Revise Entrepreneurship

Overview of Entrepreneurship
1 CAMAD COLLEGE (SIXTH SEMESTER)

Chapter: I




NATURE AND DEVELOPMENT OF
ENTREPRENEURSHIP
The concept of entrepreneurship was first established in the
1700s, and the meaning has evolved ever since. Many simply
equate it with starting ones own business. Most economists
believe it is more than that.

To some economists, the entrepreneur is one who is willing to
bear the risk of a new venture if there is a significant chance for
profit. Others emphasize the entrepreneurs role as an innovator
who markets his innovation. Still other economists say that
entrepreneurs develop new goods or processes that the market
demands and are not currently being supplied.

In the 20th century, economist Joseph Schumpeter (1883-1950)
focused on how the entrepreneurs drive for innovation and
improvement creates upheaval and change. Schumpeter viewed
entrepreneurship as a force of creative destruction. The
entrepreneur carries out new combinations, thereby helping
render old industries obsolete. Established ways of doing
business are destroyed by the creation of new and better ways to
do them.

The entrepreneurial function implies the discovery, assessment
and exploitation of opportunities, in other words, new products,
services or production processes; new strategies and
organizational forms and new markets for products and inputs
that did not previously exist (Shane and Venkataraman, 2000).



The entrepreneurial opportunity is an unexpected and as yet
unvalued economic opportunity. Entrepreneurial opportunities
exist because different agents have differing ideas on the relative
value of resources or when resources are turned from inputs into
outputs. The theory of the entrepreneur focuses on the
heterogeneity of beliefs about the value of resources (Alvarez
and Busenitz, 2001: 756).

Entrepreneurship the entrepreneurial function- can be
conceptualized as the discovery of opportunities and the
subsequent creation of new economic activity, often via the
creation of a new organization (Reynolds, 2005).

Business expert Peter Drucker (1909-2005)
One who considers the changes that take place in market as an
opportunity to do business? Innovation is his tool.
He took this idea further, describing the entrepreneur as someone
who actually searches for change, responds to it, and exploits
change as an opportunity. A quick look at changes in
communicationsfrom typewriters to personal computers to the
Internetillustrates these ideas.

Most economists today agree that entrepreneurship is a necessary
ingredient for stimulating economic growth and employment
opportunities in all societies. In the developing world, successful
small businesses are the primary engines of job creation, income
growth, and poverty reduction. Therefore, government support
for entrepreneurship is a crucial strategy for economic
development.
As the Business and Industry Advisory Committee to the
Organization for Economic Cooperation and Development


(OECD) said in 2003, Policies to foster entrepreneurship are
essential to job creation and economic growth. Government
officials can provide incentives that encourage entrepreneurs to
risk attempting new ventures. Among these are laws to enforce
property rights and to encourage a competitive market system.

The culture of a community also may influence how much
entrepreneurship there is within it. Different levels of
entrepreneurship may stem from cultural differences that make
entrepreneurship more or less rewarding personally. A community
that accords the highest status to those at the top of hierarchical or-
ganizations or those with professional expertise may discourage
entrepreneurship. A culture or policy that accords high status to the
self-made individual is more likely to encourage
entrepreneurship.

This overview is the first in a series of one-page essays about the
fundamental elements of entrepreneurship. Each paper combines the
thinking of mainstream economic theorists with examples of
practices that are common to entrepreneurship in many countries.
The series attempts to answer:
Why and how do people become entrepreneurs?
Why is entrepreneurship beneficial to an economy?
How can governments encourage entrepreneurship, and,
with it, economic growth?

According to GEM (Global Entrepreneurship Monitor) there are
6 phases to entrepreneurship. As shown in the figure below (from
the 2012 GEM Global Report) they include:


Potential Entrepreneurs defined as those who have
the capabilities and have identified opportunities but
are not planning to start their own business.
Intending to Start those entrepreneurs who have
identified opportunity; have the capabilities and are
planning to start their own business.
Nascent (or Just Starting) described as those
entrepreneurs who have started but are less than 3 months
in on their venture.
New Business Owners those who are between 3
months and 3 years into their new business.
Established those entrepreneurs who have owned
their business for more than 3 years.
Discontinuance defined as those entrepreneurs who
have discontinued their business for whatever reason at
some point after starting it.


Definitions of Entrepreneur

It is derived from the French word Entreprendre which means to
undertake.
Some of the famous definitions area as follows:

A person who buys factors of production at certain
prices in order to combine them into a product with a
view to sell them at uncertain prices.
Richard Carleton

Examples:


Considered as a risk bearer. Farmer pays definite price for seeds,
fertilizers, pesticides, labor etc but not certain at which price he
could sell his produce.

A person who bears uncertainty (risk which cannot be
insured &is incalculable) can be reduced by taking
insurance. F.H. Knight

One who combines the land of one, labor of another and
capital of yet another and thus produces a product. By
selling product pays rent wages and interest. J.B. Say

Characteristics of an entrepreneur

An entrepreneur is a person who initiates a business venture.
There are some essential features of an entrepreneur which are
describing below.

Risk taking capability: every business has risk of time
money etc .so an entrepreneur must have the risk taking
capability.
Entrepreneur as risk bearer: Richard Cantilon defined
entrepreneur as an agent who buys factors as production
at certain prices in order to combine them into a product
with a view to selling it at uncertain prices in future. He
illustrated a former who pays contractual incomes, which
are certain to land owners and laborers, and sells at prices
that are uncertain. He includes merchants also who
make certain payments in expectation of uncertain


receipts. Hence both of them are risk-bearing agents of
production. P.H. Knight described entrepreneur to be a
specialized group of persons who bear uncertainty.
Uncertainty is defined as risk, which cannot be insured
against and is incalculable. He made distinction between
certainty and risk. A risk can be reduced through the
insurance principle, where the distribution of outcome in
a group of instance is known, whereas uncertainty cannot
be calculated.
Creativity and innovation: an entrepreneur has an
initiator possesses creativity and innovative power.
Entrepreneur as an innovator: Joseph A SchumPeter in
1934 assigned a crucial role of innovation to the
entrepreneur. He considered economic development as a
dynamic change brought by entrepreneur by instituting
new combinations of factors of production, i.e.
innovations. The introduction of new combination
according to him may occur in any of the following
forms.
(a) Introduction of new product in the market.
(b) Use of new method of production, which is not yet
tested.
(c) Opening of new market.
(d) Discovery of new source of raw materials.
(e) Bringing out of new form of organization.

Need for achievement: the entrepreneur has strong
desire to achieve the goal of business. He is always
driven by the needs for achievement.


Need for autonomy: an entrepreneur does not like to be
under anybody. it is the need for autonomy which drives
a person to be an entrepreneur.
Internal locus of control: an entrepreneur believes in
him his work.
External locus of control: he also believes in fate for
ultimate result.
Self confident: an entrepreneur has confidence in him.
Leadership capability: an entrepreneur must have
leadership capability to lead works under him
Industriousness: a successful entrepreneur must have
leadership capability to lead workers working under him.
Decision making capability: the entrepreneur has
capability to take quick decision.
Adaptability: he has the capacity to adapt with any kind
of situation that arise in the enterprise
Foresightness: The entrepreneurs have a good foresight
to know about future business environment.
Others; the other feature are dynamism, ambition,
education and training, long term involvement, future
orientation.

Qualities of successful entrepreneur

To become a successful as an entrepreneur in its business life, a
businessman should possess a quite a number of essential
qualities. Those are noted below:

Moderate risk taking: an entrepreneur always takes
calculated risk to operate the organization.


Hard work: an entrepreneur is very much hard worker,
he or she always busy with various types work.
Accountability: a successful entrepreneur is accountable
well as his associates always accountable to him.
Educated in real sense: successful entrepreneur is
educated in real sense .he tries to implement his
organizational objectives through his education.
Analytical mind: a successful entrepreneur is analytical
minded. He scrutinizes every activity on the organization.
Dynamic leadership: a successful entrepreneur is always
dynamic to operate the organization.
Presence of mind: a successful entrepreneur is always at
present of mind he is always aware of activities that to
happening in the organization and around him
Accommodative: a good entrepreneur has the capacity to
make his own place at every sector.
Courageous and tactful: Corsages and techniques is
very much essential for a successful entrepreneur.
Maker of right decision: A successful entrepreneur
makes right decision in right time in right place.
Foresighted: successful entrepreneur foresights the
future and take decision accordingly.
Right perception of things: A successful entrepreneur
things in a right way.
Enjoy simple life: A successful entrepreneur always
deals a simple life a general people of the society.
Strong desired to success: A successful entrepreneur
have a strong desire to success. he is driven by the desire
to success.
Innovation: innovation is the process of making new
something. A successful entrepreneur is innovative.


Self confidence: A successful entrepreneur is self
confidence. does not really on other for decision or fate.
Goal setting: a successful entrepreneur set the goal.
Keen observation: A successful entrepreneur always
observes the origination.
Sociable: A successful entrepreneur is sociable person.
Loves to work; A successful entrepreneur is very much
addicted to work.
Loves new ideas: A successful entrepreneur loves new
ides of the organization.
Team builder: A successful entrepreneur builds a
suitable team.
Clean understanding: A successful entrepreneur clearly
understands everything.
Ability to conceptualize: A successful entrepreneur is
able to conceptualize the reality.

Types of Entrepreneurs

Schumpeter made the entrepreneur the adventurous innovator
who acting on his own account, introduces changes that others do
not dare to experiment with. Other writers have, however,
identified some other categories of entrepreneurs.

Arthur H. Cole distinguishes between empirical, rational and
cognitive entrepreneurs. The empirical entrepreneur hardly
introduces anything revolutionary and follows the principle of
rule of thumb. The rational entrepreneur is well informed
about the general economic conditions and introduces changes
that look more revolutionary. The cognitive entrepreneur is
well informed, draws upon the advice and services of experts and


introduces changes that reflect complete break from the existing
scheme of things.
In a study of American Agriculture, Clarence Danhof classifies
entrepreneurs into four types-innovative, imitative, Fabian and
drone. The innovating entrepreneur is one who assembles and
synthesizes information and introduces novel combinations of
factors. He is an aggressive figure and an industrial leader. The
imitative entrepreneur is also known as the adoptive
entrepreneur. He simply adopts successful innovations
introduced by other innovators. The Fabians entrepreneurs are
timid and cautious. He will imitate other innovations only if he is
certain that failure to do so may damage his business. Finally
there is the drone entrepreneur. His entrepreneurial activity
may be restricted to just one or two innovations. He refuses to
adopt changes in production even at the risk of reduced returns.

This classification of Danhof brings into focus two important
aspects:

(a) It shows that an economy which is making a lot of
technical advancement has in its ranks a large
number of innovating and adoptive entrepreneurs and
less number of Fabians and drones.
(b) Technological advancement may not take place even
if innovators are present, if the actual control and
ownership of production is in the hands of Fabians or
drones.

Another classification of entrepreneurs is between private and
public entrepreneurs. Private entrepreneur is motivated by
profit and as such would not enter those sectors of the economy


in which prospects of monetary rewards are not bright. In
general, infrastructure industries fall under this category. For
example electricity generation and distribution is Government
owned. This forces the Government to take the initiative to start
enterprises in these sectors. Thus, we have the category of public
entrepreneurs. In the less developed countries the
entrepreneurial functions of the Government has greatly widened
due to the lack of sufficient private entrepreneurs.

Another classification based on the scale of enterprise is between
small scale and large scale enterprises. This classification is
especially relevant in the less developed countries. Private
enterprise is usually found in households, small scale and
medium scale industries. The small entrepreneur does not
possess the necessary talents and resources to initiate large scale
production and introduce revolutionary technological changes. In
the developed countries most entrepreneurs deal with large scale
enterprises. They possess the financial wherewithal and the
necessary expertise to initiate large scale enterprises and
introduce novel technical changes. The result is the developed
countries are able to sustain and develop a high level of technical
progress. It is this classification which has led to the wide
technological gap between the developed and the less developed
countries.

In the initial stages of economic development, entrepreneurs tend
to have less initiative and drive. As development proceeds, they
become more innovating and enthusiastic. Similarly, when
entrepreneurs are shy and humble the environment is
underdeveloped. Business environment becomes healthy and
developed when entrepreneurs are innovating.


1. Innovating entrepreneurs:

Innovative entrepreneurship is characterized by aggressive
assemblage of information and the analysis of results derived
from sound combination of factors. Persons of this type are
generally aggressive in experimentation and cleverly put
attractive possibilities into practice. An innovating entrepreneur
sees the opportunity for introducing a new technique or a new
product or a new market. He or she may raise money to launch
an enterprise, assemble the various factors, choose top executives
and set the organization going. Schumpeters entrepreneur was of
this type. Such an entrepreneur introduces new products and new
methods of production, opens new markets and re-organizes the
enterprise.

Among the different types of entrepreneurs, the innovating
entrepreneur is the most vigorous type of entrepreneur.
Innovating entrepreneurs are very commonly found in developed
countries. There is dearth of such entrepreneurs in
underdeveloped countries. A country with little or no industrial
tradition can hardly produce innovating entrepreneurs. Such
entrepreneurs can emerge and work only when a certain level of
development is already achieved and people look forward to
change and progress. Innovating entrepreneurs played the key
role in the rise of modern capitalism through their enterprising
spirit, hope of money making, ability to recognize and exploit
opportunities, etc.



2. Adoptive or imitative entrepreneurs:

These kinds of entrepreneurs are characterized by readiness to
adopt successful innovations created by innovative
entrepreneurs. These type of entrepreneur are revolutionary
entrepreneurs with the different that instead of innovating the
changes themselves, they just imitate the technology and
techniques innovated by others. These entrepreneurs are most
suitable for developing countries because such countries prefer to
imitate the technology, knowledge and skill already available in
more advanced countries. The Cochin Shipyard is a good
example of the result of imitative entrepreneurship. The Shipyard
has been constructed using the innovative technology provided
by the Mitsubishi Heavy Industries Ltd. of Japan. 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 more advanced
countries. In highly backward countries there is shortage of
imitative entrepreneurs also. People who can imitate the
technologies and products to the particular conditions prevailing
in these countries are needed.

Sometimes, there, is a need to adjust and adopt the new
technologies to their special conditions. Imitative entrepreneurs
help to transform the system with the limited resources available.
However, these entrepreneurs face lesser risks and uncertainty
than innovative entrepreneurs. While innovative entrepreneurs
are creative, imitative entrepreneurs are adoptive.

Imitative entrepreneurs are also revolutionary and important. The
importance of these humbler entrepreneurs who exploit


possibilities as they present themselves and mostly on a small
scale must not be under-estimated. In, the first place, such
adaptation requires no mean ability. It often involves what has
aptly been called subjective innovation that is the ability to do
things which have not been done before by the particular
industrialist, even though, unknown to him, the problem may
have been solved in the same way by others. By western
standards, an imitative entrepreneur may be a pedestrian figure,
an adopter and imitator rather then a true innovator. He is more
an organizer of factors of production than a creator. But in a poor
country attempting to industrialized, he is nevertheless a potent
change producing figure. He can set in motion the chain reaction
which leads to cumulative progress. This humbler type of
entrepreneur is important in under developed countries for
another reason. These countries are placing great emphasis in
their economic planning on small scale industries and
decentralized industrial structure.

3. Fabian entrepreneurs:

Entrepreneurs of this type are very cautious and skeptical while
practicing any change. They have neither the will to introduce
new changes nor the desire to adopt new methods innovated by
the most enterprising entrepreneurs. Such entrepreneurs are shy
and lazy. Their dealings are determined by custom, religion,
tradition and past practices. They are not much interested in
taking risk and they try to follow the footsteps of their
predecessors.



4. Drone entrepreneurs:

Drone entrepreneurship is characterized by a refusal to adopt
and use opportunities to make changes in production methods.
Such entrepreneurs may even suffer losses but they do not make
changes in production methods. They are laggards as they
continue to operate in their traditional way and resist changes.
When their product loses marketability and their operations
become uneconomical they are pushed out of the market. They
are conventional in the sense that they stick to conventional
products and ideas. The traditional industries of Kerala are
characterized by drone entrepreneurs. The coir and bamboo
industries are still in the hands of laggards who refuse to
innovate.

Entrepreneur and Entrepreneurship

Entrepreneur Entrepreneurship
Entrepreneur is a
person.
Entrepreneur is an
organizer.
Entrepreneur is an
innovator.
Entrepreneur is a risk
bearer.
Entrepreneur is a
motivator.
Entrepreneur is a
creator.
Entrepreneurship is a
process.
Entrepreneurship is an
organization.
innovation.
Entrepreneur is a risk
bearing.
Entrepreneur is a
motivation.
Entrepreneur is a creation.
Entrepreneur is a vision.


Entrepreneur is a
visualize.
Entrepreneur is a
leader.
Entrepreneur is an
imitator.

Entrepreneurship is a
leadership.
imitation.

Differences between Entrepreneurship and Intrapreneurship
1. Intrapreneurs operate within the confines of an established
organization. Due to the culture of the organization, he or she
might have to dance to the music of the management and so may
not exercise the freedom associated with entrepreneurship.
Nevertheless, in practice, the intrapreneur is likely to act before
asking for permission or if possible to act in an autocratic way to
put through his entrepreneurial ideas. A case in point is when a
Starbucks manager in one of the stores took advantage of the
Starbucks' brand and made tapes to sell in his store which proved
so popular with the customers that the company licensed them
for sales. Now, music has become one of Starbucks' brand
extensions. Schultz admits that he had 'to get talked into selling
music...'

Entrepreneurship on the other hand thrives because the
entrepreneur has the liberty needed to carry out all the trials until
success is achieved because he or she is not under any obligation
to follow any organizational culture. A typical example of this
difference is Dr Land, the inventor of Polaroid.


Dr. Land did not give up on his vision of SX-70 instant camera,
an improvement on his first invention with added features for
Polaroid until he succeeded several years later.
2. Even though intrapreneurship is seen as a panacea to
recent trend of business competitions, the intrapreneur is
considered as intra-organizational revolutionary who challenges
the status quo of the organization to change the system or
culture. This creates frictions within the units if not mutually
resolved.
Entrepreneurship on the other hand affects organizations from
outside by trying to find alternative ways of creating more value
for either already existing product which is not meeting the
consumer needs or create a new product altogether. Chen
Tianqiao, 31 year old Chinese entrepreneur who taking
advantage of the collapse of the Chinese dot.com following the
U.S dot.com bubble burst. He discovered that no one was
engaged in the online gaming. With the vision to meet the
insatiable appetite, he raised some funds from his previous start-
up and ventured into that as there are no X-box and Play station
anywhere to buy in China. He even came out with an innovative
way of collecting cash in this country where e-commerce is not
in operation at the moment by using a prepaid scratch-off card.
He is now worth about $680million
3. Another issue which makes intrapreneurship different from
entrepreneurship is that an intrapreneur readily has an easier
access to ready- source of all kinds of resources within the
organization which can be considered as very important to the
individual since the project might have to be tried and tested
several times to get the desired results. Thus with a ready source


of finance or other form of resources it will be ideally welcomed.
As expected, an intrapreneur might already be part of an R&D
unit or in a key position and might have access to needed
resources; money and or personnel. An example of an
intrapreneur with available resources is when in 1968 an
American Don Wetzel, head of product planning for an
automated baggage handling company called Docutel, used his
entrepreneurial instinct to improve upon ATM when he was
frustrated standing in a long queue one afternoon to cash a
cheque in a bank. His company, Docutel, provided $4million for
Wetzel and his engineers to build his idea. The result was a card
equipped with a magnetic stripe and can be re-used after each
transaction which was not the case previously; it was later
patented by Docutel. This is something which normally eludes an
entrepreneur who might have to borrow from the bank (if lucky),
parents, friends, or turn to lifetime savings to go into the venture.
Richard Branson used mostly acquaintances to start his
entrepreneurial ventures and Chen had to use his $300,000
savings from a previous venture. The most significant thing
about Chen is that every other successful Chinese company
started as a copy of another company but not Chen's company
Shanda. This implies that entrepreneurs are rewarded according
to the successes of their efforts. The entrepreneur would have to
fend for him or herself in terms of funds for carrying out any
experiment. Unlike their counterparts, the intrapreneur is likely
to go home with some pay packet even if he 'fails'. Some
intrapreneurs are guaranteed some pay packet whilst they
experiment with their ideas mostly through employee projects
was being embarked on by companies who are trying to
introduce entrepreneurship in their organizations.


To say the least in conclusion, all things being equal, both
entrepreneurs and intrapreneurs need the backing of the society
to develop their 'usually good' thoughts, and quoting Aristotle "it
is the mark of an educated mind to be able to entertain a thought
without accepting it". The Harvard Business Reviews also shared
a thought on this issue that ninety percent of the task of the top
manager is to ask useful questions. Answers are relatively easy to
find, but asking good questions, that is the more critical skill".
ENTREPRENEUR INTRAPRENUER
Entrepreneur is employer Intrapreneur is employee
Independent in operation Depends on the organization to
implement his ideas
Bears all the risk involved in
enterprises
Does not bear all the risk
Exhibits higher need for
achievement
May not have high need
achievement
Profit in the reward Attractive salary, promotion and
incentives are the reward
May not have formal
qualification
Should have some professional
or technical qualification
Do not have any boundary for
operations
He has to operate within the
organization policies.



ROLE OF ENTREPRENEURSHIP IN ECONOMIC
DEVELOPMENT

The industrial health of a society depends on the level of
entrepreneurship existing in it. A country might remain backward
not because of lack of natural resources or dearth of capital [as it
is many times believed] but because of lack of entrepreneurial
talents or it inability to tap the latent entrepreneurial talents
existing in that society. Entrepreneurs historically have altered
the direction of national economies, industry or markets- Japan,
Singapore, Korea, Taiwan to name a few.

1. ENTREPRENEURSHIP AND ECONOMIC
DEVELOPMENT

Entrepreneurship is basically concerned with creating wealth
through production of goods and services. This results in a
process of upward change whereby the real per capita income of
a country rises overtime or in other words economic
development takes place. Thus entrepreneurial development is
the key to economic development. In fact it is one of the most
critical inputs in the economic development of a region. It speeds
up the process of activating factors of production leading to a
higher rate of economic growth, dispersal of economic activities
and development of backward regions. If a region is unable to
throw up a sufficient number of entrepreneurs then alien
entrepreneurs usually step in to provide goods and services
needed by the people. However the profits earned by these
entrepreneurs are usually not ploughed back but repatriated to
their place of origin. As a result development in that region
cannot take place. Dr. M.M.


Akhori refers to this practice as The Leech Effect. The above
reiterates the importance of entrepreneurship development for
fuelling economic growth of a region. Entrepreneurship begets
and also injects entrepreneurship by starting a chain reaction
when the entrepreneur continuously tries to improve the quality
of existing goods and services and add new ones. E.g. when
computers came into the market there was continuous
improvement in the models, their functions etc. like first
generation computers, personal computers, laptops, palmtops etc.
Not only had this fostered the development of the software
industry, computer education institutes, computer maintenance
and stationery units etc. but also other industries like banking,
railways, education, travel, films, medical and legal
transcriptions, business process outsourcing [BPOs] etc. In this
manner by harnessing the entrepreneurial talent a society comes
out of traditional lethargy to modern industrial culture. India
needs entrepreneurs to capitalize on new opportunities and to
create wealth and new jobs.

2. ENTREPRENEURSHIP AND EDUCATION

There is a positive linkage between entrepreneurship and
economic development and the other was regarding the
emergence of a strong hypothesis that entrepreneurship can be
developed through planned efforts. Consequently planners
realized that absence of a strong entrepreneurial base acts as a
serious handicap in the industrial development of a region. The
identification and development of first generation entrepreneurs
through Entrepreneurial Development Programmes is an
important strategy.



There is a growing realization that presence of resources and
favorable government policies cannot automatically manufacture
economic development. It is the entrepreneurial spirit of the
people, which can transform the economy of that region. Both
the quantity and quality of entrepreneurs are of utmost
significance for achieving the goal of economic development.
The myth that entrepreneurs are born with some innate traits is
fortunately no longer held. Many research studies have brought
out that entrepreneurship can be taught and learned.
Entrepreneurship is a discipline and like all disciplines it has
models, processes and case studies, which can help an individual
to study this subject. The necessary competencies required of a
successful entrepreneur can be acquired through training and
development.

Entrepreneurs play a vital role in economic development

Innovation
Job Creation
Increased Competition
Increased Productivity
New Markets





Usually the model used for entrepreneurial education has three
phases:

Stimulatory Phase- This phase involves planned
publicity for opportunities, motivation training and help
and guidance in selection of product or service.
Support Phase- This provides help in registration of
units, arrangement of finance as well as land, sheds,
power, water, common facility centre etc. Help is also
provided in marketing of products.
Sustenance Phase- Once the enterprise is set up then
help is provided for modernization, diversification,
additional finance etc.

Some of the other roles are:

Product evolution process ( Process for developing
and commercializing an innovator)
Iterative synthesis ( The intersection of knowledge and
social need that starts the product development process)
Ordinary innovations (New products with little
technological change)
Technological innovations (New products with
significant technological advancement)
Breakthrough innovation (New products with some
technological change)
Government as an innovator (A government active in
commercializing technology)
Technology transfer (Commercializing the technology
in the laboratories into new products.


Relationship between Entrepreneurship, Corporations, and
Economic Development

We know that Corporations influence economic growth of the
country by creating new plants which in turn provides ample of
job opportunities. Researchers states that earlier analysis of
economic development use to focus on big corporations ignoring
the innovations that comes from small business .the potential
entrepreneurs if thinking to start a business had to refer to
Entrepreneurial Framework Conditions which means need to
business is influenced by additional characteristics within the
existing business environment. This have a significant effect on
entrepreneurial process as this may lead to increase in innovation
and competition having direct impact on national economic
growth. Entrepreneurship is vital for larger economy. A nations
economic development depends on successful entrepreneurship
joint with the force of established corporations. However, the
beneficial value of this mechanism varies with the national
income, as measured by GDP per capital. At low levels of
national income, self-employment provides job opportunities and
scope for the creation of markets. As GDP per capital income
increases, the emergence of new technologies and economies of
scale allows larger and established firms to satisfy the increasing
demand of growing markets and to increase their relative role in
the economy. It is also observed that if people find stable
employment, it will decrease business start ups. Studies states
that in high income economy, where lower costs and technology
development is fast, entrepreneurs plays competitive advantage.
Therefore entrepreneurs in different countries having different
levels of GDP per capital face different challenges. This means


conditions and framework for entrepreneur in one country may
not be favorable and as effective in other region

Family Business and Succession Strategies
If you own a family business, you probably worry even more
than the average entrepreneur about ensuring that your company
not only survives, but also thrives to nurture the next generation.

INNOVATIVENESS
PROACTIVENESS
RISK - TAKING
NEW PRODUCTS
RADICAL PRODUCT
CHANAGES
INITIATIVE CHANGE
FIRST TO INTRODUCE
HIGH RISK PROJECTS
FEARLESS AND POWERFUL


Several years ago, researchers David Sirmon and Michael Hitt
examined the strategies behind successful family businesses.
They found that success is tied directly to how well a company
manages the five unique resources every family business
possesses:
1. Human capital. The first resource is the family's human
capital, or "inner circle." When the skill sets of different family
members are coordinated as a complementary cache of
knowledge, with a clear division of labor, the likelihood of
success improves significantly.
2. Social capital. The family members bring valuable social
capital to the business in the form of networking and other
external relationships that complement the insiders' skill sets.
3. Patient financial capital. The family firm typically has
patient financial capital in the form of both equity and debt
financing from family members. The family relationship between
the investors and the managers reduces the threat of liquidation.
4. Survivability capital. The family company must manage its
survivability capital-family members' willingness to provide free
labor or emergency loans so the venture doesn't fail.
5. Lower costs of governance. The family business must
manage its ability to hold down the costs of governance. In
nonfamily firms, these include costs for things such as special
accounting systems, security systems, policy manuals, legal
documents and other mechanisms to reduce theft and monitor
employees' work habits. The family firm can minimize or


eliminate these costs because employees and managers are
related and trust each other.
Clearly delineating these unique family resources and leveraging
them into a well-coordinated management strategy greatly
improves your business's chances of success compared to
nonfamily-owned companies.
10 strategies for succession of Family Business
Family owned businesses are complex and planning for an
internal succession is challenging. There are a number of issues
to deal with in a variety of areas, including financial, personal
and family dynamics, tax, legal and business operations. So
where to start? We have identified and developed 10 strategies to
help you safely navigate the mine fields and create a smooth
succession.
1. Family-Business Assessment Are you, your family
members and key personnel all on the same page regarding
succession? What are their expectations? Is there support
for your successor? What financial, legal and personal
obstacles exist? Our first step is a 360 assessment process
which includes gathering information about your family and
business and interviewing as many of the stakeholders as
possible, both inside and out of the business. Our goal is to
understand all the relevant issues and the relationships
between the family members. Result: A roadmap for
succession that includes which strategies are critical to
success, a cost estimate and suggested timeline. Exit
strategies could include a full buy-out, gifting over time,


sweat equity earn out, note payable over time or other
financing techniques.

2. Contingency Plan What would happen to the business and
your family if you died today? Who would run things?
What financial emergencies would this create? Who would
fill the leadership vacuum? What taxes would be due? How
would your banker and vendors react? Are there any key
employees you could not afford to lose? It is important to
have contingency plans in place in the event of any
emergency. For a family business, this usually includes a
buy-sell agreement, estate plan and key person coverage.
Even if you have all these in place, it is critical to ensure that
they will all work together smoothly at the right time.
Result: A written contingency plan that can be shared
with your family, key personnel and vendors to ensure
the financial security of your family and the survival of
the business.

3. Core Values What values are most important to you and
your family? What values have been key ingredients in the
growth of your business? Have you shared these values and
your beliefs with your key people? At the core of most
successful family owned businesses is a set of shared values.
These values can bring family members and employees
together to work for a common goal. Succession involves
major changes in the ownership and management structure of
the organization. This is a critical time to identify, share and
re-affirm the core values that will continue throughout the
life of the business. Result: A clear and concise statement


of the core values for your family and business that can
be communicated to employees and customers.

4. Business Strategic Plan Is your business well positioned
for growth? What are the key drivers and metrics around
which the business should be managed? Are you passing on
a thriving or a stagnant enterprise to your successor? Only
successful, growing businesses concern themselves with
succession. Succession is about preparing the next group of
owners and managers to take the business to the next level.
A strategic plan is a blueprint developed with the input of
your key employees and potential successors. Together you
will create a shared vision to grow the business into the next
generation. Result: A written plan with performance
criteria that you can use to monitor progress towards
your business goals.

5. Ownership Transition How will the current owners and
managers gracefully exit the business? Is there an ongoing
role that they can and should play in the future? Have you
created financial security for the owners? In our experience,
business owners are not willing to step away from the
business unless they have financial security separate from the
business. In addition, your skills and experience have value
to the business. Choosing a role as a mentor, focusing on
your passion in the business or serving on the Board of
Directors is often a good transition during succession.
Result: Written analysis of your personal financial
security and a clear plan of how to pursue your interests,
whether within or outside of the business.


6. Family Participation Guidelines How do you hire,
compensate, evaluate and promote family members? What
are the qualities that the next CEO needs to lead the business
successfully into the future? How will you choose the next
successor? How will you ensure that the process appears
fair to other key people and family members? How do you
help family members utilize their full potential? How do you
manage the expectations of family members? It is important
to clearly communicate the opportunities and expectations for
family members interested in working in the business.
Establishing employment and work rules reduces family
conflict and creates a sense of fairness rather than
entitlement. Result: A written policy that can be shared
with all family and key employees that will outline the
rules and benefits of working in the business.

7. Business Value Have you commissioned an independent
valuation of the business? What is the value of your business
and how was it determined? What are the key factors that
affect the business value over time? What is the value for
estate planning purposes and how does it differ from the
value if you were to sell the business? A formal valuation is
helpful to obtain financing, set a buy-out price, plan for estate
taxes or develop a gifting strategy. We will help you define
the purpose and focus for the business valuation. We will
gather all the necessary information and coordinate with key
advisors. Result: A comprehensive package that can be
used by an independent valuation firm to provide a
written valuation based on your needs.



8. Legacy Planning What will be your legacy? How will
your family manage wealth in the future? What are the
leadership skills that will be needed in the next several
generations? How do you want to be remembered? You
have created a successful business that positively impacts
your employees, family members and the wider community.
We will help you define the elements of your legacy.
Result: A written plan of action that could include a
charitable gift program, family foundation, education
plan, family bank/entrepreneurial pool or other
strategies.

9. Board of Directors Do you have an independent and
effective Board of Directors? Does your Board create new
ideas? Does it ask the right questions? Does it help generate
the right kind of contacts for your business? Does it hold
your management team accountable for results? Do you have
the right people on your Board? A Board of Directors is a
cost effective way to bring a high level of expertise and talent
into your business. You can utilize the experience of
successful business people to take your firm to the next
level. Independent, non-family, Board members bring new
ideas, fresh perspectives and an expanded circle of contacts
to your business. Result: A written statement of intention
outlining the types of Board members you are seeking
and assistance in identifying and qualifying candidates.



10. Family Meetings Does the family meet regularly to discuss
family issues and manage family assets? Does the family
have a process for. collaborative decision making and goal
setting? Are you educating family members about business
and financial issues? Family businesses require clear and
open communication to be fully effective. Regular meetings
foster good relationships, reduce conflict and clarify
expectations. Similar to a fully functioning Board of
Directors, family meetings can bring unique expertise and
perspectives to the business if their input is solicited and
valued. Result: Family meetings facilitated to
communicate current plans, educate family members and
develop collaborative decision making.

These 10 Succession Strategies are not necessarily sequential and
they do not all apply to every family business. Underlying all of
these is the ongoing process of improving communication,
providing opportunities for learning and education and
developing skills in conflict resolution. Succession is a long-
term and ongoing process. It generally takes 3 to 5 years to
develop a viable succession plan and create the structure within
the business and family to support the succession plan. The
purpose is to create an environment in which the business and the
family can thrive for the betterment of all involved.



The Challenges Working with Non - Family
Business

To achieve long-term success, family owners must resist the
desire to keep top jobs in the family. As the business expands
they need to increase the diversity of their management
background by introducing experienced outsiders with special
talents, fresh insights and a dispassionate perspective.

Family businesses need to work extra hard recruiting and
retaining non-family talent. The job doesn't suit everybody, and
many candidates think twice before applying. And, if they get the
job, they sometimes end up resigning because they've run out of
opportunities - or run out of patience, as family politics and
emotional cross-currents repeatedly interfere with their work.
Bringing in non-family managers can cause cultural and
integration challenges. Family businesses often have a strong
defining culture that may be resistant to change. If outside
executives have previous experience working in a family
company, this may help them carry out their role in a way that's
sensitive to the family's emotional involvement.
Successful non-family managers are often interesting,
unusual characters - psychologically suited to a demanding
work environment. Indeed, some top performers are attracted
by the unique opportunities of working with a close-knit family
team, building a business underpinned by family values and
long-term stewardship principles. Some also play a valuable role
as coach and mentor to succession candidates and the next
generation.


Family companies need to devise imaginative reward
structures that motivate and retain top-performers. Non-
family executives will want to know that their efforts and
achievements growing the business will be recognized - in salary
and benefits terms, and possibly via an equity (or quasi-equity)
stake in the company.



Family firms that confine equity share ownership to family
members are at a disadvantage compared with competitors
offering share options. However, effective alternatives include:
Restricted voting shares - identical to other equity shares,
except they carry no rights (or restricted rights) to vote at
general meetings.
Restricted transferability shares - shares that must be
offered back to the company, the family or an employee
trust when the executive leaves (or before they can be
sold).
Phantom share options - a cash bonus plan where the
amount of the bonus is determined by reference to the
increase in value of a notional share option.
Percentage bonuses - not involving shares, real or
phantom, but still enabling executives to participate in
any appreciation in company value.
Attracting and keeping the best people. Some guidelines:
Set up a fair system by which both family and non-family
are recruited and evaluated on merit.
Look at all aspects of non-family executive rewards to
ensure you are offering a competitive, incentivizing
benefits package.
Provide attractive career development opportunities.
Work to instill a sense of responsibility, autonomy and
fulfillment.





Entrepreneurial Decision Process

Entrepreneurial Decision Process is about deciding to become an
entrepreneur by leaving present activity i.e. a movement from the
present lifestyle to forming a new enterprise. The decision to
start a new company occurs when an individual perceives that
forming a new enterprise is both desirable and possible.
The decision to become an entrepreneur to start a new business
consist of several sequential steps-
1. The decision to leave a present career or lifestyle
(Pushing and pulling influences active in the decision to
leave a present career or lifestyle.

2. The decision about desirability of new venture formation
i.e. the aspects of a situation that make it desirable to start
a new venture and this relates to culture, subculture,
family, teachers and peers.

3. The decision about possibility of new venture formation
i.e. factors making it possible to create a new venture like
government, background, marketing, financial, role
models.

Desirability of New Venture Formation :- (Aspects of a
situation that make it desirable to start a new company)

1. The perception that starting a new company is desirable
results from an individuals culture, subculture, family,
teachers and peers.
American culture places a high value on being your own
boss, being a success and making money therefore, it is not


surprising to find a high rate of company formation in the
United States.
On the other hand in some countries making money is not as
valued and failure may be a disgrace. The rate of business
formation in these countries is not as high.

2. Many subcultures that shape value systems operate within a
cultural framework.
In the U.S. they include Route 128 (Boston), Silicon Valley
(California), and North Carolina Triangle. In India they
include Marwari, Gujrati, and Rajasthani Businessmen.
These subcultures support and even promote
entrepreneurship.

3. Studies indicate that a high percentage of founders of
companies had fathers and/or mothers who valued
independence.
4. Encouragement to form a company is also gained from
teachers, who can significantly influence individuals.
5. An area having a strong educational base is also a
requirement for entrepreneurial activity.
6. Peers are important, also, as is an area with an
entrepreneurial pool and peer-meeting place.



Possibility of New Venture Formation : - (Factors making it
possible to create a new venture)

Although the desire of new venture formation derived from the
individuals culture, subculture, family, teachers and peers needs
to be present before any action is taken, the second feature
necessary centers around this question What makes it possible
to form a new company?
1. The government contributes by providing the infrastructure
to help a new venture.


The India has the necessary roads, communication and
transportation systems, utilities, and Economic stability
The Indian tax rate for companies and individuals is better
than in some European countries.
2. The entrepreneur must have the necessary background.
Formal education and previous business experience give
a potential entrepreneur the skills needed to form and
manage a new enterprise.
Although educational systems are important in
providing the needed business knowledge, individual
will tend to be more successful in forming in fields in
which they have worked.

3. The market must be large enough and the entrepreneur must
have the marketing know-how to put together the entire
package.
4. The entrepreneur must have the marketing know-how to put
together the entire package.
5. A role model can powerfully influence the perception of
venture possibility.
6. Finally, financial resources must be readily available.
Although most start-up money comes from personal
savings, credit, and friends, but there is often a need for
additional capital.
Risk-capital availability plays an essential role in the
development and growth of entrepreneurial activity.



Types of Start - Ups
1. Cottage Company: A small venture that generally
employs fewer than 10 people and has revenues of less
than $1 million.

2. Lifestyle firms: A small venture that supports the
owners and usually does not grow.

3. Foundation Company: A type of company formed from
research and development that usually does not go public.

4. High-potential venture: A venture that has high growth
potential and therefore receives great investor interest
gazelles Very high growth ventures
Generating the Business Ideas for starting a New
Business
SOURCES OF NEW IDEAS

A sound idea for a new product or service, properly evaluated, is
essential to successfully launch a new venture. Some of the more
frequently used ideas for new entrepreneur include consumers,
existing companies, distribution channels, the federal
government and research and development.

Consumers- Potential entrepreneurs should pay close attention
to the final focal point of a new product-the customer. This can
be an informal or formal survey of consumers expressing their
opinions. Care should be taken to ensure that the idea represents
a large enough market.


Existing Companies- Entrepreneurs should establish a formal
method for monitoring and evaluating the products and services
in the market. This may uncover ways to improve on present
products, resulting in new product ideas.

Distribution Channels- Because they are familiar with the
needs of the market, channel members often have suggestions for
new products. These channel members can also help in
marketing the new product.

Government Offices- The files of the Patent Office contain
numerous new product possibilities. The patents can suggest
other new product ideas. Several government agencies and
publications are helpful in monitoring patent applications. New
product ideas can also come in response to government
regulations.

Research and Development- The largest source for new ideas is
the entrepreneur's own research and development. This can be a
formal endeavor connected with one's current employment.
Important Web link for Methods of Generating New Ideas

Methods of Generating New Ideas

1. Product Planning and Development Process

Once idea emerges from idea sources or creative problem
solving, they need further development and refinement in to final
product or service to be offered. This refining process- the
product planning and development process is divided in to five
major stages. Idea stage, concept stage, product development


stage, test marketing stage and commercializing; it result in the
product life cycle.

2. Establishing evaluation criteria
At each stage of product planning and development process,
criteria for evaluation need to be established. These criteria
should be broad, yet quantitative enough to screen the product
carefully in the particular stage of development. Criteria should
be developed to evaluate the new product in terms of market
opportunity, competition the marketing system, financial factors
and production factors. A market opportunity and adequate
market demand must exist. Current competing producers, prices,
and policies should be evaluated in their impact on market share.
The new product should be compatible with existing
management capabilities. The product should be able to be
supported by and contribute to the company's financial structure.
The compatibility of new product's production requirements with
existing plant, machinery, and personnel should be determined.
Entrepreneurs should formally evaluate an idea throughout its
evolution.

3. Idea Stage

Promising new product ideas should be identified and
impractical ones eliminated in the idea stage allowing maximum
use of company's resources. In the systematic market evaluation
checklist method, each new product idea is expressed in terms of
its chief values, merits, and benefits. This technique can be used
to determine which new products should be pursued. The
company should also determine the need for the new product and
its value to the company. Need determination should focus on the
type of need, its timing, the users involved, the importance of


marketing variables, and the overall market structure and
characteristics. In determining the product's value to the firm,
financial scheduling should be evaluated.
4. Concept Stage
In the concept stage the refined idea is tested to determine
consumer acceptance without manufacturing it. One method of
testing is the conversational interview in which respondents are
exposed to statements that reflect attributes of the product.
Features, price, and promotion should be evaluated in
comparison to major competitors to indicate deficiencies or
benefits. The relative advantages of the new product versus
Competitors should be determined.

5. Product Development Stage

In this stage, consumer reaction is determined, often through a
consumer panel. The panel can be given samples of the product
and competitors' products to determine consumer preference.
Participants keep the record of their use of product and comment
on its virtues and deficiencies. The panel of consumers is also
given a sample of product and one or more competitive product
simultaneously. One test product may already be on the market,
whereas the other test product is new.

6. Test Marketing Stage

Although the results of product development stage provide the
basis of the final marketing plan, the market test can be done to
increase the certainty of successful commercialization. The last
step in the evaluation process, the test marketing stage, provides
actual sales results which indicate the acceptance level of


consumers. Positive test results indicate the degree of probability
of a successful product launch and company formation.

The Fundamental issues in entrepreneurship

As evidenced by the many different definitions, the term
entrepreneurship means different things to different people and
can be viewed from different conceptual perspectives. However,
in spite of the differences, there are some common aspects: risk
taking, creativity, independence, and rewards. These
commonalities will continue to be the driving force behind the
notion of entrepreneurship in the future. One thing is clear: The
future for entrepreneurship appears to be very bright. We are
living in the age of the entrepreneur, with entrepreneurship
endorsed by educational institutions, governmental units, society,
and corporations. Entrepreneurial education has never been so
important in terms of courses and academic research. The
number of universities and colleges offering at least one course
in entrepreneurship increases each year. The number of faculty
teaching entrepreneurship as well as the number of endowed
chairs increases regularly. There are some unique entrepreneurial
programs as well, such as masters programs in entrepreneurial
science and technology entrepreneurship, and MBA with a
concentration in bioscience.

Entrepreneurship education throughout the world is also
growing. Many universities in Europe have well-established
programs in entrepreneurship. Most universities and associations
do research on entrepreneurship, followed by training courses
and then education coursescourses for which degree credit is


given. Very few universities are yet involved in the actual
enterprise creation process where the university, faculty, and/or
students share in the sales and profits of the new venture.

This increase in course offerings has been accompanied by an
increase in academic research, endowed chairs in the area,
entrepreneurship concentrations and majors, and centers of
entrepreneurial activity. This trend will continue, supported by
an increase in PhD activity, which will in turn provide the
needed faculty and research effort to support the future increases
in course offerings, endowed positions, centers, and other
research efforts.

Various governments are taking an increased interest in
promoting the growth of entrepreneurship. Individuals are
encouraged to form new businesses and are provided such
government support as tax incentives, buildings, roads, and a
communication system to facilitate this creation process.
Encouragement by the federal and local governments should
continue in the future as more lawmakers understand that new
enterprises create jobs and increase economic output in the area.
Some state governments in the United States are developing their
own innovative industrial strategies for fostering entrepreneurial
activity and the timely development of the technology of the
area. The impact of this strategy is seen in the venture-capital
industry, which is always sensitive to government regulations
and policies. Many states now have their own state-sponsored
venture funds, where a percentage of the fund has to be invested
in ventures in the state.



Societys support of entrepreneurship will also continue. This
support is critical in providing both motivation and public
support. Never before have entrepreneurs been so revered by the
general populace. Entrepreneurial endeavors in the United States
are considered honorable and even, in many cases, prestigious
pursuits. A major factor in the development of this societal
approval is the media. The media have played, and will continue
to play, a powerful and constructive role by reporting on the
general entrepreneurial spirit in the United States and
highlighting specific success cases of this spirit in operation.
1. Legal Issues for the Entrepreneur

Intellectual property
Patents
The Disclosure Document
Trademarks
Copyright
Trade secrets
Licensing
Product safety and Liability
Insurance
2. Availability of human resources
3. Industrial innovative sensation
4. Mobility of profession
5. Large number of educated unemployed
6. Tendency toward industries work
7. Preference in establishing agro-based industry in
Government planning
8. Liberalization of Govt. industrial policy
The Entrepreneurial and Entrepreneurial Mind


Chapter: II

The Entrepreneurial and Entrepreneurial
Mind



The entrepreneurship process is the process through which a new
venture is created by an entrepreneur which involves more than
just a problem solving in a typical management position. An
entrepreneur must find, evaluate and develop an opportunity by
overcoming the forces that resist the creation of something new.
This process has four phases:
The Entrepreneurial Process:
1. Identify and evaluate the opportunity:

Opportunity assessment
Creation and length of opportunity
Real and perceived value of opportunity
Opportunity versus personal skills and goals
Competitive environment

2. Develop a business plan:
A good business plan must be developed in order to exploit the
defined opportunity. It is essential for developing the opportunity
and determining the resources required, obtaining those
resources and successfully managing the resulting venture.
3. Determine the resources required:

Determine resources needed
Determine existing resources
Identify resource gaps and available suppliers
Developing access to needed resources



4. Manage the enterprise:

Develop management style
Understand key variables for success
Identify problems and potential problems
Implement control systems
Develop growth strategy

(Refer text book Entrepreneurship 6
th
edition, pg. 38, and table
2.1)

Managerial Vs Entrepreneurship Decision Making
The difference between the entrepreneurial and managerial styles
involves five business dimensions.

Strategic Orientation

The entrepreneur's strategic orientation depends on his or her
perception of the opportunity. This orientation is most important
when other opportunities have diminishing returns accompanied
by rapid changes in technology, consumer economies, social
values or political rules. When the use of planning systems is the
strategic orientation, there is more pressure for the administrative
domain to be operant.



Commitment to Opportunity

The entrepreneurial domain is pressured by the need for action
and has a short time span in terms of opportunity commitment.
The administrative domain (the ways mangers make decisions)
is not only slow to act on an opportunity, but the commitment is
usually for a longer time span.

Commitment of Resources

An entrepreneur is used to having resources committed at
periodic intervals, often based on certain tasks or objectives
being reached. In acquiring these resources the entrepreneur is
forced to achieve significant milestones using very few
resources. In the administrative domain, the commitment of
resources is for the total amount needed. Administrative-oriented
individuals receive personal rewards by effectively administering
the resources under their control.

Control of Resources

The administrator is rewarded by effective resource
administration and has a drive to own or accumulate as many
resources as possible. The entrepreneur, under pressure of
limited resources, strives to rent resources on an as-needed basis.

Managerial Structure

In the administrative domain, the organizational structure is
formalized and hierarchical in nature. The entrepreneur employs
a flat organizational structure with informal networks.


Entrepreneurial venturing inside a corporation

A project that is new to the company and carries a much
higher risk of failure than other project.
Due to the level of uncertainty, it is often managed
separately
Corporate ventures undertaken to move the company in
new directions

Benefits of Corporate Venturing

Effective way to create new revenue streams
Entrepreneurial activities stimulate product/process
innovation
CV is a source of organizational growth
Entrepreneurial activities spur the company to take risks
and pioneer, making it more competitive
Entrepreneurial activities help the company overcome
resource limitations.

Climate for entrepreneurship

In establishing an Entrepreneurial environment, certain factors
and leadership characteristics need to be present.
The first of these is that the organization operates on the
frontiers of technology. Since research and development are key
sources for new product ideas, the firm must operate on the
cutting edge of technology and encourage and supporting new
ideas instead of discouraging them.



Second is experimentation, or trial and error, is encouraged.
Successful new products usually do not appear fully developed;
instead they evolve. A company wanting to establish an
Entrepreneurial spirit has to establish an environment that allows
mistakes and failures. Without the opportunity to fail, few
corporate Entrepreneurial ventures will be developed.

Third an organization should make sure that there are no initial
opportunity parameters, such as turf protection, inhibiting
creativity in new product development.
Fourth, the resources of the firm need to be available and easily
accessible. Often, insufficient funds are allocated not to creating
something new but instead to solving a problem that have an
immediate effect on the bottom line. Some companies, such as
Xerox, 3M, and AT&T have established separate venture capital
areas for funding new internal ventures.

Fifth a multidisciplinary team approach needs to be encouraged.
One key to Entrepreneurial success is the existence of "skunk
works" involving key people. Developing the needed team work
for a new venture is further complicated by the fact that a team
member's promotion within the corporation is related to
performance in the current position, not in the new venture. The
corporate environment must establish a long time horizon for
evaluating the success of the overall program.

Sixth the spirit of entrepreneurship cannot be forced on
individuals; it must be voluntary. Most managers in a corporation
are not capable of being successful Entrepreneurs. Those who do
emerge from this self selection process must be allowed the
latitude to carry a project through to completion. An


Entrepreneur falls in love with the new venture and will do
almost anything to ensure its success.

The seventh characteristic is a reward system. The Entrepreneur
needs to be appropriately rewarded for the energy and effort
expended on the new venture. An equity position in the new
venture is one of the best motivational methods.

Eight a corporate environment favorable for entrepreneurship
has sponsors and champions throughout the organization that
supports the creative activity and resulting failures.
Finally the Entrepreneurial activity must be whole-heartedly
supported by top management.

INTREPRENEURIAL LEADERSHIP
CHARACTERISTICS
There are certain individual characteristics needed for a person to
be successful Entrepreneurs, including:
1. Understanding the environment
2. being visionary and flexible
3. Creating management options
4. Encourage teamwork while employing a multi-disciplined
approach
5. Encouraging open discussion
6. Building a coalition of supporters, and persisting

An Entrepreneur needs to understand all aspects of the
environment. Part of this ability is reflected in individual's level
of creativity. Creativity tends to decrease with age and education.
The individual must be creative and have a broad understanding


of the internal and external environments of the corporation The
Entrepreneurial person must be a visionary leader-a person who
dreams great dreams.

Leadership is the ability to dream great things and communicate
them in a way that people say yes to being a part of the dream.
To establish a successful new venture, the Entrepreneurial leader
must have a dream and overcome all obstacles to achieve it.

The third necessary characteristic is that the Entrepreneur must
be flexible and create management options. An Entrepreneur is
open to and encourages change. By challenging the beliefs and
assumptions of the corporation, an Entrepreneur can create
something new in the organization structure. He or she must
possess the ability to encourage teamwork and use a multi-
disciplined approach.

Every new company formation requires a broad range of
business skills. The Entrepreneur must be a good diplomat to
minimize disruption. Open discussion must be encouraged to
develop a good team for creating something new. Many
corporate managers have forgotten that frank, open discussion is
part of the learning process. A successful venture can be formed
only when the team feels the freedom to disagree and to critique
an idea. The degree of openness among the team depends on the
degree of openness of the Entrepreneur. Openness leads to a
strong coalition of supporters and encouragers. The Entrepreneur
must encourage each team member, particularly during hard
times. A good Entrepreneur makes everyone a hero. Only
through persistence will a new venture be created and successful
commercialization result.



Qualities of Entrepreneurship Leadership
Vision and dissatisfaction with the present.
Knowing and taking advantages of your unfair
advantages.
The ability to get people on board and add to the vision.
Flexibility to adopt, openness to feedback and ability to
learn.
Persistence and execution.

CAUSES FOR RECENT INTEREST IN
INTREPRENEURSHIP
Interest in entrepreneurship has resulted from events occurring
on social, cultural, and business levels. There is an increasing
interest in "doing your own thing." Individuals frequently desire
to create something of their own. They want responsibility and
want more freedom in their organizations. Frustration can
develop and result in the employee becoming less productive or
leaving the organization. This has recently caused more
discontent in structured organizations. When meaning is not
provided within the organization, individuals often search for an
institution, such as entrepreneurship, that will provide it.
Entrepreneurship is one method for stimulating and capitalizing
on those who think that something can be done differently and
better, such as Xerox Corporation's commitment to Xerox
Technology Ventures In large organization problems occur that
thwart creativity and innovation. This growth and diversity that


can result are critical, since large corporations are more efficient
in a competitive market than are smaller firms. The resistance
against flexibility, growth, and diversification can be overcome
by developing a spirit of entrepreneurship, called
Entrepreneurship, within the existing organization.
There are social, cultural, and business pressures for
Entrepreneurship. Hyper competition has forced U.S. companies
to focus on new product development and increased productivity.
Reductions in large corporation's staff are being absorbed in the
workforce, particularly in small businesses.

Entrepreneurial endeavors consist of four key elements.

1. New business venturing refers to the creation of new
business within an existing organization.

2. Organizational innovativeness refers to product and service
innovation with an emphasis on Development and innovation
in technology.

3. Self-renewal reflects the transformation of organizations
through the renewal of the key ideas on which they are built.

4. Proactive includes initiative and risk taking, as well as
competitive aggressiveness.



Importance of Intrapreneurship
1. Growth: During the economic downturn most companies
stopped investing in the future. Now they are sitting on piles of
cash. They know they need to grow, they just arent sure how.
Intrapreneurship answers the question of HOW!
The goal of Intrapreneurship is to create the entrepreneurial
mindset and infrastructure needed to support growth. It takes a
systems view of growth. It is a framework for transformation.
Intrapreneurship helps organizations generate new business
growth.
2. Innovation: Innovation is the key element in providing
aggressive top line growth. But doing one or two innovation
initiatives a year will not support or sustain innovation.
Organizations need to be innovating all the time. Failure rates for
innovation are still high, 50% to 90%.
Innovation alone is not enough. Organizations need to set the
context for innovation; the right people, the right processes and
the right environment. Innovation and intrapreneurship are
entwined, they are tied together. You need both to be successful.
Intrapreneurship provides an environment to support and sustain
innovation over time.
3. Leadership: Research has identified leadership as the key
predictor of innovation success. The skills and capabilities that
propelled most executives to the top in the past are not the skills


required to build new growth businesses. Only 4% of leaders are
Intrapreneurial.
Intrapreneurship requires a new set of competencies and
behaviors. Intrapreneurial leaders think and act differently, they
have different motivations and aspirations, and they prefer
working in different work environments. It is this differentiation
that makes them the perfect candidate to lead new growth
initiatives.
Intrapreneurship is the one of the best ways to attract and retain
your most entrepreneurial leaders.
4. Change: Change is one of the least understood and under
developed management disciplines. Most studies report a 60%
70% failure rate when it comes to change initiatives. Risk
adverse cultures and resistance to change impede an
organizations ability to grow.
Intrapreneurial leaders are change agents. They blaze new trails.
They become the very change they wish to see. Not just driving
change, but modeling change so others can change as well.
Intrapreneurship enables organizations to effectively accelerate
and manage change.
5. Engagement: Gallup Research estimates that disengaged
employees cost US organizations over $450 billion in lost
productivity. In 2012, only 30% of American workers were
engaged and committed to their workplace. Lost productivity
translates to slow or no growth.


Intrapreneurship provides a platform to engage employees in
work that is challenging and meaningful. Intrapreneurs are
highly engaged in their work. Their passion and determination
inspire others to get involved and try new things. As they grow,
the organization grows.
Intrapreneurship helps employees stretch and grow while
keeping them engaged.
Intrapreneurship has become a critical imperative for all
organizations and a survival strategy for others. Organizations
that have embraced Intrapreneurship have achieved higher
financial returns, increased productivity, more innovation and
higher levels of employee engagement.



The Environment for Entrepreneurship

CHAPTER: III



The Context of Entrepreneurship

This view of entrepreneurship education is built from years of
experience and from solid theoretical studies.

Theoretical background

Olsen and Bosserman (1984, 53) says that individuals will
exhibit entrepreneurial behavior when they possess a
combination of three attributes, namely:
1. Role orientation - emphasizing effectiveness
2. Abilities - to think both intuitively and rationally
3. Motivation - the driving force behind action
According to Alain Fayolle (2002) to achieve these, it seems
necessary to adopt an approach to learning that:
Gives participants ownership of their learning, including
negotiating with their tutor, their own learning objectives,
the resources, etc.

Involves participants in problem-solving in real-world
situations, possibly in teams

Encourages participants to formulate decisions on data
which are immediate, incomplete, dubious and, as
appropriate, personally generated

Provides participants with role models who are involved
in both the learning and assessment processes

This approach to learning is deeply founded in the Scandinavian
educational tradition and is the basis for our approach to
entrepreneurship education.

Goal of training programme

The goal of the training programme Unleashing the
Entrepreneurial Spirit is:
To provide the participants with the understanding that
they themselves can create a business and give them the
tools to carry out this entrepreneurial desire.
The distinctive quality of the early stage entrepreneurial
experiences arises from its focus on following factors:
Opportunity orientation
Unstructured and Uncertain
Resource Security
Fluid, Dynamic, Turbulent

Business Environment & Entrepreneur ship Environment

(a) Political System, Stability, Leadership

(b) Socio cultural Culture, Community, Values, Ethics,
Attitude

(c) Technological Education, Absorption, Competition,
Innovation


(d) Legal Regulatory framework, Consumer protection,
Concern for environment, Labor laws

(e) Economic GDP, GNP, Resources, Fiscal, Non fiscal
policies, Incentives and Subsidies
Dimensions of Environment

(a) SPECTACLES Social, Political, Economic, Cultural,
Technological, Aesthetic, Customer, Legal, Environmental
and Sectoral

(b) PEETS Political, Economic, Ecological, Technological
and Sociodemographical

(c) SLEPT Social, Legal, Economical, Political and
Technological


Government Policies

Entrepreneurial activity leads to economic growth and helps to
reduce poverty, create a middle class, and foster stability. It is in
the interest of all h governments to implement policies to foster
entrepreneurship and reap the benefits of its activity.
Thomas A. Garrett, a senior economist with the Federal Reserve
Bank of St. Louis, says that government policies can be
categorized as active or passive depending on whether they
involve the government in determining which types of businesses
are promoted. Active policies, such as targeted tax breaks, help
specific forms of businesses, while passive policies help create
an environment that is friendly to entrepreneurs without regard to
specific firms.

Both active and passive policies are effective in promoting small
business, Garrett says, but passive policies promote entrepreneur-
ship most broadly. It is this entrepreneurial-friendly
environment that will allow any individual or business
regardless of size, location or missionto expand and to thrive,
he says.

Among the most successful strategies for encouraging entrepre-
neurship and small business are changes in tax policy, regulatory
policy, access to capital, and the legal protection of property
rights.

Tax Policy: Governments use taxes to raise money. But taxes
increase the cost of the activity taxed, discouraging it somewhat.
Therefore, policymakers need to balance the goals of raising
revenue and promoting entrepreneurship. Corporate tax rate
reductions, tax credits for investment or education, and tax

deductions for businesses are all proven methods for encouraging
business growth.

Regulatory Policy: The simpler and more expedited the
regulatory process, the greater the likelihood of small business
expansion, says Steve Strauss, a lawyer and author, who
specializes in entrepreneurship. Reducing the cost of compliance
with government regulations is also helpful. Governments can,
for example, provide one-stop service centers where
entrepreneurs can find assistance and allow electronic filing and
storage of forms.

Access to Capital: Starting a business takes money. There are
required procedures and fees as well as the initial costs of the
new enterprise itself. Therefore, the most important activity a
government can undertake is to assist potential entrepreneurs
with finding money for start-ups.

Legal Protection of Property Rights: Small business can thrive
where there is respect for individual property rights and a legal
system to protect those rights. Without property rights, there is
little incentive to create or invest.
For entrepreneurship to flourish, the law needs to protect intel-
lectual property. If innovations are not legally protected through
patents, copyrights, and trademarks, entrepreneurs are unlikely to
engage in the risks necessary to invent new products or new
methods. According to the World Bank report, Doing Business
2007: How to Reform, new technologies are adopted more
quickly when courts are efficient. The reason is that most
innovations take place in new businesseswhich unlike large
firms do not have the clout to resolve disputes outside the
courts.

Infrastructures for entrepreneurship

Cost-effective infrastructures both physical and legal
provide the essential platforms for the activities of all economies.
In the physical realm, for example, it is hard to imagine life
without roads, communications networks, airports, ports, sewer
systems and electricity grids. Because of their public good
nature, government plays a central role in financing, if not
operating, such infrastructure facilities. In turn, because so many
infrastructures are local, the planning and construction of many
projects historically has been delegated to the states (although
aided by federal financing).
As federal policymakers increase resources devoted to
infrastructure projects in the coming years, it is important that
they not overlook the important advantages that entrepreneurs
can, and indeed must, provide.
1
Modern infrastructure
increasingly will be smart, incorporating the latest information
technologies to manage traffic and scarce resources, such as
energy and water, used on each network. To realize these goals
policy makers must find ways of harnessing the experience,
talent and innovation of private sector entrepreneurs in
improving public infrastructure.


Assistance for entrepreneurship

Entrepreneurship is potential and vital to support economic
growth and social stability. it is the policy and goal of many
governments to develop a culture of entrepreneurial thinking.
Entrepreneur needs several types of assistance to establish, grow
and sustain the enterprise. This can be done in a number of ways:
by integrating entrepreneurship into education systems,
motivating to encourage risk- taking and establishing several
institutions for their capacity development. The areas where the
entrepreneur needs assistance are as follows:

Capacity building
Access to finance
Marketing linking
Promotional schemes
Concession on excise duty and other forms of taxes
Credit facility to MSME


International Entrepreneurial Opportunities
THE NATURE OF INTERNATIONAL
ENTREPRENEURSHIP

As more countries become market oriented and developed, the
distinction between foreign and domestic markets is becoming
less pronounced. International entrepreneurship is the process
of an entrepreneur conducting business activities across national
boundaries. It is exporting, licensing, or opening a sales office in
another country. When an entrepreneur executes his or her
business in more than one country, international entrepreneurship
occurs.

THE IMPORTANCE OF INTERNATIONAL BUSINESS
TO THE FIRM

International business has become increasingly important to
firms of all sizes. The successful entrepreneur will be someone
who understands how international business differs from
domestic business and is able to act accordingly.

INTERNATIONAL VERSUS DOMESTIC
ENTREPRENEURSHIP

Whether international or domestic, an entrepreneur is concerned
about the same basic issues-sales, costs, and profits. What varies
is the relative importance of the factors being considered.
International entrepreneurial decisions are more complex due to
uncontrollable factors such as the following-


Economics- A domestic business strategy is designed under a
single economic system. Creating a business strategy for multiple
countries means dealing with different levels of economic
development and different distribution systems.

Balance of Payments- A country's balance of payments affects
the valuation of its currency. This economic variable will affect
how companies do business in other countries.

Type of System

Barter or third-party arrangements have been used to increase
business activity with the Commonwealth of Independent States,
the former U.S.S.R.

There are still many difficulties in doing business in developing
and transition economies due to:
Gaps in the knowledge of the Western system regarding
business plans, marketing, and profits
Widely variable rates of return.
Non-convertibility of the ruble.
Differences in the accounting system.
Nightmarish communications.

Political-Legal Environment- Multiple political and legal
environments create different business problems. Each element
of the international business strategy can potentially be affected
by multiple legal environments. Laws governing business
arrangements also vary greatly in the 150 different legal systems
and sets of national laws.

Cultural Environment- The impact of culture on entrepreneurs
and strategies is significant. Understanding the local culture is
necessary when developing worldwide plans.
Technological Environment- Technology varies significantly
across countries. New products in a country are created based on
the conditions and infrastructure of that country.

Strategic Issues- Four strategic issues are important to the
international entrepreneur:

1. The allocation of responsibility between the U.S. and
foreign operations.

2. The nature of the planning and control systems to be
used.

3. The appropriate organizational structure for conducting
international operations.

4. The degree of standardization possible.

With experience in international operations, entrepreneurs tend
to change their approach to responsibility.
Stage 1: In the first stages the entrepreneur typically follows a
highly centralized decision-making process.

Stage 2: When success occurs, it is no longer possible to use
completely centralized decision-making process.

Stage 3: Decentralization is scaled back and major strategic
decisions are again centralized.


To understand what is required for effective planning, reporting,
and control, the entrepreneur should consider:
1. Environmental analysis.
2. Strategic planning.
3. Structure.
4. Operational planning.
5. Controlling the marketing program.

The first step in identifying markets is to analyze data in the
following areas:

1. Market characteristics.
2. Marketing institutions.
3. Industry conditions.
4. Legal environment.
5. Resources.
6. Political environment.

ENTREPRENEURIAL ENTRY INTO INTERNATIONAL
BUSINESS
The choice of entry method depends on the goals of the
entrepreneur and the company's strengths and weaknesses.

Exporting
As a general rule, an entrepreneur enters into international
business through exporting. Indirect exporting involves a
foreign purchaser in the local market or using an export
management firm. For certain commodities, foreign buyers seek
out sources of supply. Export management firms, another
indirect method, are located in many commercial centers.

Direct exporting through independent distributors or through
one's own overseas sales office is another entry method. An
independent foreign distributor directly contacts foreign
customers and takes care of all technicalities. Entrepreneurs who
do not wish to give up control over marketing can open overseas
sales offices and hire their own salespeople.
Franchising
It is one of three business strategies a company may use in
capturing market share. The others are company owned units or a
combination of company owned and franchised units.
Franchising is a business strategy for getting and keeping
customers. It is a marketing system for creating an image in the
minds of current and future customers about how the company's
products and services can help them. It is a method for
distributing products and services that satisfy customer needs.
Franchising is a network of interdependent business relationships
that allows a number of people to share:
A brand identification
A successful method of doing business
A proven marketing and distribution system
In short, franchising is a strategic alliance between groups of
people who have specific relationships and responsibilities with a
common goal to dominate markets, i.e., to get and keep more
customers than their competitors.

There are many misconceptions about franchising, but probably
the most widely held is that you as a franchisee are "buying a
franchise." In reality you are investing your assets in a system to
utilize the brand name, operating system and ongoing support.
You and everyone in the system are licensed to use the brand
name and operating system.
The business relationship is a joint commitment by all
franchisees to get and keep customers. Legally you are bound to
get and keep them using the prescribed marketing and operating
systems of the franchisor.
To be successful in franchising you must understand the business
and legal ramifications of your relationship with the franchisor
and all the franchisees. Your focus must be on working with
other franchisees and company managers to market the brand,
and fully use the operating system to get and keep customers.
Throughout this article we will discuss in detail some of the
benefits of conducting business as part of a larger group.
Other franchisees and company operated units are not your
competition. The opposite is true. They and you share the task of
establishing the brand as the dominant brand in all markets
entered and reinforcing the customers familiarity with and trust
in the brand. So in this respect you are working as a team with
others in the system. Other franchisees share with you the
responsibility for quality, consistency, convenience, and other
factors that define your franchise and insure repeat business for
everyone. Increasing the value of the brand name is a shared
responsibility of the franchisor and franchisee.

An "ownership mentality" destroys the reason franchised and
company-operated units are successful. Think about it. If you
think you "bought" a franchise, you become an "owner" and
begin to think and act like an owner. You will want to change the
system because of your needs, you will wonder what you are
paying the royalty for, and you will begin thinking of other
franchisees as your competitors. For these and many other
reasons you do not want to think of yourself as an "independent
owner."
As a franchisee you own the assets of your company, which you
have chosen to, invest in someone else's brand and operating
system and ongoing support. You own the assets of your
company, but you are licensed to operate someone else's business
system.
Finally, your desire to become a franchisee must be grounded in
your belief that you can be more successful using someone else's
brand and operating according to their systems and methods,
than you could if you opened up your own independent business
and competed against them. You want to look for a franchisor
who is building a system of interdependent franchisees who are
committed to getting and keeping customers, to growing faster
than the market, to growing faster than the competitors, and to do
all of that with high margins. When you discover a franchisor
who understands this relationship, you have a franchisor worth
your consideration.


Strategic Alliances

Strategic alliances are partnerships in which two or more
companies work together to achieve objectives that are mutually
beneficial. Companies may share resources, information,
capabilities and risks to achieve this. According to Producer's
Source, a common reason for entering into a strategic alliance is
to obtain the advantage of another company's innovations
without having to invest in new research and development.
While companies have used acquisition to accomplish some of
these goals in the past, forming a strategic alliance is more cost-
effective. Example:
Apple
According to "An Overview of Strategic Alliances," Apple has
partnered with Sony, Motorola, Phillips, and AT&T in the past.
Apple has also partnered more recently with Clear well in order
to jointly develop Clear wells E-Discovery platform for the
Apple iPod. E-Discovery is used by enterprises and legal entities
to obtain documents and information in a "legally defensible"
manner, according to a 2010 press release.

Strategic Alliances can take different forms, occur within an
industry or between actors in different industries, and can range
from simple agreements to mergers or equity joint ventures.
There are basically three types of generic strategic alliances:
Non-Equity Strategic Alliances, Equity Strategic Alliances, and
Joint Venture Strategic Alliances.

Types / Form of Strategic Alliances

1. Joint Venture Alliance

A Joint Venture Alliance occurs when two or more companies
combine their resourcestalent, money, business skillsto
produce products and services. The synergy that occurs allows
the products and services to be created; they would not exist
otherwise

Joint Ventures are agreements between parties or firms for a
particular purpose or venture. Their formation may be very
informal, such as a handshake and an agreement for two firms to
share a booth at a trade show. Other arrangements can be
extremely complex, such as the consortium of major U.S.
electronics firms to develop new microchips, says Charles P.
Lickson in A Legal Guide for Small Business.


2. Non - Equity Strategic Alliance
Non Equity Strategic Alliances is an alliance in which two or
more firms develop a contractual-relationship to share some of
their unique resources and capabilities to create a competitive
advantage. Non-Equity Strategic Alliances can range from close
working relations with suppliers, outsourcing of activities or
licensing of technology and IPRs, to large R&D consortia,
industry clusters and innovation networks. Informal alliances
without any agreements, or based on "Gentlemens agreement",
are common among smaller companies and within university
research groups. Another form of informal non-equity alliances
are geographic clusters where concentrations of interconnected
players, industries, universities and government agencies co-
exists, increasing local competition and productivity.

3. Equity Strategic Alliances

In Equity Strategic Alliances agreements are supplemented by
equity investments, making the parties shareholders as well as
stakeholders in each other. The investments are passive so each
firm retains fully its decision power. The cross-shareholding of
companies may result in a complex network where company A
owns equity in company B that owns equity in C, creating direct
and indirect ownership. Intuitively, when firms share profits the
incentives for competing are reduced and are often done to
enhance control and make takeovers more difficult.
Alliances types based on two constructs alliances purpose
and alliances parties.

Business Networking

A networking, network marketing or MLM (multi-level
marketing) business entails recruiting business-minded people
into an organization. A newly recruited business associate then
purchases product from the networking company and builds his
down line, or network of sponsors. You can earn monthly
commissions off people in your down line when they start
buying your product. Network marketing is a legitimate business
opportunity, according to Entrepreneur.com. A company can
legally sell through multi-level sales with a legitimate product.

Business networking is an effective low-cost marketing method
for developing sales opportunities and contacts, based on
referrals and introductions - either face-to-face at meetings and

gatherings, or by other contact methods such as phone, email,
and increasingly social and business networking websites.
The shortened term 'networking' can be confused with computer
networking/networks, which is different terminology, relating to
connection and accessibility of multiple computer systems.
A business network of contacts is both a route to market for you,
and a marketing method. Business networking offers a way to
reach decision-makers which might otherwise be very difficult to
engage with using conventional advertising methods.
Ten Principles of Business Networking
Elevator speech. Describe yourself concisely and
impressively.
2. Be different. Differentiate yourself. Aim high. Be best
at something.
3. Help others. Help others and you will be helped.
4. Personal integrity. Integrity, trust and reputation are vital
for networking.
5. Relevant
targeting.
Groups and contacts relevant to your
aims and capabilities.

6. Plans and aims. Plan your networking - and know what
you want.
7. Follow up. Following up meetings and referrals
makes things happen.
8. Be positive. Be a positive influence on everyone and
everything.
9. Sustained focused
effort.
Be focused - and ever-ready.
10. Life balance.


E - Entrepreneurship

An e-entrepreneur is defined as an individual willing to take the
risk of investing time and money in an electronic business that
has the potential to make a profit or incur a loss.

The creation of new ventures plays a decisive role for the social
and economic development of every country. This is due to the
fact that with each new venture created a market participant
comes into existence which potentially stimulates the
competition and drives the economy further. The formation of
new companies within the Net Economy (e-entrepreneurship) is
therefore in spite of the current market turbulence a key topic
for every national industry. Consequently, e-business must not be
ignored by decision makers; its technological advantages are
obvious and therefore will most certainly lead to new business
processes and business concepts as well. Because of those
circumstances there will be a solid basis for new venture creation
within the net economy in the future too.

Examples:

E-bay and Google
A classic example of entrepreneurship and innovation in
the business world.
Google not only an entrepreneurial company but also a
pioneer of innovation


E-Commerce and Business Start-Up and Growth

The Internet

The Internet started in the 1970s with a U.S. Defense Department
program named ARPA. In the early 1990s the concept of World
Wide Web pages was developed. The Internet is a channel for
the creation of profitable companies. Electronic business (e-
business) is any process that a business organization conducts
over a computer-mediated network.
Electronic commerce (e-commerce) is any transaction completed
over a computer-mediated network that involves the transfer of
ownership or rights to use goods or services.

Factors that facilitate the growth of e- commerce are:

The widespread use of personal computers.
The adoption of intranets in companies.
The acceptance of the Internet as a business
communications platform.

Starting an E-Commerce Company

The Internet is especially important for small and medium-sized
companies as it lets them minimize marketing costs while
reaching broader markets. An entrepreneur starting an Internet
commerce venture needs to address many of the same strategic
and tactical questions as other companies plus some specific
online issues. One decision is whether to run the Internet
operations within the company or outsource these operations. If
handled in-house, expensive equipment and software have to be

maintained. There are numerous possibilities for outsourcing the
Internet business.

The two major components of Internet commerce are front-
end and back-end operations.

Front-end operations are encompassed in the website's
functionality, such as search capabilities, shopping cart, and
secure payment.

Back-end operations involve integrating customer orders
with distribution channels and manufacturing capabilities.

Website

A website is an online connection between the company and its
customers and can be developed in-house or outsourced.

There are several important features of every website.

Each website should have search capabilities.
Other functions include shopping cart, secure server
connection, credit card payment, and customer feedback
features.
Orders and other sensitive customer information should be
transferred only through secure servers.
An Internet company should also obtain a merchant account,
which will allow the acceptance of major credit cards.

A successful website has three characteristics: speed, speed, and
speed. Short download time should be the primary concern of

website developers. A website should be easy to use, customized
for specific market target groups, and compatible with different
browsers. If the company is targeting international markets, then
translation and cultural adaptation need to be considered.
Probably the most difficult aspect of setting up an online
business is advertising and promoting the web pages. A company
can advertise its website through search engines, banner ads, e-
mail, and classifieds. Banner ads can be targeted to the exact
audience of the firm. The entrepreneur should collect e-mail
addresses from customers for targeted e-mail campaigns.
The Internet offers many low-cost or free services for small
businesses, including Internet access, unlimited e-mail accounts,
online calendar, instant messaging, and online conference rooms.

Tracking Customer Information

Electronic databases support personal marketing targeted at
individual clients. The online company can capture customers'
information in many ways. The U.S. government has generally
maintained a policy of noninvolvement with Internet regulation,
but the Federal Trade Commission has also pressed for new laws
to protect minors.

Relationships and Endorsements by Other Companies

The company needs to establish strong connections with other
companies in the supply chain to create an end-to-end value
stream. The entrepreneur should protect its innovations and its
relationship with other companies. Another type of relationship
is endorsements by prominent Internet companies and
associations. Participation in merchant networks can bring
needed credibility.

Doing E-Commerce as an Entrepreneurial Company

The decision to go online should be made on a case-by-case
basis.
The products should be able to be delivered economically
and conveniently.
The product has to be interesting for a large number of
people.
Online operations have to bring significant cost reductions
compared with brick-and-mortar operations.
The company must have the ability to economically draw
customers to its website. Conflict between traditional and
online marketing channels can lead to a hostile, competing
position of once partnering companies.

Opportunities and challenges of e-commerce for
Entrepreneurial Firms

Opportunities/ Advantages/Benefits

Ability of small firms to complete with other companies
both locally and nationally (promotional tools)
Convenient and easy way of doing business
transactions(not restricted to certain hours of operations,
open 24 hours a day, seven days a week)
Ecommerce allows people to carry out businesses without
the barriers of time or distance. One can log on to the
Internet at any point of time, be it day or night and
purchase or sell anything one desires at a single click of
the mouse.
The direct cost-of-sale for an order taken from a web site
is lower than through traditional means (retail, paper

based), as there is no human interaction during the on-
line electronic purchase order process. Also, electronic
selling virtually eliminates processing errors, as well as
being faster and more convenient for the visitor.
Ecommerce is ideal for niche products. Customers for
such products are usually few. But in the vast market
place i.e. the Internet, even niche products could generate
viable volumes.
Another important benefit of Ecommerce is that it is the
cheapest means of doing business.
The day-to-day pressures of the marketplace have played
their part in reducing the opportunities for companies to
invest in improving their competitive position. A mature
market, increased competitions have all reduced the
amount of money available to invest. If the selling price
cannot be increased and the manufactured cost cannot be
decreased then the difference can be in the way the
business is carried out. Ecommerce has provided the
solution by decimating the costs, which are incurred.
From the buyers perspective also ecommerce offers a lot
of tangible advantages.
- Reduction in buyers sorting out time
- Better buyer decisions
- Less time is spent in resolving invoice and order
discrepancies.
- Increased opportunities for buying alternative products.
The strategic benefit of making a business ecommerce
enabled, is that it helps reduce the delivery time, labor
cost and the cost incurred in the following areas:

- Document preparation
- Error detection and correction
- Reconciliation
- Mail preparation
- Telephone calling
- Credit card machines
- Data entry
- Overtime
- Supervision expenses
Operational benefits of e commerce include reducing
both the time and personnel required to complete
business processes, and reducing strain on other
resources. Its because of all these advantages that one
can harness the power of ecommerce and convert a
business to e-business by using powerful turnkey
ecommerce solutions made available by e-business
solution providers.

Challenges

Customers wont trust your website
Take advantage of social media- but only if you know
how to use it well
Beware: your website will be hacked
Master the sales funnel and increase your conversions
(i.e., sales)
You need a multichannel shopping platform
You need to define your sites privacy settings
Use deal-of-the-day sites to your advantage

Get involved with mobile commerce
You will be using crowd sourcing
Educational posters, brochures, interactive tools and even
e-books can also help position your site as one of the top
search engine finds.
You will need to work on site SEO (Search Engine
Optimization)

E commerce in Nepal
Many companies have started the trend of e-Commerce in Nepal
decade ago, but the challenges are still the same. The actual sales
have not been able to start due to lack of knowledge, awareness
and online payment systems. Selling globally and inside the
country is the same in years. Payment Gateways are being
developed but they have their limitation due to legal and security
issues. The lack of proper knowledge and awareness among the
generation is the major hurdle in e-Commerce In past recent
years due to education and reach to internet among the many
people in Nepal has brightened the future of e-Commerce The
interest of students in the field of IT, the growth of IT companies
has helped a lot in the awareness and interest in young generation
for internet and IT, has directly created more opportunities for
the growth of e-Commerce in Nepal
Growth of Commerce in Nepal
Before a decade e-Commerce was setup as sending gifts and
money online and other websites promoting Send Gifts to
Nepal which had merely a concept of e-Commerce it was target

to Nepali residing in USA, UK, Australia and Europe. There was
no effect of that business to support the e-Commerce concept in
Nepal. Gradually the business was promoted by other companies
who saw there was a marginal profit. Along with the rise of IT,
and business concept many online stores were launched but they
didnt have the actual process of buying and selling online. They
were the virtual stores with the best example which gave a
concept of selling and buying online but not paying.
Current Practice of E commerce in Nepal
Many online portals and shopping portals are launched. Leaving
the measurement of success behind, they are now on the top list.
Peeping into the future of e-Commerce, launch of few large
online shopping portals was thought as milestone, everyone
thought there will be a turnaround in the e-Commerce industry in
Nepal. Now having dozens of virtual Nepali stores in the web,
they still have the same problem of payment and a belief of
people, they still have a level of trust to build among the visitors.
Future of E commerce in Nepal
Its a practice which no one can escape and avoid. It will be
either today or tomorrow we must adapt to it. Both the
development of payment system, legalizing and securing the
payments, creating reliability from the portals is a major issue.
With the growing generation every business will have to adapt
and think about their online existence in future depending on the
nature of business. It will not be too long; there will be a boom in
the trend of e-Commerce business soon in Nepal.


Ethics and Social Responsibility of Entrepreneurs

Business Ethics: A Brief Definition

Ethics is the branch of philosophy concerned with the meaning
of all aspects of human behavior. Theoretical ethics, sometimes
called normative ethics, is about discovering and delineating
right from wrong. It is the consideration of how we develop the
rules and principles (norms) by which to judge and guide
meaningful decision-making. Theoretical ethics is supremely
intellectual in character, and, being a branch of philosophy, is
also rational in nature. Theoretical ethics is the rational reflection
on what is right, what is wrong, what is just, what is unjust, what
is good, and what is bad in terms of human behavior. How we
see 'ethical behavior' - in terms of what is right and wrong - is
guided by these definitions.

Business ethics (also corporate ethics) is a form of applied ethics
or professional ethics that examines ethical principles and moral
or ethical problems that arise in a business environment. It
applies to all aspects of business conduct and is relevant to the
conduct of individuals and entire organizations.

Business ethics can be defined as written and unwritten codes of
principles and values that govern decisions and actions within a
company. In the business world, the organizations culture sets
standards for determining the difference between good and bad
decision making and behavior. In the most basic terms, a
definition for business ethics boils down to knowing the
difference between right and wrong and choosing to do what is
right. The phrase 'business ethics' can be used to describe the

actions of individuals within an organization, as well as the
organization as a whole.

There are three parts to the discipline of business ethics:
personal, professional, and corporate. All three are intricately
related. It is helpful to distinguish between them because each
rests on slightly different assumptions and requires a slightly
different focus in order to be understood. We are looking at
business ethics through a trifocal lens: close up and personal,
intermediate and professional, and on the grand scale (utilizing
both farsighted and peripheral vision) of the corporation. In spite
of some recent bad press, business executives are first and
foremost human beings. Like all persons, they seek meaning for
their lives through relationships and enterprise, and they want
their lives to amount to something. Since ethics is chiefly the
discipline of meaning, the business executive, like all other
human beings, is engaged in this discipline all the time, whether
cognizant of it or not.

Social responsibility: A Brief Note

Social responsibility is an ethical ideology or theory that an
entity, be it an organization or individual, has an obligation to act
to benefit society at large. Social responsibility is a duty every
individual or organization has to perform so as to maintain a
balance between the economy and the ecosystem. A trade-off
always exists between economic development, in the material
sense, and the welfare of society and the environment. Social
responsibility means sustaining the equilibrium between the two.
It pertains not only to business organizations but also to anyone
whose action impacts the environment. This responsibility can be

passive, by avoiding engaging in socially harmful acts, or active,
by performing activities that directly advance social goals. This
shows the various ways that companies can invest in being
socially responsible and the value those actions can bring to the
company.

A report suggests that social responsibility is a way of
conducting business through balancing the long-term objectives,
decision-making, and behavior of a company with the values,
norms, and expectations of society. Social responsibility can be a
normative principle and a soft law principle engaged in
promoting universal ethical standards in relationship to private
and public corporations.

Companies can demonstrate social responsibility in a myriad of
ways. They can donate funds to education, arts and culture,
underprivileged children, animal welfare, or they can make
commitments to reduce their environmental footprint, implement
fair hiring practices, sponsor events, and work only with
suppliers with similar values.

Social responsibility in business is also known as corporate
social responsibility, corporate responsibility, corporate
citizenship, responsible business, sustainable responsible
business, or corporate social performance. This term refers to a
form of self-regulation that is integrated into different
disciplines, such as business, politics, economy, media, and
communications studies.


Entrepreneurship v/s Ethics and social responsibility

Ethics and social responsibility are very important values in
entrepreneurship ventures. This is particularly essential in
decision making process. Ethical conscience reminds
entrepreneurs to make trustworthy and profitable
entrepreneurship decisions. Likewise, the social responsibility
component sought entrepreneurs to make entrepreneurial
decisions that can enhance benefits and repelling harms to the
stakeholders.

The entrepreneur must establish a balance between ethical
exigencies, economic expediency, and social responsibility. A
managers attitudes concerning corporate responsibility tend to be
supportive of laws and professional codes of ethics.
Entrepreneurs have few reference persons, role models, and
developed internal ethics codes. Entrepreneurs are sensitive to
peers pressure and social norms in the community as well as
pressures from their companies.

While ethics refers to the study of whatever is right and good
for humans, business ethics concerns itself with the
investigation of business practices in light of human values. The
word ethics stems from the Greek ethos, meaning custom and
usage. Development of Our Ethical Concepts Socrates, Plato, and
Aristotle provide the earliest writings dealing with ethical
conceptions; earlier writings involving moral codes can be found
in both Judaism and Hinduism.

Ethics and social responsibilities of an entrepreneur is certainly
an important issue considering the role of social responsibility in
society and ethics in business. Social responsibility is beneficial

for business community and at the same time for global
community. Social responsibility is significant owing to the
realism of globalization. The people of the universe are
becoming interconnected more owing to the advancement of
technology, transportation and communication. The world
market economy is affecting not only services and goods but
values and ideas as well. Expansion on the global front,
enhancing regulatory omission and the factors which is
responsible for creating awareness regarding the significance of
making for sectored, macro and operational hazards to both an
organizations and entrepreneurs competitive position and
reputation. As small business owners and entrepreneurs,
activities which harm the people and the planet, will spoil the
scope for your profits. For this reason there is great significance
for triple bottom line which is profits, planet and people.

The world economy requires innovators and entrepreneurs to
both advance and sustain global community. While ethics and
social responsibilities of an entrepreneur and businesses
undertake the plan and consider social responsibility a vital event
in their activities, everybody benefits. The effect could be
noticed within local communities and ultimate profit making
from their business. With the extension of cooperation for
businesses, governments and NGOs, they encourage in the
matter of corporate social responsibility and entrepreneurship
and take steps to improve the mechanism for its potential growth.
Therefore, in regards ethics and social responsibilities, an
entrepreneur has to become aware about his role and strive to
obey them in perfect manner which would be beneficial to him as
well as the community as a whole


An entrepreneur is actually running his own business and being a
businessman he has some obligation of a business to meet his
economic and legal responsibilities. Social responsibility is
basically a business intention, beyond its legal and economic
obligation to do the right things and act in ways that are good for
society.

While we are talking about the business ethics, there are
three things that need consideration:

1. Avoid breaking criminal law in ones work related
activity
2. Avoid action that may result in civil law suits against the
company
3. Avoid actions that are bad for the company image.

For example, an entrepreneur made a chemical that looks like a
pesticide and he started selling it like a pesticide in the market
and earns the profit, this act is against the law.

Link between Ethics and Social Responsibility

You will probably note the link between business ethics and
corporate social responsibility (CSR). The two concepts are
closely linked:

A socially responsible firm should be an ethical firm
An ethical firm should be socially responsible


However there is also a distinction between the two:

CSR is about responsibility to all stakeholders and not just
shareholders
Ethics is about morally correct behavior

How do businesses ensure that its directors, managers and
employees act ethically?

A common approach is to implement a code of practice. Ethical
codes are increasingly popular particularly with larger
businesses and cover areas such as:

Corporate social responsibility
Dealings with customers and supply chain
Environmental policy & actions
Creativity and Business Idea

CHAPTER: IV



Nature of creative process

Creativity is the ability to bring something new into existence.
Innovation is the translation of an idea into application, which
has a commercial value. Creativity is a prerequisite for
innovation. It can be developed by any individual who has
a concern for excellence and is willing to work hard. A
creative person develops new alternatives and offers innovative
solutions.

Creativity is showing imagination & originality. It is basically an
innovation generated by entrepreneur in business to solve or
generate ideas to serve the market better. Creativity can decline
due to age, education, idleness, and perceptual, cultural,
emotional & organizational factors. Creative thinking is basically
a process of searching, screening & connecting thoughts.
Creativity can be used for development of better business ideas
in terms of product, process, and market development aspects.

Definitions

Creative behaviors possessing an element of newness, novelty,
and difference (Herrmann, 1996)

Creativity is an act, an idea, or product that changes an existing
domain or that transforms an existing domain into a new one,
and creative person is whose thoughts or actions bring these
changes. (Csikszentmihalyi)


Innovation is the specific instrument of entrepreneurship. The
act endows resources with a new capacity to create wealth.
Innovation, indeed, creates a resource. (Ducker)

Early model of Creativity propose by Wallas. He divided the
creative process into the four distinct phases of Preparation,
Incubation, Illumination and Verification.

1. Preparation involves gathering knowledge and
understanding the problem.

2. In the Incubation phase, the subconscious takes over,
mulling over the problem without deliberate
concentration.

3. Illumination occurs as a sudden flash of light, when the
solution has been discovered.

4. Verification consists of evaluation of the newly formed
idea.

Brilliant ideas do not simply materialize out of the blue.

They are the outcome of a creative process consisting of the
following six stages:

Stage 1: Task Presentation: If one has a burning desire to
discover or to do something then the seed of curiosity
germinates to form a focused idea.


Stage 2: Preparation: A conscious search for collecting
information and seeking solutions has to be made.

Stage 3: Incubation: This is the stage when the subconscious
mind takes over and mulls over the problem. This stage can be
short or it can run into months or even years sometimes.

Stage 4: Idea Generation: A number of ideas and solution are
generated depending upon the personal knowledge, experience,
insight etc. of the potential entrepreneur.

Stage 5: Idea Validation: Each idea that is generated is
verified to test its usefulness, and application.

Stage 6: Outcome Assessment: The creative process ends with
either the crystallization of an idea or the lack of it. If it is the
latter then one goes back to stage 1 and starts the process all
over again. However if an idea is zeroed on then its feasibility
has to be evaluated and a project Report has to be prepared.

Components of Creativity

Motivation : Initial motivation which provides
stimulus for processing information and exploring
alternative solutions.

Skills in the Task domain: The extent of the
knowledge, talents and technical skills of the
entrepreneur will help in his search for solutions,
pin pointing an idea and verifying the idea.

Skills in Creative thinking: These will help him to
visualize different solutions, generating a number of
alternatives, see divergent uses of a single idea etc. to
come up with a workable idea or plan.

Role of creativity
Roger von Oechs 4 Roles of Creativity
1. The Explorers job is to collect the raw material for
creativity. He is constantly asking questions, talking to
different people, and processing as many inputs as
possible.

2. The Artist takes the raw material from the Explorer and
combines it in new and interesting ways. Hes playful and
imaginative with no concerns about judging the quality of
what hes creating.

3. The J udge takes the Artists ideas and determines if
theyre practical. He thinks critically and realistically
about what can actually be done.

4. Finally, the Warrior takes an idea the Judge has
determined worthy and tenaciously follows it to
completion. The Warriors job is to overcome resistance,
be courageous, and ship the idea.

Sources of new ideas for Entrepreneurs
Entrepreneurs frequently use the following sources of ideas:
1. Consumers the potential consumer should be the final focal
point of ideas for the entrepreneurs. The attention to inputs from
potential consumers can take the form of informally monitoring
potential ideas or needs or formally arranging for consumers to
have an opportunity to express their concerns. Care needs to be
taken to ensure that the new idea or the needs represents a large
enough market to support a new venture.
2. Existing Companies with the help of an established formal
methods potential entrepreneurs and intrapreneurs can evaluate
competitive products & services on the market which may result
in new and more market appealing products and services.
3. Distribution channels members of the distribution channels
are familiar with the needs of the market and hence can prove to
be excellent sources of new ideas. Not only do the channel
members help in finding out unmet or partially met demands
leading to new products and services, they also help in marketing
the offerings so developed.
4. Government it can be a source of new product ideas in two
ways firstly, the patent office files contain numerous product
possibilities that can assist entrepreneurs in obtaining specific
product information, and secondly, response to government
regulations can come in the form of new product ideas.


5. Research & development Entrepreneurs own R&D is the
largest source of new idea. A formal and well-equipped research
and development department enables the entrepreneur to
conceive and develop successful new product ideas.

Most research and development projects are examples of a
project, or one-shot, production system. Here, as opposed to the
ongoing activity found in batch or continuous systems, resources
are brought together for a period of time, focused on a particular
task, such as the development of a new product, and then
disbanded and reassigned. The management of such projects
requires a special type of organization to administer project
resources in an effective manner and maintain clear
accountability for the progress of the project. This organization
also must avoid the inherent conflict of authority between project
managers and managers in the marketing, production, and other
departments and coordinate members of R and D teams who are

assigned to more than one project and must divide their time
among conflicting demands. The management of the whole
process is a key to R and D and commercial success.

Business Incubator

"Business incubation is a unique and highly flexible combination
of business development processes, infrastructure and people
designed to nurture new and small businesses by helping them to
survive and grow through the difficult and vulnerable early
stages of development."

Business incubation provide SMEs ( Small and Medium
Enterprises) and start-ups with the nurturing environment
needed to develop and grow their businesses, offering everything
from virtual support, rent-a-desk through to state of the art
laboratories and everything in between. They provide direct
access to hands on intensive business support, access to finance
and experts and to other entrepreneurs and suppliers to really
make businesses and entrepreneurs to grow.

Business incubation provides a nurturing, instructive and
supportive environment for entrepreneurs during the critical
stages of starting up a new business. The goal of incubators is to
increase the chance that a start-up will succeed, and shorten the
time and reduce the cost of establishing and growing its business.
If successful, business incubators can help to nurture the
companies that will form the true creators of a region or nations
future wealth and employment.


Incubators serve as a launching pad for young and small
businesses. Start-ups, which are innately dynamic entities, need
access to support, and incubators are a means of providing this.

Definition:

An organization designed to accelerate the growth and success of
entrepreneurial companies through an array of business support
resources and services that could include physical space, capital,
coaching, common services, and networking connections
Business incubation programs are often sponsored by private
companies or municipal entities and public institutions, such as
colleges and universities. Their goal is to help create and grow
young businesses by providing them with necessary support and
financial and technical services. There are approximately 900
business incubators nationwide, according to the National
Business Incubation Association.
Incubators provide numerous benefits to owners of startup
businesses. Their office and manufacturing space is offered at
below-market rates, and their staff supplies advice and much-
needed expertise in developing business and marketing plans as
well as helping to fund fledgling businesses. Companies typically
spend an average of two years in a business incubator, during
which time they often share telephone, secretarial office, and
production equipment expenses with other startup companies, in
an effort to reduce everyone's overhead and operational costs.
Not all business incubators are alike, however, so if you have a
specialized idea for a business, try to find the incubator that best
suits your requirements. If you're interested in finding an

incubator in your state, visit the National Business Incubation
Association's website. Or get in touch with your local economic
development agency, located in the phone book under the listing
for your state government. You can also call the information
offices of your local colleges and universities to see whether they
have any business incubation programs.
If an incubation program seems interesting to you, be prepared to
submit a fleshed-out business plan. The plan will be reviewed by
a screening committee to determine whether or not you meet the
criteria for admission. Incubators carefully screen potential
businesses because their space, equipment, and finances are
limited, and they want to be sure they're choosing to nurture
businesses with the best possible chance for success.
Effective Business Incubation Principles
The incubator aspires to have a positive impact on its
community's economic health by maximizing the success
of emerging companies.

The incubator itself is a dynamic model of a sustainable,
efficient business operation.


Importance of Business Incubation
Finance
Incubators help start-ups save on operating costs. The companies
that are part of an incubator can share the same facilities and
share on overhead expenses, such as utilities, office equipment
rentals, and receptionist services. Start-ups can also take
advantage of lower lease rates if the incubator is located in low-
rent industrial parks. Incubators may also help start-ups with
their financing needs by referring them to angel investors and
venture capitalists, and helping them with presentations. Start-
ups may have better luck securing financing if they have the
stamp of approval of incubator programs.
Management
In addition to financial help, start-ups also need guidance on how
to compete successfully with established industry players.
Incubators can tap into their networks of experienced
entrepreneurs and retired executives, who can provide
management guidance and operational assistance. For example, a
biotechnology start-up would benefit from the counsel of retired
pharmaceutical executives who have first-hand experience of the
drug development and clinical approval process. Similarly, a
restaurant entrepreneur could learn about the difficulties of
overseas expansion from retired hospitality-industry executives.
Start-ups usually benefit from having respected individuals on
their boards of directors and scientific advisory panels, because
these individuals bring invaluable connections and experience to
the table.

Synergy
The close working relationships between an incubator's start-ups
create synergies. Even after the start-ups leave an incubator, the
connections and networks established through these relationships
can endure for a long time. Start-up entrepreneurs can provide
encouragement to one another, and employees may share ideas
on new approaches to old problems. Start-ups may plan joint
marketing campaigns and cooperate on product development
initiatives. These synergies do not necessarily exist among start-
ups funded by venture capitalists, because, as Kenneth Liss
points out in a March 2000 Harvard Business School Working
Knowledge article, the companies that receive the funds do not
necessarily know one another and they may be located in
different geographic locations.
Economy
By helping new businesses prosper, incubators assist in creating
long-lasting jobs for their host communities. In a March 2003
Association for Small Business and Entrepreneurship conference
paper hosted by the University of Central Arkansas Small
Business Advancement National Center, Northwestern
Oklahoma State University professor Patti L. Wilber and her
colleague cited research to write that start-ups in incubation
programs have greater viability and show superior financial
performance over the long term. They create long-lasting jobs for
new graduates, experienced mid-career personnel, and veteran
executives. This benefits communities and drives economic
growth.


Formation Process of Incubation
The basic structure of an incubator facility is determined by
owner attributes and regional demographics. The following
owner/sponsor classifications can generally be applied:
private
local government
university
state government
private nonprofit
federal government
A typical organizational format includes executive and advisory
boards, a CEO or operations manager, and support staff.
Selections for board positions and other representative forums
may come from the following: private enterprise, educational
institutions, government, organized labor, development and
investment community, and private citizens.
The role of the manager or chief executive officer of the
incubator is both internal and external. This person is chiefly
responsible for:
incubator policy and planning
marketing and recruitment
tenant selection and lease negotiation
facility operations management
tenant service and administration
The manager has multiple constituent groups representing both
the sponsoring (funding) segments and the user (spinout)

population. Appropriately selecting advisory board members
allows the manager to establish and maintain networks for the
dissemination of information and policy to these disparate
groups.
An important function is marketing the incubator, which will be
driven, in part, by the results of the market analysis conducted
during the feasibility study. The market analysis should consider
the following major aspects of the local economy:
2. characteristics of large corporations in the area
3. level of entrepreneurial activity in the community
4. demand for incubator-type space
5. Small-business support services by industry type, if
feasible.

Types of Business Incubations

Business incubators can offer startups various forms of
assistance from economies related to share business services, to
expert advice, and access to venture funding opportunities.
Dinah Adkins, executive director of the National Business
Incubation Association (NBIA) suggests that, except for
restaurant and retail operations, most start-up businesses are
well-suited for an incubator. "The main areas [incubators] cover
includes research and development, manufacturing and service."
Entrepreneurs can find support in one of three main types of
incubators. NBIA statistics show that most incubators are mixed-
use, meaning they serve a variety of industries.

Mixed-use incubators will have varying businesses in varying
fields, which could encompass business services, consulting
firms, high tech research companies, and manufacturing
operations. These incubators are the majority incubator type, as
indicated in the chart above. Mixed-use incubators are can better
accommodate the start-up who has knowledge in the industry of
choice and needs help to grow the business and answer the
common operational questions unique to small business.
Technology incubators, which target clients involved in
creating and commercializing new technologies, are another
major category. Generally, these two types of incubators aim to
bring outside investments into a particular geographic area to
expand the tax base.
The third type involves a smaller number of incubators (only 5
percent), but it appears to be a fast-growing segment. Known as
empowerment incubators, these mixed-use facilities focus on
clients considered underprivileged and underserved, such as
minorities and women. Such empowerment incubators are often
situated in economically distressed areas in hopes of revitalizing
the regions.
Perhaps one of the biggest benefits of incubators is being part of
what is essentially an entire entrepreneurial community, says Joel
Wiggins, assistant director for the Austin Technology Incubator
in Austin, Texas. "There's a synergy that develops within
incubators. Everyone celebrates when someone gets a contract."
It's this type of "doorway consulting" that makes incubators so
valuable, says Sam Pruett, executive director of the Genesis
Technology Incubator in Fayetteville, Arkansas. "Our experience

has been that there is a huge feeling of isolation for many start-
up businesses," he says. "The incubator keeps them connected to
other entrepreneurs in similar situations."
Although the drawbacks to incubator life are minimal, as you
might have guessed, there are a few. Perhaps the biggest is that
you're expected to participate in various communal incubator
events, which, though helpful, will take you away from your
business. You must also be willing to accept help.
The acceptance policy varies among incubators, but in general,
they're looking for business ideas with potential and
entrepreneurs who can make their visions realities. This often
includes writing a solid business plan and submitting a personal
financial statement.
Most incubators require tenants to graduate and move out after a
specified period of time, usually after four or five years. Being
booted from the nest may seem harsh, but if you've used your
time there to the fullest, your business will be more than ready to
spread its wings and fly unassisted to even greater heights.
Incubator facilities vary widely in size as measured by the square
footage or total startup costs and the number of tenants resident
in the facilities.


Techniques of idea generation

According to Smith [29] 172 idea generation techniques have
been identified. According to the results of our interviews, 19
techniques were mentioned as appropriate idea generation
strategies for design. The idea generation techniques identified
are briefly introduced as follows:

1. Role Playing: Role playing involves designers acting out
scenarios. These scenarios are often ones that the designers
observed during the research phase of the design process when
they participated in user research. This technique is used as a tool
for both team-based ideation and communication to users and/or
clients.

2. Active Search: Active search refers to designers hunting for
a particular solution. This hunt could range from a web search
for images of current vacuum cleaners to searching through
books, magazines, newspapers, etc. to find the demographics of a
particular population.

3. Attribute List: Attribute listing refers to taking an existing
product or system, breaking it into parts and then recombining
these to identify new forms of the product or system.

4. Brainstorm: Brainstorming involves generating a large
number of ideas or solutions to a problem with a focus on
quantity of ideas. During this process, no ideas are evaluated; in
fact unusual ideas are welcomed. Ideas are often combined to
form a single very good idea as suggested by the slogan
1+1=3. Brainstorming can be used by groups as well as
individuals. Since brainstorming was the first idea generation

technique created it is often referred to as, the mother of all idea
generation techniques.

Steps /Process of Structured Brainstorming
Structured brainstorming can prove to be difficult as input comes
from various team members. Hence, the following steps can be
followed to ensure that constructive results can be obtained at the
end.
i. State clearly the objective/theme behind the
structured brainstorming. Make sure that each
participant is fully aware of what is expected from the
brainstorming session. This will save time and energy
of the team.
ii. Give each team member a chance to demonstrate or
voice his/her idea.
iii. During structured brainstorming, advise that team
members are not allowed to criticize one another's
opinion or idea. This promotes freedom of sharing
one's idea without hesitation.
iv. Repeat the round until the team members do not have
any more ideas or solutions.
v. Review the input from each team member and discard
any duplicate input.

5. Collaborate: Collaboration refers to two or more people
working together towards a common goal. Designers
often work in groups and co-create during the entire
creative process.

6. Concrete Stimuli: Concrete stimuli are used when
designers want to gain new perspectives on a problem by
manipulating physical materials. This could be looking at
paint chips, feeling different material textures or
physically maneuvering objects.

7. Critique: Critique refers to receiving input on your
current design ideas. This could be collaborative such as
receiving a design critique from a colleague or
individuals critiquing their own ideas (either
systematically or intrinsically). This technique often spurs
new thought by finding solutions to design flaws within
current concepts.

8. Documenting: Documenting refers to designers writing
down ideas (physically or electronically). This includes
journaling, writing stories, and taking notes.

9. Expert Opinion: Designers often elicit opinions from
experts to identify potential problems with products or
services before more comprehensive evaluations. This
occurs when they are looking for an answer to a problem
that is outside their domain knowledge or when they want
to test a new idea.

10. Empathy/User Research: User research requires the
designer to observe real people in everyday situations in
order to develop empathy for the users. Many of the
methods used to conduct this type of research are founded
in ethnographic research methods such as observations,
field studies and rapid ethnography

11. Encompass: Encompassing is an inspirational technique
which involves designers immersing themselves in
information relevant to the current project.

12. Forced Analogy: Forced analogy involves comparing the
current problem with something else that has little or
nothing in common in order to gain new insights and
results. This technique often generates ideas for new
areas of research.

13. Incubate: Incubation refers to stepping back from the
problem to let the subconscious mind work.

14. Passive Searching: Passive searching refers to when
designers look through material (web, magazines, books)
for inspiration; they are not searching for a particular
solution to a problem, they are merely looking to be
inspired.

15. Prototyping: Prototyping, in this study, refers to a low-
fidelity model of an idea. These models can be created
with any type of material (paper, clay, etc.) as they are
only used to conceptualize a thought.

16. Reflect: Reflection occurs when designers review their
previous work (sketches, documents, prototypes, etc

17. Sketching: Sketching refers to a rough drawing of an
idea.


18. Socializing: Socializing refers to talking with others
about topics unrelated to the current project.

19. Storyboards: Storyboards are a way for designers to
represent information gained in the research phase of the
design process. Quotes from the user, pictures, and other
relative information are placed on cork board or a similar
surface, to represent a scenario and to help understand the
relationships between design ideas. Designers often post
information about users using as little detail as possible to
allow for interpretation of information.

Business Development plan for a new venture

CHAPTER: V

Business Development plan for a new
venture

9 hours

Defining the business plan

Business plan is written document that is prepared by an
entrepreneur that describe all the relevant internal and external
elements for creating a new venture.
It is the integration of functional plans such as finance, marketing
manufacturing, sales, HR etc.
A business plan is also a road map that provides directions so a
business can plan its future and helps it avoid bumps in the road.
The time you spend making your business plan thorough and
accurate, and keeping it up-to-date, is an investment that pays big
dividends in the long term.
Your business plan should conform to generally accepted
guidelines regarding form and content. Each section should
include specific elements and address relevant questions that the
people who read your plan will most likely ask.

Scope and value of the business plan

The business plan may be read by employees, investors, bankers,
venture capitalists, suppliers, customers, advisors and
consultants.

Three perspectives should be considered in preparing the plan:


Firstly is the perspective of the entrepreneur, who
understands about the creativity and technology, involved
in the new venture.
Secondly is the marketing perspective, entrepreneur must
try to view their business through the eyes of customers.
Thirdly entrepreneur should try to view his or her
business through the eyes of the investor.

The depth and detail in the business plan depend on the size and
the scope of the proposed new venture. Thus, the difference in
the scope of the business may depend on whether the new
venture is a service, involves manufacturing, or is a consumer
good or industrial product. The size of the market; competition
and potential growth may affect the scope of the business plan.

The business is valuable to the entrepreneur, potential investors,
or even new personnel, who are trying to familiarize themselves
with the venture, its goals and objectives. The business plan is
importance to those people because:
It helps determine the viability of the venture in a
designated market.
It provides guidelines to the entrepreneur in organization
his or her planning activities.
It serves as an importance tool in helping to obtain
financing.


Structure and components of business plan
Sample Business Plan Outline
Sample Business Plan Outline

Title Page
Name of company, date, contact information, etc.
Table of Contents
Executive Summary
1. Business Concept
2. Company
3. Market Potential
4. Management Team
5. Distinct Competencies
6. Required Funding and its Use
7. Exit Strategy
Main Sections
I. Company Description
Mission Statement
Summary of Activity to Date
Current Stage of Development
Competencies
Product or Service
o Description
o Benefits to customer
o Differences from current offerings
Objectives
Keys to Success

Location and Facilities
II. Industry Analysis
Entry Barriers
Supply and Distribution
Technological Factors
Seasonality
Economic Influences
Regulatory Issues
III. Market Analysis
Definition of Overall Market
Market Size and Growth
Market Trends
Market Segments
Targeted Segments
Customer Characteristics
Customer Needs
Purchasing Decision Process
Product Positioning
IV. Competition
Profiles of Primary Competitors
Competitors' Products/Services & Market Share
Competitive Evaluation of Product
o Distinct Competitive Advantage
o Competitive Weaknesses
Future Competitors

V. Marketing and Sales
Products Offered
Pricing
Distribution
Promotion
o Advertising and Publicity
o Trade Shows
o Partnerships
o Discounts and Incentives
Sales Force
Sales Forecasts
VI. Operations
Product Development
o Development Team
o Development Costs
o Development Risks
Manufacturing (if applicable)
o Production Processes
o Production Equipment
o Quality Assurance
o Administration
Key Suppliers
Product / Service Delivery
Customer Service and Support
Human Resource Plan
Facilities


VII. Management and Organization
Management Team
Open Positions
Board of Directors
Key Personnel
Organizational Chart
VIII. Capitalization and Structure
Legal Structure of Company
Present Equity Positions
Deal Structure
Exit Strategy
IX. Development and Milestones
Time may be specified on a relative scale rather than specific
calendar dates. Milestones may include some or all of the
following:
Financing Commitments
Product Development Milestones
o Prototype
o Testing
o Launch
Signing of Significant Contracts
Achievement of Break-even Performance
Expansion
Additional Funding
Any other significant milestones


X. Risks and Contingencies
Some common risks include:
Increased competition
Loss of a key employee
Suppliers' failure to meet deadlines
Regulatory changes
Change in business conditions
XI. Financial Projections
Assumptions (Start date, commissions, tax rates, average
inventory, sales forecasts, etc.)
Financial Statements (Balance Sheet, Income Statement,
Cash Flow Statement)
Break Even Analysis
Key Ratio Projections (quick ratio, current ratio, D/E,
D/A, ROE, ROA, working capital)
Financial Resources
Financial Strategy
XII. Summary and Conclusions
Appendices
May include:
Management Resumes
Competitive Analysis
Sales Projections
Any other supporting documents


Measuring plan progress

The entrepreneur should determine the points at which decisions
should be made as to whether the goals or objectives are on
schedule. One cannot wait for 12 month for whether plan has
successfully achieved or not, instead entrepreneur should check
the profit and loss statement, cash flow projections and
information on inventory, production, quality, sales collection of
account receivable and disbursements for the previous month.

A brief description for each of the control elements is given
below:
Inventory control

By controlling inventory, the firm can ensure maximum
service to the customer. The faster the firm gets back its
investment in raw materials and finishes goods, the faster
that capital can be reinvested to meet additional customer
needs.

Production control

Compare the cost figures estimated in the business plan
with day-to-day operation costs. This will help to control
machine time, worker hour, process time, and delay time
and downtime cost.

Quality control

This will depend on the type of production system but is
designed to make sure that the product performs
satisfactory.

Sales control

Information on units, dollars, specific product sold, price
of sales, meeting of delivery dates, and credit term is
useful to get good perspectives of the sales of the new
venture. In additional an effective collection system for
accounts receivable should be set up to avoid aging of
accounts and bad debts.

Disbursements

The new venture should also control the amount of
money paid out. All bills should reviewed to determine
how much is being disbursed and for what purpose.

Updating a plan
You should be updating your business plan every month, every
week and every day; whenever things change, you update your
plan. And things always change. You should update your
business plan when you're alone in the shower, when you're
caught in traffic on the way to work, and when you're walking
alone. Update your business plan when listening to customers
and other managers.
While this might seem like chaos, it's actually the opposite; the
constantly-updated business plan is what makes order out of
chaos. It becomes a long-term planning process that sets up your
strategy, objectives and the steps you need to take by constantly
being aware of the results.

Managing the Planning Process
The Annual Update
Update your plan thoroughly at least once a year. You can start
with an old plan and revise, but make sure you're taking a fresh
look--distance yourself from the trees and look at the forest.
Talk to your customers and potential customers.
Review your value proposition. What are your customers
buying? What problems do you solve? What other
solutions can they choose?

Try to come up with new market segmentation.
Segmentation is the grouping or divisions you see in the
market. For example, if you normally view your market
by type of product, look at it by channel or buyer. If you
divide by region, divide by size of Buyer Company.
Think up a new segmentation to give you a fresh view.
Look at the larger potential market for the problems that
need solutions.
Look at contiguous businesses. Look at changing trends and
technologies.
The Monthly Update
Accounting and financial analysis normally works in months
since the books close after every month. Make sure you have a

monthly review of the difference between planned results and
actual results for your sales, profits, balance and cash.
For each of the standard pro-forma projections, always
maintain a table with the plan, another with actual results,
and a third with the difference between plan and actual,
which is called variance.
As an annual plan marches through the months, you can
use the table reserved for actual results to include changes
in budget that affect the near future. For example, if the
annual plan starts in January, then by the end of May you
have an actual Sales Forecast that includes actual results
for January through May and the latest revised forecast
for June through December.
You must also review the activities, deadlines and
planned results that don't fall into the financials. A good
plan is full of milestones, assumptions and tasks, all of
which should be measurable. Make sure you review and
update these measured results every month.
Managing the Major Revisions
The business planning process involves an important paradox.
Strategy works only when consistently applied over a long
period, which means that you can't implement strategy without
following a long-term plan. However, blindly following a long-
term plan can also kill a company that stubbornly insists on
following a plan that isn't working.
Resolution of the paradox is called management. It involves
judgment. The owners, operators and managers of the business
have the responsibility of distinguishing between consistently

applying long-term strategy and blindly following a failing plan.
There are no easy rules for this, but the first place to look for
clues is in false assumptions. Has the real world proven wrong
the assumptions on which your strategy is based? This kind of
subjective judgment is what makes business management so
important. The planning process, with its regular review, is
critical.
Every Business Plan is Wrong
You have to realize your business plan is wrong. All business
plans are wrong. Plans are about the future--and nobody gets the
future right very often, so keep the plan fresh and watch closely
as reality moves forward. A planning process constantly watches
the difference between the plan and actual results. Reality
swallows our assumptions and we need to keep track of where,
why and how we were wrong. This kind of tracking becomes the
key to management.


Reasons for business failure
1. No Business Plan
Knowing what your business will be and how you will sell your
products or services are not enough to keep it running. You need
to have a business plan written out, including (but not limited to)
the following:
your short and long term goals;
the business finances for labor, production equipment, etc.;
your target markets; and
Marketing.
Having one which outlines every detail will guide your business
to the right path.
2. Wrong Reasons
Starting a small business simply because you want to be rich can
lead to an unfulfilling experience, where you will always be
looking for schemes that can bring you fortune. Before you do,
think first about your own interests and passions. Do you believe
you can give something of value to people at large? Are you
driven enough to overcome the many inevitable obstacles an
entrepreneur will face?
3. Inefficient Management
Small business entrepreneurs usually come into their industries
with little to no knowledge of handling the multiple facets of a
business such as financial management, employee relations,

advertising and other essential responsibilities. Educate yourself
through short business and finance courses, or hire managers
who have expertise in the fields where you are lacking.
4. Lack of Capital
Some entrepreneurs think they will be making profits for their
beginning operation cycles, spending most (if not all) of their
resources immediately, only to find out later that they will not
have enough funds to start the succeeding cycle/s. Consider
every possible cost (overhead, production, equipment, etc.) and
save enough money that can be used for at least one fiscal year
despite poor sales.
5. Bad Location
It is not enough to set up a store at a location with high human
traffic or with a very cheap lease. Opening a restaurant near a
school campus can seem like a good idea, but dont expect too
many customers if the food is expensive and there are much
cheaper alternatives around.
You need to consider your target market and their habits, as well
as the direct competition in the area. Dont be afraid of spending
on prime location, as the increased rate of customers coming into
your store and making a purchase will make up for the initial
cost.
6. No Online Presence
In this age of high-speed information, people expect to find just
about everything on the Internet with their computers and mobile

devices. Not having a website or at least a social media page will
render your business virtually invisible to a great majority of the
worlds population.
You can hire professionals to create a website for you or put up
the website yourself. Make accounts for your business on Face
book, Twitter and other leading social media platforms where
your target market can usually be found.
7. Uncontrolled Growth
Growth is a good thing unless it is left unchecked and your
generated revenue cant keep up with the expansion. If your
business experiences great success, do not be overeager to spend
your profits by immediately buying more equipment or opening
up new stores. Stick to the strategies you have set so you can still
grow without bankrupting the business.
8. Financial Neglect
Cash is the lifeblood of any business, and there will be no
business once that runs out. Therefore, it is imperative that small
business entrepreneurs practice strict financial record-keeping so
that every penny is duly accounted for. Knowing exactly how
much money is going in and out of your business will correctly
guide every decision you make.
9. Lackluster Execution
Having a great business plan will amount to nothing if each
objective is tackled with incompetence. Employees who are lazy,
dull, bad-mannered and unmanageable will not just cut down on

productivity, but will also have a negative effect on the work
environment and customer/client relations. Follow strict hiring
guidelines and subject your hires to rigorous training to ensure
quality output from each one.
10. Poor Marketing
A small business needs to market its brand considering the tough
competition it will face against more established businesses. You
need to invest enough resources into promoting your products
through the right channels. This is so your target market knows
exactly that you can fulfill its needs. Online marketing is a must
these days, but you should not ignore the physical reach of
traditional marketing methods such as brochures, flyers and
business cards.

Managing Early Growth and Challenges

CHAPTER: VI

MANAGING EARLY GROWTH AND
CHALLENGES


Managing the early growth of the new venture: to
grow or not to grow

Successfully established new enterprise provides the opportunity
for the entrepreneur to grow his or her business. Introducing a
new product into an existing market provides the opportunity to
take market share for competitors, entry into new market and
provides the opportunity to serve a new group of customers.

Whether to grow into a large organization, what are the strategies
for growth, the challenges, opportunity and implication of
growth and supporting the growth are the aspects of managing
early growth.

To grow or not to grow

At some point between young and adulthood, many small
profitable companies face a dilemma: should they keep growing
or stay the same size? Completing the start-up stage, successful
small business boast cash flow, loyal customers and rising
demand for products and services. Then question arises should
they go for becoming big or should they remain happy with their
fates as small businesses?

Many of the business owner refuses to high grow and instead
choose to remain with status quo. There are a whole lot of
entrepreneur who believe that success isnt about size, its about
satisfaction. Its completely reasonable for business owners to
make a decision not to grow because they are satisfied with the
current size of the enterprises.


Most common reason for not to grow are as:

To avoid risk and maintain their lifestyle.
To avoid regulation authority.
To avoid having to delegate responsibilities.
Growth can increase an organization problem.
Growth need not necessarily equal profitability.
Customers may get ignored.

Dimensions and Strategies for expansion and
growth

Most small companies have plans to grow their business and
increase sales and profits. However, there are certain methods
companies must use for implementing a growth strategy. The
method a company uses to expand its business is largely
contingent upon its financial situation, the competition and even
government regulation. Some common growth strategies in
business include market penetration, market expansion, product
expansion, diversification and acquisition.

Market Penetration
One growth strategy in business is market penetration. A small
company uses a market penetration strategy when it decides to
market existing products within the same market it has been
using. The only way to grow using existing products and markets
is to increase market share, according to the article "Growth
Strategies" at gaebler.com. Market share is the percent of unit

and dollar sales a company holds within a certain market vs. all
other competitors. One way to increase market share is by
lowering prices. For example, in markets where there is little
differentiation among products, a lower price may help a
company increase its share of the market.

Market Expansion
A market expansion growth strategy, often called market
development, entails selling current products in a new market.
There several reasons why a company may consider a market
expansion strategy. First, the competition may be such that there
is no room for growth within the current market. If a business
does not find new markets for its products, it cannot increase

sales or profits. A small company may also use a market
expansion strategy if it finds new uses for its product. For
example, a small soap distributor that sells to retail stores may
discover that factory workers also use its product.
Product Expansion
A small company may also expand its product line or add new
features to increase its sales and profits. When small companies
employ a product expansion strategy, also known as product
development, they continue selling within the existing market. A
product expansion growth strategy often works well when
technology starts to change. A small company may also be
forced to add new products as older ones become outmoded.
Diversification
Growth strategies in business also include diversification, where
a small company will sell new products to new markets. This
type of strategy can be very risky, according to gaebler.com. A
small company will need to plan carefully when using a
diversification growth strategy. Marketing research is essential
because a company will need to determine if consumers in the
new market will potentially like the new products.
Acquisition
Growth strategies in business can also includes an acquisition. In
acquisition, a company purchases another company to expand its
operations. A small company may use this type of strategy to
expand its product line and enter new markets. An acquisition
growth strategy can be risky, but not as risky as a diversification

strategy. One reason is that the products and market are already
established. A company must know exactly what it wants to
achieve when using an acquisition strategy, mainly because of
the significant investment required to implement it.

Challenges and Opportunities of Global Expansion

Opportunities
By buying products from other nations customers are offered a
much wider choice of goods and services.
Creates competition for local firms and thus keeps costs down.
Globalization promotes specialization. Countries can begin to
specialize in those products they are best at making.
Economic Interdependence among different nations can build
improved political and social links.
Exporting
Non-equity arrangement
Direct foreign investment
Challenges
Cheap imports from developing nations could lead to
unemployment in developed countries where the cost of
production is high.
Choosing to specialize in certain products may lead to
unemployment in other sectors which are not prioritized.
Increased competition for infant industry.
Dumping of goods by certain countries at below cost price
may harm industries in order countries.

Cross countries legislations
Social-cultural barriers
Need for business localization
Unstable economies and government
Security and labor concerns
Finding the first global employee
Protecting intellectual property
International business reputation
Economic implication of Growth

Growth makes the firm bigger and it begins to benefits from the
advantages of size. It provides the economy with increased tax
revenue, employment, reduction of trade deficit, and so on. At
the organizational level the growth enable the firm to enjoy
production efficiency, attractive to suppliers, increases
bargaining power, credibility to financiers, reliable to
stakeholders and other power to influence etc.

But the history has witnessed many businesses that were at one
stage growing rapidly but later failed. Business failures are not
considered as negative outcome for an economy, rather a source
of knowledge that generates improvement and increase in future
economic stability.

As in the economy, the firms growth has its implications to the
entrepreneurs. As the form grows, it changes. These changes
introduce a number of managerial challenges. These challenges
arise from the following pressures. They are:
1. Pressures on Existing Financial Resources
2. Pressures on Human Resource

3. Pressures on the Management of Employees
4. Pressures on the Entrepreneurs Time

Hitting the Growth Wall

Most small-business owners are capable technicians or
marketers. Yet, they sometimes have difficulty developing the
right company processes, systems and management practices to
support and sustain business growth. They may sense that their
company has "hit a wall" - become challenged to effectively and
efficiently handle increased customer orders.
Resolving this situation requires the business founder to make
the transition from entrepreneur to "business owner/manager."
This requires scaling a number of business "growth walls" -
specific and significant hurdles or challenges along a company's
growth path. Along that way, the experienced business
owner/manager proactively focuses on the right organizational
issues at the right time, and ensures that similar issues don't
resurface.
Once a company has become a successful start-up (developing a
salable product, service or technology in a defined market niche)
then, to grow effectively, it must build a sound organization
infrastructure to be able to efficiently sell, make, deliver, service
and support its offering.


The solution to this first growth challenge is:
Company Systematization, where the business needs to:
Acquire sufficient and appropriate human, material, and
equipment and capital resources to fuel the business.
Develop day-to-day operating policies, procedures and
systems to coordinate the organization's daily work.
Organize company functions (e.g., sales, operations,
product development, administration, etc.) into separate
and reasonably self-managed areas.
Install appropriate human resource practices to bring on,
retain, motivate and develop capable and committed
employees.
Company Management, where the business needs to:
Perform organizational and functional planning and
budgeting.
Establish a functional area and individual performance
management process.
Institute a useful management information and reporting
system, and sound financial controls.
Build a capable and reasonably self-sufficient
management team.
Business-Unit Coordination and Alignment, where the
business needs to:
Move the company from a functional to business unit
structure (along product lines or market niches) in order
to better compete in the marketplace,

Diversify its products and markets, and possibly grow
through mergers & acquisitions.
Create cross-company forums or teams for
product/service innovation, quality/service improvement,
process improvement and knowledge transfer.
Use organizational leadership and culture as leverage for
organizational change.
The customer is always right. We've heard that as a basic
business truth since the beginning of business. And for the most
part, it's true. But there are times when it's appropriate to tell a
particular buyer-the one who saps your strength and wastes your
time again and again-that although the customer may be right,
the relationship is wrong.
I'm not saying get rid of every customer who is difficult to deal
with. I'm suggesting that it may be time to weed out your
customer base so you can harvest the greatest rewards. Here are
some ways to do that:
1. Know when to walk away.
2. Follow the 80/20 rule.
3. Ask the difficult questions.
4. Measure your return on investment.
5. Leave the door open.
The next time you deal with a difficult customer, ask yourself
this question: "Is the time I'm spending with this customer taking
time away from others who need me more?" If the answer is
"yes," then it's time to cut your losses and walk away. So the next
time youre first thought is "The customer is always right," stop
and ask yourself this instead: Is this customer right for me?

Financial Strategies to Support Growth

The pressure created by financial resources obstructs growth. To
overcome pressure on existing resources, the entrepreneur could
acquire new resources. However, the acquisition of new
resources can be expensive, whether in terms of the equity sold
or the interest payments from debts. Therefore the strategy is to
manage the existing resources in a better way. These financial
control strategies include:

1. Managing cash flow
2. Managing inventory
3. Managing fixed assets
4. Managing costs and profits
5. Taxes and other provisions
6. Record keeping
Cash flow is vital when it comes to managing the finances of a
small business as research shows that around 80 percent of small
business failures are the result of poor cash flow.
Good cash flow management means delaying the outflow of cash
for as long as possible while ensuring that those who owe you
money pay it as soon as possible. It is important for you to
prepare cash flow projections for a period of time, whether it is
for next year, next quarter or next month. A sound forecast
model will enable you to anticipate problems and be prepared if
and when financial trouble strikes. It can also be used to develop
projections for sales, costs, credit and funding. Below are a range
of steps to help SMEs effectively manage their cash position:

Prepare a sales forecast
Estimate cash inflows
Estimate cash outflows
Calculate your net cash position
Surviving shortfalls
Good cash flow management can often be the determining factor
between a successful business and a failed one. In any business
venture, cash is king, therefore it is important to understand your
cash cycle and effectively manage cash coming in and cash
going out during any given period.

Most businesses hold inventory for many reasons. Among them
are:
Meeting unexpected demands
Smoothing seasonal demands
Taking advantage of price discounts
Hedging against price increase
Getting quality discounts


Fixed Asset Management is an accounting process that seeks to
track fixed assets for the purposes of financial accounting,
preventive maintenance, and theft deterrence. Many
organizations face a significant challenge in tracking the
location, quantity, condition, and maintenance and depreciation
status of their fixed assets. A popular approach to tracking fixed

assets utilizes serial numbered Asset Tags, often with barcodes
for easy and accurate reading. Periodically, the owner of the
assets can take inventory with a mobile barcode reader and then
produce a report. Some tracking methods automate the process,
such as by using fixed scanners to read barcodes on railway
freight cars or by attaching a Radio Frequency Identification
(RFID) tag to an asset.


Cost, revenue and profit are the three most important factors in
determining the success of your business. A business can have
high revenue, but if the costs are higher, it will show no profit
and is destined to go out of business when available capital runs
out. Managing costs and revenue to maximize profit is key for
any entrepreneur.

Revenue is the same as total income for a business and measures
all money taken in through sales of goods and services. Cost
measures the total expenditures made by the business to run the
operation: both the "direct" costs involved in creating the goods
or services, as well as the "indirect" costs that stem from running
a business, such as rent, salaries and legal or professional fees.
Profit is the total revenue minus the total cost; this is the money
made by the business and is the key indicator of success.


The entrepreneur will be required to withhold different types of
taxes for his/her employees. Each month or quarter, deposits or

payments will need to be made to appropriate tax offices for fund
withheld from salary and wages. If payments are late, there will
be high interest and penalties assessed.
Apart from government taxes the entrepreneur will be required to
provision for provident fund, medical benefits, social welfare
funds, bonus and other facilities. The entrepreneur should be
careful not to use these funds.

3. Record keeping
Good record keeping can help you protect your business,
measure your performance and maximize profits. Records are the
source documents, both physical and electronic, that specify
transaction dates and amounts, legal agreements, and private
customer and business details.
Developing a system to log, store and dispose of records can
benefit your business by allowing you to:
plan and work more efficiently
meet legal and tax requirements
measure profit and performance
generate meaningful reports
protect your rights
Manage potential risk

Organizational Changes during Growth

Larry E. Greiner's organizational development theory research


An organization developmental theory developed by Larry E.
Greiner is helpful in change management when examining the
problems associated with growth on organizations and
developing a proactive framework to cope with such situations.
It can be argued that growing organizations move through five
relatively calm periods of evolution, each of which ends with a
period of crisis and revolution.
Each evolutionary period is characterized by the
dominant management style used to achieve growth,
while
Each revolutionary period is characterized by the
dominant management problem that must be solved
before growth will continue.


Five Stages of Organizational Growth
Creativity / Leadership
The first stage of organizational growth is called creativity. This
stage is dominated by the founders of the organization, and the
emphasis is on creating both a product and a market.
These "founders are usually technically or entrepreneurially
oriented, and they disdain management activities; their physical
and mental energies are absorbed entirely in making and selling a
new product."

But as the organization grows, management problems occur that
cannot be handled through informal communication and
dedication. Thus the founders find themselves burdened with
unwanted management responsibilities? and conflicts between
the harried leaders grow more intense.
Direction / Autonomy
It is at this point that the crisis of leadership occurs and the first
revolutionary period begins. "Who is going to lead the
organization out of confusion and solve the management
problems confronting the organization?" The solution is to locate
and install a strong manager "who is acceptable to the founders
and who can pull the organization together." This leads to the
next evolutionary period-growth through direction.
During this phase the new manager and key staff "take most of
the responsibility for instituting direction, while lower level
supervisors are treated more as functional specialists than
autonomous decision-making managers." As lower level
managers demand more autonomy, this eventually leads to the
next revolutionary period-the crisis of autonomy. The solution to
this crisis is usually greater delegation.
Delegation / Control
Yet it is difficult for top managers who were previously
successful at being directive to give up responsibility. Moreover,
lower level managers are not accustomed to making decisions for
them. As a result numerous organizations flounder during this
revolutionary period, adhering to centralized methods, while

lower level employees grow more disenchanted and leave the
organization.
When an organization gets to the growth stage of delegation, it
usually begins to develop a decentralized organization structure,
which heightens motivation at the lower levels. Yet, eventually,
the next crisis begins to evolve as the top managers "sense that
they are losing control over a highly diversified field operation?
Freedom breeds a parochial attitude."
The crisis of control often results in a return to centralization,
which is now inappropriate and creates resentment and hostility
among those who had been given freedom.
Coordination / Red Tape
A more effective solution tends to initiate the next evolutionary
periodthe coordination stage. This period is characterized by
the use of formal systems for achieving greater coordination with
top management as the "watch dog."
Yet most coordination systems eventually get carried away and
result in the next revolutionary period-the crisis of red tape. This
crisis most often occurs when "the organization has become too
large and complex to be managed through formal programs and
rigid systems."
Collaboration /?
If the crisis of red tape is to be overcome, the organization must
move to the next evolutionary period-the phase of collaboration.
While the coordination phase was managed through formal

systems and procedures, the collaboration phase "emphasizes
greater spontaneity in management action through teams and the
skillful confrontation of interpersonal differences. Social control
and self-discipline take over from formal control."
Greiner is not certain what the next revolution will be, but he
anticipates that it will "center around the 'psychological
saturation' of employees who grow emotionally and physically
exhausted by the intensity of teamwork and the heavy pressure
for innovative solutions."
It is felt that to overcome and even avoid the various crises
managers could attempt to move through the evolutionary
periods more consistently with the sequencing -direction to
coordination to collaboration to delegation-rather than the
ordering depicted by Greiner.

Entrepreneurial skills and strategies:

Some of the skills of entrepreneur are as follows:

1. Personal characteristics
2. Interpersonal skills
3. Critical and creative thinking skills
4. Practical skills
5. Business knowledge


1. Personal characteristics

Theyre goal-orientated
Entrepreneurs are all about setting goals and putting their all into
achieving them; theyre determined to make their business
succeed and will remove any encumbrances that may stand in
their way. They also tend to be strategic in their game plans and
always have a clear idea in mind of exactly what they want to
achieve and how they plan to achieve it.
Theyre committed to their business
Entrepreneurs are not easily defeated; they view failure as an
opportunity for future success, and if they dont succeed the first
time, theyll stay committed to their business and will continue to
try and try again until it does succeed. A true entrepreneur
doesnt take no for an answer.
Theyre hands-on
Entrepreneurs are inherently proactive, and know that if
something really needs to get done, they should do it themselves.
Theyre doers, not thinkers, and tend to have very exacting
standards. They view their business as an extension of
themselves and like to be integral in its day-to-day operations
even when they dont have to be.


They thrive on uncertainty
Not only do they thrive on itthey also remain calm throughout
it. Sometimes things go wrong in business, but when youre at
the helm of a company and making all the decisions, its
essential to keep your cool in any given situation. True
entrepreneurs know this and secretly flourish and grow in the
wake of any challenges.
They continuously look for opportunities to improve
Entrepreneurs realize that every event or situation is a business
opportunity, and theyre constantly generating new and
innovative ideas. They have the ability to look at everything
around them and focus it toward their goals in an effort to
improve their business.
Theyre willing to take risks
A true entrepreneur doesnt ask questions about whether or not
theyll succeedthey truly believe they will. They exude this
confidence in all aspects of life, and as a bi-product, theyre
never afraid to take risks due to their unbinding faith that
ultimately they will triumph.
Theyre willing to listen and learn
The most important part of learning is listeningand a good
entrepreneur will do this in abundance.


They have great people skills
Entrepreneurs have strong communication skills, and its this
strength that enables them to effectively sell their product or
service to clients and customers. Theyre also natural leaders
with the ability to motivate, inspire and influence those around
them.
Theyre inherently creative
This is one trait that, due to their very nature, entrepreneurial
business people have by the bucket load. Theyre able to not only
come up with ingenious ideas, but also turn those ideas into
profits.
Theyre passionate and always full of positivity
Passion is perhaps the most important trait of the successful
entrepreneur. They genuinely love their job and are willing to put
in those extra hours to make their business grow; they get a
genuine sense of pleasure from their work that goes way beyond
just cash.

2. Interpersonal skills
Interpersonal skills are measures of how adept you are at
interacting with others. Active listening is an interpersonal skill,
as knows how to communicate to someone else that you respect
him or her. When problems arise you use your interpersonal
skills to resolve conflict with others. People learn interpersonal

skills by interacting with family members, going to school, and
socializing with their peers. Healthy interpersonal skills reduce
stress, resolve conflict, improve communication, enhance
intimacy, increase understanding, and promote joy. Others are
leadership and motivation, communication skills, listening,
negotiation.
3. Critical and creative thinking skills
Creative thinking skills use very different approaches to critical
thinking skills. They involve a much more relaxed, open, playful
approach. This can require some risk-taking. Creative thinking
skills involve such approaches as:
Looking for many possible answers rather than one.
Allowing you to make wild and crazy suggestions as well
as those that seem sensible.
Not judging ideas early in the process - treat all ideas as if
they may contain the seeds of something potentially
useful.
Allowing you to doodle, daydream or play with a theory
or suggestion.
Being aware that these approaches necessarily involve
making lots of suggestions that are unworkable and may
sound silly.
Making mistakes.
Learning from what has not worked as well as what did.


4. Practical skills
For successful entrepreneur following practical skills are
required:
Goal Setting:
Setting goals is an integral part of choosing the business
that's right for you. After all, if your business doesn't
meet your personal goals, you probably won't be happy
waking up each morning and trying to make the business
a success. Sooner or later, you'll stop putting forth the
effort needed to make the concept work.
Goal setting should be (SMART) Specific, Measurable,
Attainable, Realistic and Time bounded.

Planning and Organizing:
Planning is the intellectual process and entrepreneur
should think a head future oriented planning process for
organizational objectives and goals.
Organizational skills are defined as the skills, strategies
and qualities needed in order to be able to organize your
time, deadlines and productivity. The different kinds of
organizational skills include desktop organization, task
organization and self organization.
Decision Making:
Decision made by the entrepreneur should be rational
and logical.


5. Business knowledge
Many companies base their organizational structures on various
functional areas, creating departments around these functions and
assigning responsibilities according to employees' job titles and
experience. A functional organizational structure groups
employees by various skills and expertise, leading to greater
efficiency, according to the online Encyclopedia of Management.
Several key types of functional areas are typically seen in
business environments.

Human Resources
The human resources or personnel department is responsible for
hiring employees and ensuring that they get the proper training to
perform their jobs. Human-resources directors or managers have
employees fill out proper paperwork, including W-4 and I-9
forms. The W-4 form determines how much is deducted from
each paycheck; the I-9 or employment eligibility verification
form ensures that a recently hired worker can legally work in the
United States. Human-resources professionals establish pay
scales for all employees, basing salaries on comparable
compensation packages in the industry.
Marketing
Marketing professionals determine the products that their
companies introduce to the marketplace, often using marketing
research surveys to determine what consumers need and want.
This helps the company to better align its strategies. Marketing
workers help to establish prices for products, based on

manufacturing costs. Marketing managers and directors decide
which types of advertising and promotions their companies use.
Some marketing departments have advertising directors or
managers who handle these functions; they establish budgets for
various types of advertising, such as television, radio and Internet
ads, and track the results. The marketing department determines
the right distribution channels for the company's products. For
example, a consumer products company may sell its products in
grocery stores and mass-merchandise outlets.
Accounting/record keeping
Accounting professionals usually work in one of three areas:
accounts receivable, accounts payable and payroll. Accounts-
receivable specialists track the debts owed to the company. For
example, customers who purchase items on credit fall within the
bailiwick of accounts-receivable employees. These professionals
prepare and send invoices to apprise customers when payments
are due. Accounts-payable employees track payments that the
company owes, including amounts owed for parts or to repair
and maintenance vendors. Payroll specialists ensure that
employees are paid on time and distribute annual W-2 and 1099
forms to employees and independent contractors, respectively,
for tax purposes.
Financial Controls

Financial controls are a critical part of any financial system.
They ensure that the resources of the Housing Association are
being correctly and effectively used and that activities are
correctly and accurately reported. Poor controls can lead to the

risk that resources are used inefficiently or are subject to theft,
fraud or abuse.
Management control (as exercised in planning, performance
evaluation, and coordination) of financial activities aimed at
achieving desired return on investment. Managers use financial
statements (a budget being the primary one), operating ratios,
and other financial tools to exercise financial control.

Inventory Control
Inventory Control is designed to support the requisition
processing, inventory management, purchasing, and physical
inventory reconciliation functions of inventory management
through a set of highly interactive capabilities. The design of
Inventory Control is based on the following key objectives:
To provide information on the availability of stocked
items and the status of stocked requisitions
To facilitate timely requisition processing
To automatically record and service backorders
To help minimize inventory investments consistent with
service objectives by basing purchasing decisions on
usage history
To provide automated tools to assist servicing,
purchasing, and management of the inventory
To improve financial control of the inventory by
chargebacks to the user organizations
To improve financial control of the inventory by periodic
reconciliation of the inventory balances with the physical
counts.

Strategic Planning Skills

In today's highly competitive business environment, budget-
oriented planning or forecast-based planning methods are
insufficient for a large corporation to survive and prosper. The
firm must engage in strategic planning that clearly defines
objectives and assesses both the internal and external situation to
formulate strategy, implement the strategy, evaluate the progress,
and make adjustments as necessary to stay on track.
An entrepreneur must have a vision for the future. He / She must
be able to see the bigger picture and know where he/she is going
with everything. Setting clear objectives and effective strategic
are essential for running a business successfully.
A simplified view of the strategic planning process:
1. Mission and objectives
2. Environmental scanning
3. Strategic formulation
4. Strategic implementation
5. Evaluation and control
1. Mission and Objectives
The mission statement describes the company's business vision,
including the unchanging values and purpose of the firm and
forward-looking visionary goals that guide the pursuit of future
opportunities.

Guided by the business vision, the firm's leaders can define
measurable financial and strategic objectives. Financial
objectives involve measures such as sales targets and earnings
growth. Strategic objectives are related to the firm's business
position, and may include measures such as market share and
reputation.
2. Environmental Scan
The environmental scan includes the following components:
Internal analysis of the firm
Analysis of the firm's industry (task environment)
External macro environment (PEST analysis)
The internal analysis can identify the firm's strengths and
weaknesses and the external analysis reveals opportunities and
threats. A profile of the strengths, weaknesses, opportunities, and
threats is generated by means of a SWOT analysis.
An industry analysis can be performed using a framework
developed by Michael Porter known as Porter's five forces. This
framework evaluates entry barriers, suppliers, customers,
substitute products, and industry rivalry.
3. Strategy Formulation
Given the information from the environmental scan, the firm
should match its strengths to the opportunities that it has
identified, while addressing its weaknesses and external threats.

To attain superior profitability, the firm seeks to develop a
competitive advantage over its rivals. A competitive advantage
can be based on cost or differentiation. Michael Porter identified
three industry-independent generic strategies from which the
firm can choose.
4. Strategy Implementation
The selected strategy is implemented by means of programs,
budgets, and procedures. Implementation involves organization
of the firm's resources and motivation of the staff to achieve
objectives.
The way in which the strategy is implemented can have a
significant impact on whether it will be successful. In a large
company, those who implement the strategy likely will be
different people from those who formulated it. For this reason,
care must be taken to communicate the strategy and the
reasoning behind it. Otherwise, the implementation might not
succeed if the strategy is misunderstood or if lower-level
managers resist its implementation because they do not
understand why the particular strategy was selected.
5. Evaluation & Control
The implementation of the strategy must be monitored and
adjustments made as needed.
Evaluation and control consists of the following steps:
1. Define parameters to be measured
2. Define target values for those parameters

3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes
Entrepreneur strategies are:
Strategic innovation
Integrative strategies
Vertical
Horizontal
Modular
Intensive strategy
Diversification
Global strategy

Short Notes

Write short notes on:
1. Ethics and social responsibility in entrepreneurship
Ethics and social responsibility are very important values in
entrepreneurship ventures. This is particularly essential in
decision making process. Ethical conscience reminds
entrepreneurs to make trustworthy and profitable
entrepreneurship decisions. Likewise, the social responsibility
component sought entrepreneurs to make entrepreneurial
decisions that can enhance benefits and repelling harms to the
stakeholders.

The entrepreneur must establish a balance between ethical
exigencies, economic expediency, and social responsibility. A
managers attitudes concerning corporate responsibility tend to
be supportive of laws and professional codes of ethics.
Entrepreneurs have few reference persons, role models, and
developed internal ethics codes. Entrepreneurs are sensitive to
peers pressure and social norms in the community as well as
pressures from their companies.

While ethics refers to the study of whatever is right and good
for humans, business ethics concerns itself with the
investigation of business practices in light of human values. The
word ethics stems from the Greek ethos, meaning custom and
usage. Development of Our Ethical Concepts Socrates, Plato,
and Aristotle provide the earliest writings dealing with ethical
conceptions; earlier writings involving moral codes can be
found in both Judaism and Hinduism.

Short Notes

Ethics and social responsibilities of an entrepreneur is certainly
an important issue considering the role of social responsibility
in society and ethics in business. Social responsibility is
beneficial for business community and at the same time for
global community. Social responsibility is significant owing to
the realism of globalization. The people of the universe are
becoming interconnected more owing to the advancement of
technology, transportation and communication. The world
market economy is affecting not only services and goods but
values and ideas as well. Expansion on the global front,
enhancing regulatory omission and the factors which is
responsible for creating awareness regarding the significance of
making for sectored, macro and operational hazards to both an
organizations and entrepreneurs competitive position and
reputation. As small business owners and entrepreneurs,
activities which harm the people and the planet, will spoil the
scope for your profits. For this reason there is great significance
for triple bottom line which is profits, planet and people.
2. Types of Start Ups
a. A lifestyle firm is privately held and usually achieves only
limited growth.
This type of firm may grow after several years to 30 or 40
employees.
A lifestyle firm exists primarily to support the owners and
usually has little growth opportunity.
b. Foundation Companies.
A foundation company is a type of company
formed from research and development and lays
the foundation for a new business area.
Short Notes

This firm can grow in five to ten years from 40 to
400 employees.
This type of start-up rarely goes public and
draws little outside investor interest.

c. High-Potential Venture.
The High Potential venture is an emerging company that is
venture-backed, with a seasoned management team that
possesses relevant experience. This type of venture is growing
rapidly, and is characterized by proven market acceptance
(significant sales). With growth comes the need to fund
continued product development and marketing.
While this venture type has medium to high ratings in all
categories, and as such is well balanced, there is room for
improvement in each area.
This type of venture receives the most investor interest.
The company may start out like a foundation company,
but its growth is far more rapid.
After five to ten years the company could employ around
500 employees, with $20-30 million in revenues.
These firms are also called gazelles and are most
important for the economic development of an area.

Short Notes

3. Fundamental issues in entrepreneurship
Strategic planning and decision making issue
decentralized participative.
Expertise of CEO and other managers should gain
knowledge and experience by both professional learning
and doing.
Staffing should be based on expertise, skills, knowledge
and talent not on kith and kin relationship
Technology: should have non imitable, unique and
cutting edge technology
Infrastructure issue: should have adequate infrastructure
of water power supply, communication, transportation.
Issues on entrepreneurial skills and strategies:
entrepreneur should possess various entrepreneurial
skills and strategies, via, inventory mgmt, financial
management ,strategic planning skill, HRM etc
Financial issue: sources of funding should be well
identified so that they can be made available at the time
of expansion and crisis.
Issues on government supports: government should
provide supportive policies and facilities so that the new
start-ups can flourish easily.
Market issue: an entrepreneur should be able to create
the market of own.
Structural and leadership issue: most appropriate
structure should be formed and leader should possess
required qualities to drive the organization according to
the strategy adopted.

Short Notes

4. Hitting the growth wall
Rapid growth phase where operation are out of control
Cash run out, key employees leave organization for stable
job
Top line revenue flatter out
Inventory control problem
Lack of loyal customer
Three types of growth hurdles are:
Company systemization:
Acquire sufficient capital resource material, human to fuel
the business.
Company management:
Perform organizational and functional planning and
budgeting.
Business unit coordination and alignment:
More company from functional to business structure to
better complete in market place
5. Techniques for idea generation
brainstorming
focus group
problem inventory analysis
research and development techniques

Short Notes

6. Front-end and back-end operation of an e- business
The integration of systems inside and outside the organization
can provide value for both customers and the organization. One
of the requirements for e-business is to link front-end with back-
end systems in order automates the online operations of the
organization.
Front-end activities deal directly with the customer while back-
end systems include all of the internal support activities that do
not deal directly with the customer. Some enterprises have
different geographic locations for front-end and back-end
office activities and rely on the integration of the associated
computer and network systems for successful corporate
operations.

7. Inventory control
Short Notes

Inventory management is the process of efficiently overseeing
the constant flow of units into and out of an existing inventory.
This process usually involves controlling the transfer in of units
in order to prevent the inventory from becoming too high, or
dwindling to levels that could put the operation of the company
into jeopardy. Competent inventory management also seeks to
control the costs associated with the inventory, both from the
perspective of the total value of the goods included and the tax
burden generated by the cumulative value of the inventory.
Balancing the various tasks of inventory management means
paying attention to three key aspects of any inventory. The first
aspect has to do with time. In terms of materials acquired for
inclusion in the total inventory, this means understanding how
long it takes for a supplier to process an order and execute a
delivery. Inventory management also demands that a solid
understanding of how long it will take for those materials to
transfer out of the inventory be established. Knowing these two
important lead times makes it possible to know when to place an
order and how many units must be ordered to keep production
running smoothly.
8. Entrepreneurial skills
There is one thing to keep in mind. Not all Entrepreneurs have
these skills. Some have them and some dont. That being said
skills and characteristics can be broken down into three different
categories.
Innate Characteristics Natural or characteristics that
you are born with.
Short Notes

Learned Characteristics Characteristics that have
been developed with much practice.
Experiential Characteristics Characteristics that have
been developed through different interactions and
occasions in the entrepreneurs life.
There are many different types of skills or characteristics that
entrepreneurs may possess that are unappealing, and will do
more harm than good. Those include;
invulnerability
machismo/feminism
impulsiveness
over-controlling
perfectionism
9. Strategic Alliances
A strategic alliance is an agreement between two or more players
to share resources or knowledge, to be beneficial to all parties
involved. It is as way to supplement internal assets, capabilities
and activities, with access to needed resources or processes from
outside players such as suppliers, customers, competitors,
companies in different industries, brand owners, universities,
institutes or divisions of government.
Reasons for entering a Strategic Alliance
Firms entering strategic alliances often have multiple objectives,
some of them listed below:
Access to intellectual property rights
Access to knowledge
Short Notes

Access to new technology
Access to new markets
Access to distribution skills
Access to manufacturing capabilities
Access to marketing skills
Access to management skills
Access to capital
Create critical mass
Create common standards
Create new businesses
Create synergies
Diversification
Improve agility
Improve quality
Improve R&D
Improve material flow
Improve speed to market
Influence structural evolution the industry
Inhibit competitors
Reduce administrative costs
Reduce R&D costs
Reduce risk and liability
Reduce cycle time
Utilize by-products

Short Notes

10. Strategic Planning
Strategic planning is critical to business success. Different from
classic business planning, the strategic variety involves vision,
mission and outside-of-the-box thinking. Strategic planning
describes where you want your company to go, not necessarily
how you're going to get there. However, like all other "travel
plans," without knowing where you want to go, creating details
on how to arrive are meaningless. Strategic planning defines the
"where" that your company is heading.
As critical as business planning is to the success of your
company, all plans are useless unless followed by action. An
additional side benefit of strategic planning is the natural action
plan that stems from identifying your preferred strategy. While
strategic planning involves your vision, mission and dreams, it
also further defines the rudiments of your action plan to achieve
the results you want. For example, if you adopt a strategy of
increasing business-to-business -- B2B -- revenue, you've also
identified a basic action plan.
11. Reason for failure of some business
Wrong Reasons
No Business Plan
Not Enough Experience
Lack of Capital
Poor Management
Bad Location
Cant Handle Competition
Overlook The Importance Of Getting Online
Inefficient Handling of Finances
Short Notes

Poor Marketing
Invisible Hurdles
Comparing Yourself To Others
Lack of Business Mindset
Unwilling To Take Risks
No Real Time Experience
Your Business Isnt Your Passion
Fear
12. Business incubation
Business incubation is a business support process that accelerates
the successful development of start-up and fledgling companies
by providing entrepreneurs with an array of targeted resources
and services. These services are usually developed or
orchestrated by incubator management and offered both in the
business incubator and through its network of contacts. A
business incubators main goal is to produce successful firms that
will leave the program financially viable and freestanding. These
incubator graduates have the potential to create jobs, revitalize
neighborhoods, commercialize new technologies, and strengthen
local and national economies.
Critical to the definition of an incubator is the provision of
management guidance, technical assistance and consulting
tailored to young growing companies. Incubators usually also
provide clients access to appropriate rental space and flexible
leases, shared basic business services and equipment, technology
support services and assistance in obtaining the financing
necessary for company growth.
Short Notes

Incubators vary in the way they deliver their services, in their
organizational structure and in the types of clients they serve.
Highly adaptable, incubators have differing goals, including
diversifying rural economies, providing employment for and
increasing wealth of depressed inner cities, and transferring
technology from universities and major corporations. Incubator
clients are at the forefront of developing new and innovative
technologies creating products and services that improve the
quality of our lives in communities around the world.
13. Franchising
Franchising provides benefits for both seller and buyer. For
franchisors, the primary benefit is the ability to use other people's
money to expand the brand more rapidly than they could either
on their own or through investors or lenders. The initial franchise
fee and ongoing royalties they collect allow franchisors to build
their brand without sacrificing control to outsiders or the pressure
of repaying lenders. The fees and royalties are used to fund
operations at corporate headquarters, train and support
franchisees, market and advertise the brand, improve the quality
of goods or services, and build the brand in the marketplace.
For franchisees, benefits include: a higher chance of success than
in a sole proprietorship; shorter time to opening; initial training
and ongoing support; assistance in finding an optimal site; the
selling power of a known brand; lower costs through group
purchasing; use of an established business model; national and
regional advertising campaigns; customer lead generation
through websites and centralized call centers; and a network of
peers (fellow franchisees) to provide advice and moral support
Short Notes

through a company intranet, annual conferences, and franchisee
associations; and, increasingly, assistance with securing funding.
14. Financial strategies to support growth
The pressure created by financial resources obstructs growth. To
overcome pressure on existing resources, the entrepreneur could
acquire new resources. However, the acquisition of new
resources can be expensive, whether in terms of the equity sold
or the interest payments from debts. Therefore the strategy is to
manage the existing resources in a better way. These financial
control strategies include:

12. Record keeping
13.

15. E- entrepreneurship
An e-entrepreneur is defined as an individual willing to take the
risk of investing time and money in an electronic business that
has the potential to make a profit or incur a loss.

The creation of new ventures plays a decisive role for the social
and economic development of every country. This is due to the
fact that with each new venture created a market participant
comes into existence which potentially stimulates the
Short Notes

competition and drives the economy further. The formation of
new companies within the Net Economy (e-entrepreneurship) is
therefore in spite of the current market turbulence a key topic
for every national industry. Consequently, e-business must not be
ignored by decision makers; its technological advantages are
obvious and therefore will most certainly lead to new business
processes and business concepts as well. Because of those
circumstances there will be a solid basis for new venture creation
within the net economy in the future too.

Examples:

E-bay and Google
16. Creative Process
Early model of Creativity propose by Wallas. He divided the
creative process into the four distinct phases of Preparation,
Incubation, Illumination and Verification.

1. Preparation involves gathering knowledge and
understanding the problem.

2. In the Incubation phase, the subconscious takes over,
mulling over the problem without deliberate
concentration.

3. Illumination occurs as a sudden flash of light, when the
solution has been discovered.

4. Verification consists of evaluation of the newly formed
idea.
Short Notes

17. Opportunity analysis
Opportunity identification The process by which an
entrepreneur comes up with the opportunity for a new
venture.
The ways to identify opportunity analysis is:
Opportunity assessment
Creation and length of opportunity
Real and perceived value of opportunity
Risk and return of opportunity
Opportunity versus personal skills and goals
Competitive environment
Though most of the entrepreneurs do not have formal
mechanisms for identifying business opportunities, some sources
are often fruitful: consumers and business associates, members of
the distribution system and technical people. Often consumer is
the best source of ideas for a new venture.
Many other entrepreneurs have identified business opportunity
through a discussion with a retailer, wholesalers or manufacturer
representative.
Technically oriented individuals often conceptualize business
opportunities when working on other projects. Whether the
opportunity is identified by using input from consumer, business
associates, channel members or technical people, each
opportunity must be carefully screened and evaluated.

Short Notes

18. Updating a plan
You should be updating your business plan every month, every
week and every day; whenever things change, you update your
plan. And things always change. You should update your
business plan when you're alone in the shower, when you're
caught in traffic on the way to work, and when you're walking
alone. Update your business plan when listening to customers
and other managers.
While this might seem like chaos, it's actually the opposite; the
constantly-updated business plan is what makes order out of
chaos. It becomes a long-term planning process that sets up your
strategy, objectives and the steps you need to take by constantly
being aware of the results.

Extra Contents

EXREA CONTENTS
Entrepreneurial Skills and Competency Requirement
Every role has a skill and competency requirement. For a teacher
or a performing artist, for example, it is the skill to communicate
that plays a decisive role in their effectiveness besides, of course,
their knowledge. For a craftsman or an artist, it is the creativity
and skill in the chosen craft. Talking about entrepreneurship, you
need to have a knack for spotting business opportunities and
creativity and innovation in developing and delivering a product
or service.
It is hoped that after reading this chapter you will actually see the
potential of a career in entrepreneurship, and experience a desire
to start a venture of your own .At the same time there might be
certain inhibitions in your mind whether such a task is feasible,
practical and sustainable. For every task one needs certain
competencies. In this Blog post, we would be talking about the
entrepreneurial competencies. Whereas competencies reinforce a
persons perception of feasibility of a career option, there also
has to be the will and urge, a perception of the desirability. Is it
not paradoxical that entrepreneurship has a key role to play in
economic development, yet there are very few who ever think of
it as a career option? And, it is not that they may be lacking in
skills. What one often finds is the lack of motivation!
Competencies equip you with the knowledge of how to do
(know-how) of entrepreneurial behavior and motivation
provides answers to why to do (know-why) of entrepreneurial
behavior. You would also be learning about why people opt for
entrepreneurship. The question of why entrepreneurship is also
linked to reward expectations, be these financial, social status or
psychological satisfaction. In case of entrepreneurship,
Extra Contents

successful performance of the venture itself becomes a reward
for the entrepreneur.
As noted in above, every career draws on the competencies of an
individual. Some of these competencies may be general and
some peculiar to the chosen career. You may understand
competencies to mean abilities and skills. However, we would
desist from calling these as personality traits as such a
conceptualization only reinforces the mistaken belief that
entrepreneurs are born rather than made. We believe that
recognition of these competencies as abilities and skills makes
entrepreneurship as a teachable and learnable behavior. In this
blog post we would discuss about a set of entrepreneurial
competencies developed by the Entrepreneurship Development
Institute of India (EDI) Ahmadabad. These competencies were
identified by a thorough research procedure based on critical
analysis of the case studies of the successful entrepreneurs. We
also annex a questionnaire that you can use to evaluate your
score on each of these competencies. We would also suggest how
you might improve on your scores.

ENTREPRENEURIAL COMPETENCIES IDENTIFIED
BY THE EDI

Initiative- acting out of choice rather than compulsion,
taking the lead rather than waiting for others to start.
Sees and Acts on Opportunities- A mindset where one is
trained to look for business opportunities from everyday
experiences. Recall oranges example.
Persistence- A never say die attitude, not giving up easily,
striving Information seeking continuously until success is
achieved.
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Knowing- Knowing who knows, consulting experts, reading
relevant material and an overall openness to ideas and
information.
Concern for High Quality of Work- Attention to details
and observance of established standards and norms.
Commitment to Work Contract- Taking personal pains to
complete a task as scheduled.
Efficiency Orientation- Concern for conservation of time,
money and effort.
Systematic Planning- Breaking up the complex whole into
parts, close examination of the parts and inferring about the
whole; e.g. simultaneously attending to production, marketing
and financial aspects (parts) of the overall business strategy (the
whole).
Problem solving-Observing the symptoms, diagnosing and
curing.
Self-confidence- Not being afraid of the risks associated with
business and relying on ones capabilities to successfully manage
these.
Assertiveness- Conveying emphatically ones vision and
convincing others of its value.
Persuasion- Eliciting support of others in the venture.
Use of Influence Strategies- Providing leadership.
Monitoring- Ensuring the progress of the venture as planned.
Concern for Employee Welfare- Believing in employee
well being as the key to competitiveness and success and
initiating programmes of employee welfare.

The self-administered questionnaire in the annexure to this
chapter would help you measure where you stand on these
competencies. Given that these competencies matter in
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entrepreneurial success. EDI estimates that development of these
competencies can substantially (as much as 33%) bring down
incidence of business failures/industrial sickness.

DEVELOPING COMPETENCIES

Awareness, they say, is the first step towards improvement
and success. Now that you are aware of the critical
competencies for entrepreneurial success and also have a
measure of your scores on these, it is appropriate that you also
think in terms of how to improve your scores. Suppose, you find
yourself lacking in the competency- opportunity spotting, you
may start practicing to think like an entrepreneur (See Box
entitled Thinking like an Entrepreneur). With just a little
change in perspective, the world changes for you. Similarly you
may work on the other competencies as well.

The role of Prior Work Experience

Project work, summer training as well as prior work experience
hone the entrepreneurial competencies. Whichever area you
might decide upon to start a venture be it a school, restaurant,
garments, courier service, interior decoration etc. along with the
educational qualifications, if any, you need to acquire practical
experience in that field. For it is while you get on the job
training/experience that you familiarize yourself with all aspects
of the venture. You can learn as to how to handle customers,
suppliers, and government officials, financiers. You will also be
able to acquaint yourself with the nitty-grittys of the production
process, bottlenecks like power disruptions, delay or non-
availability of raw materials and a host of other things. Day to
day dealings of the various facets of business will equip you to
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handle your own venture deftly, with confidence and with
minimal of costly mistakes.

Distinguish Between Traditional Managers and the
Entrepreneur

Features Managers Entrepreneur
Primary Motives

Want promotion and
traditional Corporate
rewards. Power-
motivated.
Wants freedom, goal
oriented Self-reliant, and
self-motivated

Time Orientation

Respond to quotas and
Budgets, weekly,
monthly, quarterly,
annual planning
Horizons, the next
promotion or transfer.
End goals of 5-10 year
growth Of business in
view as guides. Takes
action now to move the
Next step along way.

Action

Delegate action.
Supervising and
Reporting take most of
energy.
Gets hands dirty. May
upset Employees by
suddenly doing their
work.
Skills

Professional training.
Often business School
trained. Abstract
analytical tools, People-
management and
political skills.
Business acumen than
managerial Or political
skill. Often technically

Risk

Careful

Like moderate risk.
Invests heavily, but
expects to succeed

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Market Research

Has market studies done
to discover needs and
guide product
Conceptualization.

Creates needs. Creates
products that often cant
be tested with market
research-potential
Customers dont yet
understand them.
Talks to customers and
forms own opinions

Failure and Mistakes

Strives to avoid mistakes
and surprises. Postpones
recognizing failure.
Deals with mistakes and
failures as learning
experiences
Family History
Family members worked
for large Organizations.
Entrepreneurial small-
business, professional or
agricultural Background.
Problem-solving style
Works out problems
within the system.

Escapes problems in
large and formal
structures by leaving and
Starting his own.

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Creating a Business Culture

Governments can also show that they value private enterprise by
making it easier for individuals to learn business skills and by honoring
entrepreneurs and small business owners. Policy makers can:
Offer financial incentives for the creation of business
incubators. These usually provide new businesses with an
inexpensive space in which to get started and services such
as a copier and a fax machine which most new businesses
couldnt otherwise afford. Often business incubators are
associated with colleges, and professors offer their expertise.

Enhance the status of entrepreneurs and businessmen in the so-
ciety. Governments might create local or national award
programs that honor entrepreneurs and call on business leaders
to serve on relevant commissions or panels.

Entrepreneur skill and strategies
Under following circumstances entrepreneur choose to grow or
not grow his venture
Market factors that affect growth
Size and characteristics
Competition
Intellectual property rights
predictability
Management factors that affect growth
Ability to adapt and change business overtime even if the
business is successful.
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Various growth stages are:
Start up success
Initial growth
Rapid growth
stable and maintenance
Problem of growth
Inability to respond to the business environment
Framework for growth
Scan the access the environment
Plan the growth strategy
Hire for growth
Create a growth culture
Build a strategy advisory board
Strategic Skills
An entrepreneur must have a vision for the future. He / She must
be able to see the bigger picture and know where he/she is going
with everything. Setting clear objectives and effective strategic
are essential for running a business successfully.

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Managerial Skills
Planning
Organizing
Staffing
Directing
Controlling
Human Relations Skills
The entrepreneur needs to have the ability to manage people as
well. He / She have to build good relationship with all workers
and needs to know who to employ in his / her business.
HR issues
Faulty Recruitment
Wage Structure
Industrial Relations Strikes
Low Productivity

Financial Skills
The success of a business is measure by the profit it makes. It is
essential that the entrepreneur has knowledge about managing
income and costs. The long-term future success of the business is
also determined by the time of investment the business makes
and how successful the entrepreneur manages those investments.
Financial issues
(a) Capital structure
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(b) Capacity to bring capital
(c) Poor resources management
(d) Costing/pricing policy
(e) Over-dependence on concessions & subsidies
(f) Diversion of capital
(g) Over-trading
(h) Unfavorable gearing
(i) Lack of tax planning

Marketing Skills
The challenge in marketing is that the entrepreneur must know
how to promote and advertise his/ her business and products. It is
essential for him / her to have good knowledge about the market
and what things the customers want and prefer.
Marketing issues

(a) Over-dependence on a single customer
(b) Marketing myopia
(c) Sales &distribution set-up
(d) Market feedback/ research
(e) Marketing strategies

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Causes of success and failure of entrepreneur:

An entrepreneur may sometime become successful and sometime
becomes failure. There are some causes of such success and
failure.
They are noted below:
1. Selection of business: It is an important aspect. That means
an entrepreneur has to determine what type business he is
going to start. Form various points of view the feasibility of
the business should be tested.
2. Proper planning: Proper planning me s also important. For
planning, planning premises like political, economic, social
premised should be considered first. The steps of planning
should be followed properly.
3. Initial capital: if the initial capitals are not an optimal level
the organization would fall. So whether the enterprise is big
or small the initial capital should be sufficient enough.
4. Determination o0f market demand: Through research the
demand in the market should be identified. Both for long
term and short term it should be considered.
5. Marketing of product: If the promotion policy, channel of
destitution, transportation is not good the enterprise would
fall.
6. Education and experience: One of the important tasks of
the entrepreneurs is to select right person for the right post
because the success of an enterprise depends on the right
selection of employees.
7. Joint initiative: One may have much money and another
may have more merit. Through joint initiative it can be
balanced. But sometime for joint initiative misunderstanding
arise, or sometimes corruption occur which may result in
fall of enterprise.
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8. Employment: Recruitment and appointment should be
properly done. Those who have specialized skill should be
appointed to that specialized job. Inefficient, corrupted
employees may be responsible for fall of business.
9. Location of business: Site selection is an important
factor. While starting a new business, an entrepreneur should
think about the location of the business. In this case, many
factors should be considered such as availability of raw
materials, proper communication system, availability of labor,
marketing facilities and so on.
10. Qualities of management: The management must have a
minimum quality to success otherwise it would fall.

These are the common causes for which one enterprise may
become successful and another may fall.

Needs for growth
survival
economies of scale
owners mandate
expansion of the market
latest technology
prestige and power
government policy
self sufficiency
Forms of growth
Organic and
inorganic
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Growth strategies
Organic/internal growth
strategy
inorganic/external growth
strategy
intensive merger
diversification joint venture
modernization

While making a business plan keep the following points in
mind:
the target audience
business strategy
competition
be realistic
involvement of people for the creating the business plan
you should keep your business plan factual and brief
Basic start - up problems
selection of the industry
product selection
choice of factory site
forms of organization
problem of construction
supply of raw materials
financing the unit
recruitment and training of staffing
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trial run
marketing
gestation period
Forms of organization
solo proprietor
partnership
company
co- operative
clearances and approvals

Strategy Planning

Strategic planning is the formulation of long range plan for the
effective management of the environment threats and
opportunities in the light of venture strength and weakness.

It involves:
venture mission
specifying achievable objectives
developing strategies
setting policy guidelines

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Importance of Strategic Planning

1. Build the distinct and sustainable advantages.
2. Creates a dynamic strategic effort on company
performance
3. Creates a unity and consistency of action in an
organization.
Steps required in preparing strategic plan
1. Examine the internal and external environment of a
venture:
The first steps in strategic planning are examine
the environments of the venture.
Identifying its threats and opportunities.
2. Formulate venture long range and short range
strategies:
The formulation of plans according to the examination of
environment is necessary.
3. Implement the strategic plan:
After the formulation of strategy then it must be
implemented in order to take it into action.
4. Evaluate the performance of the strategy:
After implementing the strategy then the performance of
the strategy is evaluated and necessary changes are made.

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5. Take follow up action through continuous feedback:
The final step is strategic planning is follow up action and
necessary changes through continuous feedback.
Entrepreneurship as economic development tools:
capital formation
employment creation
increasing productivity
balanced development
equitable distribution
export promotion
industrialization
technology transfer
opportunities for an entrepreneur(better life style, profit,
satisfaction and value)
The elements of entrepreneurial strategy are as follows:
1. power distribution
2. people
3. decision making
4. idea generation
Techniques of idea generation are:
brainstorming
focus group
problem inventory analysis
research and development techniques

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Major factor affect the Development of Entrepreneurship
Lack of a viable concept
Lack of market knowledge
Lack of technical skills
Lack of seed capital
Lack of business know how
Complacencylack of motivation
Social stigma
Time presence and distractions
Legal constraints and regulations
Monopoly and protectionism
Inhibitions due to patents

Potential Hazards
People tend to think that office environments are not very
hazardous. However, hazards do exist in the office and can result
in health and safety problems for workers.
There are many potential occupational health and safety hazards
in offices. However, with workplaces following appropriate
health and safety procedures, many of these hazards are
eliminated or avoided.
These are among the ailments most frequently reported by
computer operators. These vision problems can result from:
improper lighting
glare from the display screen
poor positioning of the screen itself
Copy material that is difficult to read.
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Office equipment is not the only cause of hazards in the office.
Other potential hazards include:
Manual handling (lifting or moving objects)
Office temperature and humidity
Noise and/or vibration
Air quality and ventilation
Office decor
Workplace conditions
Electrical hazards

Long Questions

Long Questions
1. What is e- commerce? Explain the opportunities and
challenges of e-commerce in the context of Nepalese
business.
2. What are the various e-commerce strategies?
3. What is brainstorming? Describe the process of structured
brainstorming for generation of new business ideas.
4. What is business incubation? List and describe various
types of business incubations.
5. What are the potential hazards that should be evaluated in
the risk assessment section of business plan? How would
they differ for a retail chain and an insurance company?
6. Why is strategic planning importance to a new venture?
Describe the important steps required in preparing a
strategic plan.
7. Define entrepreneur as risk bearer and innovator with
suitable examples.
8. Why modern organizations want to introduce
entrepreneur culture in their system? Discuss.
9. Define entrepreneurial strategy. Discuss the importance
elements of entrepreneurial strategy.
10. Discuss the entrepreneurial process through which a new
venture is created by an entrepreneur.
11. Discuss briefly how the economic environment can affect
the entrepreneurship growth.
Long Questions

12. Why business plan fails? What are the things to be
considered to avoid the failure of a business plan?
Discuss.
13. Define business plan. Explain the components of a
business plan.
14. Discuss the importance of business incubators for new
start up.
15. Discuss some of the pressures an entrepreneur had to face
during the growth stage of his/her venture. Discuss.
16. Discuss in detail the different phases of the creative
process.
17. Define Strategic Alliances. Explain any three types of
strategic alliances with example.
18. What Strategic planning skills are required by an
entrepreneur? Explain.
19. Define entrepreneurship. Explain the roles played by
entrepreneurship in economic development of a country.
20. How does an entrepreneur differ from a manager of a
firm?
21. What is meant by intrapreneurs? Explain the
characteristics of intrapreneurial leadership.
22. Explain the main factors that affect the development of
entrepreneurship in the country?
23. Discuss the various methods of entrepreneurial entry into
international business.
24. Environmental forces influence the performance and
outcomes of entrepreneurship.Elaborate.
Long Questions

25. What are managerial skills and strategies an entrepreneur
would need during the growth stages of a venture?
26. What is family business? Discuss the common problems
facing family business. Explain briefly the ways of
dealing with such problems.
27. The entrepreneurial decision process involves a a
movement from an individuals present life-style to
forming a new venture. Explain.
28. An entrepreneur and a manager have different strategic
orientation while making business decision. Clarify and
explain.
29. Government can help a lot for the development of
entrepreneurship. Considering the statement explain how
the Government in Nepal is helping entrepreneurs.
30. An entrepreneur requires market, operations and
financial information for preparation of a business plan.
Evaluate the statement.
31. What is hitting the growth wall? How can a business
avoid it?

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Overview of Entrepreneurship

1 CAMAD COLLEGE (SIXTH SEMESTER)

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