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Guest post by: Sameer Madaan Become an Author

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The entrepreneur in a developing country has to encounter a number of problems while establishing a new project. These problems cause greater concern to many enthusiastic entrepreneurs. However, they could be saved to a greater extent by undertaking a project formulation exercise at the appropriate time. 1. Selection of appropriate technology: The first problem faced by an entrepreneur is in the matter of selection of appropriate technology for his enterprise. Modern technology developed in the highly industrialised countries may not be suitable for adoption in the developing countries as the conditions prevalent differ from country to country. For example, the optimal size of plants recommended for a highly industrialised country may be too big for acceptance in a developing country owing to the factors such as limited market for the products and limited availability of capital and skilled labour. Hence, the entrepreneur has to examine the project idea thoroughly as regards its design, production, marketing, after sales service, etc.

2. Influence of External Economies: The second problem relates to the absence or non-availability of external economies. No project can function an isolation in any economy. It has to depend on other industries for the supply of raw materials, power, tools, spare parts, etc., or on ancillary enterprises which can provide technical, financial and managerial services or on a complex net-work of communication and transport facilities or an intricate system of business practices. The entrepreneur in developing countries is, therefore, to consider not only the basic costs of the project but also the ancillary costs which in industrially advanced countries would have been contributed by the external economies.

3. Dearth of Technically Qualified Personnel: The third problem is the non-availability of technically qualified and appropriate personnel. Modern technology calls for a certain minimum supply of various skills that are generally lacking in developing countries.

4. Resource mobilisation: The fourth problem is resource mobilisation. In the context of present-day development of the magnitude and size of project it would be very difficult for an entrepreneur to provide the entire development capital that a project may need.

5. Knowledge about Government Regulations: Besides these problems the entrepreneur has to comprehend a number of Government directives, import and export policies, price controls, etc. The difficulty is to be familiar with all these regulations, for they are not available in a consolidated and detailed form in most of the developing countries. However, in India, a compendium entitled ‘Guidelines for Industries' has been published by the Ministry of Industrial Development. II provides information regarding the industrial policy, licensing procedures, guidelines for foreign collaboration, import and export control orders and foreign exchange orders. It also has information regarding the present status of capacities and possibilities of future development in various industrial fields like metallurgical industries, electronics equipment industries, transportation industries and the like.

These problems make the entrepreneur to undergo a lot of harassment, disappointment and despair. However, a project formulation exercise undertaken at the right time mitigates the severity as well as magnitude of these problems.

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