1D TERM EXAMINATION [JUNE-2015] SIXTH SEMESTER [BBA-306] ENTREPRENEURSHIP DEVELOPMEN’ \ MM: 76 ‘Timers Hours : Noto: Attempt any five questions. @.1. Write short notes on the tela and Entropreneurship c Pe vityis the eed that inapiros entroprencurship, innovation isthe process Ans: Ifcreat hip: This was Schumpoter’s conclusion when he wrote about the economic Meare erenetr roe onterprise and entrepreneurship. According to him innovationjdoes ire rae 1. Central to the process is the entrepreneur. It is they who Ricerca and generates new opportunities. Until imitators foree prices and cobts into conformity the innovator is able to reap profits and disturb equilibrium. Sometimes innovation involves generating something from nothing. However, innovation is more likely to result from elaborating on the present, from putting old things together in new ways, or from taking something away to create something simpler or better. Peter Drucker believes that innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned and capable of being practiced, Entrepreneurs need to search purposefully for Lhe sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation, Drucker, therefore, believes innovation ean be practiced systematically. Firms that Practice innovation systematically search for change then carefully evaluate its potential for an economic or social return, Change provides the opportunity for innovation to make an economic return, Mintzberg (1983) defines innovation as ‘the means to break away from established Patterns, in other words doing things really differently. Therefore, simply introducing a new product or service that has customer's willing to buy it, is not necessarily innovation, Innovations have to break the mould of how things are done-Tb really innovate Min‘sberg says that ‘one engages in divorgent thinking aimed at innovation; the other is convergent thinking aimed at perfection’ strenhe innovation ean, of course, be of varying degrees of uniqueness. Most innovations introduced to the market are ordinary innovations, that is, with little uniqueness or technology. As expected, there are fewer technological innovations and breakthrough innovations with the number of actual imnovations decreasing as the technology involved increases. Regardless of its level of uniqueness or technology, each innovation (particularly the latter two types) evolves into and develops toward commercialnation chrough one of three mechanisms: the government, intraprenourshia or industrial organization, Earlier, we defined innovation as the process of doing new things, tis important to ize the innovation more focus on action not-conceiving new ideas only. When people have passed through the Realization and Validation stages of creativity process, they may have become inventors, but they aré not yet ‘innovators.Sixth Semester, E intrepreneurshiP Development ight -i mers and markets, requires insight into custO™ST® A Tes aleg 7a | 2-2035 ‘To innovate ef ; i i is not, ‘ into what i posible and what mob and TO he saa tit i dition. To exploit an rhelped by good luck. What is Migr it is not a sufficient cont Tal ability and establishing a growth bus” th of personal character, man! ior scare olen Entrepreneurshij js A Qn. ee of. eatteprenas eracalssly in the small enterprises fail ‘Ans: Alt problems and barriers like: | due ta ok of market knowledge «Lack of technical know how « Lack of seed capital + Lack of business know how + Complaceney-lack of motivation and individual spirit + Unfavorable family ground * Lack of Education « Lack of attitude and training ‘ Influence of Gender, Caste, Custom. + Inadequate infrastructure facilities. * Lack of transportation and communication facilities. + Unavailability of raw material. # Absence of regular supply of power. + Absencevof Ideal Market conditions. * Corruption in administration. * Unstable state government. * Legal constraints and regulations * Monopoly and protectionism Many entrepreneurs may lack managerial skills, marketing capability, or financial . Fesources. Their inventions are often unrealistic, requiring significant modification to be marketable. In addition, entrepreneurs frequently do not know how to interface with all the necessary entities, such as banks, suppliers, customers, venture capitalists distributors and advertising agencies. sr ta ia mee of, jallstheve difficulties, entrepreneurship is presently the most new enterprises, . il ee gap between science and the marketplace, creating calrepreneariol itd bringing new products and services to the market. These crnouie bas ang ics significantly affect the economy of an area by building the the employment of ite oe oe Given its impact on both the overall economy and even more of a focal iit ie itis surprising that entrepreneurship has'not become Q1.(©) Vent in economic development : as ciao capital i ‘ aie m venture ane gps of Funding for a new or growing business. It usually company in 't® Venture capital, the vente ze in building high risk financial Thi ig hee fr eau in the Pa firm gives funding to the startup ‘commonly found and softw, in hi rare, in high growth technology industries like biotech‘A person who for a venture capi 2 that are owned by a limi partner in the portfolio, a university endow partnership. Q.1. (d) Entrepreneur LP. University {BBA}-Akash Books ‘ital is a venture capitalist, deals in venture capi {tal firm. The firm ted partner ments and pensio! and Intrapreneur nd individual investors or othe n funds) are limite nd the Intraprel 2015-3 and usually works typically has one of more investment portfolios ship. The venture cap italist is often a general er institutions (particularly d partners in the limited ' neur might seem the same words g their spelling and ‘ans: The terms Entrepreneur 4) been shortly gleaned i including but both the terms have much differences incl Garetaratos ‘The differences between these two terms haye below: Differences Entrepreneur Intrapreneur i i is dependent on Dependency | Anentrepreneur is ‘An intraprenuer is be independent in his the entrepreneur, ie. the owner. operations. i * ; Raising of | An entrepreneur himself Funds are not raised by the Funds raises funds required for Intrapreneur. : the enterprise. Risk Entrepreneur bears the risk | An intraprenuer does not fully involved in the business. bear the risk involved in the enterprise. Operation | An entrepreneur operates from | On the contrary, an intraprenuer out side operates from within the organi- zation itself. Orientation | Anentrepreneur beginshis | An intrapreneur sets up his business with a newly set up _| enterprise after working someone enterprise. else’s organization. Experience | As an entrepreneur establishes | An intrapreneur establishes his new business, so he does not | business after _ gathering possess any experience over the | experiences through working in business. the other organizations. Both the entrepreneur and intrapreneur are innovators and both perform the function of organisation and management. But the contexts within which the two operate and the degree of risk they bear are different. To sum up the basic differences we could say firstly entrepreneurship involves huge amount of risk while there is no personal risk involved in case of an intrapreneurship. Secondly an intrapreneur is dependent on the organization in which he is working while an entrepreneur doesn’ work in any confines, hence independent in every task he undertakes. While companies admire an intrapreneur who is an independent thinker, being too independent could cause problems. The biggest difference between intrapreneurship and entrepreneurship,according to Pinchot, is that an intrapreneur has to deal with authority figures. z Intrapreneurship (entrepreneurship within an existing business structure) caf.also bridge the gap between science and the marketplace. Existing businessés have the financial resources, business skills, and frequently the marketing and distribution systems to commercialize innovation sticcessfully. Yet, too often the bureaucratic structure, the emphasis on short-term profits, and a highly structured organization42015 Sixth Semester, Entrepreneurship Development Ai : i leveloy inhibit creativity and prevent new products and businesses Sa ces cere ier Corporations recognizing these inhibiting factors and the it in their organizations, innovation have attempted to establish an intrapreneurial spirit se ipecduatatand the In the present era of hyper competition, the need for net Piotr Ti ae intrapreneurial spirit have become so great that more al ont SE ee developing an intrapreneurial environment,often in the form of stra (SBU ) ‘i In the new competitive environment, itis necessary to grow out of a mindset that think only of control. Organisations have to learn to treat their employees note as mere implementers of decisions, but as entrepreneurs thus, intrapreneur who can all contribute to the growth of the company. But entrepreneurial Intrapreneur Entrepreneur he operates within the organizational environment. He operates outside the organizational environment. He transforms an idea into reality by focussing on innovation and creativity in the internal organisational environment. He se business opportunity, obtains the necessary inputs and starts a business operation He brings about change in the existing state of equilibrium of organisation's operations. brings an organisation into existence. Once the business enters stagnation, he entrepreneurship within large organisations. He starts a smal! business and grows it to a large business house. 82 freedom is more than just the decentralisation or delegation of work. Gifford Pinchot III suggested that well- established companies should learn to make use of the entrepreneurial talents within to avoid stagnation and decline. Intrapreneur introduces new products, services and which enable the company to grow and succeed in a changing environment. What is, therefore, needed to grow a system and an organization culture within a large organisation that would allow the executives to operate like entrepreneurs. These persons are driven not by monetary gain but by a deep desire of personal achievement. Therefore, companies should provide such people with adequate financial resources and the autonomy necessary for the development and applications off their ideas. Pinchot suggested the creation of a system which will provide selected executives a status within the corporation similar to that of an entrepreneur in a society. Such people are ‘intra-corporate entrepreneurs’ or ‘intrapreneurs’. QL (e) Franchising Ans: Franchising 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, ,,, 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LP, Univeraity-{BBA]-Akash Books 2016-5 ho brand namo, oporating ayatom and ofigoing tl your assets in a aystem to Authoe Mtam aro leanved to uso the brand namo and ‘support, You and evoryono in the syst rating systom. . aria Gaskasd relationship is a joint commitment by all franchivoos to got and keop customers, Legally you aro bound to got and keop thom using tho proscribed ‘rketing and oporating systoms of tho franchisor. = To ra at in franchising you must undorstand the business and legal ificati relationship with the franchisor and all tho franchisees, Your Tet bs an goth with other franchisoos and company managers to market the brand, and fully use the operating system to got and keep customers. Other franchisees and company operated units are not your competition. The opposite is true. They and you share tho task of establishing the brand ag the dominant bound in all markets entered and reinforcing the customers’s familiarity with and trast 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 insures repeat business for everyone. Increasing the value of the brand namo 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. Ifyou 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. Q.2. Discuss the role of an entrepreneur in the economic growth of a country? Describe how entrepreneurship brings socio-economic development of a country? Give an example. Ans: The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic’ activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development: of an economy is discussed in a systematic and orderly manner as follows. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilising the idle. savings of public. They employ their own as well as borrowede-n016 Sixth Semester, Entrepreneurship Development yeroitives for sotting up their enterprises. Such type of entrepreneurial activities load tw vuluo addition and creation of wealth, which is very essential for tho industrial and economic development of the country. he as nee eeeale Employment Opportunities: Entrepreneurs provide ‘ea elvalonat seal oe yPlesment to the unemployed which isa chronic problem of both onieseltaat ee it ; the setting up.of more and more units by entropronouts, time pasvea, cheyaitferseale numerous job opportunities are created for others, An Opportunitice to many weerPtises grow, providing direct and indirect employment economic development of the nation, ee Rciinal dinner Rogional Development: Entrepreneurs help to remove areas. The growti of ele eeting up of industries in loss developed and backward Dublic benefits Tike ong ees nd business in these areas lead to a large numberof eects insport, health, education, entertainment, ete. Sotting up ve Industries lead to more development of backward regions and thoroby promotes balanced regional development. (# Reduces Concentration of Economic Power: Economic power is the natural outcome of industrial and business activity, Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in tho growth of monopolies, In order to redress this problem a large number of entrepreneurs to be developed, which will help reduce the concentration of economic power amongst the population. (5) Wealth Creation and Distribution: It stimulates equitable redistribution | of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. (6) Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this | way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. (6) Improvement in the Standard of Living: Increasé in the standard of living of the people is a.charactoristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in Jarge scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which rosults in tho improvement of their standard of living. (7) Promotos Country's Export Trade: Entrepreneurs help in promoting a country's oxportstrado, which is an important ingredient of economic development. ‘They produce goods and services in large scale for the purpose earning huge amount of foreign oxchange from oxport in order to combat the import dues requirement. Hence Import substitution and export promotion ensure economic independence and dovelopmont. ' (8) Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an | ontorprine ia oatablished in accordance with the changing technology, it induces iTAs me HOO ke GZERAB aap Sr) 10. Univerntiye (INRA }-AKanh Booka 9018-7 dackwvard and forward Linkagoe which atinulate the process of aoonomio development in the country, (®) Facilitates Overall Developments Nntreprencury aot a catalytic agent for whieh results in chain reaction, Onee an enterprise (a eatabliahed, the process ‘of induatriatioation ie aet dy motion, This init will generate demand for various typos ‘of unite required hy it and there will be ao many other unite which require the output ‘of this unit, This loads to overall developnyent of an area due to increase in demand ‘and setting up of more and more unite In thin way, the entrepreneurs multiply their entrepreneurial activities, thus creating al cnviqonment of enthusiasm and conveying ‘an impetus for overall dovelopment of the area, Butrepreneure Also Create Soolal Change Through their unique offoringy of new goods and Hervicos, entrepreneura break avway from tradition and indirectly aupport freedom by reducing dependonce on obsolete ystems and technologies, Overall, this resulta in an improved quality of life, groater morale and economic freedom Por example, the water supply in a waterssearce rogion will, at times, foree people to stop working to collect water, This will impact their business, productivity and income, Imagine an innovative, automatic, low-cost, flow-based pump that can fill in people's home water containers automatically, Such an installation will onsure people are able to focus on their core jobs without worrying about a basic necessity like carrying water, More time to devote to work moans economic growth, ‘ For a more contemporary example, smartphones and their smart apps have revolutionized work and play across the globo, Smartphones are not exclusive to rich countries or rich people either. As the growth of China's smartphone market and its smartphone industry show, technological entrepreneurship will have profound, long lasting impacts on the entire human race, Moreover, the globalization of tech means entrepreneurs in lesser-developed countries have access to the same tools as their counterparts in richer countries. They also have the advantage of a lower cost of living, so a young individual entrepreneur from an underdeveloped country can take on the might of the multi-million dollar existing product from a developed country. Q.3. (a) What are the essential qualities of an entrepreneur? Explain in details. Ans: The success of an enterprise new or old depends upon the qualities or characteristics of an entrepreneur or entrepreneur. In order to be successful, an entrepreneur must possess certain qualities which are unique of its kind. If we go through the business history of India, we come across the names of Tata, Birla, Modi, Dalmia and others who started their business with small size and made good fortunes. This is possible only because they possess all the entrepreneurial qualities. McClelland has identified these qualities or characteristics or features of a successful entrepreneur as “an individual with technical competence, risk-taking, high initiative, good judgment, intelligence to analyse and solve problem areas, leadership qualities, confidence, positive attitude, high level of energy, creativeness, honesty, integrity emotional stability and fairness.” Robert D. Hisrich identified adequate commitment, motivation and skills to start and build some of the important qualities of an entrepreneur. Flexibility, good social behaviour, open mind and desire to take personal responsibilities will fit in the qualities of a true entrepreneur.weeds Aixth Semester, Entrepreneurship Development Home of (he important qualities or characteristics that are necessary for a syocoastil entrepreneur are discussed below ; 1, Desive to Hxcel The firat and foremost quality an entrepreneur should possess vetor to a burning desire tq excel, The entrepreneur should always engage in competitions with self imposed standards with himself to beat his last best performance, According to Me Clelland, this high achievement motive strengthened Nim to aurmannt the obstacles, suppress anxieties, repair misfortunes and devise expediants, Nhe entrepreneur must have a strong desire to be a winner, 2, Hand Work: Entrepreneurs who successfully build new enterprises possess an intense level of strong determination and willingness to work hard. They possess a capacity to work for long hours and in spurts of several days with less than normal amount of sleep, Through their hard work and intense desire to complete a task or solve & problem or overcome hurdles, they can able to achieve the never ending goal of excallanee, 4, Self Confidence; Entrepreneurs must have confidence and belief in themselves to achieve their desired objectives, They strongly believe that they can beat any one in the field, They do not believe in status quo, rather they believe that the events in {heir life ave self-determined and have little belief in fate. 4, Initiative: An entrepreneur must have initiative seeking personal responsibility for actigna and use the available resources for optimisation of objectives. They take full credit for the auccess and assume full responsibility for the failure of the enterprise, 5, Moderate Risk-Taker: An entrepreneur must be a moderate risk taker and Jearn fiom failures, The successful entrepreneurs are neither high risk takers, nor gamblers, They work in between the two extremes. They take moderate challenging risk to attain moderate returns which are. influenced within their abilities and decisions, 4, Innovative: An entropreneur must be innovative and creative. Through his innovative ideas and creative thinking an entrepreneur can be able to engage himself in the analysia of various problems and situations in order to deal with them. An innovative entrepreneur introduces new products, develops new method of production, discovers new market and reorganises the enterprise. 7, Motivation: An entrepreneur should have a strong motivation towards the achievement of a ask and must be able to exert considerable efforts in getting things done by others, He should be a person who likes working with people and has skills in dealing with them, He has to motivate people to act, through his interpersonal skills. 8, Optimistic: Entrepreneurs do not believe that the success or failure of a new business venture depends mostly upon luck or fate or external uncontrollable factors. They are highly optimistic about the success of the enterprises. They use positive knowledge to support their thinking. They are rarely negative. They always look at the brighter side of the situation, They are never disturbed by any internal or external threat to their business or intermittent problems in accomplishing their goals. ®, Analytical Ability: Entrepreneur must be realistic in their approach. They should not be affected by the personal likes and dislikes. At the time of crisis, they must select exports rather than their friends and relatives to solve the problems. They must analyse the problem in detail before taking any decisions. 10, Mental Ability: Mental ability refers to the inner strength of an entrepreneur which helps him to reach his goal. It is that ability which helps him to quickly respond to difficult situation. It consists of intelligence and creative thinking of an entrepreneur.LP. University-[BBA]-Akash Books 2015-9 Through this ability, entrepreneurs are able to adjust themselves with the changing business environment, 11, Communication Ability: An entrepreneur must be well-versed with the art of communication. It is that skill through which both thé sender and receiver understand each other and are being understood. Entrepreneur are required in many Situations to influence customers, employees, suppliers, creditors, and government and make them think in his way and act accordingly. An entrepreneur who can effectively communicate and convince the above people will be more likely to succeed than the entrepreneur who does not. 12, Flexibility: Entrepreneurs should be flexible in their decisions in the sense that they should not be very rigid in the decision making process. If the situation demands a change in the decision that will be beneficial to the enterprise, then after analysing the pros and cons of the decision, the entrepreneur should revise or modify or change the decisions. 13. Independence: Successful entrepreneurs do not like to be guided by others. They prefer to work in an environment free from interference. They like to be independent in the matters of decision making of their own business. They want to be their own masters and resist to be pigeonholed. 14, Leadership: An entrepreneur must possess good leadership qualities to become a successful entrepreneur because leadership is the important aspect of entrepreneurship. The entrepreneur must have an ability to lead so that he ean induce the people to work with confidence and zeal. It is an aid to authority and helps in better utilization of manpower. 15. Good Human Relations Ability: Entrepreneurs must have the abilities to maintain and establish good relations with customers, employees, suppliers, financiers and other people related with the business to run it effectively and efficiently. Emotional stability, tactfulness and warm human relations are some important qualities which bring success to an entrepreneur. An entrepreneur who maintains good human relations is much more likely to succeed in his business than the individual who does not practice such relations. . Q.3.(b) What is Entrepreneurship Development Programme(EDP)? Why is EDP needed? Ans: As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among the people. In other words, it refers to inculeation, development, and polishing of entrepreneurial skills into a person needed to establish and successfully run his/her enterprise. Thus, the concept of entrepreneurship development programme involves equipping a person with the required skills and knowledge needed for starting and running the enterprise. Let us also consider a few important definitions of EDPs given by institutions and experts: Small Industries Extension and Training Institute (SIET 1974), now National Institute of Small Industry Extension Training (NISIET), Hyderabad defined EDP as “an attempt to develop a person as entrepreneur through structural training. ‘The main purpose of such entrepreneurship development programme is to widen the base of entrepreneurship by development achievement motivation and entrepreneurial skills among the less privileged sections of the society.” According to N. P. Singh (1985), “Entrepreneurship Development Programme is designed to help an individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role10-2015 Sixth Semester Natrepreneurahip Development » A Wheie Leripaey, effectively. It is necessary to promote this underaland iit of motives and ‘on entrepreneurial values and behaviour for thie purpowe,” Now, wo ean enally ofiag EDP as a planned effort to identify, iheuleate, develop, and puliah the éapabilitieg and skills as the prerequisites of a person to become anid bohave aa an entraprence Need for EDPst ‘That, entrepreneurs possess certain competencies or bratla, Thane comnpotericton of traits are the underlying chavacteriaties of (he entieprenetire whieh result In auperior performance and which distinguish auecedstiil entrepreneur from thé anmuccomaful ones. Then, the important question arises tei whore do these traite core from? Or, whether these traits ate in born in the entrepreneurs or van be fndueed and developed? In other words, whether the entreprenetire ate born or made? Nehavioural aolentiata have tried to seek answets to these questions A well-known behavioural scientist David ©, Medielland (1061 at Harvard University made an interesting investigation.cum-experinient into why Cortain soclation displayed great creative powers at particular periods of thelr hielory? What was the | cause of these creative bursts of energy? He found (hat ‘the need for achievement (n' ach factor)’ was the answer to this question, It was the need for achievement that motivates people to work hard. According to him, money: making was incidental, ft was only a measure of achievement, not ite motivation In order to answer the next question whether thie need for achievement could be induced, he conducted a five-year experimental atudy in Kakinada, Le, one of the prosperous districts of Andhra Pradesh in India in collaboration with Himall Industries Extension and Training Institute (SIB'T), Hyderabad This experiment is popularly known aw ‘Kakinada Experiment’, Under this experiment, young persons were selected and put through a three-month training programme and motivated to see fresh goals, One of the significant conclusions of the experiment was that the traditional beliefs did not seem to inhibit an entrepreneur and that the suitable training ean provide the necessary motivation to the entrepreneurs (McClelland & Wintor 1969), The achievement motivation had a positive impact on the performance of entrepreneurs. In fact, the ‘Kakinada Experiment’ could be treated ax a procurtor to the present day EDP inputs on behavioural aspects. In a sonse, ‘Kakinada Exporimont? in considered as the seed for the Entrepreneurship Development Programmon (EDPa) in a. The fact remains that it was the ‘Kakinada Exporimont’ that made people sabrecate the need for and importance of the entrepreneurial training, now popular ly = en EO to induce motivation and competence among tho' young proupective fx paral on this, it was the Gujarat Industrial Investment Corporation (CHIC) which, devela att time, started a three-month training programmes on ontroproncurship opment. Impressed by the results of GIIC’s this training progr h Government of India embarked, i i ene ne development, Siac nemmbarked in eth en a vewnn programmo on ontropronourship 7 n, there is no looking back in this front, B; 686 all-India and Sta feat ont. By now, thore are some te level institutions engaged i ing EDPs j fnpaciae wed in conducting EDPs in hundr ‘imparting training to the candidates in thousands be Till now, 12 State Governmen i 1 ts have established state-levol Ce: U Entrepreneurship Development (CED) or Institute of Entrepreneurship DectlagirartLP. University-{BBA}-Akash Books 2015-11 (IED) to develop entrepreneurship by conducting EDPs. Today, the EDP in India has proliferated to such a magnitude that it has emerged as a national movement. It is worth mentioning that India operates the oldest and large&t programmes for entrepreneurship development in any developing country. : The impact of India's EDP movement is borne by the fact that the Indian model of entrepreneurship development is being adopted by some of the developing countries of Asia and Africa. Programmes similar to India’s EDPs are conducted in other countries also, for example, ‘Junior Achievement Programme’ based on the principle of ‘catch them young’ in USA and ‘Young Enterprises’ in the U. K. Q-4, Explain in details the steps needed to start an enterprise. Ans: Starting a business means setting up a new enterprise and initiate its promotion in the market. The setup and initiation of a company is a foundational work done by a Promoter or an Entrepreneur. The entrepreneur has to take some crucial steps to start a business. Doing its Promotion is not an easy task. One mistake can create many problems for newly founded business. Therefore, the skills and qualities of a promoter matier a lot. The promoter must be a wise decision-maker. He must be sound with the technical knowledge and expertise required to run the business. He must also be energetic, hard- working and dedicated. After a new business is established, the promoter must promote his business idea in the market to attract investors. The investment will help to fund the activities of the new company. Once a company goes public, the promoter must give its charge to the newly formed Board of Directors (BOD) elected or appointed by its shareholders (real owners). He charges a commission for his services and gets paid either in cash or shares. Steps to Start a Business: 1. Discover @ Business Opportunity Decide the Size of Business ‘Decide Form of Business Ownership + 4 Select Location of Business + 5. Fix Capital Needs of Business + 8. Organize Physical Facies + T-Plana Good Layout 8. Proper Organizational Stucture 8. Manpower Requirements +10. Registration of Business +11, Starting the Business #12. Tax Planning Promotion of businesses is necessary for the industrial and economic growth of a cums, f ; The twelve steps to start a business are lengthy as well as time-consuming and usually involves following principal formalities: ' ‘The promoter must first discover a business opportunity. He must decide the size of the Business Unit.IZNG S920 Sactomt or, Kedaangpteracon tiy Ihoveenpiisers, Hes rinst deteriine the tori of businewn wmner ship, Hes ticish take wr opper enre vibiiie whuntinn, the loxation fh doe mnyany, Hes roast fiz the aenenard of empl renprired tv 10m eomnmneries aA, Gord subection wd irianiimtion if Yous yoyo taii\iiun i er eied He teat have 4 YH phen Weyer, Onganizational M1 Whit 4 newhud ty ren the \prsinawe omusADy. He must use sciennitic medias ty HAE the remuiremuns (Aunand) f AMichenk ire the | ‘1 Hetirrs initiation, ths Inveinunn ehwll tne a 0 wvsil ee shal) toe Baby reppwtwred Wn wv9i) 1» Suga) avn Alter registrntion, 4 Cmnpany Can srt ie operation in tal) wing Once under oper ation, the tox Viability of the onmpany muss be properly planned, , managed and cleared regularly ty miniitn vazus, Now let's discess wbirre saps to 0d, uy 9 new Wesinens, 1. Discover 9 business opportunity The Promoter first finds wut 4 businuss opportunity, Wu ean discover thie information from newspapers, maysrines, marked surveys, remaron, Me Wo may find out an opportunity ty Start a new business, Onnpany or enterprise, Expand or diversity the existing (id) business, Purchase another cnnyary, Enter a joint venture or foreign oMlatyration, be, All business opportunities look exellent in the beyinwing. However, Uhe promoner must investigate the possibility very exrebully, Me muss find out whether » sep forward would be profitable or not. He must study the unnpetition, future prospects of the business, demand supply position, availability of raw materials, ote, He must initinte r in this direction only if he ix emplately satisfied ? 2, Decide the Hie of Busines: The promoter has tn decide whether the business unit will be a small, mediusn or large sized. The size of the ompany depends on many factors such the as the economics of scale, future demand, finance He must wee that there is an optimum utilization of resources and maximum profit, 8, Decide Form of Business Ownership: The promoter must decide about the type or form of business ownership wheth Jer, partnership firm, a private company, public vompany, eouperti jon on welecting form depends on many factors such ax the sive of business, finance, tax, extent of lability, ete, 4, Select Location of Business: While choowiny the location of the company the Promoter must consider crucial factors like availability of land, electricity, water, nearness to market, trartsportation, the sope for expansion, and so on. Unascientific location affects the efficiency of business, It increases the covt of production and decreases the profitability. Therefore, immense care must be taken while selecting the region, location and site for the business unit, 5. Fix Capital Needs of Business Finance is the lifeline of a business, Ax a result, the promoter haw Ww decide about business capital requirements and also find out different sources of funding. While starting a new company the promoter has ty decide on: The financial needs of the enterprise, That is, the short-term and long-term capital requirements. y BOKLP. Univeralty=[NBA}-Akash Nook OL A Sources of finange like shares, debentures, loans from hanks and -other Anancial institutions, : ‘The cost of collecting fund and the returns on eapital invested, "The capital structure and appropriate time for obtaining finance, Sources of working capital, ete,’ 6, Organize Physical Facilittest Physical facilities mean the resourced used bo convert raw materials into finished products, ‘The promoter has to decide about the machines and equipment to be used, the process of production and the skilled and unakilled workers required far performing jobs. He must get the bosl-qualily raw materials, quality machines and skilled workers, Only then that he ean produce the beat quality yoodn 7. Plan a Good Layout: An arrangement of physteal facilities like machines, equipment and workers required for manufacturing Kod meann Layout, Plant layout is a scientific and ayatomatic arrangomont of machines and equipment within the factory. A good layout plan ensures minimum wastage, bettor uso of available space, minimize production loss, safety and security of workors, It aluo incroaniow tho profits of the business, Therefore, the promoter must have a good plant layout, 8. Proper Organizational Structure: A systematic organizational structure ks needed to conduct business smoothly and efficiently, The company is divided, according to functions, into various departments. After forming departments, the employees aro assigned their duties and shouldered significant. responsibilities, ‘Thin organization results in a superior-subordinate relationship, Organization structure is a pattern of relationships, and it is necessary to fix responsibilities on the employees. 9. Manpower Requirements: Business enterprise requires skilled and sem skilled workers to do factory and clerical jobs. ‘The success of any organization depends upon selecting a right individual for the right job, The promoter must use scientific methods for selection and trai (personnel) and match the right person with an appropriate job. 10. Registration of Business: Registering a new company is a critical step. It is not compulsory but is beneficial to due to the following main reason Registration gives a legal entity and status to the business, and so it ean enforce its legal rights. ; A registered business gets all government assistance and incentives Such a business can get licenses to import raw material. In short, after the registration, a business legally comes into existence and can enjoy all legal rights. 11. Starting the Business: After registration, the promoter can launch (start) the business. He brings together the physical facilities, begins the production process, recruits labor, produces and distributes goods. If everything goes well as per plan, then the business runs smoothly and starts making a good profit. 12, Tax Planning: The promoter must not avoid the tax liability of the business. Bettermanagement can legally minimize the tax obligation. Tax planning does not mean non-payment of tax. It means to reduce the taxes and the effect of the taxes on the business. ng manpower14-2015 Sixth Semester, Entrepreneurship Development ’ isi it choosit ‘Therefore, tax planning also influences the promoter’s decision about choosing the location, size, form and profitability of the enterprise. ae @55. Discuss the role of Start-ups in the eurrent economic sooner does the financial structure need to align themselves to finance Name a few financial institutions for funding the start-ups. ‘Ans: Technology, in both its evolutionary form and in its revolutionary form hos changed our lives drastically. In recent times, some of the products and services th "4 have transformed the way we live, such as Tablets, smart phones, the Internet, soci media etc, have been a result of revolutionary innovation. Great innovation led by visionary leaders have made this possible. The changes have been adopted rapidly, dnd most of us cannot really remember what it was like before we had these products and services even though they have seeped into our lives only recently. There are some products, or we can say by-products, of these revolutionary organizations that impact lives in a more non-obvious evolutionary way. We all well understand that a startup is always about an idea of how to impact @ customer, But, this is just where it all begins, What we don't always give credit (o is how stariupa have a fareaching ripple affect on the socio-economic fabric of the demography in which they operate. I got interested in exploring this ripple effect, and all the changes that some startups have brought in the cities, in their industries, in the global markets they operate in. And the changes have they brought in the socio- economic fabric of the societies in which they operate ~ the impact that they have treated beyond their customers. The questions to ponder around policy and progressive government to encourage startups is not discussed enough. India should have this on its agenda and perhaps Venture capitalists who fund startups should measure their success also by the greater impact metrics beyond returns. ‘Apart from delivering value to their customers, startups have a direct impact on the cities they make their homes. Infosys has impacted Bangalore and Alibaba has changed Hangzhou. What Google has done to Mountain View and how Microsoft transformed Redmond are case studies in themselves. ‘When these startups grew, they directly irnpacted growth of their cities as well. Employment opportunities for youth increased and new employment patterns came into picture. Demand and employment opportunities for engineers saw a steep rise. Local youth had new opportunities to pursue, and experienced talent started moving to these cities in pursuit of a challenging and high-growth career. Employees (in year X and today) Apple 14, 290+ (in 1994) & 11,7004 (in 2004) 98,000 Infosys 35, 000+ (in 2004) 1,60,400+ Alibaba 50 (in 2000) and 160 (in 2008) 26,845, Google 800+ (in 2004) 55,000+ ‘Microsoft 56,000+ (in 2004) 1,28,000+ ‘As demand for highly talentéd youth increased in these cities, they saw a surge in inflow of recent graduates. As more and more college graduates started settling down in these cities, lifestyle patterns and culture also saw a wave of change. ‘These startups not only created new industries and came up with more revolutionary technology over time, but also created a stream of millionaires in the city. When these startups went public, they became engines of creation not just for themselves, but for their employees and their shareholders.LP. University-[BBA}-Akash Books 2015-13 2 ae of finance like shares, debentures, loans from banks and -other financial The cost of collecting fund and the returns on capital invested. The capital structure and appropriate time for obtaining finance, Sources of working capital, etc.’ 6. Organize Physi iti yea eect rie materials info fasten ns facilities mean the resources used to ‘The promoter has to decide about the machines and equipment to be used. The process of production and the skilled and unskilled workers required for performing jobs. He must get the best-quality raw materials, quality machines and skilled ‘workers, Only then that he ean produce the best quality goods. 7, Plan a Good Layout: An arrangement of physical facilities like machines, equipment and workers required for manufacturing goods means Layout. Plant layout is a scientific and systematic arrangement of machines and equipment within the factory. A good layout plan ensures minimum wastage, better use of available space, minimize production loss, safety and security of workers. It also increases the profits of the business. Therefore, the promoter must have a good plant layout. 8. Proper Organizational Structure: A systematic organizational structure is needed to conduct business smoothly and efficiently. The company is divided, according to functions, into various departments. After forming departments, the employees are assigned their duties and shouldered significant responsibilities. This organization results in a superior-subordinate relationship. Organization structure is a pattern of relationships, and it is necessary to fix responsibilities on the employees. 9, Manpower Requirements: Business enterprise requires skilled and semi- skilled workers to do factory and clerical jobs. The success of any organization depends upon selecting a right individual for the right job. ‘The promoter must use scientific methods for selection and training manpower (personnel) and match the right person with an appropriate job. 10, Registration of Business: Registering a new company is a critical step. It is not compulsory but is beneficial to due to the following main reasons: Registration gives a legal entity and status to the business, and so it can enforce its legal rights. ‘Aregistered business gets all government assistance and incentives. Such a business can get licenses to import raw material. In short, after the registration, a business legally comes into existence and can enjoy all legal rights. 11. Starting the Business: After registration, the promoter can launch (start) the business. He brings together the physical facilities, begins the production process, recruits labor, produces and distributes goods. If everything goes well as per plan, then the business runs smoothly and starts making @ good. profit, ; : 12, Tax Planning: The promoter must not avoid the tax liability of the business. tax obligation. Bettermanagement can legally minimize the Tax planning does not mean non-payment of tax. Tt means to reduce the taxes and the effect of the taxes on the business.14-2015 Sixth Semester, Entrepreneurship Development. ‘Thorefore, tax planning also influences the promoter’s decision about choosing the location, sizo, form and profitability of the enterprise. Q.. Discuss the role of Start ~ups in the current economic scenario, How does the financial structure need to align themselves to finance the start-ups? Namo a fow financial institutions for funding the start-ups. Ansi Technology, in both its evolutionary form and in its revolutionary form, has changed our lives drastically. In recent times, some of the products and services that havo transformed the way we live, euch as Tablets, smart phones, the Internet, social media ote, have heen a result of revolutionary innovation, Great innovation led by visionary leaders hav e made this possible. The changes have been adopted rapidly, ‘and most of us cannot really remember what it was like before we had these products and servieos oven though they have seeped into our lives only recently There are some Products, or wo can say by-products, of these revolutionary organizations that impact lives in a more non-obvious evolutionary way. We all well understand that a startup is always about an idea of how to impact a customer. But, this is just where it all begins, What we don't always give credit to is how startups have a far-ronching ripple effeet on the socio-economic fabric of the demography in which they operate, I got interested in exploring this ripple effect, and all the changes that some startups have brought in the cities, in their industries, in the global markets they operate in, And the changes have they brought in the socio- economic fabric of the societies in which they operate - the impact that they have created beyond their customers, The questions to ponder around policy and progressive government to encourage startups is not discussed enough. India should have this on its agenda and perhaps Venture capitalists who fund startups should measure their success also by the greater impact metries beyond returns, Apart from delivering value to their customers, startups have a direct impact on the cities they make their homes. Infosys has impacted Bangalore and Alibaba has changed Hangzhou. What Google has done to Mountain View and how Microsoft transformed Redmond are case studies in themselves, ‘When these startups grew, they directly ithpacted growth of their cities as well. Employment opportunities for youth increased and new employment patterns came into picture. Demand and employment opportunities for engineers saw a steep rise. Local youth had new opportunities to pursue, and experienced talent started moving to these cities in pursuit of a challenging and high-growth career, Employees (in year X and today) Apple 11, 290+ (in 1994) & 11,7004 (in 2004) 98,000 Infosys 35, 000+ (in 2004) 1,60,4004 Alibaba 50 (in 2000) and 150 (in 2008) 26,845 Google 800+ (in 2004) 55,000+ Microsoft 56,000+ (in 2004) 1,28,000+ As demand for highly talentéd youth increased in in inflow of recent graduates. As more and more down in these cities, lifestyle patterns and culture These startups not only created new industries and came up with more revolutionary technology over time, but also created a stream of millionaires in the city. When these startups went public, they became engines of creation not just for themselves, but for their employees and their shareholders, these cities, they saw a surge college graduates started settling also saw a wave of change.LLP. Univeratty-[BBA}-Akash Books 2015-15 Market oap at [PO and today (approx) Tae to 1.6 billion 626 billion Cloogl 2004 318 million 96 billion tee + 29 billion 974 billion orwwoft 1086 600 million 384 billion Apple created 900 millionaires instantly as it went public. In 2007, 1000 Google comp! ne Wore Worth more than $6 million, While the exact number is not known, it saat Toasonably ‘assumed that Microsoft had created approximately 10,000 Microsoft millionaires ky the year 2000, Narayan Murthy, who co-founded Infosys, ushered in a now ora of wealth creation atong ils middle-class employees in India, Infosys was one of the frst companies in Indin to offor ity employees ESOPs (employee stock ownership plans) and made millionaires of them. In 2000, Infosys had almost 2,000 Tupeostnillionaires on its staff and over'200 dollar-millionaires. According to securities lings, current and former Alibaba employoos (non-founders) hold 26.7 per cent of the company, xxxBillion in value, Alibaba has single-handedly changed the trade scenario for small and medium businesses in China, a country with innumorable internal barriers to trade. The ease and confidence with which these SMBs can buy and sell goods has increased many folds in the last decade, Microsoft had created a new computing and industry revolution itself when it started scaling up. For most of the technologists and people in their 20s and early 308 today, the first operating system was Windows. Regardless of the fact that many hackers and technologist may gravitate towards other technologies later in their life, Windows as an operating system proved to be the alphabet using which people fed their inane curiosity of learning computers and got their first exposure to technology. Tt was the tool for beginners that helped shape the minds who are, today, a part of the technology revolution we sce in the Silicon Valley and the world around us. Had it been a different world, it would have been next to impossible to see people use technology and not be intimidated by it. It was not only about creating the next generation of technologists & future engineers by putting a computer in every house, but was also creating a new industry = the software industry. Due to its widespread use, a good amount of software built around the world is built keeping Windows OS in mind, thus making sure maximum number of people ean henefit by it. In very early days of Microsoft, more emphasis was paid to the hardware, and software was just something bundled with it. It started selling software licenses as individual entities, which further propagated this practice. This showed a new ray of hope to developers who could now sell their software individually without lining up to big corporations for support and begging them to bundle it with their devices. This led to creation of a different economy where software became the champion of technology delivery model for newer companies. Microsoft not only impacted the whole computing industry, but also created a new software industry that would go on to rule the world of technology. After gifting the world Bill Gates wanted to give bi a new industry, which would thrive in the coming years, ack to society as well. He started the Bill and Melinda Gates Foundation in 2000. ‘Today, itis the largest private foundations in the world. It had an endowment of 38 billion by last year. The foundation is extremely active and works for improving global health, policy & advocaey, runs multiple development programs and also has a concentrated US Program.16-2015 Sixth Semester, Entrepreneurship Development Shortly before Google went for an IPO in 2004, Larry Page and Sergey Brin, madg ttiving back @ company priority and proclaimed in their letter to potential investors commitment to “make the world a better place” by dedicating 1 percent of Google's profits, 1 percent of its equity and significant employee time toward philanthropig ‘aims. Though Google faced criticism in its early days of giving back to the society on: multiple grounds, it gave away $105 million in grants during 2012, plus $1 billion more in product donations to non-profits. Google was the Bay Area's top corporate philanthropist in 2010 and 2011, giving more than $20 million to local charities both years, According to the Chronicle of Philanthropy, it was the 12th-largest U.S. corporate cash donor in 2011 and 2012. Approximately $50 million of these funds were directed toward disaster relief, university research and community organisations in Silicon Valley, with $23 million dedicated to Google's Global Impact Awards, ‘The Infosys Foundation was started in 1996 by Infosys. ‘The foundation works in partnership with NGOs to help underprivileged rural communities in India in the areas of healthcare, education, culture, care for the destitute and rural development, Later in 2009, the Infosys Science Foundation, a not-for-profit trust, was started by Infosys and some members of its Board. ‘The Foundation instituted the Infosys Prize, an annual award, to honour outstanding achievements of researchers and scientists across six categories; Engineering and Computer Science, Humanities, Life Sciences, Mathematical Sciences, Physical Sciences and Social Sciences, each carrying a prize of INR 55 lakh. The award intends to celebrate success and stand as a marker of excellence in scientific research, Narayan Murthy was named a Global Humanitarian for his efforts in transforming the world through ideas, technology and charitable endeavours. Apart form the foundation's efforts, Narayan Murthy and his wife, Sudha Murthy, are known to be big philanthropist in their personal capacity, but usually tight-lipped about their personal giving. As India’s vibrant entrepreneurial ecosystem is emerging, it would do well to understand the role of startups and create support for them to succeed. As we see some of the Indian startup founders turning angel investors to support and encourage new innovation in India, we will surely see the ripple effect of their efforts in the long run, Governments should be well prepared to create a culture of startups to impact their cities, countries and citizens. A start up business does not have an established financial track record or history of operations that: projects the business as potentially successful. A business plan should convince the readers that the business will be successful. It should largely be able to substitute the historical information that does not exist in the plan. This will : help to obtain finance and also convince prospective employees to work in that business. The plan should include personal financial information in lieu of the historical information that is provided by the ongoing business. This personeal financial information can include the following details: * The amount and source of funding that the owner has to invest in the business. * Specific details regarding personal assets that will be used in running the business, * Other documents that may be required to obtain outside fi personal income tax returns for the last few years, The plan should also provide projected profit and loss st fatements and projected cash flow budget worksheets. The estimated financial statements should include any, inancing, such asLP, University-[BBA]-Akash Books 2015-17 caine ink at al be incurred prior 10 opening the business. These documents 2 er expects to achieve through business operations. Some of the common start up expenses that must be included are: + Professional fees i + Regulatory charges + Security deposits on rented space ‘ * Computer equipment and cash registers. Finance is one of the essential requirements of an enterprise. Without adequate funds, no business can be developed. In India, Central and state governments are Promoting number of financial institutions to bring in the industrial development in the country. Some of the important financial institutions are: 1. Industrial development bank of India (IDBI) 2. National bank for agriculture and rural development (NABARD) 3. Export import bank of India 4, Small industrial development bank of India (SIDBD 5. Industrial investment bank of India 6. Industrial finance corporation of India (IFC!) 7. Industrial Credit and Investment Corporation of India (ICICI) 8, Industrial Reconstruction Bank of India 9. Indian banking system and commercial banks 10. State Financial Corporations 11. Life Insurance corporation of India (LIC) 12) Unit Trust of India (UTD Q.6. Discuss how an entrepreneur can bring more value addition to his enterprise by innovaton. Give an example of an innovation driven enterprise in support. : Ans: A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and thereby initiates and sustains the process of development. Embarking upon ‘new combinations’ of the factors of production - which he succinctly terms, innovation - the entrepreneur activates the economy tr « new level of development. ‘Schumpoter introduced a concept of innovation as key factor in entrepreneurship in addition to assuming risks and organising factor of production. Schumpeter defines entrepreneurship as “a creative activity’. An innovator who brings new products or services into economy is given the status of an entrepreneur. He regards innovation as a tool of entrepreneur, The entrepreneur is viewed as the ‘engine of growth’, He sees the opportunity for introducing new products, new markets, new sources of supply, how forms of industrial organization or for the development of newly discovered Tesourees. The concept of innovation and its corollary development embraces five funetion: * The introduction of a new product with w! introduction of a new quality of an existing product, © The introduction of new method of ‘production that is not yet tested by experience i .d by no means be founded upon a the branch of manufacture concerned, which nee . diseovery scientifically new and can also exist in a new way of handling commodity commercially, yhich consumers are not yét familiar ora | 16-2015 Sixth Semester, Entrepreneurship Development . ‘The opening of new market that is a market on to which the particu lar bra: of manufacturer of the country in question has not previously entered, whether or this market has existed before, = + Conquest of a new source of supply of raw material and + The carrying out of the new organisation of any industry. Schumpeter is the first major theorist to put the human agent at the centre of the process of econornie development, He is very explicit about the economic functic of the entrepreneur, The entrepreneur is the prime mover in economic development, his function, to innovate or carry out new combinations. Schumpeter makes z distinction between an innovator and an inventor. An inventor discovers new methods ‘and new materials, On the contrary, an innovator is one who utilises or applies inventions and discoveries in order to make new combinations, An inventor is concerned with his technical work of invention whereas an entrepreneur converts the technical work into economic performance, An innovator is more than an inventor because he does not only originate as the inventor does but goes much farther in exploiting the Invention commercially, a t New Product New Method Innovation New Market New Source of supply 7 Caries cut a men organization ee J Entrepreneurship st Sustainable Economic Development Fig. Innovation Theory of Entrepreneurship Wilken had added the concept of the changes that an entreprencur brings: Innovation « Expansion of goods, products. « Productivity of | factors of production such as finance, labour, material. + Innovation in production such as, technology, Process changes and increase in human resource productivity. « Innovation in marketing area such as th market and new Markets ‘To Schumpeter, entrepreneurs are individuals motivated by a will for power; their special characteristic being an inherent capacity to select correct answers, energy, will fpermind to overcome fixed talents of thoughts, and a capacity to withstand social opponition, The factors that contribute to the development of entrepreneurship would ily be a suitable environment in grasping the essential facts. .e composition of the market, size of the essentialLP. University-{BBA]-Akash Books 2015-19 It can be noted i : Mgeten coats ast te eras main figure, the “innovating entrepreneur” has deena ore be rise modem capitaliem. The entrepreneur has been seems one-sided att puts ton mach empharis on movative function. ignores the risk taking and organs su h emphasis on innovative functions. It ignores the dinette ae, Beco eyed nkreprancrship, ha ctrepronen hes not only The ng wen tee ero ignored the risk-taking function, a ive function ¢2 entrepreneur, Schumpeter rien anc tk taking function, whic 1 equally important When an entrepreneur pike combination of factors of production, there is enough risk involved cation eee these lacking, the theory supports the “enterprising spirit” of seperrenent to innovate, It is the act that endows resources with a new eapacity to Sead beris taliag”™ a er says, “Innovation, indeed, creates a resource. It endows it with Creeieaie chamfer views are particularly relevant to developing countries Lae be encouraged. The transformation of an agrarian economy n ‘economy required a great deal of initiative and changes on the part of businessmen and managers, _ Q.7 (a) In the light of “ Make in India” call of the Prime Minister of India discuss the role of an entrepreneur. ‘The Make in India Vision: Manufacturing currently contributes just over 15% to the national GDP. The aim of this campaign is to grow this to a 25% contribution as seen with other developing nations of Asia. In the process, the government expects to generate jobs, attract much foreign direct investment, and transform India into 2 manufacturing hub preferred around the globe. The logo for the Make In India campaign is a an elegant lion, inspired by the ‘Ashoka Chakra and designed to represent India’s success in all spheres. The campaign ‘was dedicated by the Prime Minister to the eminent patriot, philosopher and political personality, ‘Pandit Deen Dayal Upadhyaya who had been born on the same date in Why PM wants to Make in India: The Prime Minister called for all those associated with the campaign, especially the entrepreneurs and the corporates, to step and discharge their duties as Indian nationals by First Developing India and for investors to endow the country with foreign direct investments. The Prime Minister also promised that his administration would aid the investors by making India @ pleagant experience and that his government considered overall development of the Pistion an article of faith rather than a political agenda. He also laid a robust Faindation for his vision of a technology-savvy Digital India as cov:plementary to Make [rindia. He etressed on the employment generation and poverty alleviation that would inevitably accompany the success of this campaign. Entrepreneurs play a significant role in economic development of = countey He promotes the prosperity of a nation by his innovation ‘and dynamic leadership Skills. Bie ereates wealth, opens up employment opportunities and fosters the other segments. ‘According to Harbison, entrepreneurs are prime movers of innovation, growth and as seth, entrepreneurship is a dynamic force. The role and significance of an entrepreneur are explained below : TT pringing Beonomic Growth and Prosperity: bovrenronntt bring economic ity i ion of employment opportunities, tivand prosperity in the country through generation n = tapital and ProsPih creation, increasing per capita income and GDP, improvement in Guay of life by raising the standard Ee living, growth of infrastructural facilities, frward and backward linkages in society, development ofbacke ard regions eno i George gilder sbserves, “The ‘heroic creat) ee atial cor economic well-being in a global ‘economy”. Baumback and20-2015 Sixth Semester, Entrepreneurship Development Mancuso write, “In underdeveloped nations, entrepreneurs often hold the key 1, economic growth for a whole society, So entrepreneur is not a dirty word or 2 fast back opportunist, but, rather the backbone of the capitalist system” 2. Brining Social Stability and Balanced Regional Development: Entrepreneurs play a crucial and unique role in bringing about social stability ang balanced regional development through absorption of workforce in industries, removal of poverty, improving health and education facilities, creating fair competition, equitable distribution of income, creation of social infrastructures, empowering women and weaker sections of the society and supply of qualitative goods and services Although entrepreneurs are criticized as self interested exploiters, Adam Smith. while recognizing that they do some good for society, partly reflected this view when be wrote in The Wealth of Nations: “In spite of their natural selfishness and rapecity, though they mean only their convenience, though the sole end which they propose from the labours of all the thousands they employ be the gratification of their own vain and insatiable desires they are led by a hidden hand, and without intending it, without knowing it, advance the interest of society”. 3. Innovator in Economic Growth: by bringing new ideas, combinations, products techniques, organizations, new markets, making full use of technical knowledge, balanced growth, systematic innovation, technological advancement, implementation of mechanical skills, an entrepreneur play very crucial role in encouraging entrepreneurship and economic development. Peter Drucker writes, “Just as management has become the specific organ of all contemporary institutions and the integrating organ of our society of organizations, so innovation and entrepreneurship have to become an integral life-sustaining activity in our organizations, our economy, and our society”. He further says that the emergence of a truly entrepreneurial economy is the most significant and hopeful event that have occurred in recent economic and social history. 4, Creation of Employment Opportunities: Entrepreneurs play a significant role in generation of employment opportunities by establishing new units in manufacturing, trading and service sectors, laying emphasis on small seale industries, utilizing the surplus labour force in varied industrial and/or service activities, upholding self-employment as a core objective. Entrepreneur integrates resources and technologies into profitable business ventures and creates job opportunities 5. Increase Productivity with Modern Production System: Play an important role in raising productivity. John Keudrick writes, “Higher productivity is chiefly a matter of improving production techniques, and this task is the entrepreneurial function par excellence”. Two keys to higher productivity are research and development and investment in new plant and machinery. But there is a close link between R & D and investment programmes, with a higher entrepreneurial input into both”. George Gilder in The Spirit of Enterprise said that: “Entrepreneurs are innovators who evoke demand’, They are makers of markets, creators of capital, and developers of opportunity and producers of new technology. They seek the unique product, the marketing breakthrough, the startling new, feature or the novel design. They change technical frontiers and reshape public desires. They create wealth and employment. They take exception to the received view that companies should be market led. They lead the market”.LP. University-[BBA}-Akash Books 2015-21 7.E entrepettrereneur Plays a Role of Catalytic Agont: As Josoph Schumpaer sys, changes and tran Sk is “creative destruction’. He destroys to create new things. He creator. Ralph H, 'smutes values, He searches change and responds to it. He is # change makes a hapa ae Jrrites in his book Realities of Profitability, “The entrepreneur ms , Wants pie ion, is no happening, no action, an ane et a is the growth man. Without him there is signinen menting and Mecting Local Demands: Entreproneurs also play arene role in augmenting local demands and meeting them satisfactorily. Towards technol Preneurs focus their attention to manufacture service through indigenous nology, skill, resources and experiences, : Social Stabity Economics Growth Regional Development Through Innovation Esonomice Growth Export ; Import Promotion | ~y | Substitution Role of Entrepreneurs increase in] + [hugmenting and Productivity Mesting Demand Catalytic Reinventing ‘Agent Entrepreneurial Venture Employment Creation Fig. Role of Entrepreneurs 9. Reinventing Entrepreneurial Venture: An entrepreneur work to reinvent his entrepreneurial venture. He knows that change and innovation is good for his organization. Paul Wilken observes, “Entrepreneurship is a discontinuous phenomenon, appearing to initiate changes in the production process and then disappearing until it reappears to initiate another change”. Zoltan Acs writes,"Entrepreneurs stir up the waters of competition in the market place. They are ‘agents of change in a market economy”. Q.7.(6) Describe various incentives that are provided to the entrepreneurs engaged in exports. i : ‘Ans: Export Incentives: The export incentives are the widely employed strategy for the export promotion with the aim to increase the profitability of export business. The bmportant export incentives in India, include, rebate of duties, cash compensatory Porvgome tax incentives. The export incentives are, however, observed by the en ppor ‘he compensation for the comparative i mittee, as more of tl snsatio aervaatages| acod by the Indian exporter than the incentives. The brief account of incenti ‘eh provide service to the first rational of export promotion that ane ston the eae for the high'domestic costs are as explained below, which cannpe onsidered by the entrepreneurs in improving thelr exports: ne uty Drawback: In order to avoid the incidence of commodity + Duty Exemption/Duty ‘orroms duties on the exports the scheme of Duty i oi 1 Teta — Tike, exci avback, ‘so as to make the exports more price competitive, which xemptiorintrepreneurship Development ise duties on inputs raise the cost Nd errlffect the competitiveness of exper the escalation in their cog, 22-2015, Sixth Semester, Ei is straight forward. Customs duties an fon in export industries and thereby production if exTporiere need to be compensated for : sh customs and excise duties. ; attributable to sw ion scheme had its origin in India during the Second plan, as ‘The Duty Bxehich had been enlarged and modified over the years. —s ¢ promotmnpted from the payment of duty while procuring inP\ P| are either eX?Tt rmediaries or, in cases where the duty is paid on the inputs, materials 6°14, Thus, under the duty drawback scheme, the exporters are reimburse duty is rer paid on the imported raw materials and intermediates and central exc for the 4"'ye domestically produced inputs entering into the export producti duties of the series of modification to the import policy for registered expo Beea ‘cularly with respect to the introduction of advance licensing system, which ha ‘etpled the exporters’ to make the imports of inputs without payment of the customs uty. However, the eligible exporters are entitled to the interest-free bank credit against the duty drawback applicable to them upto a period of 90 days or upto the time they realize the drawback, whichever is earlier. Similarly, with the application of MODVAT. a large number of the products, covered by the MODVAT, can be exporter in bond ang in that event, the duty relief in the form of drawback would be restricted only to basig customs and auxiliary duties suffered, if any, by the inputs. There are two types of the drawback rates, viz., all industry rate applicable tog group of the products and brand rate applicable to the individual products not covered by the industry rate. The all industry drawback rates are derived from the estimates of average quantity of value of materials or excisable materials used in the manufacturing of these goods, and the average amount of duties paid on the materials wasted in the manufacturing process. Such average industry rates are fixed by the Drawback Directorate in the Ministry of Finance * Income Tax Concession: Besides, the exemption/rebate of indirect taxes, a special fiscal treatment granted to the exports is the income tax concession according to which the earnings from the exporters are either partially exempted from income, tax, or taxed at a lower rate. Such income tax rebates have been provided to exportery in India since the early 1960s. * Awards: A number of awards have been instituted to encourage the exports ant to recognize the excellence in exports, for the varied categories of exporters, on thi basis of the certain specific criteria, such as, the development of market for product which has not been exporter previously, substantial increasing in exports, successfu introduction of new products, product development, successful break-through in th foreign markets where conditions have been especially difficult etc. | * Other Incentives: Some important incentives were terminated consequent | certain measures taken as the part ofthe economic liberalization which is out low: _(a) The Cash Compensatory Support (C.C.S): It is the cash subsidy sched designed for compensating the exporters for un-rebated indirect taxes and to provid the resources for product/ market development. The CCS enabled the exporter { increase the profit or to reduce the price content to the extent of the subsidy witha incurring a loss. With the devaluation of the Rupee in July 1991, the CCS 4 abolished. (6) Another important incentive was the 5 hmet A P ystem of Import i (REP) licenses, which were related to the F.0.B value of exports Te etLP. University i‘ 'y-1BBA]-Akash Books = as EXIM Scrip signitic, : tee aE 28 however, abolished win Modified the scheme. The EXIM April 1992,” “ith the introduction of the partial convert ip Scheme was, ty of Rupee since (c) The Intern; to make available ne Price Reimbursement Scheme (IPRS) was designed which was initially avanti ®4 inputs to the exporters at the international prices, the proposal to extend ree to the steel, was later extended to the aluminum with Engineering Products Rycptt®, 102 limits. The IPRS has been replaced by the Scheme. ports (Replenishment of Iron and Steel Intermediates) Q8 (a) Name a fe i engage ote Nae a epagenies of Government of India din promotion Ans: 1. Nati i : : a stena small industries corporation (NSIC) i Seale industries board ( SSIB) 3. Small industries development organization (SIDO) 4. Entrepreneurshi aoe - State Level Insti eee institute of India ( EDI) 1. Directorate of industries (DIs) 2. District Industries Centres (DICs) 3. State Financial Corporation’s (SFCs) . on ae Development / Investment Corporation ( SIDC/SIIC) . Stat industrial development corporation (SSIDC) 6. National bank for agriculture and rural development (NABARD) 7, Industrial development bank of India (IDBI) @. (b) Write a short note on market survey and demand analysis. Ans: Market survey: Definition: The study of the spending charaeteristies and purchasing power of the consumer who are within your business's geographic area of operation; a research method for defining the market parameters of a business. Market survey—where you actually speak to members of your target audience— are an important part of market research. You can choose to hire a company to do it for you, but conducting the interviews yourself will most likely give you a much better idea of the needs of your target audience and will provide you with insights that you might not otherwise have gleaned. If you're going the do-it-yourself route, you'll probably want to act as the focus group moderator. As the moderator, you'll want to encourage an open-ended flow of Conversation and be sure to solicit comments from quieter members, or you may end up getting all your information from the talkative participants only. Also, when ‘whether it’s a focus group, a questionnaire or a phone ing any type of survey, question ns picaag beers ‘on to customers who complain or give you negative articular attenti ; aa ey Pont need to worry about the customers who love your product or service, dee act ves who tell you where you're going wrong provide valuable information to help you improve. Telephone int potential customers. Prepare i : This is an inexpensive, fast way ‘to get information from teri ee a script before making the calls to ensure you cove all eH hone, so keep ject Te don't like to spend a lot of time on the phone, eee oOo Ne early or ded and brief. If you don’t have time to make the eae ij do it for you. it students to do it * : : SL aeeey eae Tfyou want to survey a wider audience, direst mail ean ye just the ticket.24-2015 Sixth Semester, Entrepreneurship Development oe i i covor letter, questionnaire and reply envelope, Keep questionnaires to a maximum | one page, and nsk no more Uhan 20 questions, Ideally, direct-mail surveys should by | simple, structured with “yes/no” or “agree/disagree” check-off boxes so respondents can answer quickly and easily. If possible, only ask for one or two write-in answers at most, Demand analysis: Companies use market demand analysis to understand how much consumer demand oxists for a product or service. This analysis helps management determine if they can successfully enter a market and generate enough Profits to advance their business operations, While several methods of demand analysis may be used, they usually: contain a revie: market which are: * Market identification * product niche * competition Ww of the basic components of an economic * Business eycle * growth potential Market Identification: The first ‘step of market analy: the specific market to target with new products or services, Companies will use market surveys or consunier feedback to determine their satisfaction with current products and services. Comments indicating dissatisfaction will lead businesses to develop ew produets or services to mect this consumer demand. While companies will usvally identify markets close to their current product line, new industries may be tested for business expansion possibilities. Business Cycle: Once a potential market is identifies what stage of the business eyele the market is in. ‘Three s cycle: emerging, plateau and declining, Markets in the em: consumer demand and low supply of current products or is the break-even level of the market, where the supply of demand. Declining stages indicate lagging consumer dem: supplied by businesses. Product Niche: Once markets and business cycles are reviewed, companies will develop a product that meets a specific niche in the market. Products must be differentiated from others in the market so they meet a specific need of eonreres demand, creating higher demand for their product or service. Many companies will conduct tests in sample markets to determine which of their potential product styles is most preferred by consumers. Companies will also develop their goods so thet competitors cannot easily duplicate their product, : While every market has an init goods can create a sense of u: specialized products are iPods personal electronics market and increased demand thi by consumers. This type of demand quickly increases allowing companies to increase profits through new consumer demand. Competition: An important factor of market analysis is determining the number $f competitors and their current market share, Markets in the emerging stage of the meaning a higher profit margin may sis is to define and identify d, companies will assess stages exist in the business erging stage indicate higher services, The plateau stage goods meets current market ‘and for the goods or services tial level of consumer demand, isefulness, which will increase or iPhones, which entered the rough their perceived usefulness the demand for current markets, and products, fewer profits are achieved and o markets enter the declining business cycle, analysis to find more profitable markets. ompanies will begin to lose money. As companies will-conduct a new market