry too much about the demand for our product at the planning stage if the item's total sales in the target market exceed ten times the level of production we are considering. A tiny unit won't significantly change the industry's output figures, and I'm convinced that with the right planning and efforts, one may capture 10% of the market over the course of two to three years in order to reach the desired sales. If the product is novel, we should be content if it has a sales potential that can be reached with the help of the little marketing resources we can support.

5. How should an entrepreneur keep good relations with employees? How can personnel relations be improved in an enterprise? 20

Ans) There are numerous methods for working with individuals. The approaches to motivation and leadership, however, frequently become muddled by informal relationships in the small business due to the strong personal interaction between employers and employees. The old, rigid, "Do it immediately," authoritarian tactics don't yield results in a way that is desirable. Therefore, the small business manager must understand the significance of giving employees a voice in running the show and motivate them to take part in all crucial choices affecting their working lives.

Employee respect can be earned by:

1. Fair treatment of employees

2. Operates within the bounds of morality.

3. Honours workers that show promise.

4. Enables workers to take part in crucial activities.

5. Connects with staff members in an easy-to-understand way.

6. Encourages workers with both monetary and non-monetary benefits.

7. Sympathetically responds to employee complaints and grievances.

Handling Employees’ Grievances

The utilisation of employee complaints to improve employee relations is organised by large businesses. The small business owner taking undue risks by relying only on their close personal contacts in this sector.

The following options can be used to find the best solution to this issue:

1. A procedure that is clear from the perspective of the employees for presenting their complaints, as well as information on how those complaints will be handled.

2. As little time and red tape as possible should be used to process their concerns and find a solution.

3. A different means of getting the point through to employees who find it difficult to express themselves.

Improving Personnel Relations

Managers of small businesses should appreciate the distinctiveness of their companies. The effectiveness of the personnel has a significant impact on the small company's degree of efficiency.

Unlike a major company, a small unit typically does not employ a personnel specialist due to its limited financial resources. Instead, the owner-manager may personally oversee the tasks relating to personnel or assign them to a worker who handles them in addition to their regular duties.

Despite not having the position of a full-time manager, the people management job is nonetheless extremely important. In fact, it should serve as a warning to the owner-manager that more effort must be put in if the employee relations are to be established and kept in a satisfactory state. If small business managers are aware of the precise recommendations mentioned by Martin M. Bruce (Human Relations in Small Business), they can significantly improve employee relations:

1. Develop your own understanding of behaviour in general.

2. Recognize that not everyone sees things the same way you do.

3. Consider the potential that you might not have the correct response in any disagreements of opinion.

4. Make it clear to your staff that you care about them and are interested in their suggestions on how to make things better.

5. Never treat your staff impersonally; always treat them as unique individuals.

6. Observe variations in opinion.

7. As much as you can, provide justifications for management decisions.

8. Give advice and information on issues affecting the security of "workers."

9. Try your best to keep the work you do interesting.

10. Encourage internal promotion.

11. Thank someone in public for a job well done.

12. Provide constructive feedback in the form of suggestions for improvement in a secluded setting.

13. Teach managers to care as much about the people they are in charge of as they would about products, commodities, or equipment.

14. Keep your staff informed about issues that concern them.

15. Stop false rumours from spreading and give accurate information.

16. Fair play.