Entrepreneurship management

BBA (505)
ASSIGNMENT
Summer 2016-2017

Saurabh Bhalla (BBA 2)

1405009510
Q1) Explain the different types of personalities of entrepreneurs
defined by Zahorsky.
Ans : different types of personalities of entrepreneurs by zahorsky :
1. The improver: an improver operates business with high
degree of integrity and ethics and focus on continuous
improvement.
2. The advisor: An advisor entrepreneur tends to be focused o
consumer needs, and they provide high level of assistance
and advice to customers.
3. The superstar: Charismatic entrepreneur is a superstar.
Business is centered around the superstar who is very
competitive in nature.
4. The artist: An entrepreneur is reserved but creative in
nature, like an artist. Creativity based businesses succeed
with this types of entrepreneurs.
5. The visionary: Some entrepreneurs are completely driven by
their own vision and values. They have curiously to
understand and improve the world around them.
6. The analyst: Some have tendency of investing their time in
fixing problems in a methodical way. Where problems are of
structured nature like that in science, engineering and
software development this type of entrepreneurs succeed
well.
7. The fireball: An entrepreneur who brings energy, optimism
and life in the environment is called the fireball. These
people set higher goals and achieve them, but are often
impulsive.
8. The hero: when will and ability to lead is so strong that a
person can take the business through any challenge
9. The healer: An entrepreneur who has ability to nurture and
develop people, who usually have user claim, bring harmony
in the organization and act as healer.
Q2) what do you mean by business plan? Explain its
significance.
Ans) Business plan:
Business plan is a written description of a business. It is
comprehensive in nature and comprises details like promoters,
existing and proposed products and services ,know-how and
techniques intended to use ,potential markets and customers,
proposed strategies for the marketing of the products and
services ,details of manpower ,available or planned
infrastructure , sources of supply input items, organizational
structure, estimated costs and revenues, estimated investment
 in fixed assets as well as working capital and finally projection
financing needs.
A well prepared business plan server several purposes such as:
1. Integrated perspective: A business plan gives multi-year
integrated perspective of business. The integration of
product and technology understanding, understanding of
marketing mechanics and organizational interplay
collectively gives a bigger picture through a business
plan.
2. Develops common understanding: Due to integration, The
understanding among partners as well as among
employees at all the level would increase the efforts of
coordination and reducing the chances of
misunderstanding.
3. Identifies resource requirements: Although a business
plan begins with he assumption, it passes through a stage
where resources requirement planning is also done. That
helps the business identify the sources of resources, their
availability and pricing, among others.
4. Gives a comprehensive estimates of funds requirement: All
assumptions together would identify the short-term as
well as long-term funding gaps.
5. Facilities funds raising: one can plan out working capital
financing and project financing requirements ahead of
time and avoid crisis situation. Timely action for fund
raising would reduce the cost of capital.
6. Getting manpower: In case of a new startup firm, a
business plan often helps in luring suitable manpower
 resources. Getting the right type of human resource is a
very important for a start-up.
Q3 ) Explain harvesting strategy.
Ans)
Harvesting strategy:
Harvesting of a business though becomes necessary when in the
process of bankruptcy it is realized that the business is not visible.
At this time business is not harvested or sold voluntarily but
through court intervention. If there is no buyer of the business-as-is
then assets are sold one by one and the proceeds are used for
repaying the dues in the order of priority as laid down by the law.
This is called salvaging. An entrepreneur may consider harvesting as
exist strategy and consider either direct sale, management buy-out
or employee stock option plan
1. Direct sale: Mergers and acquisition is often easy when a firm is
publicly traded firm. If the firm is in a partnership form, one or
more of the co-owners may consider selling their interest to
the remaining partners .In case of a sole proprietorship and
partnership forms the valuation of business is difficult.
Therefore, businesses are sold based on some thumb rules like
,x-times three last years’ average sales revenue or y-times are
location and industry specific based on the common
understanding of business scope in that location.
Payment terms are important to negotiate and not just the
payment amount .Though the entrepreneur may like to be
relieved instantly from all obligations, it may not be desirable
 nor could be possible in the interest of the business, buyer and
employees of the business
2. Management buy-out: An entrepreneur may like to reward
some key and important management team members by
inviting them to acquire and own the business rather than
selling it to any outsider. In this case both the sides are
operating from the full knowledge perspective and therefore,
easy deal is possible with full trust and confidence. Moral
obligations of both the sides will continue for quite some time.
The management buy-out has one more important advantage ;
the relationship with employees, lenders, customers and
suppliers remains almost unchanged and therefore, continuing
business effectiveness is easy.
The offer for management buy-out may be by invitation. Before
the invitation is extended an assessment of fair value becomes
essential of business can remain central while exploring their
options for raising money for the new management team. Tax
implication cannot be ignored in determining payment terms
3. Employee stock option plan: Stock option plans are designed to
retain employees for longer period. It is also called sweat
equity, because it is made available if employees ‘sweat’ for
some period. ESOP is a variation of making employees part-
owners of business, so that they work harder to create firm’s
value. As the term indicates, ESOPs are possible when the
shares are traded on the stock market, though ESOPs are
possible when the shares are traded on the stock market,
though ESOP’s are designed for unlisted firms also.
Expert services are available in the market for designing and
managing employee stock option plan, otherwise managing it
on one’s own may be difficult and controversial. Price of stock
option, determining how many stock should be given in the
option , timing of making it available, vesting period of stock
option, option to buy more than entitlement, and several other
highly complex issues are involved in designing the stock
option plans. ESOP’s would work if the firm is actually able to
create value that reflects in increasing share price, otherwise it
will not work as an incentive. Some employees may view it as a
deferred payment of salary, with risk built into it.