Types of audit programme. Points in modifying audit programme.

 Q. Discuss various types of audit programmes. What are the points to be kept in mind while modifying audit programme.

Ans. An Audit programme is a flexible, planned procedure of examination. Audit programme are of following two types.

(1) Standard Programme: An audit programme based on standard format is known as a standard auditing programme. This document is used uniformly in all audits, and there is no need for the auditor to prepare a separate audit programme for each audit. Such a programme is also referred to as fixed or predetermined or planned programme. Such a programme may be suitably modified in order to accommodate the specific problems of a particular business.

(2) Tailor-made Programme: A tailor-made programme is one which is prepared separately for each organisation keeping in mind the nature of business, nature of transactions, method of accounting, efficiency of internal control etc. Such a programme is more practical and flexible as compared to a standard programme.

Every auditor prepares an audit programme according to his convenience and keeping in mind the nature of business. The success of an efficient auditor depends largely upon the audit programme. Hence, the auditor should formulate the audit programme very carefully. While preparing an audit programme the following things must be kept in mind:

1. In Writing: The audit programme should always be in writing in order to avoid any misunderstandings between the auditor and his employees in the future. When there is a written audit programme the auditor’s staff need not enquire again and again about the work to be performed by them.

2. Clarity: While drafting the audit programme it should be ensured that it is simple and clear so that every person concerned with the programme can understand it easily. Ambiguity in the programme results in hindrances in the audit work and waste of the time and efforts.

3. Division of Work: The audit programme should be in accordance with the departments of the organisation so that work may be assigned and responsibility may be fixed among the staff on the same basis. While dividing the work the auditor should be completely aware the level of competence of his staff, since only then he will be able to assign work in accordance with the capabilities of the person. The division of work should be done keeping the business of the organisation and various other aspects of the work to be done in mind, so that the work may be completed successfully and no part of the work escapes examination by the auditor.

4. Flexibility: The audit programme should be flexible, so that in case of a change in circumstances, there is no problem in altering the programme. During the course of the audit, some circumstances do arise due to which work cannot be proceed according to the plan and minor deviation have to be made. Hence, the programme should be such that minor alterations can be made in it.

5. Policies and Provisions: While formulating the audit programme, the related policies and provisions having bearing on the audit work should be kept in mind, such as, Memorandum of Association and Articles of Association in the case of a company and the partnership deed in case of a partnership concern. In order to prepare a good audit plan it is necessary that the books of accounts being maintained by the organisation, the method of accounting being used, internal check system etc. be kept in mind and efforts should be made to reduce the deficiencies in the same. 

6. Object Oriented: The audit programme should be in accordance with the objectives of the organisation so as to maintain co-ordination in the work of the organisation and complete the audit smoothly and within the specified time. Unless the audit programme has these qualities, it is of no practical use.

7. Previous Reports: While drafting the audit programme the final accounts and auditors reports of past years should be looked into, since by doing so many facts which are important from the point of view of the audit will come to light.

8. Department–wise: A separate audit programme should be prepared for each department and sub-department of the organisation. Apart from this different audit programmes should also be prepared depending upon the nature of work. For example, different audit programmes should be prepared for cash, purchases, sales etc. By doing so one can obtain important information and explanations from the employees of the organisation in a smooth manner.

Define Budgetary Control. Objectives.

Q. Define Budgetary Control. Describe the objectives of budgetary control.

SBP

Ans. MEANING OF BUDGETARY CONTROL: Budgetary control is an important technique of control on business activities by management, in which business activities are operated on the basis of pre-prepared budget and thereafter actual results are evaluated in the light of budget estimates. 

DEFINITIONS OF BUDGETARY CONTROL: Important definitions of budgetary control are as follows:

1. According to Brown and Howard, “Budgetary control is a system of controlling costs which includes the preparation of budgets, co-ordinating the departments and establishing responsibilities, comparing actual performance with budgeted and acting upon results to achieve maximum profitability.”

2. According to J. Batty, “Budgetary Control is a system which uses budgets as a means of planning and controlling all aspects of productivity and/or selling commodities or services.”

In brief, budgetary control is a tool of management control and accounting which directs and co-ordinates the working operation on the basis of budgets. If there are variances in actual results, then they are corrected or budget is modified so that the objective of maximum efficiency as per the policy of management may be achieved.

OBJECTIVES OF BUDGETARY CONTROL: Budgetary control is essential for policy planning and control. It also acts as an instrument of co-ordination. The main objectives of budgetary control are as follows:

1. To assist in policy formulation on the basis of proper and reliable data.

2. To ensure planning for future by setting up various budgets.

3. To determine short-term and long-term financial and physical targets.

4. To operate various cost centres and departments with efficiency and economy.

5. To classify expenses according to their nature such as direct and indirect expenses; fixed, variable and semi-variable, etc.

6. To help administration as under this system, executives perform their functions according to pre-determined budgets.

7. To anticipate capital requirements and to make necessary arrangements for it.

8. To make cost accounting more reliable and systematic.

9. To promote research in order to bring down cost, to increase efficiency, and to achieve the targets of sales.

10. To develop co-ordination and co-operation among employees and executives.

11. To eliminate waste and profitability.

12. To correct the variations from the established standards.

13. To fix the responsibility of various individuals in the organisation.

VK

Ans. The main objective of budgetary control is to maximise the profits by proper use of limited business resources. It is an important tool for policy planning and control. The main objectives of budgetary control are as follows: 

1. To help in policy making.

2. To determine the capital requirement.

3. To coordinate the activities of different departments.

4. To control the costs of various departments.

5. To control research and development activities.

6. To eliminate the wastage and increase in profitability.

7. To anticipate capital expenditure for the future.

8. To bring economy in costs by classifying them into fixed and variable.

9. To increase the efficiency of production.

10. To help the management in administrative functions.

Codification of overheads: Meaning and Methods.

 Q. What do you mean by codification of overheads? Discuss the various methods of codification. 

Ans. Meaning of Codification of overheads: When the collected overheads are grouped according to their class it is known as classification of overheads. Each group or class is given a code number to help in maintaining mechanised accounting and secrecy in the system. This code allotment procedure is known as codification. Codification may be done by any of the following methods:

(i) Numbers

(ii) Alphabets

(iii) Combination of numbers and alphabets

(iv) Symbols

Methods of Codification: The various methods of codification are as follow:

(1) Numerical Numbers: Under this method the various groups are alloted numerical numbers so that one group of overhead may represent one standing order number. As for example 

No. 1 to 20 Indirect Material 

       21 to 30 Indirect Labour

       31 to 37 Idle Time

       38 to 43 Overtime 

       44 to 50 Insurance 

       51 to 54 Rent

       55 to 70 Depreciation 

       51 Rent of factory

       52 Rent of Office Building 

       53 Rent of Warehouse 

       54 Rent of Branch Office

(2) Alphabets: Under this method, alphabets are alloted to each overhead. These alphabets help in memory and identification of overheads. For example, 

PO – Power

RE – Repair

DE – Depreciation 

CA – Carriage

MA – Maintenance 

(3) Combination of Alphabets and Numericals: Under this method both of the above methods are combined into one. Under this method, alphabet stands for head of expenses and number shows further analysis of expenses. As for example,

RE1 = Repair to factory building

RE2 = Repair to office building 

RE3 – Repair to warehouse 

RE4 – Repair to vehicle

RE5 – Repair to furniture 

Again repair to furniture can be divided into further code number.

RE5.1 – Repair to factory furniture 

RE5.2 – Repair to office furniture 

RE5.3 – Repair to warehouse furniture and so on.

(4) Symbols: This method is used in those concerns which are working under mechanised system with punched card accounting. The nine digit punched card is divided into four parts.

00/000/00/00

The first part of two digits represents class of overhead i.e., fixed or variable. The second part of three digits represents head of overhead (i.e. idle time etc.), the third part of two digits signifies analysis of expenses (i.e. waiting for material). The fourth part of two digits represents the cost centre (i.e. assembly shop).

   For example symbol 10/120/01/07

Stands for 10 for variable cost, 120 for idle time, 01 for waiting of material, 07 for assembly shop.

Code.                       Stands

10/120/01/07.        Variable/Idle Time/Waiting for material/Assembly Shop

Training of Sales Force: Meaning and Methods

 Q. What do you mean by training of Sales force? Explain the various methods of training the sales force. 

Ans. Meaning of training of sales force: Industrial sales force training is a process of providing the sales force with specific skills for performing their task better and helping them to correct deficiencies in their sales personnel.

In modern industrial organization, the need of training of sales personnel is widely recognized so as to keep the sales personnel in touch with the new technological developments. Every company must have a systematic training program for the growth and development of employees. Training is one of the most important activities of management. The technological developments are taking place at much faster rate. Individual needs training to match him with the requirements of new changes. After recruitment and selection, the next step is training, which is required for all types of jobs in the organisation. New jobs require some sort of special training. Training is also valuable for sales personnel and the organization. It helps to reduce the cost. Training is thus no more a luxury but now it is considered as a necessity.

According to Jucius, “The term training is used here to indicate only process by which the aptitudes, skill and abilities of employees to perform specific jobs are increased.”

Methods of training the sales force: The various training methods adopted for the training of sales personnel are as follows: 

1. Orientation and Induction Training: This training is given to help new entrants for adapting themselves with the new environment. In this method, the new comer is taken around the organisation and informed about the location of various departments and offices. The employees are given a full description of the job they are expected to perform. Orientation training helps the new employees to acquaint themselves with their immediate boss and the persons who will work under their command. They are also informed about the policies, procedures and rules which are related to their assigned work. 

2. Refresher Training: Refresher training is helpful in acquainting personnel with latest improvements in their work. The changing technological methods require fresh training to existing employees even if they are well trained and qualified. Everybody requires attending refresher courses to know the the latest techniques of doing the work. Such training also helps in refreshing the memory of the sales personnel. The introduction of new products may also necessitate fresh training of sales personnel.

3. Case Study: In this method, the case is assigned to the trainees. The trainees learn analytical thinking and reasoning ability by discussing the case. This method improves the ability to evaluate facts and appreciate other’s view point. The trainees come to understand more than one way to analyze the problem.

4. Coaching: In this method, the immediate superior guides and instructs his subordinates as a coach. It is learning through on the job experience because a manager can learn when he is a put on a specific job. The immediate superior briefs the trainees what is expected from them and guides how to effectively achieve them. The coach or immediate superior watches the performance of their trainees and directs them in correcting their mistakes.

5. Special Projects Assignment: In this method a trainee is assigned a project which is closely related to his job. Further, sometimes the number of trainee executive is provided with the project assignment which is related to their functional area. This group of trainees is called project team. The trainee studies the assigned problem and formulates recommendation on it. These recommendations are submitted in the written form by the trainee to his superior.

6. Role Playing: In role playing, the conflicting situation is created and two or more trainees are assigned different roles to play on the spot. They are provided with the written or oral description of the situation and roles to play. The trainees are then provided with the sufficient time, they then have to perform their assigned roles spontaneously before the class. This technique is generally used for human relations and the leadership training. This method is used as a supplement to other methods.

7. Syndicate Method: Syndicate refers to the group of trainees and involves the analysis of the problem by different groups. Thus, in this method, 5 or 6 groups consisting of 10 members are formed. Each group works on the problem on the basis of the briefs and the backgrounds provided by the resource persons. Each group presents its view on the involved issues along with the other groups. After the presentation, these views are evaluated by the resource persons along with the group members. Such exercise is repeated to help the members to look into the right perspective of the problem. This method helps in the development of the analytical and the interpersonal skills of the managers.

8. Demonstration: In this method, the trainees are given the demonstration of the product. This method is appropriate for imparting training for technical and complex products. It demonstrates the features of the product, its uses, method of using it, its superiority over the competitirs’ product. The purpose of the training is to make the salesmen fully aware of the product so that they can effectively demonstrate the product to the prospective customer.

9. Sales Conference Method: In sales conference method, training is given in both formal and informal ways. These conferences are addressed by an expert or group of experts. Salesmen of the organization attend these conferences as participants. The experts give knowledge of new sales techniques to the participants. These conferences discuss specific sales related problems like how to redress consumer complaints, how to maximize consumer satisfaction, etc. The group discussion between the experts and the participants is organized at the end of the conference, thereby making it a two way communication.

What is Materials Management? Need and importance

 Q. Define Materials Management. Why is materials management important for an organisation ? Explain.

OR

What is materials Management ? What is the need of materials management in the present scenario ?

Ans. Meaning of Materials Management: Materials Management is a combination of two words – material and management. The term material refers to such commodities which are supplied to the manufacturing industry in the crude or original form which need to be processed further. Management is the process of dealing with or controlling things or people. Management is the organisation and coordination of the activities of a business in order to achieve objectives. Thus, materials management is a technique which is concerned with planning, organising and control of flow of materials from purchase of raw material to consumers. 

Materials management is a branch of logistics which deals with the tangible components of supply chain. The materials management is useful for manufacturing Industries. Materials Management is concerned with the planning, procuring, storing and providing the appropriate quality material at right time in right quantity and at right place.

Materials management is ideal for the industries who track the flow and manage the materials in their enterprises. It involves the purchase of material, inventory management and control. It is the integrated function of purchase. It has a very wide scope including purchase of material, planning of materials, maintenance of material and spare parts, obtaining quality material at right time and place, storing of material and issuing of material. There are 5 M’s which are critical for an organisation and out of these, the material is the most important. Thus, the materials management is very important for each such organisation which uses raw-material.

Definition: As per Bailey and Farmer, “Material management is the management of the flow of materials into an organisation to the point, where, those materials are converted into firm’s end product (s).”

Materials Management is important for an organisation for the following reasons.

1. Helps in reducing cost: Materials management helps in solving problems related to reducing the overall cost of product by purchasing materials at reasonable prices. Simultaneously it reduces costs by reducing wastage of material.

2. Improving material productivity: Productivity means quality of producing something. Materials management also solves problems related to standardisation and reduction methodologies for improving productivity. Improved productivity helps in decreasing the cost per unit and thus helps in increasing profitability.

3. Optimum Utilisation of Physical Resources: Materials Management provides adequate and timely material for production. Thus it helps in optimum utilisation of physical resources, and therefore helps in decreasing the cost.

4. Warehouse Management: Warehouse management is also the function of materials management. Through proper warehouse management, materials management helps in decreasing the wastage of material. Thus, indirectly it helps in improving the profitability.

5. Helps in solving Inventory Problem: It helps in solving problems of shortage or excess of inventory. It projects the demand of the material and accordingly arranges the materials. For exact requirement of materials in the stock, it uses various techniques such as EOQ, re-order level, etc. The overstocking of materials is undesirable as it increases the cost. Thus it helps in keeping the investment in materials to minimum.

So, The materials management is crucial for the success of an organisation because it involves a major part of the total cost of the product.

‘Income Tax is charged on the income of previous year’. Do you fully agree with this statement? If not, what are the exceptions?

Q. ‘Income Tax is charged on the income of previous year’. Do you fully agree with this statement? If not, what are the exceptions?

Ans. The year in which income is earned is known as previous year and the next year in which this income is taxable is known as assessment year. 

‘Income Tax is charged on the income of previous year’. This statement is generally true but not fully. Under the Income Tax Act, income earned in previous year is taxable in assessment year. This means that tax is not charged in the same year in which the income is earned. 

Income tax is charged on the income of the previous year. However, there are certain exceptions to this rule. In the following cases the assessee is liable to be assessed to tax in the same year in which he earns the income :

1. Income of non-resident from shipping business: In case of a non-resident carrying shipping business, any income derived from carrying passengers, livestock, mail or goods shipped at a port in India, will be taxed in the year of its earning. 7½% of the amount paid or payable on account of such carriage will be deemed to be the income. 

2. Income of persons leaving India: When an individual may leave India during the current assessment year or shortly after its expiry, and that he has no present intention of returning to India, the total income of such individual for the period from the expiry of the previous year for that assessment year up to the probable date of his departure from India shall be charged to tax in the assessment year.

3. Income of an association of persons or a body of individuals or an artificial juridical person formed for a particular event or purpose: Where any A.O.P or B.O.I or an artificial juridical person is formed or established or incorporated for a particular event or purpose and is likely to be dissolved in the assessment year in which it is formed or established or incorporated or immediately after such assessment year, the total income of such assessee for the period from the expiry of the previous year for that assessment year upto the date of its dissolution, shall be chargeable to tax in that assessment year.

4. Transfer of property to avoid tax: An assessee is likely to transfer his property to avoid tax, the total income of such person for the period from the expiry of the previous year for the assessment year to the date when assessing officer commences preceeding shall be chargeable to tax in the same assessment year.

5. On discontinuance of business or profession: In the case of discontinuance of a business or profession, the income of the period from the expiry of the previous year for the assessment year in which the business or profession is discontinued upto the date of such discontinuance may be charged to tax in the same assessment year. 

[C.W. General rule is that income of previous year is taxable in assessment year with some exceptions.

Exceptions to the general rule:

1. Income of non-resident shipping company: Shipping company is one which carry passengers from one port to another. 7.5% of the total freight shall deemed to be the income of non-resident shipping company.

2. Income of person leaving India: has no intention to come back will chargeable to tax in the same assessment year.

3. Income of AOI, BOI or artificial juridical person fall for a particular object.

4. Transfer of assets/shares to avoid tax liability: tax will be paid on same year.]

5. On discontinuance of business.

entrepreneurs not made but born comment types of entrepreneurs

 Q. “Entrepreneurs are not made but born.” Comment on it. Explain different types of Entrepreneurs.

Ans. Entrepreneurs are the persons who takes the risk of new enterprise. It is general perception that entrepreneurs are not made but born. This statement suggests that entrepreneurial quality are inborn. It implies that business family background is considered necessary for the success of an entrepreneur. It also implies that some of the qualities are inborn or hereditary. Thus, entrepreneurs are not made but born.

However some people are of the opinion that entrepreneurs are made not born. They believe that people with adequate knowledge, skill and experience may also become successful entrepreneur. Most of the qualities can be acquired by constant effort and practice. 

In conclusion, entrepreneurs have a combination of inborn and acquired skills and abilities.

Different types of Entrepreneurs: Entrepreneurs can be of classified various basis. Some of important types of entrepreneurs are being explained here:

A. BASED ON THE TYPES OF BUSINESS: An Entrepreneur is found in every type of business. On this basis they can be of following types.

1. Industrial Entrepreneur: Industrial entrepreneurs are essentially considered as manufacturers. He  imdentifies the needs and wants of the customer and manufacturers product according to their need and expectation. He is generally a producer-oriented man. He is found in any Industrial unit such as electronic industry, textile units, machine tool and the like.

2. Trading Entrepreneur: Trading entrepreneur is one who undertakes trading activities (buying and selling of goods and services). He is not engaged in manufacturing. These entrepreneurs identify market opportunities and stimulate demand for their product. Trading may be national and international.

3. Corporate Entrepreneur: A Corporate undertaking is a form of business enterprise which is registered under some state or act which gives it a separate legal entity. A corporate enterpreneur is one who promotes corporation. He is a person who demonstrate his innovative skill in organising and managing a corporate undertaking.

4. Agricultural Entrepreneur: Agricultural entrepreneurs are those who undertake business related agricultural activities. For example, farm equipments, fertilizers and other agricultural inputs. They provide supportive products that can increase the agricultural production through biotechnology and improvement in agricultural yield. In a way, they are engaged in allied agricultural activities.

B. BASED ON THE USE OF TECHNOLOGY: Technology is becoming an important part of every business irrespective of its size and nature. The entrepreneur on the basis of technology usage can be:

1. Technical Entrepreneur: A technical entrepreneur is generally compared to ‘Craftsman’. He mainly concentrates more on production area than marketing. He demonstrates his innovative capabilities in the matter of production of goods and services. Their main asset is technical expertise. Due to his expertise, he develops new and improved quality of goods and attempt to succeed in their business.

2. Non-Technical Entrepreneur: Non-technical entrepreneurs are those who are not concerned with the technical aspects of the product in which they deal. They do not target or concentrate to change the production technique but to increase the demand for the product by alternative course of actions.

3. Professional Entrepreneur: Professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established. He sells out his running business and then starts a new venture with the sale proceeds of the old one. They are considered to be dynamic and keep on conceiving new ideas to develop alternative projects.

C. BASED ON THE MOTIVATION:

1. Pure Entrepreneur: A pure entrepreneur is one who undertakes any activity to satisfy his ego. He is motivated to achieve or prove his excellence. He undertakes an entrepreneurial activity for his personal satisfaction in work or status. He is generally a status conscious person.

2. Induced Entrepreneur: He is the entrepreneur who prepares his sound project and wants to start business but needs support in some forms or other. Most of the induced entrepreneurs enter into business due to financial, technical and several other facilities provided to them by the state agencies to promote entrepreneurship. He is the person who is induced to take the entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture.

3. Motivated Entrepreneurs: This is a special class of entrepreneurs. They are motivated by the desire for self-fulfullment. They come into existence because of the possibility of making and marketing some new product for the use of consumers. Their level of motivation becomes more high when their idea provides them a satisfactory amount of profit.

4. Spontaneous Entrepreneur: These are the entrepreneur which has the basic qualities of entrepreneur in him. They are such types of persons who have qualities like boldness, confidence, determination, initiatives etc. They commence their business due to their confidence and talent. They need not to be induced by any other due to their strong conviction.

D. BASED ON OWNERSHIP / CLASSIFICATION ON THE BASIS OF OWNERSHIP: Ownership means the legal entitlement of the business. On this basis, the entrepreneur may be of following types:

1. Founders Entrepreneurs: The word founder itself explains the meaning of this category. They are those individuals who are founder of the business. They are those who conceptualise a business plan and put all their efforts to make the plan successful.

2. Family owned business or second generation operator: They are those entrepreneurs who have inherited the business from their fathers or forefathers. Like Mukesh Ambani and Anil Ambani, sons of Dheerubhai Ambani of Reliance Group.

3. Franchises: ‘Franchises’ has been derived from a French word which means free. It is a technique of doing business where in the patent owner (The Franchiser) licenses his trademark, tried, tested and proven method of doing business to a franchisee in exchange for a recurring payment. Here the franchisee has not conceptulised the business but has invested his money and time in the business. These days, this concept is gaining more and more popularity.

4. Owner Manager: When a person buys a business from the founder and then invests his time and resources in it he is called owner manager. 

E. CLASSIFICATION ON THE BASIS OF STAGE OF DEVELOPMENT: Every business grows with the passage of time. It goes through various stages in its life. On this basis, entrepreneur can be: 

1. First generation Entrepreneur: A first generation entrepreneur is one who starts an individual unit by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable product or service.

2. Modern Entrepreneur: A modern entrepreneur is one who undertakes business to satisfy the contemporary demand of the market. He is one who undertakes those ventures which suit the current market needs.

3. Classical Entrepreneur: A classical entrepreneur is called starve type entrepreneur. He aims to maximise the economic return at a level consistent with the survival of the firm with or without the element of growth. 

F. CLASSIFICATION ON THE BASIS OF GROWTH: In Industrial world, the industrial units on this basis are categorized as units with high growth, medium growth and low growth industries, similarly entrepreneurs are classified as under:

1. Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up a high growth industry. These entrepreneur choose such type of industry which has substantial growth prospects.

2. Super Growth Entrepreneur: These are those entrepreneurs who have shown extraordinary growth in the performance of their venture. The growth or performance is measured on the basis of various parameters like liquidity, solvency, profitability. 

In addition, every economy has witnessed by the presence of large number of entrepreneurs. They are also found in social, and cultural activities. They are found among different sectors of society i.e. farmers, artisans, workers, etc. In a study of American Agriculture, Dannof has classified entrepreneurs in the following categories:

1. Innovating Entrepreneur: An entrepreneur who is able to foresee potentiality viable and profitable opportunities through innovation is considered to be an innovative entrepreneur. He is highly motivated and talented and, innovation is his key function. These types of persons are generally aggressive in experimentation and cleverly put possibilities into practice. Peter Drucker also stated that an innovating entrepreneur is one who always searches for change, responds to it and exploit it as an opportunity. Innovating entrepreneurs are very commonly found in developed countries. 

2. Imitative Adoptive Entrepreneur: Imitative entrepreneur adapts a successful adoption. They are risk aversive so they do not try any new idea. They do not innovate anything but imitative techniques and technologies adopted by others. That means an imitative entrepreneur is one who is ready to adopt the successful innovations already inaugurated by innovative entrepreneur. They simply follow the innovators after carefully observing their success and extent of attractiveness of society towards innovation. 

Imitative entrepreneurs are most suitable for the underdeveloped nations because in these nations, people prefer to imitate the technology, knowledge and skill already available in the more advance countries. These entrepreneurs also play an important role in the developing countries also. For example, Indian entrepreneurs are adopting Germany in various lines of products such as automobiles, electronics and infrastructure.

3. Fabian Entrepreneur: These entrepreneurs neither fall in innovative category nor in adoptive one. These are very cautious people. They have neither the will to introduce new changes nor the desire to adopt new methods of productions. They are considered as shy and lazy. They follow the footsteps of their predecessors. They are ready to imitate only when it becomes perfectly clear that failure to do so would result in heavy loss to them. They are dominated more by customs, religion, traditions and past practices and are not ready to take risk at all.

4. Drone Entrepreneur: Drone entrepreneurship is characterised by a refusal to adopt and use opportunities to make changes in production. They blindly follow the traditional methods of production even when there is loss to him. They are not prepared to introduce any change in his method of production, which is already in place. They are conventional in the sense that they stick to conventional products and ideas. Reasons of this attitude could be several. Such as lack of funds, lack of understanding of new development in their field of production etc. They are laggards because they continue in their traditional way and in the long run their product loses its marketability or their business becomes uneconomical so they are pushed out of the market.