McClelland’s Achievement motivation or Manifest Need

Theory.
Achievement motivates individuals to strive for more success. Achievement plays an important
role in the success of entrepreneur and it plays an integral part in the process of entrepreneurship. Some
people have an intense desire to achieve while others are not so keen about achievement. David C.
McClelland had studied this phenomenon and proposed his Achievement Motivation Theory (Also called
Manifest Need Theory). According to him, there are certain needs that are learned and socially acquired as
the individual interacts with the environment. McClelland classified such needs into three broad categories.
These are (a) Need for power, (b) Need for affiliation, and (c) Need for achievement.

(a) Need For Power.

This need is indicated by a person's desire to control and influence the behavior of others. A
person with desire for power likes to compete with others when the situation is favorable for such
domination. Such persons prefer jobs that provide them an opportunity to acquire leadership with power.
There are two aspects of power accordingly to McClelland. These are: positive and negative. Positive use
of a power is necessary when a manager desires to achieve results through the efforts of others. The
negative use of power is possible when a person uses power for personal aggrandizement. Such use of
power may prove to be harmful to the Organization.

(b) Need For Affiliation.

Here, the person has a need/desire for affection and wants to establish friendly relationships. A
person with high need for affiliation seeks to establish and maintain friendships and close emotional
relationships with others. He wants to be liked by others and develops a sense of belonging by joining
informal groups in the Organization. Such persons (managers) prefer tasks that require frequent interaction
with subordinates/co-workers.

(c) Need For Achievement.

Here, the person desires to succeed in competitive situations. He desires to prove his superiority
over others. Such person sets reasonably difficult but potentially achievable goals for himself. He accepts
moderate degree of risk. He is more concerned with personal achievement than with the rewards of
success. Moreover, he feels that he can achieve the goal with his efforts and abilities. He also desires to
have concrete feedback (social or attitudinal) on his performance. Such person has high level of energy and
capacity to work hard. He naturally prefers jobs which tax his abilities and skills fully. This again is for
achieving the objectives set. According to McClelland, the need for achievement is the most important
need which can be used effectively for the economic progress of a nation.

Persons with achievement needs tend to be motivated by difficult, challenging and competitive
work situations and not by routine and non-competitive situations. They habitually spend their time
thinking about doing things better. They are not motivated by money but in their future achievements.
Such employees are better achievers and naturally get promotions faster. An Organization also grows
faster and moves towards prosperity with the support of such achievement seekers employees.

Importance of Achievement
a. Achievement is more important than material or financial rewards.
b. Achieving the goal or aim gives greater personal satisfaction than receiving praise.
c. Achievement motivates people to constantly seek improvement and ways of doing things better.

Kakinada Experiment

Kakinada is an industrial town in Andhra Pradesh. The experiment started in January 1964. The
main objective of the experiment was to break the barrier of limited aspirations by including achievement
motivation. A total of fifty two people were selected from business and industrial community of the town.
They were given an orientation program at Small Industrial Extension training Institute (SIET),
Hyderabad. The participants were grouped into three batches and were put under training for 3 months.

The program included the following in its syllabus:

1. The individuals strived to attain concrete and regular feedback.
2. The participants sought models of achievement to emulate.
3. The participants thought of success and accordingly set plans and goals.
4. The participants were encouraged to think and talk to themselves in a positive manner.

The impact of this training program on the participant’s behavior was observed after a period of
two years. It was found that those attended the program performed better than those who did not
participate. The participants need for achievement was assessed by using Thematic Appreciation Test
(TAT), in TAT ambition related pictures were displayed to the trainees and then they were asked to
interpret the picture and what was happening in the pictures. Thereafter all the themes related to
achievement were counted and thus the final scores represented one’s need for achievement. McClelland
concluded that the training program positively influenced the entrepreneurial behavior of the participants.

The above experiment had created a realization that entrepreneurship needs to be developed from a
very young age as the younger minds are more susceptible to change. Accordingly, efforts have to be made
to develop a school curriculum that would result in high need for achievement among the student.
 Types of enterprises

1. Joint stock company (JSC) is a type of business entity in which there is a corporation or
partnership between two companies. Certificates of ownership (or stocks) are issued by the company
in return for each contribution, and the shareholders are free to transfer their ownership interest at any time
by selling their stockholding to others.
There are two kinds of Joint Stock Company. The private company (sometimes called an "unlisted
company") is one in which the shares are not offered for sale on the open market. The shares are usually
only held by the directors and Company Secretary. The purpose of shareholding in such a company is to
confer the financial protection of limited liability upon the owners.
In contrast, a public company (sometimes known as a "listed" company) offers its shares for sale
upon the open market—they are "listed" upon the stock exchange. In Britain, they are usually distinguished
by the letters "PLC" after their name. The public company can raise part of its capital by a share issue, but
the directors have no control over the sale or purchase of its shares. Thus, a public company can be "taken
over" by another through the act of purchasing a controlling interest in the shareholding.

2. Proprietorship: A sole proprietorship or simply proprietorship is a type of business entity

which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a
corporation and limited liability partnerships do not apply to sole proprietors. All debts of the business are
debts of the owner. The person who sets up the company has sole responsibility
for the company's debts. It is a "sole" proprietorship in the sense that the owner has no partners. A sole
proprietorship essentially refers to a natural person (individual) doing business in his or her own name and
in which there is only one owner. A sole proprietorship is not a corporation; it does not pay corporate
taxes, but rather the person who organized the business pays personal income taxes on the profits made,
making accounting much simpler. A sole proprietorship does not
have to be concerned with double taxation, as a corporate entity would have to.

3. Partnership is a type of business entity in which partners (owners) share with each other the
profits or losses of the business undertaking in which all have invested. Partnerships are often favored over
corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits
before it is distributed to the partners (i.e. there is no dividend tax levied). However, depending on the
partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to
greater personal liability than they would as shareholders of a corporation.

4. Private Company (Pvt., Ltd.): A company whose ownership is private. As a result, it does
not need to meet the strict Securities and Exchange Commission filing requirements of public companies.
Private companies may issue stock and have shareholders. However, their shares do not trade on public
exchanges and are not issued through an initial public offering. In general, the shares of these businesses
are less liquid and the values are difficult to determine.

5. Public Company (Ltd.): A public limited company (PLC only) is a type of limited company
which is permitted to offer its shares to the public. All public limited companies names end in "P.L.C“. A
company which has issued securities through an offering, and which is now traded on the open market,
also called publicly held or publicly traded. A company that has issued securities through an initial public
offering (IPO), and is traded on at least one stock exchange or in the over the counter market. Although a
small percentage of shares may be initially "floated" to the public, the act of becoming a public company
allows the market to determine the value of the entire company through daily trading.
Public companies have inherent advantages over private companies, including the ability to sell future
equity stakes and increased access to the debt markets. With these advantages, however, come increased
regulatory scrutiny and less control for majority owners and company founders.

6. Cooperative (also co-operative or cooperative; often referred to as a co-op or coop) is

defined by the International Co-operative Alliance's Statement on the Co-operative Identity as an
autonomous association of persons united voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. It is a
business organization owned and operated by a group of individuals for their mutual benefit. A cooperative
may also be defined as a business owned and controlled equally by the people who use its services or who
work at it. Cooperative enterprises are the focus of study in the field of cooperative economics.
  Policies governing SSI

• The Small Scale Industrial Sector has emerged as a dynamic and vibrant sector of the economy during the
Eighties. At the end of the Seventh Plan period, it accounted for nearly 35 percent of the gross value of
output in the manufacturing sector and over 40 percent of the total exports from the country. It also
provided employment opportunities to around 12 million people. The primary objective of the Small Scale
Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to
enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment
and exports. The sector has been substantially de-licensed. Further efforts would be made to deregulate and
de-bureaucratize the sector with a view to remove all fetters on its growth potential, reposing greater faith
in small and young entrepreneurs. All statutes, regulations and procedures would be reviewed and
modified, wherever necessary, to ensure that their operations do not militate against the interests of the
small and village enterprises.

 INDUSTRIAL POLICY

• Aim: To formulate philosophy for the pattern of Industrial development

• Indian policy --- Framework--- (Public and Private)
• First important industrial policy resolution was issued by Government of India on April 6, 1948.

 Industrial policy resolution, 1948

• Emphasis was on continuous production and distribution.

• Importance of SSI for utilization of local resources and employment generation were realized
• Acceptance of importance of private and public sector
• Problem of raw material, capital, skilled labor were considered.
• Emphasis was given to problem solving of SSI and cottage industries by central and state
government.

 Strategy

• Expansion of public sector in new lines of production.

• Allowing private sector development under proper direction and regulation

 Division of industrial sector

• Industries where state had monopoly : Atomic energy, railway transport

• Mixed sector (public and private) : Ex: Coal, iron and steel, aircraft manufacturing, ship building,
mineral oils, wireless apparatus
• Industries of vital importance: Ex: Automobile, heavy chemicals, heavy machinery, machine tools,
fertilizers Cement, cotton etc.
• Other industries left open for private sector

 Industrial policy resolution 1956

 New classification of industries (3 Categories)

• Schedule A : (17 industries) : exclusive responsibility of state : arms and ammunition, atomic
energy, iron and steel, Heavy castings and forging ,Heavy electrical industries, iron ore and other
metals like copper, lead and zinc, mining, air, railway transport, generation and distribution of
electricity
• Schedule B : (12) Mixed sector (Public+ private) : Aluminum and other non ferrous metals, ferro-
alloys, chemical industry, antibiotics, fertilizers, synthetic rubber, road and sea transport
• Schedule C:Remaining industries for private sector : Rest of other, fit in social, economical policy,
industrial act and relevant legislation of state

 Strategy

• 128 items were reserved for exclusive production in the SSI.

• Development projects like Rural Industrial Projects and Industrial Estate Projects were undertaken to
strengthen the SSI
• The state will support cottage and SSI by restricting volume of production in large scale sector.
• Facilitate development of transport, power and other services, appropriate fiscal and other measures.
• Financial aid by state sponsored financial institutions
• Living and working condition of laborer would be improved, Labor laws were introduced.

 Industrial policy resolution 1969

 Licensing policy

• Aim: To solve the shortcomings of IPR 1956 Powerful industrial houses are always able to take
fresh license at the cost of new entrepreneur.

 Strategy
• The monopolistic and restrictive trade Practices act was passed(MRTP) 1970
• To regulate trading and commercial practices of firms
• Checking monopoly and concentration of economic power
• Firms asset of Rs.25 crore or more take license from Government of India before any expansion or
takeover by other firms

 Industrial policy resolution 1973

• Core industries concept (Fundamental importance)

• Iron and steel, cement, coal, crude oil, oil refining and electricity ( Basic industries)
• Out of the 6 core industries, private sector can apply for license which were not the part of schedule
A of IPR 1956
• Few industries put under reserved list for Small and medium industries to set up
• Foreign exchange regulation act (FERA) passed
• Limited permission for MNC to set up subsidiaries in the country.

 Industrial policy resolution 1977

• Foreign investment were prohibited

• The district industries centers(DIC) was set up
• To promote expansion of SSI and cottage industry.
• Serious attention was given to the level of production and prices of essential commodities.
• 504 items were reserved for exclusive production in SSI.
• Small scale sector was classified and defined into three categories :
1. Cottage and household industry
2. Tiny sector with investment limit of Rs. 1 lakh.
3. Small scale industries with investment limit of Rs. 10 lakhs and in case of ancillary units’ up
to Rs. 15 lakhs.

 Industrial policy resolution 1980

• Foreign investment allowed

• Monopolistic and restrictive trade Practices (MRTP) limit was revised to 50 crore
• District industries centers (DIC) continued
• Industrial licensing simplified
• Liberal attitude towards expansion of private industries.
• Investment ceiling for SSI were increased as follows;
1. Tiny Units: from Rs. 1 lakh to Rs. 2 lakh
2. Small Scale Units: from Rs. 10 lakh to Rs. 20 lakh
3. Ancillary Units: from Rs. 15 lakh to Rs. 25 lakh
• Village and rural industries were promoted.

 Industrial policy resolution 1985 and 1986

• Foreign investment simplified

• 49 %(MNC) and 51% equity(Indian partner)
• MRTP limit revised to Rs 100 crore
• Compulsory license remained for 64 industries only.

 Industrial policy resolution 1991

• Aim: to unshackle the Indian industrial economy from unnecessary bureaucratic control
• Purpose: Liberalization to integrate Indian economy with world economy, remove restriction on
direct foreign investment.

 Strategy

• To free domestic entrepreneur from restriction of MRTP act

• 836 items were reserved for exclusive production in SSI

 Major Policy Reforms

• Industrial licensing policy abolished all industrial licensing

• Only 6 items kept under compulsory licensing
• Ex: alcoholic drink, cigar and cigarettes, electronic aerospace and defense equipment, Industrial
explosives, hazardous chemicals, drug and pharmaceuticals
• Investment ceiling for SSI were increased as follows;
1. Tiny Units: from Rs. 5 lakhs
2. Small Scale Units: from Rs. 60 lakhs
3. Ancillary Units: from Rs. 75 lakhs
• Small industrial development organization (SIDO) and Small business development bank of India
(SIDBI) were established.
 Procedure to set up SSI
A. For starting a Small Scale Industry (Other than Chemical, Chemical based industries and highly
polluting industries), entrepreneurs have to first apply to the Directorate of Industries in the form
prescribed by the Development Commissioner (SSI). In case of Chemical and Chemical based industries,
entrepreneurs have to first get clearance from the Committee for Chemical Industries through the
Directorate of Industries and then approach for provisional SSI registration. All the entrepreneurs
irrespective of their size of investment may approach the 'Single Window Committee' which functions in
the District Industries Centre for getting the said clearances expeditiously.

B. The District Industries Centre will forward the complete set of applications received from the
entrepreneurs to the concerned Municipality/Panchayat. In turn, the Municipality/Panchayat after getting
clearances from the concerned Departments/ Organizations will issue permission for establishment of the
industrial units. The Municipalities/Panchayat will obtain the following clearances depending upon the
nature of the manufacturing activities:-

1. NOC on pollution angle from the Department of Science, Technology and Environment (Second
working day of every month is earmarked for environmental clearances meeting);
2. Approval of Factory Building and Machinery lay out from the Inspectorate of Factories;
3. Site clearance from Town and Country Planning Department;
4. Permission for land use conversion and ground water clearance from Agricultural Department;
5. Power feasibility Certificate from Electricity Department;
6. Building Plan approval from Pondicherry Planning Authority;
7. Clearance from Health Department;
8. Clearance from Fire Service Department;
9. Clearance from Revenue Department;
10. License from Food and Drugs Administration;
11. License from Civil Supplies Department.

C. In order to help the entrepreneurs to get the above clearances, procedures are being simplified. Single
Window Committee, under the Chairmanship of the Secretary to Government (Industries) is being given a
new strength with meaningful "Single Point Deliberation" with the concerned decision making
departments/authorities right in the presence of the promoters of the industries.
D.After installing machinery, entrepreneurs have to get licenses from the concerned
Municipality/Commune Panchayat. And license from Inspectorate of Factories along with consent orders
from the Department of Environment for operation of the unit.
F. After commencement of regular production, the entrepreneurs have to apply for Permanent SSI
Registration to the Directorate of Industries.
  Types of small scale Industry

1. Manufacturing Industries- Industries producing complete articles for direct consumption and also
processing industries
2. Feeder industries- specializing in certain types of products and services like casting, welding etc.
3. Serving industries- Covering light repairs and maintenance
4. Ancillary industries- producing parts and components and rendering services
5. Mining and quarrying

 Advantages of Small Scale Industry(SSI)

1. This industry is especially specialized in the production of consumer commodities.

2. Small scale industries can be characterized with the special feature of adopting the labor intensive
approach for commodity production. As these industries lack capital, so they utilize the labor power for the
production of goods. The main advantage of such a process lies in the absorption of the surplus amount of
labor in the economy that was not being absorbed by the large and capital intensive industries. This, in
turn, helps the system in scaling down the extent of unemployment as well as poverty.
3. It has been empirically proved all over the world that Small Scale Industries are adept in distributing
national income in more efficient and equitable manner among the various participants in the process of
good production than their medium or larger counterparts.
4. Small Scale Industries help the economy in promoting balanced development of industries across all the
regions of the economy.
5. This industry helps the various sections of the society to hone their skills required for entrepreneurship.
6. Small Scale Industries act as an essential medium for the efficient utilization of the skills as well as
resources available locally.