Role of Entrepreneurs in import substitution & meeting local Demand
Role of Entrepreneurs in Import Substitution
Every developing country is facing the problem of adverse balance of payment. Entrepreneurs play an important role in solving this problem through import substitution Entrepreneurs can take up production of such goods and services which can be used as import substitution. In simple words they can produce such goods and services which can be used in place of similar goods imported from outside.
Government is making all out efforts in the direction of import substitution. It is encouraging entrepreneurs to undertake production of goods and services which can be used as substitutes for imported goods to reduce imports. Needless to emphasis that reducing import by producing goods is as good as increasing export. The purpose of increasing export and reducing import is to conserve scarce and valuable foreign exchange reserves.
Entrepreneurs in Augmenting and meeting local demand
According to Pension it means effective desire. One should clearly understand distinction between desire and demand. Had the desire were horses, the beggars might ride. It is not every desire which can be called demand. It is only effective desire which can be termed as demand. A demand to be effective must have the following characteristics :
- A desire to have a particular thing.
- Means (money) to buy.
- Willingness to buy.
According to J.S. Mill demand is related to price. A demand without price has no meaning. According to him “demand means quantity of a commodity which is purchased at a certain price. “Higher the price lower the demand and vice versa. If price rises demand falls and if price falls, demand rises.
There is yet a third concept of demand, which is related to price as well as time. According to this theory demand is related both to the price and time. Demand not only changes due to price but also from time to time.
Demand may be :
- Local
- National
- International
Factors Affecting Demand
- Nature of demand: Luxury comfort or necessity
- Level of income.
- Number of customers
- Size of population
- Change in fashion
- Price of substitutes.
- Utility of goods or services.
- Price of the commodity.
- Quality of the commodity.
- Degree of competition.
Augmenting and meeting Demand:
Demand can be augmented and met through :
- Market analysis.
- Personal contact/touch with customers.
- Sales promotion.
- Competitive price.
- Quality of product.
- Credit facility.
- After sale service.
- Customer’s grievance redressal system.
Important links
- Entrepreneurship- Meaning, Definition, Functions & Characteristics
- Role of an Entrepreneur in Economic Development
- Entrepreneur Role:for Balanced Reg. Dev. of industries & Export promotion
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