New

, ,
,
,
,

, -

.

-
:

,

,

3

20

-

-

-

15 20 ,
40

-

19

2014-15
, ,
' '
2014-15

, -

,

, ,

,
"
"

-
,
" ,
, -
"
": , : 100% "

...
...
... ...
2010 ...
...
Dheeraj Sarthak
March 21, 2016
, ,

- -
-, ,

,
|
- : ||
, ,

,
http://www.univexcellence.com/home/
,

, ,
,
, 100

,
12

2002-06

,
World is a class room and room is university

, ,
2010
?

,
,

-

- -

2011 6-12
The Power of 5 E E Lectures, E Learning, E Avdhan, E Testing &
E Query Solution.
- 5
- 10,000

40 20
,
-

40
20

-
( )

,

-
,

,

-
,
2014

Mumbai, Bangalore among cheapest cities in world

ShareComment
To get such articles in your inbox

Enter Your
Text size: A A A
Last updated on: March 10, 2016 19:27 IST
The EIU said India and Pakistan accounted for five of the 10 least expensive cities in the
world.
Image: Mumbai among world's cheapest cities.
Mumbai and Bangalore are among the cheapest cities in the world, according to a top Londonbased forecast group that named Singapore as the most expensive city.
The Economist Intelligence Unit (EIU) ranked Singapore as the priciest ahead of Zurich, Hong
Kong, Geneva and Paris.
Image: Bangalore 2nd among worlds cheapest cities. Photograph: Reuters
The EIU also said India and Pakistan accounted for five of the 10 least expensive cities in the
world.
London was sixth and New York seventh on the list that compares the cost of a basket of goods
across 133 cities, 'BBC News' reported.
Image: London was sixth in the list. Photograph: Reuters
The cheapest were Lusaka, the capital of Zambia, followed by Bangalore and Mumbai, the EIU
said.
The expense of cities are tabled by comparing them to the cost of living in New York.
Although Singapore was the most expensive, the cost of living there was 10 per cent cheaper
when compared to New York than was the case in the EIU survey a year ago.
Image: Singapore was ranked the most expensive city. Photograph:

Reuters
As cities coped with economic factors ranging from the strength of the US dollar and currency
devaluations to falling oil and commodity prices and geopolitical uncertainty, there was a
considerable movement in the rankings, researchers said.
"In nearly 17 years of working on this survey I cannot recall a year as volatile as 2015," said Jon
Copestake, an editor of the survey.
"Falling commodity prices have created deflationary pressures in some countries, but in others
currency weakness caused by these falls has led to spiralling inflation."
IDEA Cellulars New Campaign : Fuel Price Up by 70% 3G Price Down by 70%
HomeVoice & DataIdea CellularIDEA Cellulars New Campaign : Fuel Price Up by 70% 3G Price Down by 70%
Reported by Sanjay Bafna Idea Cellular, Telecom Ads Posted: July 10, 2012 at 6:27 pm 13
Idea Cellular one of the most aggressive operator in 3G marketing has come up with its yet another innovative
advertisement campaign which is recently thrown on digital space with new punch line Fuel Price Up by 70% 3G
Price Down by 70% !!.
The icing on the cake is depiction of the simplicity in Idea Cellulars refreshing new campaign as all earlier
campaign by the companys brand ambassador Bollywood star Abhishek Bachchan.
Idea Cellular has been in the front runner in its 3G campaign since its inception and has always brought out new
ways to showcase their products and service. In the recent past we have seen many catchy ideas transformed into
ads.
This time they are going to highlight that with the effect of inflation, the prices of everything going up over just
like Fuel Prices in India going up day by day and Idea Cellular pointing out it with new punch line Fuel Price Up
by 70% 3G Price Down by 70% !!.
The new campaign has been executed well as recently all 3G operators, including Idea Cellular slashed their
3G/HSPA data tariff to a new level of affordability as we shared on TelecomTalk.
At the end of the day, what really matters is the affordablity and availability of 3G services across the country and
whether people are really interested in migrating from 2G to 3G with the quite costlier 3G compatible handsets
and tariff as compared to 2G.However Idea also launches some 3G handset starting at Rs. 5850 to boost adoption
of 3G services among its subscribers in India.
What an Idea sir ji
Last updated on: July 14, 2009
For a long time, only those who spent hours in front of the television set, gorging junk snack food, qualified as
couch potatoes. It was an unhealthy lifestyle, a sure recipe for disaster.
Equally bad, it is now realised, is the lifestyle of those addicted to their mobile phones. It has made them forget the
virtues of a workout. The answer is to walk while you talk -- exercise and indulge at the same time.
This is the latest message from Idea Cellular delivered by its brand ambassador, Abhishek Bachchan.
Idea Launches Language Helpline

Expanding its Break The Language Barrier campaign, Idea will now facilitate day-to-day conversations in 16
different Languages.
Hitesh Ranot | Delhi | October 6, 2010
The idea to use the mobile phone to seek conversational help when away from home, as suggested by Sirji to the
four idiots in the new Idea advertisement, is now a reality! Idea has demonstrated that assistance on conversations in
different Indian languages can be made available on the mobile platform, by launching countrys first Language
Helpline which will offer conversational support to callers, in as many as 16 languages. Indeed, What an Idea
Sirji, in a multi-linguist country!
Any of the over 650 million mobile users in the country who have to move out of their homes for Career, Education,
Travel and other prospects in life; or need to communicate with people talking different languages in their own
surroundings, can now avail this unique service from Idea.
For instance, a Bengali speaking person who needs to have a conversation in Marathi, with a vegetable vendor or a
cab-driver in Mumbai, can just dial 9702012345 and seek assistance on Marathi. The caller needs to verbalise his
message and the same will be translated by the Idea Helpline agent, instantly on the phone. Input to the agent needs
to be given in Hindi or English only for translation in the desired local language.
Callers can call any of the 22 customer care helplines of Idea from anywhere in the country, to get assistance on the
language spoken in the circle where the call is being made. For eg: The Bengali caller in Mumbai can call the Idea
Helpline number of Tamil Nadu for assistance in Tamil if the need arises.
Announcing the launch of Language Helpline, Anupama Ahluwalia, Senior Vice President Marketing, IDEA
Cellular said, Our consumer research revealed an interesting insight that people struggle to communicate with
other fellow Indians when they move out to other parts of the country where a different language is spoken. Ideas
consumer oriented approach led us to the development of a unique and novel concept Language Helpline, to
offer real-time assistance on day-to-day conversations to those who need to communicate with local people in their
preferred language. The Idea Language Helpline is a demonstration of the power of mobile telephony in bridging
language barriers and will take the brand to a new level of consumer connect.
Ideas Language Helpline is available across all 22 telecom circles and in 16 Indian languages Assamese, Bengali,
Bhojpuri, English, Gujarati, Hindi, Kannada, Kashmiri, Malayalam, Marathi, Tamil, Telugu, Oriya, Punjabi,
Rajasthani and Urdu. Language assistance will be offered on the most spoken language(s) in the circle. The helpline
number is the Idea customer care number of that circle and can be accessed by Idea subscribers as well as any other
mobile user.
Ideas customer care IVR has been revamped to incorporate the Language Helpline. Callers seeking assistance on
language will be directed to the Language Helpline through the IVR menu in a user-friendly manner. A dedicated
team of agents who understand and speak the local language have been deployed to assist callers. A nominal charge
of 50 paisa per minute will be applicable for calling the Language Helpline.
Take a look at the list of all 16 languages and the Language Helpline numbers here:
Idea Cellular had earlier launched its Break the Language Barrier campaign, which suggests a Champion idea to
use the mobile phone to build bridges with people speaking different languages. Idea Brand Ambassador, Abhishek
Bachchan, features as a mute chaiwalah in the ad who conveys this idea without speaking a word. The Idea
Language Helpline is an extension of the campaign which is touching millions of Indians across the country.
-Latest Campaign Of IDEA Cellular Company With Tagline IINWe Are From IIN Running On Television
And Now Also Available To Download.
All Those Who Wish To Download This One Advertisement Song IIN We Are From IIN Then You Are At Right
Place. Here Below We Provided Its Complete Download Link On Which By Clicking You Can Download This
Song Easily.
- See more at: http://nitendra.in/2015/01/iin-we-are-from-iin-haryana-tv-ad-mp3-ringtone-download-2015-ideacellular/#sthash.hnZJ2zl1.dpuf
Idea Cellular's IIN: A successful campaign?
Beginning of this year, Indian TV was abuzz with the IIN ads. Now the question arises that was the campaign was
just an online meme or an actual success.Somrweeta Mukherjee | 11 June 2015, 11:57 AM IST
Newsletter A A
inShare6
Towards the beginning of this year, Indian TV was abuzz with the IIN ads from Idea Cellular. A teenage boy sitting
at his father's shop fulfills his dream of becoming an engineer taking help of IIN. A chef becomes a Master Chef,
opens his own restaurant and vows his success to IIN. A home-maker finds a way to realize her incomplete dream
through IIN. These are some of TVCs from the complete series that Idea had run to promote its Idea Internet
Network among people from different background, age group and interests.
They ran this campaign after the sweeping success of campaigns like 'What an Idea Sirji' and 'No Ullu Banaoing'
Idea Cellular was back celebrating data services in its latest campaign titled 'Idea Internet Network (IIN)'. And it was
just an attempt by Idea Cellular to 'democratize education' leveraging their Idea Internet Network platform, where
anyone can learn anything.
Decoding this campaign, S Subramanyeswar, National Planning Director, Lowe Lintas + Partners had said, "Most of
these success stories are coming against all odds. Limitations like lack of funds, time or even education isn't
dampening the spirits of these successful individuals. They always find out a way to navigate around their problems
and reach their destination. This campaign brings forth such stories of achievement which were made possible
through IIN."
Trolled!
IIN's bigger purpose was not only to make people learn new skills through live and uninterrupted content available
through its network, but to develop these skills into a hobby, business or career which ultimately brings prosperity in
their lives.
Immediately after the airing of the first TVCs, the social media backlashed the campaign with trolls on IIN.
While this article is being written, thousands of students wait for their admission at undergraduate colleges in
Engineering, Medical, and General Courses and many more. Now what if these students are asked to let go off their
dream college seats and ask them simply to join IIN (Idea Internet Network) which will be much easier and above
all cheaper. How does that sound? Ask this question to any of these thousand students and define this idea as nothing
but rubbish.
So, clearly Idea was not on its way to win accolades for this campaign unlike the previous cases. But did all these
social trolls stop Idea from extending the campaign? Apparently not! The campaign is running full-fledged with
more new TVCs being introduced.
As Dheeraj Sinha, Chief Strategy Officer, South & South East Asia, Grey, figures out "I think Idea's advertising has
always been targeted at the mainstream India. While social media may not warm up to communication such as this,
the people on the road may still connect with the brand's message. I would be wary of judging the campaign's
success by the response from the Twitterati alone."
Surely, the social trolls are not complimentary, but they do give away one fact that the campaign is not a 'I didn't
notice what you said' campaign," believes Manish Porwal, Managing Director, Alchemist Marketing and Talent
Solutions.
"It is a clutter breaking idea with a somewhat average execution. Few brands have been able to create value beyond
product benefits and Idea has consistently been amongst those. This idea helped catapult the brand as an advisor and
facilitator for the masses... akin to the Tata Sky campaign long back," he adds.
Losing Its Ground?
If 'What an Idea Sirji' reinforced and highlighted Idea as a brand, 'No Ullu Banaoing' had a sense of humour added
to which was a serious message of the usefulness of Internet. The current campaign, on the other hand, provides an
alternative to formal education and brings out the process of gaining knowledge.
Hence, there can hardly be any comparison between the three campaigns, which had three totally different agendas.
But with the kind of negative feedback received by the IIN campaign, does the brand stand to lose anything?
Jagdeep Kapoor, Chairman and Managing Director, Samsika Marketing Consultants, doesn't think the brand will be
harmed. "The objective of this campaign is different and the brand has moved from a lighter tone in the earlier
campaigns to a serious note trying to bring out credibility," he adds.
Neither the brand is suffering any face loss or is giving up to the highly-opinionated conversations on social media.
Rather, it is counting upon the positive feedback the campaign is receiving. "It is in fact a runaway success. At Lowe
Lintas, our communication efforts are always aimed at business effectiveness. How much did the idea succeed in the
market place is the only filter we use to rate a campaign's success or failure", says Subramanyeswar.
Reports suggest that post campaign, Idea gained 3 points on the Brand Track Index (BTI) score in both urban and
rural markets. BTI is a measure of brand's health that includes competition brands and the whole telecom category.
And a gain of 2 points is considered a significant success. This measure is widely acknowledged as a standard by all
the players in the category.
Moreover, in the 15 established circles, Idea had overtaken Airtel (the leader in the country) to take up the no. 1 slot
by a clear margin of 1 point. In urban areas, Idea had overtaken Vodafone on network, billing and customer care,
while it had widened the gap in rural areas on the same aspects.
So, clearly, the campaign is not an out and out dud. "As long as the marketing objectives are met through the brand
campaign, the campaign helps to evolve the brand successfully, though on a serious platform rather than the lighter
campaigns earlier," says Kapoor.
Similarly Sinha believes that although the execution is bit over the top, the campaign should still work. "Negative
feedback unless criticising straight forward the product and its promise, are good to have. They keep brand salience
high and conversations open with your consumer and prospect. Good publicity is actually the best one. However,
getting automatic brand salience and responses which are not ugly but zestful is always good too. To the least, it
means you are being noticed and are breaking clutter," he adds.
Our Take
It is true that this campaign has attempted to democratize knowledge and to a certain extent it has been successful
but to show a student becoming an engineer or a guy becoming a master chef, just by acquiring knowledge from
them, is an exaggerated effort and hence is open for debate.
Education is a tricky affair in India. While on one hand we have systems being made to make education easy, on the
other hand, education remains a distant dream for many.
It takes a lot of effort to build brains and that surely doesn't happen only with a good Internet network, and that too
in a country like India, where connectivity issue ranges from one corner to the other. So far, 'What an Idea Sirji' and
'No ullu banaoing' did convince us that an 'Idea can change your life', but with IIN, we are surely not going to spend
our monies on this. Sorry Idea!, you couldn't touch our lives here, forget about changing them.
What an Idea, Sirji! for a Green planet
HomeVoice & DataIdea CellularWhat an Idea, Sirji! for a Green planet
Reported by Sanjay Bafna Idea Cellular Last Updated: January 7, 2010 at 7:12 pm 18
As the planet faces hazards of global warming, and the world leaders debate the role
of developed and developing countries to save the Earth there is one simple solution that our very prudent and
popular Sirji! proposes this time. He advocates the message Use Mobile, Save Paper, thus have a green planet.
The talk here is about IDEA Cellulars new ad campaign which goes on air, today. After a successful series of What
an Idea, Sirji! campaigns with Brand Ambassador, Abhishek Bachchan, the leading mobile brand will now be seen
promoting the idea of mobile VAS usage for vast number of day to day activities, to save paper.
World over, millions of tonnes of trees get cut everyday to produce paper, leading to alarming rates of deforestation.
The new IDEA TVC showcases how the mobile phone can be used as an efficient tool to read daily newspapers,
generate e-bills, make payments and transactions, issue e-tickets and boarding passes; thereby saving tonnes of
paper everyday.
IDEA Brand Ambassador Abhishek Bachchan, playing the role of an agonized Tree this time, strikes the idea of
using mobile phone to save paper, and therefore, the greenery around him. As more and more people switch to their
mobile screens, from everyday usage of paper, the tree regains life and leaves the audience with a simple message
Use Mobile, Save Paper. The pan-India mobile brand will launch a nation-wide awareness campaign to spread this
message.
IDEAs new campaign will be extensively seen across TV, Print, Digital and
Outdoor media space during the next few months. IDEA plans to launch a range of Value Added Services which will
help customers access more information and utility services on their mobile phones, thus reducing dependency on
paper usage.
Speaking about the campaign, Mr. Pradeep Shrivastava , Chief Marketing Officer, IDEA Cellular said,
Environment as a subject touches all, but gets attention only at strategic forums. The common man gets to
contribute little towards the cause, due to lack of direction and ideas. Hence, IDEA Cellular has taken up the
responsibility of educating the 500 million mobile phone users in the country. If they start using the mobile phone
more judiciously, together we can make a significant contribution of saving paper, and therefore, the green cover
necessary for the health of the planet.
The new campaign from IDEA abides by the essential brand promise of providing a simple, fresh and imaginative
solution to a complex problem of the society. The new ad is sixth in the series of IDEAs campaigns with the popular
tag line What an Idea, Sirji!. The preceding campaigns Championing a world without caste; Championing a
world in which no one suffers from the disability to communicate; Education for All, Participative Governance,
and the last Walk When You Talk addressed subjects such as Caste War, Disability to Communicate, Education,
Democracy and Health, respectively. Now, Environment is IDEAs next big Idea!
Advertisement Campaigns
.
Site:
Virtual Learning Environment
Course:
Advertising
Book:
Printed by:
Guest User
Date:
Saturday, 5 March 2016, 04:16 PM
Table of Contents
Learning Outcomes
Introduction
Meaning and Definition of Advertisement Campaign
Elements of Ad campaign
4.1 Strategy
4.2 Big idea
4.3 Creative Execution
Advertisement Vs Advertisement Campaign
Advertising Campaign: A Technique for Integrated Marketing Communications
Advertisement Campaign Management
Advertisement Campaign Planning
Summary:
Exercises
Glossary
References
Subject: Commerce
Lesson : Advertisement Campaigns
Lesson Developer: Anita Mendiratta
College/ Department: Keshav Mahavidyalaya, Commerce, University of Delhi
Learning Outcomes
After you have read this chapter, you should be able to:
understand the meaning of ad campaign,
appreciate the need to understand elements of ad campaign,
understand the meaning of marketing communication,
conceptualize the concept of integrated marketing communication,
understand advertising campaign as a technique for integrated marketing communication,
differentiate between advertising and advertising campaign,
explain the management of advertising campaign,
appreciate the importance of process of planning in advertising campaign.
Introduction
The organizations produce goods and services and face competition to sell those products to their target customers.
They have to communicate the availability of the product, generate awareness among the consumers leading to
favourable purchase behaviour. At the same time, there are many mediums to communicate this marketing message.
Each medium provides an opportunity to the advertiser to communicate information about the goods and services. It
is up to the advertiser how efficiently he uses the various mediums. When the message is communicated
independently without synchronising with the other media, it will result in cacophony whereas a well-coordinated
unified message covering all the mediums results in campaign.
Value Addition 1: Pause & Think
Ad Campaign
Call your friends and make a group. Ask them to shout their names. What do you hear? Cacophony? Now,
tell them to shout your name at the count of two? What difference do you find? Is it clearer? It is because
there was a series of coordination in their voices that sounds unified. It was like a campaign with
integrated communications, a single minded unified message.
Figure 1: Click on the link below to view an example for Ad Campaign

Source: http://www.campaignindia.in/Article/327537,2012-campaign-100.aspx
Meaning and Definition of Advertisement Campaign
The advertisement campaign consists of two words, that is, advertising and campaign. We are very much familiar
with both the words as we commonly use these words in our day-to-day life. Lets explore the meaning of
advertising and campaign individually and then collectively.
Advertising is one of a tool of marketing communication that the advertiser can use to achieve their targets.
Advertising term originates from the latin word adverto, that is, to turn around. Advertising implies drawing
attention to something. In marketing context, it can be defined as- a paid for, non-personal communication from an
identified sponsor to communicate the information and to influence consumer behaviour. Advertisement is paid, that
is, paid for the time and space for the respective advertisement message. It is non-personal, implies that a single
message is not conveyed personally but easily transmitted to masses through various media at the same time. It is
because of this fact; there is a need to check the message and the way of communicating thoroughly before sending.
Now, we have to define campaign. Think about a brand of washing powder that comes in your mind. The highest
probability is of Surf. In the households of India, Surf is synonym of the washing powder. The loyal consumers
cannot think and convince of any other name. Do you remember any of the Surf ads? I am sure, you have heard of,
Surf excel he na and Kuch karne mein agar daag lage to ......dag acchhe he. Now, just give a minute to think how do
you remember this ad. It is because,
You have seen its video on television, heard it on radio and when you were reading a magazine, you had
seen various adverts too saying . 'daag acchhe he'. Each individual element communicated the message.
So, when you see the surf in a grocery store, you purchase it without realizing the number of times you
have been bombarded by these series of ads. Hence, there is a series of coordinated advertisement placed in
various media to influence the buying behaviour of the customer.
The catchy phrase of the ad, 'daag acchhee he', that uses the negative aspect and denotes that freedom
should be given and needed to be. The phrase adds a touch of positivity to the negative word 'daag'. This
part describes the theme of an advertisement. The ad supports that dirt is not bad rather it will help the kids
to explore the world and built their confidence. It builds around a theme of social adaptability of dirt by
portraying that if a person spoils his clothes while helping someone or making somebody happy-then better
spoil one's clothes, as the solution of 'daag' is readily available in the form of Surf. Especially showing
small children makes it attractive and a lesson for elderly people. The theme here is to give a message for
social and physical development of a child and freedom to do anything for helping others without caring for
dirt.
This unique ad with a theme when communicated through different mediums becomes a campaign.
Figure 2: Campaign of Surf Excel- Dirt is Good.
Source: http://upload.wikimedia.org/wikipedia/en/0/0e/Surf_Excel.jpg
From above discussion, we can define advertisement campaign as a series of correlated and coordinated ads based
on same theme, characters, jingles and placing them in various advertising media to communicate a message to the
target customer for a particular product for a definite period of time. In the given example, we can see that the same
theme is communicated to the audience by different media, that is, print and non-print media. The advertiser wants
to communicate the message to the target audience through ad campaign. It is imperative that each ad in the
campaign should and must reinforce each other and functions together to get the benefit of synergy effect. We
should understand the fundamental concepts related to the ad campaign that is discussed in the next section.
Elements of Ad campaign
The advertisement campaign is a series of advertisement with a common unified theme. This theme should be same
throughout the campaign, that is, all the ads should be based on single strategy to ensure coordination. For instance,
imagine one television ad of a brand stressing on quality and the other on radio saying it a cost effective one. All the
ads in the campaign should sell one big idea that should be novel to the campaign and all the ads in the campaign
should be creatively executed to present a holistic view of the brand. Therefore, a good advertisement campaign is a
combination of three things- a meaningful and compelling strategy, a fresh and unique idea for communicating that
message and dexterous and creative execution. If any of these elements is not in order, the message will be trashed
just as soon as it is seen, read or heard and will not be able to reach the target audience. According to Kruti Shah,
the question here is what message is to be communicated and how it is to be communicated;. The answer lies in
advertising strategy, big idea and creative execution. The strategy defines 'what' whereas big idea and creative
execution defines 'how'.
For instance, the Strategy of Fevicol brand is to reinforce its leadership position as the ultimate adhesive. The big
idea is to show the bonding power and its creative execution lies in the creative taglines, add on humour, storylines,
sound effects etc. All the print and non-print ads of Fevicol are well coordinated, based on same strategy with the
idea selling the bonding power and well executed on lines of humour and stories. Let's have a look at an ad of
Fevicol.
Figure 3: Click on the link below to the ad.
Source: http://files.coloribus.com/files/adsarchive/part_555/5551055/file/fevicol-adhesive-pole-small-33467.jpg
Pidilite industries Ltd launched its brand Fevicol in 1959, mainly for carpenters. This adhesive brand soon becomes
synonymous to adhesives. Many of its campaigns include a series of interesting ads like Bob Christo wrestling with
a chair made of Fevicol, a politician who is glued to his chair, a hen that lays unbreakable eggs, an overloaded bus, a
joint family that refuses to fall apart, and many more. The catch phrases of Fevicol are also equally popular, such as
'Dum Laga Kar Haisya, Zor Laga Kar Haisya', Chutki mein chipkaye, 'Fevicol ka Majboot Jod Hai, Tootega Nahi',
and 'Pakade Rehna, Chhodana Nahi'.
To start with, Fevicol had the boring ad of tug of war where two groups of people were trying to separate two pieces
of wood joined by Fevicol, and they failed. The ad was further extrapolated to 2 elephants trying to do the same job
that is the trademark of Fevicol. Then the Ogilvy and Mather made the Cannes award winning hen and egg
advertisement. Since then, the ad campaign has been winning awards almost every year and comes up with ads that
surprise everyone and are absolutely brilliant. The strategy of all the fevicol advertisement campaign is very simple,
fevicol aise jod lagaye acche se accha na tod paaye.
In one more wonderful print ad of fevicol, the god of death Yama is trying to pull out life from a person whose
ordained time has come, but is unable to do so, the reason, the body is lying next to a tin of fevicol and it says
fevicol aise jod lagaye, yamraj bhi tod na paaye. Fevicol advertisements have overcome all regional and language
barriers as viewers can relate them easily.
Value Addition 2: Fevicol campaign
Elements of Ad Campaign
One of its brilliantly executed mooch wali campaign to celebrate the 50 years of Fevicol says a tagline 50
saal se champion. You can see the video and its details at
In another campaign for Fevicol Marine, with the phrase- wohi mazboot zod, paani mein bhi, describing
about the specialized waterproof adhesive that protects furniture from de-bonding even when exposed to
water. Fevicol, with this ad proves its consistency in their communication that has been interesting as well
as informative and maintained that it is the ultimate adhesive available and has been creating
communication. Look at the video on the website cited below.
Ad campaign says Wohi mazboot zod, paani mein bhi
4.1 Strategy
This is the first step towards forming a campaign. Strategy is a message the advertiser wants to give or aspires to
solve the communication related problems. The problem can be brand awareness, poor quality, and insufficient
sales. It is a long-term direction /plan to achieve, that is why, it does not change frequently. The strategy not only
gives direction to creative people but also brings consistency to the brand. The following are the strategic options
that can be chosen by the advertisers.
Generic approach: The brands advertise as if it is the only brand in the market and ignores competition. The market
leaders in their ad campaign ignore the competition in their category and advertise as if they are the only brand and
convince the customer about their monopoly. Many times the product names gets synonym of the brand name. Coca
cola says Thanda matlab Coca Cola, Fevicol claims the ultimate adhesive, Tata Salt swanks Desh ka Namak.
Unique Selling propositions (USP): It is a distinct competitive advantage that other brands dont possess. The USP
can be a technological advantage or a product base on innovation.However, with increase in technology, all the
products and brands have started attaining parity and USP in terms of technological advantage cannot be seen.
Value Addition 3: Did You Know?
Unique Selling propositions
Since 1919, Iodex was the first choice for Indians. It was the market leader until in 1986 when the Paras
Pharmaceuticals entered the market with brand Moov. The USP of Moov was it was the modern opposite
of Iodex. Iodex was sticky, black, Foul smelling balm in an old-fashioned glass bottle whereas Moov was
a white fragrance cream in a slick tube.
Image of the Brand: There is a great competition and the advertiser has to sell the product by highlighting the
features of the product. But the different products offered in the market are more or less identical because the brands
attaining parity. Therefore, the strategy to sell can be extrinsic to the product by relating it with the image of the
brand.
Product positioning: It is placing the product relative to competitors in the minds of the consumer. The brand
image strategy is about creating an image whilst positioning is about creating image relative to competitors. It
emphasise on the superiority of the product by direct or indirect comparisons. The comparison does not mean
throwing garbage on each other and fighting publicly like Horlicks and Complan did.
Tiff between Horlicks and Complan
There has been many a tiff between Horlicks and Complan. There was a HC directive to Complan in
2004 to telecast its advertisement after deleting the cup marked H. The advertisements showed a bigger
cup and a smaller cup, marked C and H respectively. Horlicks was initially targeted at older people
and was positioned as a great family nourisher. With increasing competition, it started introducing new
flavours targeting children. Thus began the fire. Complan claimed that it made kids taller whilst Horlicks
claimed to make kids taller, stronger and sharper. In one of its ad, Horlicks made a comparison that shows
the Complan packet and claims that Horlicks provides more value for lesser money while Complan
provides less value at a far greater price. The ad spoke of the high price of Complan and was claiming
that Horlicks had more than 23 nutrients but costs less than Complan.
Look at the video by clicking on the link below.
As a result, Complan has made a comeback with both printed advertisements and TVCs comparing the
two drinks, Complan and a blue colored bottle (Horlicks whose name was not shown). It concluded with
the Complan Mom asking the blue colored bottle Mom, Do you want to give your kid a sub-standard
drink just because it is cheap? Think about it. In the print ad, Complan has put a direct comparison with
Horlicks by showing Horlicks brand on the ad and then comparing the various attributes. Then it asks the
readers to chose between the " low cost health drink " and "Complete Growth" and talks about the
parameters like Ingredients ,Protein Content ,Protein Quality and number of nutrients. It was very
undesirable in in which both of these mega brands fought against each other. Washing dirty linens in
public was never a healthy practice.
Pre-emptive Claim: It means claiming something that is not unique but claiming first before the competitor. Real
juices claims the ingredients are real, makes one suddenly question the ingredients that competitors use.
Affective: It is about using emotional appeal for product differentiation.Many advertisers exhibit emotions while
airing their advertisements.
Value Addition 5: Video
Ad Campaign
In one of the Surf commercial, it uses the brother- sister adorable chemistry as the models. The audience
gave full points to it for a genuine Big Brother attitude and it was a hit. This ad certainly has captured a
very emotional moment. Look at the video here.
Resonance: This strategy links the product with an occasion, festival sometimes or an experience. The greeting card
companies sell product to cherish the memories of special occasions. They went a step further and created special
days like fathers day, mothers day, friendship day etc. to increase the demand of their product.
Value Addition 6: Example
Cadbury Chocolates
Cadbury has associated chocolates with special occasions and festivals like Diwali. In its ad, it showed
people sharing chocolates instead of traditional mithai on Diwali, and Raksha bhandan. Cadbury's milk
chocolates with the campaign Shubh Aarambh to Kuch meetha ho jaye has kind of taken to mithai
category. This campaign has connected so well with the consumers because its creators, Ogilvy and
Mather, thought differently and marketed it well. In these series, all ads were superb and brilliantly
executed.
The above strategies are not mutually exclusive. The advertiser should go for relevant and original strategy and
should check the strategy of competitors before opting the one.
4.2 Big idea
Once the strategy is finalised, the hunt begins for a big idea to run a campaign. The strategy, big idea and its creative
execution are overlapping concepts and there is no line of separation between them. The big idea can be derived
while arriving at the strategy or reformulated at the execution stage. It is the link between strategy and creative
execution. It is the idea that advertiser select for communicating the strategic message to the audience. It is a
creative idea that serves as a central theme for all the ad series. The big idea may change from campaign to
campaign to keep the advert fresh. To get the big idea, the advertisers have to be very creative and bring something
that never existed before. It is all about being original, novel, innovating and at the same time, different. One of the
techniques for generating useful big ideas is Brainstorming. It is the process of generating ideas spontaneously in a
group-by-group discussion. The groups can brainstorm on advertising strategy, media choice, current events etc.
Value Addition 7: Big idea of Airtel
Ad Campaign of Bharti Airtel
Bharti Airtel since its inception has been at the forefront of technology with its world-class products and
services. It is a pioneer in various communication campaigns. One of its earlier campaigns says that dil jo
chahe paas laye without saying for whom the brand stood for. It changed its campaign to connect with the
youth without compromising on the older audience. The big idea here was to stress upon the value of
friendship in youth life and it was executed with the musical campaigns like Harek friend zarrori hota he
and Jo tera he wo mera he. The sequel camapign that says: I, me, myselfboring hai/ us and we
interesting hai/Internet hai toh friendship hai/Friendship hai toh sharing hai. It is certainly one of the
most popular commercial of the year. The great music, lyrics, casting, acting makes it one of the best
song on friendship. It brought back Airtel into focus about recall and likeability factor when faced the
competition from Vodafones pug and Zoozoos and Ideas Sir ji.
4.3 Creative Execution

At this stage, the advertiser begins making the ad based on the big idea, which is based on the strategy. According to
Jef Richards, Creativity without strategy is art. Creativity with strategy is advertisement. According to Kruti Shah,
Creativity in advertisement is about delivering a relevant selling message in an unexpected manner, such that it
catches the attention of the target audiences, establish a connection with them and makes them want to read, listener
view on. In the words of Keith Reinhard, CEO of DDB Worldwide, Today, more than ever, if marketing
communication is not relevant, it has no purpose. If it is not original, it will attract no attention. If it does not strike
with impact, it will make no lasting impression. An execution is considered effective when it is relevant, original
and impactful (ROI).
Relevant
The creativity should be relevant in context with the advertisement strategy and marketing objective. A customer
today is smart enough to tag an irrelevant ad. The ads for ghutkas saying chaiya chaiya is understandable to some
extent. But ads for FMCG products or a cement ad, when found irrelevant, is very disappointing as a good ad can be
made for all useful products. For instance, the ad of J. K. Cement shows a bikini clad girl coming out of sea and then
a background voice says 'vishwas he isme kuch khaas he'.
'Lalitaji' of Surf
A few decades back, Surf identified the relevance of women power, who is intelligent, confident and did
not shy away for fighting her rights if need arises. Dressed in a traditional saree, an Indian middle class
housewife in her 30s with a kid age around 10, heed not only to cost but cost effectiveness and will not
purchase a cheap detergent, but a value for money detergent. Surf, in its ad, showcases the changing
perspective of confident and smart women to recognize the women power that led to the iconic character
'Lalitaji'.
Original
We see lots of advertisements daily on television and other media. How many do we remember? The advertisements
that we remember are because of the originality. If the advert is unoriginal then the audience will churn this out of
their mind. Originality means being unique and different by coming out of the comfort zones. The original ad grabs
attention and changes the way people perceive the company. The ads which uses Bollywood songs into jingles,
fairness creams emphasising the same thing in their commercials lacks originality. In the same way, if we compare
the print ad of Diamonds, we find no difference in them. All ads look similar, that is, the lady admiring her
jewellery. Here, is the need of some original creativity for fruitful execution. The advertiser has to shed the fears and
have to come out of the comfort zone to bring originality.
Impact
Creating impact means creating effective communication and getting result in terms of public appreciation, sales
increase and brand recognition. A successful ad campaign is said to create an impact when the laid objectives are
achieved. This part of execution is important as it emphasises on accomplishment of objectives. The relevant
original ad if unable to achieve the targets, fails. The ad is made not only to just amuse people with the unique idea
but to achieve the targets at the same time. Creative messages should translate into sales increase or awareness
creation through effective execution.
Ad campaigns of Vodaphone, Fevicol and Amul
Look at the video of top three ad campaigns of the decade, namely Vodaphone, Fevicol and Amul by
clicking on the link below.
Listen to the people who created those ads and see the reasons why they are successful.
Source: http://economHYPERLINK "http://economictimes.indiatimes.com/et-now/brand-equity/top-threeadvertising-campaigns-of-the-decade/videoshow/5407309.cms"ictimes.indiatimes.com/et-now/brandequity/top-three-advertising-campaigns-of-the-decade/videoshow/5407309.cms
Advertisement Vs Advertisement Campaign

The difference between a single shot advertisement and advertisement campaign is all about continuity. The single
shot advertisement has its own message, theme aimed for the message communication to the customer. But, when
we talk about an ad campaign, continuity is the one of the essential that demands an integrated single-minded
approach towards all the customers across all the medias. There should be continuity between all the components of
the campaign so that it should be perceived as one common shot to the audience. It is important to note that
continuity doesn't mean that the T.V. commercial would be exact as the radio commercial or the graphics would be
same in all the non-print mediums. It means:
Unified message
It does not imply that each ad in the campaign should be identical in all respects. Rather, it means that the campaign
should communicate a well-defined message to the audience.
Common theme
The theme, jingle, phrase should be common or at least means the same thing to the audience when interpreted.
The two things should be kept in mind to ensure continuity of an effective ad campaign, these are extending the
creative strategy across different medias (Extendibility) and repeating the creative strategy and not the idea within
each medium (Repeatability).
Extendibility
Extendibility means extending the media coverage by including more and more media. It means using the same
theme, jingle and other common components in more than one media. The advertiser can increase the coverage of a
campaign from print media to Television, billboard, Internet etc.
Repeatability
There is a difference between repetition and repeatability. Repetition means telecasting the same ad again and again
to convey message to the audience. Repetition is a media decision of the advertiser. Repeatability means use of
common idea or related element, not necessarily identical, to create an ad campaign with a series of ads. This series
of ads work collectively to convey the message and at the same time can stand alone with its common theme.
In the ad campaign of Idea cellular, the extendibility component is they used the ads in different medias with the
same theme What an Idea sir ji! This ad was everywhere, on television, radio, newspaper, magazine etc. R.
Balkrishnan, better known as Balki (directed the Hindi Films Cheeni Kum and Paa), CEO of Lowe Lintas and
Partners, is the brain behind What an Idea Sir ji! commercial for Idea Cellular.
The repeatability aspect in this ad was the common element in all these ads to create awareness in the society
regarding various issues. These ads were based on variety of themes like Democracy, education, walk and talk etc.
but the common idea was the unique answer to the social problems. Have a look at different ads based on different
themes with a unified message to the society. One of its innovative advertising campaigns is with a punch line, Fuel
Price Up by 70% 3G Price down by 70%!! This time they highlight that the prices of everything is going up with
the effect of inflation. This new campaign has been executed well as recently all 3G operators, including Idea
Cellular slashed their 3G/HSPA data tariff to a new level of affordability.
Figure 4: Click on the links below to see the ads

Source: 4 (a) http://cdn.wittysparks.com/wp-content/uploads/2009/09/Idea_Walk_When_You_Talk.jpg?a26616
4 (b) http://telecomtalk.info/wp-content/uploads/2012/07/IDEA-3G-Campaign-Fuel-Price-Up-3G-Price-Down.jpg
4 (c) http://shankeresh.hubpages.com/hub/Is-it-A-Good-Idea-Sirji-Introspecting-the-Idea-behind-the-IDEA-MobileCampaigns
In one of its ad a Sarpanch of the village orders people to be identified with their mobile numbers rather than castes.
It addresses big problem of caste barriers in India saying na koi jaat paat, na koi bhed bhaav.
Figure 5: Click on the link below to see the ad
Source: http://www.techibuzz.com/wp-content/uploads/2012/11/Idea-Cellular.jpg
In another one, a deaf and dumb communicates through SMS that tells you that being differently abled does not stop
you from enjoying the life. These ads imagine a world without caste, disabilities and were a huge hit among the
audience. In these campaigns, the brand ambassador, Abhishek Bacchan, played many roles and each time comes
with an innovative idea that provides a simple and effective solution to the problem, by using the mobile phone.
Figure 6: Click on the link below to view the ad
Source: http://whattothink.files.wordpress.com/2009/03/abhishek_idea_print_ad.jpg
There is always a scope to enhance extendibility and repeatability, and hence continuity. These can be maximised
with the help of following factors:
Animated characters
The advertiser uses animated characters to arouse interest in the audience. Amul's ads began in 1966 when they
hired Sylvester Da Cunha to design an ad campaign for Amul Butter. These utterly butterly delicious Amul ads never
fail to amuse us and have become The Taste of India. This ad survived for so long and still continues to be
sustainable.
Figure: 7 click on the links below to see Amul ads
Source: 7 (a) http://www.instablogs.com/wpcontent/uploads/2012/07/amul_milk_nourishment_for_the_young_ad_image_title_mhdyj.jpg
Source: 7(b) http://images.idiva.com/media/photogallery/2012/Mar/best_amul_ads_of_all_time_600x450.jpg
Celebrities/ Celebrity voice
The celebrity can be from film industry, sports, politics, or any other service. His voice can be used during the whole
campaign. This works best when a celebrity has a reasonable association with the product. While choosing a
celebrity, the advertiser should give a thought for the affordability factor and the likeability among the consumers.
Spokespersons
Spokespersons can be created and they can become celebrities. Remember Lalitaji of Surf. A real life person who is
connected with a product can also be a spokesperson. Ex; Dove ad depicts real women in their campaign for real
beauty.
Storytelling
The advertiser sometimes conveys the message with a story in it. Fevicol, in the ad for completion of 50 years, there
was a mooch wali campaign telling a story of a girl from birth to rebirth.
Catch phrases/ Taglines
The phrase that is simple and easy to remember for the audience. McDonalds - I am loving it.
Musical
It is all about using music to establish a connection of the product with the audience. The latest ad of the Idea
Cellular is with a jingle 'You are my pumpkin pumpkin, hello Honey Bunny'. The ad showcases the people from
different parts of the country humming the tune while they follow their daily routines. This funny, soothing tune
relaxes their mind and gives them a chance to share a laugh with friends. Four teasers were launched to create
curiosity in the initial phase that was supported by timely radio and TV spots, the teaser campaign generated a lot of
buzz, especially among the youth. Later, Idea launched the full 60-second TVC on both digital and television media.
Idea Musical Ads
Look at the video ads of Idea on Holi, Telephone exchange, Valentines Day, Honey Bunny, Christmas and
the like by clicking on the link below.
Source: http://www.ideacellular.com/wpsHYPERLINK
"http://www.ideacellular.com/wps/wcm/connect/aboutus/idea/idea_cellular_media_center/tv_commercials
"/wcm/connect/aboutus/idea/idea_cellular_media_center/tv_commercials
Characters
Specific characters can be created which establishes a connection of the product with the character. Every time a
customer sees the character, he thinks of the product.
Figure 10: Click on the link below to see the character.
Source:
http://2.bp.blogspot.com/_YjF5rgKuMuY/S88elK5kx3I/AAAAAAAAGZk/suW1TmFr6r4/s1600/www.FunAndFun
Only.org_22.jpg
In Vodafone ad(formerly Hutch Pug), Zozoos were launched during IPL season by Ogilvy and Mather was an instant
hit. They released 25 Zozoos commercial each day to sustain interest till the end of IPL season. They are not the
animated characters but actually are the human beings. Zozoos are actually ballet dancers dressed in white outfits
with black dots for eyes and mouth and the shadows were created by spray painting. They come in all sizes and
shapes; mother, friend, kids. There was no set format to use them making the possibilities endless. That is the reason
they are a hit. People follow them on Twitter, You tube to know when a new commercial go on air. Zozoos has a fan
page created on Facebook that has more than 5600 members. Look at the video here.
http://www.youtube.com/watch?v=efRNKkmWdc0
Value Addition 11: Pause & Think
Online Polling to choose Best Ad
A website named Campaign India did an online polling of consumer to choose the best ad among 10 given.
Look at the ads and chose your best one. Write down your reasons and the point out the similarities
between the ads. Go to the link given. http://www.campaignindia.in/Video/331039,video-campaign-indialove-that-ad.aspx
Advertising Campaign: A Technique for Integrated Marketing Communications

To understand the above statement, you need to understand the meaning of marketing communication and the need
to integrate the various communications towards the target audience. It will help you to comprehend the relation
between advertising campaign and integrated marketing communication. The following components we have to
study:
1. Marketing Communication,
2. Integrated Marketing Communication, and
3.Relation between Advertising Campaign and Integrated Marketing Communication.
Lets explore these concepts one by one to know the answers of the above questions.
Marketing Communication
There should be an effective communication flow between an organization and its target customers. The firms job is
not over with the manufacturing of the product. From here, the job of marketing starts. The need of any marketing is
to transmit the message of availability of the product to the target customers via different tools of marketing. When
this message is received and interpreted by the customer, marketing communication takes place. According to Kotler
and Keller, marketing Communications are the means by which firms attempt to inform, persuade and remind
consumers, directly or indirectly, about the products and brands that they sell. There are various means to
communicate the message to the target customers, like, advertising, sales promotion, direct marketing, public
relations, personal selling and sponsorship marketing.
From here, we can realize that advertisement is one of the means to communicate to the audience.
Integrated Marketing Communication
Earlier the different marketing communication means were considered as separate elements that were planned and
implemented individually. The impact of one over another was not thought and hence not taken care of. Then the
concept of Integrated Marketing Communications (IMC) emerged that emphasises on the integration of marketing
communication. IMC integrates the effect of a promotional effort where all the marketing communications
(advertisement, salespeople, point of purchase, billboards) send a consistent message rather than working
independently. The integration of all marketing communications is required to deliver a single minded and unified
message to the target customer to reinforce the work of each other.
The American Marketing Association in the eighties defined IMC as the process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational objectives. In 1999, Kotler defined IMC as the concept under which a company
carefully integrates and coordinates its many communication channels to delivers clear, consistent and compelling
messages about the organisation and its products.
Without IMC, there will not be any coordination in the marketing communication that leads to multiple portrayals of
a brand in market. The impact of a consistent, coordinated and integrated marketing campaign has a synergy effect
that is much greater than the sum of its parts. The recent studies and publications show that the emphasis of IMC is
on brand and not just the communications. The Brand plays a central role for any marketing communication. For
instance, imagine an organization communicating to the target customer with different tools of marketing, each with
a different look. The print media sending one image of the brand and the direct selling sending a different image,
will confuse the buyer. The IMC recognizes that the consistent and coordinated promotional efforts should built
brand awareness and identity, in addition to communication effects. The consumers should be reached by the same
message of the brand awareness and exposure. As a result, the marketers are using a brand-oriented approach. IMC
highlights the integration of all the tools for a consistent impression of the brand.
Components of IMC
All the components should work together and reinforce each other rather than working in isolation. Some of the
components that can be a part of an IMC are as follows:
Advertising in magazines, Television, Radio, Newspaper, Billboards
Direct selling
Promotionincludes contest, coupons, discounts, offers
Public relations and publicity
Internet marketing
Relation between Advertising Campaign and Integrated Marketing Communication

Now, we have understood the meaning of Advertisement Campaign and Integrated Marketing Communication. We
have to explore the relationship between the two. We know that advertising is one of the main tools in promotion
mix. Hence, it acquires an important place in IMC. A series of coordinated ad with a unified message is an ad
campaign. When the advertisers combine ad campaign with other promotional tools like direct selling, event
sponsorship, website, point of purchase displays with the objective to maintain brand awareness is actually using
IMC.
It is important to take a holistic approach towards IMC to coordinate not only ad campaign but also the other
promotional element. For example, if the ad campaign stresses on low price, direct selling talks about the quality and
the website stresses innovation, then what the consumer would believe? All this should be coordinated otherwise it
may confuse the audience and he will go to competitors' product for a more consistent message and product. The
integrated, related look projects the brand and its images to allow the audience to quickly identify the brand.
Advertisement Campaign Management
The Advertisement Campaign management is the key ingredient in the success of integrated marketing
communications programme. The Campaign Management involves various interacting and coordinated institutions
to play their respective role in the advertising process.
The advertisers
The advertisers or the clients are at the core of this system. They are the organizations that use advertising and other
promotional tools to communicate to the target audience about their product, and services and pay for it to the
facilitating agencies. Advertisers can be international, national, regional and local. The small and large advertiser
can be distinguished by looking at its advertisement management. A small-scale advertisers function directly to the
media, that is, purchases space and time directly and do not use advertising agencies or other facilitating agencies.
The large advertiser makes full use of the system. He has all the players to manage the advertisement campaign. It is
to be mentioned here that the responsibility for identifying the target market, distribution system, understanding
brand position in the market lies in the shoulders of advertisers. The advertiser before hiring any agency should
know its marketing plan and the customers that he can refine and redefine with the help of agency later on.
The Advertising agency
The Ad agency is an outside firm with a pool of professionals with expertise in planning, production and placement
of the advertisement and provides other creative service to the clients. The large organizations, dealing nationally
and internationally, have in house agencies or a separate advertisement department. Despite of this, they usually take
the services of the ad agencies that work in collaboration with their in-house agency because of number of reasons.
Firstly, agencies have the experts in their areas that cannot be matched. Secondly, in this competitive world, the
firms with number of products are comfortable when assisted by number of ad agencies. Today, the ad agencies
work in partnership with the advertiser to develop the marketing plan and strategy. There are different types of
agencies with varying degrees of experts and services available with the advertiser. The selection of each one
depends on the need and budget of the advertiser. Some of the ad agencies are In - House agency, Full service
agencies and Special service agencies.
Creative Boutiques
They offer creative and artistic services and unlike full service agencies, they do not involve themselves in strategic
planning, target audience etc. Their focus is only on the development of a creative idea into the message theme.
Remember the ad Thanda Thanda Cool Cool. It was a creative campaign that made Dermicool an instant hit over
the existing leader Nycil. Its ad agency Mudra had created this ad exploiting the fact that the consumers value
cooling sensation to allay the burning sensation caused by prickly heat.
Media specialist
They are the independent companies buying the media time and space on television, radio at bulk against heavy
discounts. Then they sell these media time and space at lower cost than what an agency or the companies could have
acquired.
Figure 8: Click on the link below to see a picture for media space
Source:
http://www.lindsayburoker.com/wp-content/uploads/2012/03/advertising-ebooks-authors.jpg
Collateral services
This agency provides the support services to the client or to an ad agency. They perform specialized functions such
as package designing, event management, etc.
Value Addition 12: Activity
Ad Campaigns
Scan a newspaper and select an ad that you think is poorly executed. Redesign it. Write down the points
detailing why you dont like it and your suggestions to change it.
Every company desires to grow and hence plans for the future. Top management makes general broad objectives by
which different departmental plans are derived, production plans, finance plans, marketing plans etc. Within
marketing plan, there are different promotional plans to communicate the message to the target audience. These
marketing communications needs to be integrated. It means the message from the different sources, like
advertisement, a word of salesman, or a coupon in a newspaper, should be understood by the customer in the same
form.
The success of an Advertisement Campaign depends on its planning. A brilliant thinking with a perfect execution
makes history. The planning should be done such that every ad acts as a function of each other and reinforce the
same message with a coordinated look. This process of planning a campaign is done by different participants, like,
the advertisers, ad agency, specialist agencies that we have discussed in the preceding section.
1 Analysing the target customers
Nothing is more important than building an ad campaign for a defined target audience. It may appear as a simple
exercise but it takes careful planning and market research, analysis to determine the correct audience. For instance, a
company selling expensive accessories for the teenage kids has to identify the number of target audience that is not
the number of teenagers, but the upper middle class parents who has the capacity to spend that much for their kids.
In this case, the parents are purchasing the brand but the ultimate consumers are the teenagers. When the firm targets
the parents, the sales can increase. The moral is identifying the right target for the campaign. Once it is determined
the firm knows the area for the resource allocation.
Advertisement is aimed for its present and prospective customers. This audience are singled out by the firm because
the firm thinks that they might need or like the product, if exposed to ad campaigns. Targeting the customers means
that the firm wants to deliver their message to them.
2 Identifying Advertising objectives
The objectives that an advertisement campaign aims to achieve should be identified. It implies the campaign should
accomplish the communication objectives to be achieved in a particular period of time
Ad campaign objectives should be quantitative, precise, measurable, realistic, with specified time frame and
consistent with other marketing objectives. The objectives aims to achieve everything for all the people are not at all
effective. The focus is on getting the desired response from the target audience. Hence, the objectives should define
the target audience and the desired response. Often, the campaign objectives are tied to the life cycle of the product,
competition level and available resources. The broad campaign objectives are to increase sales and communication
with the target audience. Combining sales objectives and communication objectives is an excellent basis to plan an
ad campaign.
3 Determining Ad campaign appropriations
Ad campaign appropriation means the allocation of budget covering all media costs. This step is critical as
inadequate fund will not be able to establish a campaign whilst spending too much will waste the resources of the
company. The appropriation of funds can be decided by looking at the historical figures, the competitors spending
and the view of management.
4 Designing and Development of message
Message refers to the communication that an advertiser wants for its product to the target customer. The content of
the message is determined by the features, uses and benefits of the product. The characteristics of the target
audience- their age, lifestyle, income pattern, education level, occupation and other attributes also affect the content
of the message. It is to be mentioned here that the advertiser should avoid using the same appeals in the campaign.
Many of today's deodorant ads are a repetition. The boy or a girl applying it is seeking attention and almost mobbed
by the opposite sex. The result is a weak link between the ad message and the brand associated. The advertiser
should conduct the research to analyse the working of suitable appeal for the given product. The objective of the
appeal is to arouse interest and need in the minds of target audience.
Message development is the area where the real creativity of the agency exists. The creators have to get into the
mind and heart of the audience and realizing as if they are the actual consumers and anticipating the response by
merging the barriers of culture, thinking, and languages. They have to fully explore the rational and emotional
appeal associated with their product and should make full use of it by linking good feelings, humour and feeling of
association with them.
Till recently, the film stars, celebrities, and cricketers are the safest bet. But now, we can feel the change in the
advertising industry. The concept of bringing people together is the new concept cashing on by the advertisers.
Many brands have joined this group emphasizing on friendship, values etc.
5 Media Planning
A great ad campaign with wrong Medias will lead to wastage of resources. Selection of appropriate media is equally
important to ensure that your creative campaign reaches the right target audience at the right place and in the right
mood. But, sometimes media is least taken care of. the advertisers and the agency, all are more interested in creating
a good campaign to attract, entertain, inform, promote and sell the product. Poor media choices can waste an entire
ad campaigns. The selection of media depends on the budget of the advertiser and the creative requirements of the
campaigns. For example, if the message requires demonstration then television, internet, cinema ads would run
successfully, If the message is suppose in form of jingle, like the honey - bunny of Idea Cellular going on air now - a
-days, radio can also be chosen.
Figure 9: Click on the link below to see the Global Spend by different Media Type
Source:
advertising.png
http://www.nielsen.com/content/dam/corporate/us/en/newswire/uploads/2011/07/media-change-
Advertisers prefer media with a large coverage or circulation that is greater chances of media exposure to the
audience. Mass coverage media are television, radio, and magazines whereas regional coverage includes direct
advertising and outdoor advertising.
6 Executing the campaign/ Scheduling of ads
Execution of campaign requires great planning and coordination. At this step, the entire planning of campaign and
media is implemented. The media shows the advertisement on the decided day at the decided time. It implies
detailed scheduling of all the ads in the campaign to ensure coordination and bring in synergy effect. If there is any
deviation in the implementation phase from the planning part, it must be checked thoroughly by the advertisement
personnel. One of the most creative elements of the campaign is the execution style. The same message can be
executed in number of ways, like, humour, fantasy, demonstration, comparison, musical, research based, animated
characters and any combinations also.
7 Evaluation of Campaign
Any campaign evaluation will depend upon the objectives of evaluation. The questions to be asked in this context
are; have we achieved the objectives? How can we measure the achievement of the objectives? How the
effectiveness of any campaign is evaluated in terms of Sales objectives and communication objectives? How do we
know that a particular campaign has resulted in increase of sales or created awareness among people?
This is the area where the advertiser is not sure about the money has been well spent or not. For this, they spent huge
amount on pre-testing and post-testing of the campaigns to judge its effectiveness. There should be a systematic and
organised effort to estimate the ad effectiveness before it is actually launched (pre-test) that helps in avoiding the
adverse effects later. The post-test to measure the ad effectiveness in terms of communication objectives, consumer
surveys or experiments can be conducted and to measure the sales objectives, the change in sales and market share
has to be analysed. Further, while interpreting the results obtained from testing, some allowances for the deviations
that may have occurred due to actual market situations, demand and supply variation, consumer behaviour, etc.
should be accounted for.
Value Addition 13: Preparation of Ad Campaign
The cricket womens team needs additional funds to get them to an interstate tournament. Unfortunately,
the sports department has no extra money and has suggested that the students raise the funds. Prepare a
poster campaign that involves both the school and local community.
Summary:
Advertisement campaign as a series of correlated and coordinated ads based on same theme, characters,
jingles and placing them in various advertising media to communicate a message to the target customer for
a particular product for a definite period of time.
A good advertisement campaign is a combination of advertising strategy, big idea and creative execution.
The strategy defines 'what' whereas big idea and creative execution defines 'how'.
Strategy is a message the advertiser wants to give or aspires to solve the communication related problems.
The strategic options that can be chosen by the advertisers are Generic approach, Unique Selling
propositions (USP), Image of the Brand, Product positioning, Pre-emptive Claim, Resonance, Affective.
Big idea is the idea that advertiser select for communicating the strategic message to the audience. It is a
creative idea that serves as a central theme for all the ad series. It may change from campaign to campaign
to keep the advert fresh.
Creative execution of the advertisement campaign is about delivering a relevant selling message in an
unexpected manner, such that it catches the attention of the target audiences. An execution is considered
effective when it is relevant, original and impactful ( ROI).
The difference between a single shot advertisement and advertisement campaign is all about continuity. The
single shot advertisement has its own message, theme aimed for the message communication to the
customer. But, when we talk about an ad campaign, continuity is the one of the essential, which demands
an integrated single-minded approach towards all the customers across all the medias.
The two things should be kept in mind to ensure continuity of an effective ad campaign, these are extending
the creative strategy across different medias (Extendibility) and repeating the creative strategy and not the
idea within each medium (Repeatability).
The need of any marketing is to transmit the message of availability of the product to the target customers
via different tools of marketing. When this message is received and interpreted by the customer, marketing
communication takes place.
Earlier the different marketing communication means were considered as separate elements that were
planned and implemented individually. The impact of one over another was not thought and hence not
taken care of. Then the concept of Integrated Marketing Communications (IMC) emerged that emphasise
on the integration of marketing communication. IMC integrates the effect of a promotional effort where all
the marketing communications (advertisement, salespeople, point of purchase, billboards) send a consistent
message rather than working independently.
It is important to take a holistic approach towards IMC to coordinate not only ad campaign but also the
other promotional element. All this should be coordinated otherwise it may confuse the audience and he
will go to competitors' product for a more consistent message and product.
The Campaign Management involves various interacting and coordinated institutions to play their
respective role in the advertising process. They are the advertisers, ad agency, creative boutiques, media
services and collateral supports.
The Advertisement campaign planning should be done such that every ad acts as a function of each other
and reinforce the same message with a coordinated look. The steps to plan are analysing the target
customers, identifying advertising objectives, determining ad campaigns appropriations, designing and
development of messages, selection of media, executing the campaign and its evaluation.
Exercises
Short Questions
1. Write a note on Advertisement Campaign.
2. Write a short note on Integrated Market Communication.
3. Define advertisement.
4. What is the role of client in the management of Advertisement campaign.
5. How ad campaign is a technique of Integrated Marketing Communication ?
Long Questions
6. Why is it important to devise the ad strategy before executing a campaign ?
7.Find out two brands that have a poor ad strategy giving reasons why the strategy was weak.
8.Discuss in detail the management of Advertising Campaign.
9.What are the fundamentals to ad Campaign ? Describe.

10. 'An execution is considered effective when it is relevant, original and impactful (ROI)'.Examine the statement.
11.Elaborate the steps for the planning of the Advertisement Campaign.
12.Explain Advertisement Campaign with the help of five such campaigns.
Glossary
Advertising : Advertising can be defined as- a paid for, non-personal communication from an identified sponsor to
communicate the information and to influence consumer behaviour.
Advertisement campaign :Advertisement campaign are a series of correlated and coordinated ads based on same
theme, characters, jingles and placing them in various advertising media to communicate a message to the target
customer for a particular product for a definite period of time.
Advertisers: They are the organizations that use advertising and other promotional tools to communicate to the
target audience about their product, and services and pay for it to the facilitating agencies.
Strategy : Strategy is a message the advertiser wants to give or aspires to solve the communication related
problems.
Unique Selling propositions (USP): It is a distinct competitive advantage that other brands dont possess.
Big Idea : The big idea is the idea that advertiser select for communicating the strategic message to the audience.
Creative Execution: An execution is considered effective when it is relevant, original and impactful ( ROI).
Product positioning: It is placing the product relative to competitors in the minds of the consumer.
Continuity: Continuity is the one of the essential which demands an integrated single minded approach towards all
the customers across all the media.The two things should be kept in mind to ensure continuity of an effective ad
campaign, these are extending the creative strategy across different medias (Extendibility) and repeating the creative
strategy and not the idea within each medium (Repeatability).
Extendibility: Extendibility means extending the media coverage by including more and more media.
Repeatability: Repeatability means use of common idea or related element, not necessarily identical, to create an ad
campaign with a series of ads.
Marketing Communications : The various means to communicate the message to the target customers, like,
advertising, sales promotion, direct marketing, public relations, personal selling and sponsorship marketing are
marketing communications.
Integrated Marketing Communications (IMC): IMC involves all marketing communications to deliver a single
minded and unified message to the target customer.
Ad agency: The Ad agency is an outside firm with a pool of professionals with expertise in planning, production
and placement of the advertisement and provides other creative service to the clients.
In house agency: A separate whole department devoted to advertisement headed by advertisement manager
reporting to marketing manager, who in turn reports to top management.
Full service agency: A Full service agency offers full range of communication and promotion services to their
clients.
Special service agencies: These agencies provide specialist or experts in a particular field to the advertiser or the ad
agency.
Creative Boutiques: They offer creative and artistic services and unlike full service agencies, they do not involve
themselves in strategic planning, target audience etc.
Media specialist: They are the independent companies buying the media time and space on television, radio at
bulk against heavy discounts.
Unit-IV Functional Plans: The Organizational Plan
THE ORGANIZATIONAL PLAN
Developing the Management Team
Potential investors are interested in the management team and its ability and commitment to the new venture.
Investors usually demand that the management team not operate the business part-time while employed full time
elsewhere. It is also unacceptable for the entrepreneurs to draw a large salary. The entrepreneur should consider the
role of the board of directors and/or a board of advisors in supporting the management of the new venture.
LEGAL FORMS OF BUSINESS
There are three basic legal forms and one new form of businesses.
The three basic forms are:
a. Proprietorship.
b. Partnership.
c. Corporation
A new form is the limited liability company, which is now possible in most states. The entrepreneur should evaluate
the pros and cons of each of the legal forms prior to submitting a business plan. He should determine the priority of
several factors discussed below. It is also necessary to consider intangibles such as image to suppliers, existing
clients, and prospective customers.
Ownership
In the proprietorship, the owner has full responsibility for operations.
In a partnership, there may be owners with general or with limited ownership.
In the corporation, ownership is reflected by ownership of shares of stock.

Liability of Owners
The proprietor and general partners are liable for all aspects of the business.
Since the corporation is a legal entity that is taxable and absorbs liability, the owners are liable only for the
amount of their investment.
To satisfy any outstanding debts of the business, creditors may seize personal assets of the owners in
proprietorships or regular partnerships.
In a partnership the general partners share the amount of personal liability equally, regardless of their capital
contribution.
In a limited partnership, the limited partners are liable only for their capital contributions.
Costs of Starting a Business
The more complex the organization, the more expensive it is to start.
The least expensive is the proprietorship, where the only costs may be for filing for a business name.
In a partnership a partnership agreement is needed, in addition this requires legal advice and should explicitly
convey all parties' responsibilities, rights and duties.
A limited partnership may be more complex to form because it must comply strictly with statutory requirements.
The corporation can be created only by statute.
The owners are required to register the name and articles of incorporation and meet state statutory requirements.
Filing fees and an organization tax may be incurred.
Legal advice is necessary to meet the statutory requirements.

Continuity of Business
In a sole proprietorship, the death of the owner results in the termination of the business.
In a limited partnership, the death of a limited partner has no effect on the existence of the partnership.
o A limited partner may be replaced, depending on the partnership agreement.

o If a general partner in a limited partnership dies or withdraws, the limited partnership is terminated unless the
partnership agreement specifies otherwise.
In a partnership, the death or withdrawal of one of the partners results in termination of the partnership, but this
can be overcome by the partnership agreement.
o Usually the partnership will buy out the withdrawn partner's share at a predetermined price.
o Another option is to have a member of the withdrawn partner's family take over as partner.
The corporation has the most continuity, as the owner's death or withdrawal has no impact on continuity of the
business, unless it is a closely held corporation.
Transferability of Interest
Each of the forms of business offers different advantages as to the transferability of interest.
In a proprietorship, the entrepreneur has the right to sell any assets.
In the limited partnership, the limited partners can sell their interests at any time without consent of the general
partners.
A general partner cannot sell any interest unless specified in the partnership agreement.
In a corporation shareholders may transfer their shares at any time.
In the S Corporation, the transfer of interest can occur only as long as the buyer is an individual.
Capital Requirements
The need for capital during the early months can become one of the most critical factors in keeping a new
venture alive.
For a proprietorship, any new capital can only come from loans or by additional personal contributions.
Often an entrepreneur will take a second mortgage as a source of capital.
Any borrowing from an outside investor may require giving up some equity.
Failure to make payments can result in foreclosure and liquidation of the business.
In the partnership, loans may be obtained from banks or additional funds may be contributed by each partner, but
both methods require change in the partnership agreement.
In the corporation, new capital can be raised by:

a. Stock may be sold as either voting or nonvoting.
b. Bonds may be sold.
c. Money may also be borrowed in the name of the corporation.
Management Control
The entrepreneur will want to retain as much control as possible over the business.
In the proprietorship, the entrepreneur has the most control and flexibility in making business decisions.
In a partnership the majority usually rules unless the partnership agreement states otherwise.
In a limited partnership the limited partners have no control over business decision.
Control of day-to-day business is in the hands of management.
Major long-term decisions may require a vote of the major stockholders.

As the corporation increases in size, the separation of management and control is probable.
Stockholders can indirectly affect the operation by electing someone to the board of directors.
Distribution of Profits and Losses
Proprietors receive all profits from the business.
In the partnership, the distribution of profits and losses depends on the partnership agreement.
Corporations distribute profits through dividends to stockholders.

Attractiveness for Raising Capital
In both the proprietorship and partnership, the ability to raise capital depends on the success of the business and
personal capability of the entrepreneur.
Because of its limitations on personal liability, the corporation is the most attractive form for raising capital.
TAX ATTRIBUTES OF FORMS OF BUSINESS
A. Tax Issues for Proprietorship- For the proprietorship the IRS treats the business as the individual owner. All
income is personal income and the business is not taxed as a separate entity. The proprietorship has some tax
advantages compared to the corporation.
a. There is no double tax on profits.
b. There is no capital stock tax or penalty for retained earnings.
B. Tax Issues for Partnership- The partnership's tax advantages and disadvantages are similar to the proprietorship.
Limited partnerships can provide unique tax advantages. Both the partnership and proprietorship have a legal
identity distinct from the partners, but this identity is only for accounting purposes. The income is distributed based
on the partnership agreement, and the owners then report their share as personal income.
C. Tax Issues for Corporation- the Corporation has the advantage of being able to take many deductions not
otherwise available. The disadvantage is that dividends are taxed twice. This double taxation can be avoided if the
income is distributed as salary. The corporation tax may also be lower than the individual rate.
THE LIMITED LIABILITY COMPANY
A popular new entity is the limited liability company (LLC), which offers similar advantages as the S Corporation
but with more liberal tax rules under subchapter K. This form is a partnership-corporation hybrid with the following
characteristics:
1. Where the corporation has shareholders, the LLC has members.
2. No shares are issued, and each member owns an interest in the business.
3. Liability does not extend beyond the member's capital contribution.
4. Members may transfer their interest only with the unanimous written consent of the remaining members.
5. The standard acceptable term of an LLC is 30 years.
6. The laws governing formation of the LLCs differ from state to state.
The LLC is similar to an S corporation, but is more flexible. A major concern with LLCs is in international
business, where the context of unlimited liability is still unclear.
The primary differences between the limited partnership and the LLC are that the limited partnership must have
at least one general partner with unlimited liability for partnership debts.
The acceptability of the LLC should grow as state statutes are clarified and international rules established.
With the assistance of a tax attorney, owners should compare alternative forms of ownership.
DESIGNING THE ORGANIZATION

The design of the initial organization will be simple. The entrepreneur may perform all of the functions alone. He or
she sometimes is unwilling to give up responsibility to others. The entrepreneur may have difficulty making the
transition from a start-up to a growing well-managed business that maintains its success over a long period of time.
As the workload increases the organizational structure will need to expand to include additional employees with
defined roles. Interviewing and hiring procedures will need to be implemented. For many new ventures, part-time
employees may be hired, raising commitment and loyalty issues.
The organization must identify the major activities required to operate effectively. The design of the organization
will indicate to employees what is expected of them in five areas: Organizational structure, which defines members'
jobs and the relationship these jobs have to one another. Rewards are in the form of bonuses, promotion, and praise.
A selection criterion is the set of guidelines for selecting individuals for each position. The organization's design can
be simple or complex.
There are two stages of development in an organization
Stage 1: The new venture is operated by one person, the entrepreneur, with no need for sub managers.
Stage 2: As the business expands, the organization may be described as Stage 2.
a. Sub managers are hired to coordinate, organize, and control aspects of the business
b. .Measurement, evaluation, rewards, selection, and training become necessary.
Stage 3 may exist when the firm is large enough that a third level of managers is added.
As the organization evolves, the manager's decision roles become more critical. The primary concern is to adapt to
changes in the environment and seek new ideas. The manager will also need to respond to unexpected pressures,
referred to as "putting out fires." Another role is that of allocator of resources, delegating budgets and responsibility.
The final role is that of negotiator, as the entrepreneur can be the only person with the appropriate authority.
BUILDING THE SUCCESSFUL ORGANIZATION
Before writing the organization plan, it is helpful to prepare a job analysis. The job analysis serves as a guide in
determining hiring procedures and job descriptions and specifications. As the size of the venture changes, the
process becomes more complex. The place to start is with the tasks that need to be performed to make the venture
viable. After this list is made, then determine how many positions and what types of persons will be needed. Other
decisions to be made early in planning process:
a. Where to advertise for employees.
b. How they will be trained.
c. How they will be compensated.

Searching for senior talent requires a different strategy. Usually networking provides the best source of candidates.
Some recruiting firms are also specializing in placing senior people in start-ups.
The most important issues in the business plan are the job descriptions and specifications.
MARKETING PLAN
Purpose and Timing of the Marketing Plan- The marketing plan establishes how the entrepreneur will effectively
compete and operate in the marketplace. Marketing planning should be an annual activity focusing on decisions
related to the marketing mix variables. The marketing plan section should focus on strategies for the first three years
of the venture. For the first year, goals and strategies should be projected monthly. For years two and three, market
results should be projected based on longer-term goals. Preparing an annual marketing plan becomes the basis for
planning other aspects of the business.
Understanding the marketing plan
The marketing plan should answer three basic questions:
Where have we been? -The history of the marketplace, marketing strengths and weaknesses, and market
opportunities.
Where do we want to go (short term)? - Marketing objectives and goals in the next twelve months.
How do we get there? -Specific marketing strategy that will be implemented.

The marketing plan should be a guide for implementing marketing decision-making and not a superficial document.
The mere organization of the thinking process involved in preparing a marketing plan can be helpful in
understanding and recognizing critical issues.
MARKET RESEARCH FOR THE NEW VENTURE
Information for developing the marketing plan may require some marketing research. Marketing research involves
the gathering of data in order to determine such information as who will buy the product, what price should be
charged, and what is the most effective promotion strategy. Marketing research may be conducted by the
entrepreneur or by an external supplier or consultant. Market research begins with definition of objectives. Many
entrepreneurs don't know what they want to accomplish from a research study.
Defining the Purpose or Objectives
One effective way to begin the marketing plan is to make a list of the information that will be needed to prepare the
marketing plan.
Possible objectives:
Determine what people think of the product or service and if they would buy it.
Determine how much customers would be willing to pay for the product.
Determine where the customer would prefer to purchase the product.
Determine where the customer would expect to hear about such a product or service.
Gathering Data from Secondary Sources
An obvious source is data that already exists, or secondary data, found in trade magazines, libraries, government
agencies, and the Internet. The Internet can provide information on competitors and the industry, plus can be used
for primary research. Commercial data may also be available, but the cost may be prohibitive. Free secondary
information is available through:
Bureau of Census and the Department of Commerce.
State departments of commerce, chambers of commerce, and local banks.
Private sources of data, such as Predicasts, the Business Index, and the Directory of Business Development
Publications, can be found in a good business library.
A local business library can also provide access to reference sources and articles about competitors and the
industry.
The entrepreneur should exhaust all possible secondary data sources, observation, and networking before beginning
costly primary data research.
Gathering Information from Primary Sources
Information that is new is primary data. Observation is the simplest approach. Networking is an informal method to
gather primary data from experts in the field, can be a valuable low-cost research method.
A recent study found that the most successful ventures were focused on information about competitors, the
customer, and the industry. Less successful ventures were more focused on gathering information on general
economic and demographic trends. Interviewing or surveying is the most common approach, but is more expensive.
The questionnaire used by the entrepreneur should include questions designed to fulfill one or more of the
objectives. Questions should be designed so they are clear and concise, without bias, and easy to answer. If the
entrepreneur lacks experience, he or she should seek help in developing the questionnaire through Small Business
Development Centers or a local education institution.
Focus groups
A focus group is a sample of 10 or 12 potential customers who participate in a discussion.
Groups discuss issues in an informal, open format.
These groups should be led by an experienced monitor.

Experimentation involves control over specific variables in the research process.
Analyzing and Interpreting the Results
The entrepreneur can enter the results on a computer or hand-tabulate the results. Summarizing the answers to
questions will give preliminary insights. Data can then be cross-tabulated to provide more focused results.
CHARACTERISTICS OF A MARKETING PLAN
An effective marketing plan should:
1. Provide a strategy to accomplish the company mission.
2. Be based on facts and valid assumptions.
3. Provide for the use of existing resources.
4. Describe an organization to implement the plan.
5. Provide for continuity.
6. Be simple and short.
7. Be flexible.
8. Specify performance criteria that can be monitored and controlled
The marketing system identifies the major interacting components, both internal and external, that enable the firm to
provide products to the marketplace. Environment factors, although largely uncontrollable, should be studied.
Internal environmental factors are more controllable by the entrepreneur:
Financial resources: The financial plan should outline the financial needs for the venture.
Management team: An effective management team responsibilities assigned is needed for implementing the
marketing plan.
Suppliers: Suppliers used are generally based on a number of factors, such as price, delivery time, and quality.
Company mission: Every new venture should define the nature of its business and what it hopes to accomplish
THE MARKETING MIX
The actual short-term marketing decisions in the marketing plan will consist of four important marketing variables,
called the marketing mix:
1. Product or service.
2. Pricing.
3. Distribution.
4. Promotion.
Each variable should be described in detail in the strategy section of the marketing plan.
STEPS IN PREPARING THE MARKETING PLAN
Step 1: Defining the Business Situation- The situation analysis is a review of where the company has been and
considers many of the environmental factors. The entrepreneur should provide a review of past performance of the
product and the company. Industry analysis should include information on market size, growth rate, suppliers, new
entries, and economic conditions.
Step 2: Defining Target Market/Opportunities and Threats- The entrepreneur should have a good idea of who the
customer or target market will be. The defined target market will usually represent one or more segments of the
entire market. Market segmentation is the process of dividing the market into smaller homogeneous groups.. The
process of segmenting is:
a. Decide what general market or industry you wish to pursue.
b. Divide the market into smaller groups based on characteristics of the customer.
c. Select segment or segments to target.
d. Develop marketing plan integrating the parts of the marketing mix.
Step 3: Considering Strengths and Weaknesses- It is important for the entrepreneur to consider its strengths and
weaknesses.
Step 4: Establishing Goals and Objectives- Before strategy decisions can be outlined, the entrepreneur must
establish realistic marketing goals and objectives. These answer the question "Where do we want to go?" These
goals should specify such things as market share, profit, sales, market penetration, pricing policy, and advertising
support. Not all goals and objectives must be quantified. It is a good idea to limit the number of goals to between six
and eight.
Step 5: Defining Marketing Strategy and Action Programs- Strategy and action decisions respond to the question
"How do we get there?" It incorporates:
1. Product or Service- This includes a description of the product and may include more than the physical
characteristics. It involves packaging, brand name, price, warranty, image, service, features, and style.
2. Customer Service- Meeting customer needs and creating loyalty involves a number of low-cost steps:
In writing develop a statement of customer service principles.
Train those employees who have direct contact with customers.
Establish a process for evaluating customer service.
Reward employees who are most effective in providing quality customer service.
Make regular contact with customers.
Invest in quality telephone equipment.
Meet customer expectations.

Customer service is especially important for e-businesses.
3. Pricing- One of the difficult decisions is determining the appropriate price for the product. Factors such as costs,
discounts, freight, and markups must be considered. Marketing research can help determine a reasonable price that
consumers are willing to pay.
4. Distribution- This factor provides utility or makes the product convenient to purchase when it is needed. This
variable must be consistent with other marketing mix variables. Type of channel, number of intermediaries and
location of members should be described. Regardless of the type of business, it is usually necessary for the new
venture to have a website. The Internet will become an increasingly important medium for information and
distribution. Direct mail or telemarketing may be considered. Direct mail marketing is one of the simplest and
lowest in entry costs. But the direct- marketing or Internet strategies are not a guarantee for success. The
entrepreneur should evaluate all possible options for distribution.
5. Promotion- The entrepreneur needs to inform customers as to the product's availability using advertising media
such as print, radio, or television. Usually television is too expensive unless cable television is a viable option.
Larger markets can be reached using direct mail, trade magazines, or newspapers. A website may also create
awareness and promote the product and services of the venture. It is possible to make use of publicity as a means of
introduction. It is important that the marketing strategy and action programs be specific and detailed enough to guide
the entrepreneur through the first year.
Step 6: Coordination of the Planning Process- The management team must coordinate the planning process. The
entrepreneur may be the only person involved but may lack experience in preparing the plan. Assistance is available
from many sources, such as the SBA.
Step 7: Designing Responsibility for Implementation- The plan must be implemented effectively to meet all of the
desired goals and objectives. Someone must take the responsibility for implementing each decision made in the
marketing plan.
Step 8: Budgeting the Marketing Strategy- Planning decisions must also consider the costs involved in the
implementation of these decisions. This budgeting will be useful in preparing the financial plan.
Step 9: Implementation of the Marketing Plan- The marketing plan is meant to be a commitment to a specific
strategy. A commitment to make adjustments as needed by market conditions is also valuable.
Step 10: Monitoring Progress of Marketing Actions- Monitoring of the plan involves tracking specific results
of the marketing effort. What is monitored is dependent on the specific goals and objectives outlined.
Entrepreneurship and Innovation
Entrepreneurship and Innovation
Creative as a prerequisite to innovation
The terms creativity and innovation are often used to mean the thing, but each has a unique connotation.
1.
Creativity - is the ability to bring something new into existence. This definition emphasizes
ability, not the activity, of bringing something new into existence.
2.
the
Innovation - is the process of doing new thing.
Innovation, therefore, is the transformation of creative ideas into useful applications, but creativity is a prerequisite
to innovation.
The Creative Process
Entrepreneurs need ideas to pursue, and ideas seldom materialize accidentally. Ideas usually evolve through a
creative process whereby imaginative people, germinate ideas, nuture them, and develop them successfully.
Various labels have been applied to stages in the creative process, but most social scientist agree on five stages
that we label as:
1. Idea Germination
2. Preparation
3. Incubation
4. Illumination
5. Verification
A model of the creative process:
Idea Germination: The stage of a new idea

Recognition
Incubation: Subconscious assimilation of information
Fantasizing
Verification: Application or Test to prove ideas have value validation
Illumination: Recognition of ideas as being feasible
Realization
Preparation: Conscious search for knowledge
Rationalization
Innovation and Entrepreneurship
It is important to recognize that innovation implies action, not just conceiving new ideas. When people have
passed through the illumination and verification stages of creativity, they may have become inventors, but they are
not yet innovators.
The difference between invention and innovation is:
1. Invention - is the creation of new products, processes, and technologies not previously known to exist?
2. Innovation - is the transformation of creative ideas into useful applications by combining resources in new or
unusual ways to provide value to society for or improved products, technology, or services.
Elements in the Innovation Process

1. Analytical Planning - to identify: product design, market strategy, financial need
2. Organizing Resources - to obtain: materials, technology, human resources, capital
3. Implementation - to accomplish: organization, product design, manufacturing, services
4. Commercial Application - to provide: value to customers, reward of employees, revenues for
satisfaction for founders.
investors,
Role of Entrepreneurship in Economic Development

The role of entrepreneurship in economic development involves more than just increasing per capita output and
income; it involves initiating and constituting change in the structure of business and society. This change is
accompanied by growth and increased output, which allows more wealth to be divided by the various participants.
What in an area facilitates the needed change and development? One theory of economic growth depicts innovation
as the key, not only in developing new products (or services) for the market but also in stimulating investment
interest in the new ventures being created. This new investment works on both the demand and the supply sides of
the growth equation; the new capital created expands the capacity for growth (supply side), and the resultant new
spending utilizes the new capacity and output (demand side).
In spite of the importance of investment and innovation in the economic development of an area, there is still a lack
of understanding of the product-evolution process. This is the process through which innovation is developed and
commercialized through entrepreneurial activity, which in turn stimulates economic growth.
Entrepreneurship and economic development
Entrepreneurship and economic development are closely interknitted. The development of entrepreneurial skills and
investment in the business sector increases productivity and job opportunities resulting in overall growth and
economic development. Entrepreneurship development, therefore, is a precondition to economic growth, across
generations and across borders. In India there is a dearth of skilled human resource in industries, and demands high
level of entrepreneurship development programs for the growth of economy. Hence, our government has felt it as the
need of the hour and initiated various entrepreneurial development programs to enhance economic development.
Role of an entrepreneur in the economy: The national economy depends upon the work output of the
entrepreneur. The more investments an entrepreneur makes the higher his or her income contribution to the
economy. The economic development of the country depends upon work output of the entrepreneur. Quality work
by him or her means better economic conditions within the country.
The entrepreneur is an integral part of the economy. His or her work is very essential for the economy to run.
An Entrepreneur Stimulates the Economy: Entrepreneurs contribution to the economy is of immense value. He
or she is indispensable to the economic growth of the country. His or her products are valuable to the overall
development of the society. People need their products. They simply cannot do without them.
Ours is a consumer society now. Even in the developing countries consumerism is gaining ground. Developed
countries anyway thrive on consumerism. Naturally, the role of an entrepreneur is of much significance in
generating products valuable for the com forts and luxurious living of the people of a particular country.
An economy is much dependent upon the performance level of its entrepreneur. He or she plays a vital role in the
growth of the national income as well as raising the per capita income of the people.
How does an entrepreneur stimulate the economy?
1.
Investment Then entrepreneur has to invest in what is required for the economy. Economic progress will
much depend upon his or her contributions. Any entrepreneur will invest in products and services which the
people need. His or investment will ensure a better life for the people. More goods and services will be at
their disposal.
2.
Employment An entrepreneur by setting up various businesses and establishments is generating

employment in the economy. People need jobs. This is a major contribution that an employer can make to
provide income to an employee who can meet his or her needs.
3.
Diversity in products and services An entrepreneur can provide various types of goods and services to
the consumer. The latter has much to choose from. A consumer after all would like to have a good bargain,
and if his or her choices are more than he or she can get these products or services at reasonable rates. Also
personal desires are met if there are products and services to choose from. A person may like a particular
type of tie and he can perhaps locate it in his local market. His desire to purchase a tie of his choice is thus
met.
4.
International trade An entrepreneur promotes international trade by selling his or her products abroad.
Any entrepreneur would like a wider market. If there are more consumers to purchase his or her products,
the higher his profits.
5.
Contributes to gross national product An entrepreneur makes much contribution to the national
exchequer and to the national economy as whole. The GNP of the country is calculated based upon the total
number of products and services available in a respective country. The more products and services available
the higher the GNP. It indicates the economic prosperity of the country.
The entrepreneur is essential for the economic development of a country. The progress of a country will depend
upon his skill and talent as well as hard work to deliver necessary goods and services required by the citizens of his
or her country.
Entrepreneurs help Alleviate Poverty
Businessman or women have also social commitments apart from running their business establishments. They like
to share their profits with the less fortunate. It is not being condescending. Some businessmen or women do have
concern for the poor. Of course, at times such acts are done as part of their tax relief measures.
In many less developed countries, severe poverty causes much misery to the people living there. Disparities exist
between what they have and what they dont have. Nevertheless, the rich do share their wealth through various
measures meant to better the society, if not all, some do.
Poverty is a major issue in underdeveloped and developing countries such as India, Bangladesh, the African
countries etc. and business people help improve the conditions of the poor in the following waysHow Entrepreneurs help Alleviate Poverty? Entrepreneurship and Poverty
Charity work Business people share their prosperity through charity. They run establishments such as
orphanages, provide widows with pension, and also provide food and clothes for the poor. Charitable
hospitals are run for improving the health of the poor. All expenses are free of cost.
Schools are set up Many business houses set up school for the children of the poor. Such children are
provided with an opportunity to better themselves. Scholarships are given for higher education.
Slum development Houses are built for the poor and the sanitary conditions of the slums are improved
upon. Programs are sponsored whereby health and social workers go to various slums to educate the poor
about hygiene. Even the slums are cleaned up.
Employment opportunities Often employers of a business try to provide an opportunity to one member
of the poor family so that he or she is able to support the family.
Setting up of Foundation Business establishments set up foundations to divert their profits towards
community development. It could be perhaps for tax relief, but the money diverted is used to eradicate
poverty. These foundations focus on social work.
Entrepreneurs are also concerned about society. Either for personal or religious reasons they like to share their
prosperity with the less fortunate. Various measures are adopted by them to reduce poverty levels in their respective
countries..
Contributions of Entrepreneurship in Society
Entrepreneurs have much to give to society. Their contribution to the welfare of society is of high order. A business
person apart from making money for him or herself also helps the society in many ways financially and socially.
Financially, of course the respective country benefits by the business carried out by entrepreneurs. At the same time
many of the welfare activities of the businessman improve the living conditions of the people of that particular
society.
How does an entrepreneur help the society?
Donations A business person donates a lot of money for charity purposes. From his or her earnings, he or
she would like to help the downtrodden and try to improve their living conditions.
Charitable institutions A businessman or woman sets up various educational, medical and vocational
training institutions to provide the less privileged with benefits which they normally cannot afford. The fees
may be less or waived in the case of a meritorious student. Hospitals are also run by these charitable
institutions.
Sponsorship Many business people sponsor a candidate for higher education or fund a child in an
orphanage. In fact, many orphanages are backed by these business people. Scholarships are provided to a
poor student for him or her to avail of better educational opportunities.
Welfare programs A businessman or woman financially contributes to various welfare programs, like
helping the blind, orphans, widow etc. In times of crisis, they help by donating items such as blankets,
clothes, medicines etc.
Advisors to respective government Many successful business people participate in government

activities in order to promote the well-being of the citizens. The government often seeks their advice on
certain social and economic activities.
Business is essential for the progress of a nation. A successful businessman or woman is an asset to the society. He
or she can contribute to the wellbeing of a society in several ways that improve the living conditions of the people
The Future of Entrepreneurship
As evidenced by the many different definitions, the term entrepreneurship means different things to different people
and can be viewed from different conceptual perspectives. However, in spite of the differences, there are some
common aspects: risk taking, creativity, independence, and rewards. These commonalities will continue to be the
driving force behind the notion of entrepreneurship in the future. One thing is clear: The future for entrepreneurship
appears to be very bright. We are living in the age of the entrepreneur, with entrepreneurship endorsed by
educational institutions, governmental units, society, and corporations. Entrepreneurial education has never been so
important in terms of courses and academic research. The number of universities and colleges offering at least one
course in entrepreneurship increases each year. The number of faculty teaching entrepreneurship as well as the
number of endowed chairs increases regularly. There are some unique entrepreneurial programs as well, such as
masters programs in entrepreneurial science and technology entrepreneurship, and MBA with a concentration in
bioscience.
Entrepreneurship education throughout the world is also growing. Many universities in Europe have wellestablished programs in entrepreneurship. Most universities and associations do research on entrepreneurship,
followed by training courses and then education coursescourses for which degree credit is given. Very few
universities are yet involved in the actual enterprise creation process where the university, faculty, and/or students
share in the sales and profits of the new venture.
This increase in course offerings has been accompanied by an increase in academic research, endowed chairs in the
area, entrepreneurship concentrations and majors, and centers of entrepreneurial activity. This trend will continue,
supported by an increase in PhD activity, which will in turn provide the needed faculty and research effort to support
the future increases in course offerings, endowed positions, centers, and other research efforts.
Various governments are taking an increased interest in promoting the growth of entrepreneurship. Individuals are
encouraged to form new businesses and are provided such government support as tax incentives, buildings, roads,
and a communication system to facilitate this creation process. Encouragement by the federal and local governments
should continue in the future as more lawmakers understand that new enterprises create jobs and increase economic
output in the area. Some state governments in the United States are developing their own innovative industrial
strategies for fostering entrepreneurial activity and the timely development of the technology of the area. The impact
of this strategy is seen in the venture-capital industry, which is always sensitive to government regulations and
policies. Many states now have their own state-sponsored venture funds, where a percentage of the fund has to be
invested in ventures in the state.
Societys support of entrepreneurship will also continue. This support is critical in providing both motivation and
public support. Never before have entrepreneurs been so revered by the general populace. Entrepreneurial endeavors
in the United States are considered honorable and even, in many cases, prestigious pursuits. A major factor in the
development of this societal approval is the media. The media have played, and will continue to play, a powerful and
constructive role by reporting on the general entrepreneurial spirit in the United States and highlighting specific
success cases of this spirit in operation.
Concept of Enterprises- start-up ventures
The entrepreneurial decision process results into a suitable and viable start-up. A start-up refers to new business
enterprises.
Basic types of start-up ventures: One very useful classification system divides start-ups into three categories:
1. Lifestyle firms- A small venture that supports the owners and usually does not grow.
2. Foundation companies- A type of company formed from research and development that usually does not go public
3. High-potential ventures- A venture that has high growth potential and therefore receives great investor interest.
4. Gazelles Very high growth ventures
Life-Style Firms
A lifestyle firm is privately held and usually achieves only modest growth due to the nature of the business, the
objectives of the entrepreneur, and the limited money devoted to research and development. This type of firm may
grow after several years to 30 or 40 employees and may have annual revenue of about Rs. 10 Lakh. A lifestyle firm
exists primarily to support the owners and usually has little opportunity for significant growth and expansion.
Foundation Companies
The second type of start-upthe foundation companyis created from research and development and lays the
foundation for a new business area. This firm can grow in 5 to 10 years from 40 to 400 employees and from Rs. 15
to Rs. 30 Lakh in yearly revenue. Since this type of start-up rarely goes public, it usually draws the interest of
private investors only, not the venture-capital community
1.
2.
3.
4.
5.
High-Potential Venture
This type of start-up venture has high growth potential and therefore receives great investor interest and publicity.
The company may start out like a foundation company, but its growth is far more rapid. After five to ten years the
company could employ around 500 employees, with Rs. 20 million to Rs. 30 million in revenue. These firms are
also called gazelles and are most important for the economic development of an area.
Managerial vs. entrepreneurial approach and emergence of entrepreneurship
Managerial vs. entrepreneurial Decision Making: The difference between the entrepreneurial and managerial
styles involves five business dimensions.
Strategic Orientation: The entrepreneurs strategic orientation depends on his or her perception of the
opportunity. This orientation is most important when other opportunities have diminishing returns accompanied by
rapid changes in technology, consumer economies, social values or political rules. When the use of planning systems
is the strategic orientation, there is more pressure for the administrative domain to be operant.
Commitment to Opportunity: The entrepreneurial domain is pressured by the need for action and has a short
time span in terms of opportunity commitment. The administrative domain (the ways mangers make decisions) is
not only slow to act on an opportunity, but the commitment is usually for a longer time span.
Commitment of Resources: An entrepreneur is used to having resources committed at periodic intervals, often
based on certain tasks or objectives being reached. In acquiring these resources the entrepreneur is forced to achieve
significant milestones using very few resources. In the administrative domain, the commitment of resources is for
the total amount needed. Administrative-oriented individuals receive personal rewards by effectively administering
the resources under their control.
Control of Resources: The administrator is rewarded by effective resource administration and has a drive to own
or accumulate as many resources as possible. The entrepreneur, under pressure of limited resources, strives to rent
resources on an as-needed basis.
Managerial Structure: In the administrative domain, the organizational structure is formalized and hierarchical in
nature. The entrepreneur employs a flat organizational structure with informal networks.
Factors impacting emergence of entrepreneurship
Various researchers world over have identified the factors that contribute to the development of entrepreneurship.
Economists agree that the lack of entrepreneurs is not caused by economic conditions alone as was the earlier
feeling. It is also due to the whole set of socio-cultural and institutional environment prevailing in the less developed
countries. Various environmental factors influencing the entrepreneurship are as follows:
I.
Economic Factors: Economic environment exercises the most direct and immediate influence on
entrepreneurship. The economic factors that affect the growth of entrepreneurship are the following:
1.
Capital: Capital is one of the most important perquisites to establish an enterprise. Availability of capital
facilitates for the entrepreneur to bring together the land of one, machine of another and raw material of yet another
to combine them to produce goods. Capital is therefore, regarded as lubricant to the process of production. Our
accumulated experience suggests that with an increase in capital investment, capital-output ratio also tends to
increase. This results in increase in profit which ultimately goes to capital formation. This suggests that as capital
supply increases, entrepreneurship also increases. France and Russia exemplify how the lack of capital for industrial
pursuits impeded the process of entrepreneurship and an adequate supply of capital promoted it.
2.
Labour: The quality rather quantity of labour is another factor which influences the emergence of
entrepreneurship. Most less developed countries are labour rich nations owing to a dense and even increasing
population. But entrepreneurship is encouraged if there is a mobile and flexible labour force. And, the potential
advantages of low-cost labour are regulated by the deleterious effects of labour immobility. The considerations of
economic and emotional security inhibit labour mobility. Entrepreneurs, therefore, often find difficulty to secure
sufficient labour. They are forced to make elaborate and costly, arrangements to recruit the necessary labour. The
problem of low-cost immobile labour can be circumvented by plunging ahead with capital-intensive technologies, as
Germany did. It can be dealt by utilizing labour-intensive methods like Japan. By contrast, the disadvantage of highcost labour can be modified by introduction of labour-saving innovations as was done in US. Thus, it appears that
labour problems can be solved more easily than capital can be created.
3.
Raw Materials: The necessity of raw materials hardly needs any emphasis for establishing any industrial
activity and its influence in the emergence of entrepreneurship. In the absence of raw materials, neither any
enterprise can be established nor can an entrepreneur be emerged. Of course, in some cases, technological
innovations can compensate for raw material inadequacies. The Japanese case, for example, witnesses that lack of
raw material clearly does not prevent entrepreneurship from emerging but influenced the direction of
entrepreneurship. In fact, the supply of raw materials is not influenced by them but becomes influential depending
upon other opportunity conditions. The more favorable these conditions are, the more likely is the raw material to
have its influence of entrepreneurial emergence.
4.
Market: The fact remains that the potential of the market constitutes the major determinant of probable
rewards from entrepreneurial function. Frankly speaking, if the proof of pudding lies in eating, the proof of all
production lies in consumption, i.e., marketing. The size and composition of market both influence entrepreneurship
in their own ways. Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the disadvantage of a competitive market can be cancelled to
some extent by improvement in transportation system facilitating the movement of raw material and finished goods,
and increasing the demand for producer goods. D.S. Landes holds the opinion that improvements in transportation
are more beneficial to heavy industry than to light industry because of their effects on the movement of raw
materials. Paul H. Wilken claims that instances of sudden rather than gradual improvement in market potential
provide the clearest evidence of the influence of this factor. He refers to Germany and Japan as the prime examples
where rapid improvement in- market was followed by rapid entrepreneurial appearance. Thus, it appears that
whether or not the market is expanding and the rate at which it is expanding are the most significant characteristics
of the market for entrepreneurial emergence.
5.
Infrastructure: Expansion of entrepreneurship presupposes properly developed communication and
transportation facilities. It not only helps to enlarge the market, but expand the horizons of business too. Take for
instance, the establishment of post and telegraph system and construction of roads and highways in India. It helped
considerable entrepreneurial activities which took place in the 1850s. Apart from the above factors, institutions like
trade/ business associations, business schools, libraries, etc. also make valuable contribution towards promoting and
sustaining entrepreneurship in the economy. You can gather all the information you want from these bodies. They
also act as a forum for communication and joint action. Of late, the importance of business and industry associations
has increased tremendously. In the fast changing world of business, entrepreneurs have to move-collectively in order
to be more effective and more efficient. They need to constantly check and influence the Governments thinking and
decision-making.
II.
Social Factors: Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. The main components of social
environment are as follows:
1. Caste Factor: There are certain cultural practices and values in every society which influence the actions of
individuals. These practices and value have evolved over hundred of years. For instance, consider the caste system
(the varna system) among the Hindus in India. It has divided the population on the basis of caste into four divisions.
The Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined
limits to the social mobility of individuals. By social mobility we mean the freedom to move from one caste to
another. The caste system does not permit an individual who is born a Shridra to move to a higher caste. Thus,
commercial activities were the monopoly of the Vaishyas. Members of the three other Hindu Varnas did not become
interested in trade and commence, even when India had extensive commercial inter-relations with many foreign
countries. Dominance of certain ethnical groups in entrepreneurship is a global phenomenon. The protestant ethics
in the west, the Sammurai in Japan, the trading classes in US and the family business concerns of France have
distinguished themselves as entrepreneurs.
2.
Family background: This factor includes size of family, type of family and economic status of family. In a
study by Hadimani, it has been revealed that Zamindar family helped to gain access to political power and exhibit
higher level of entrepreneurship. Background of a family in manufacturing provided a source of industrial
entrepreneurship. Occupational and social status of the family influenced mobility. There are certain circumstances
where very few people would have to be venturesome. For example in a society where the joint family system is in
vogue, those members of joint family who gain wealth by their hard work denied the opportunity to enjoy the fruits
of their labour because they have to share their wealth with the other members of the family.
3.
Education: Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of education has a significant role
to play in inculcating entrepreneurial values.
In India, the system of education prior to the 20th century was based on religion. In this rigid system, critical and
questioning attitudes towards society were discouraged. The caste system and the resultant occupational structure
were reinforced by such education. It promoted the idea that business is not a respectable occupation. Later, when
the British came to our country, they introduced an education system, just to produce clerks and accountants for the
East India Company, The base of such a system, as you can well see, is very anti-entrepreneurial. The unfortunate
result of it is that young men and women in our country have developed a taste only for service. Their talents and
capabilities have not been made much use of. Rather it has been wasted in performing routine conventional jobs.
Our educational methods have not changed much even today. The emphasis is till on preparing students for standard
jobs, rather than marking them capable enough to stand on their feet.
4. Attitude of the Society: A related aspect to these is the attitude of the society towards entrepreneurship. Certain
societies encourage innovations and novelties, and thus approve entrepreneurs actions and rewards like profits.
Certain others do not tolerate changes and in such circumstances, entrepreneurship cannot take root and grow.
Similarly, some societies have an inherent dislike for any money-making activity. It is said, that in Russia, in the
nineteenth century, the upper classes did not like entrepreneurs. For them, cultivating the land meant a good life.
They believed that rand belongs to God and the produce of the land was nothing but gods blessing. Russian folktales, proverbs and songs during this period carried the message that making wealth through business was not right.
5. Cultural Value: Motives impel men to action. Entrepreneurial growth requires proper motives like profit-making,
acquisition of prestige and attainment of social status. Ambitious and talented men would take risks and innovate if
these motives are strong. The strength of these motives depends upon the culture of the society. If the culture is
economically or monetarily oriented, entrepreneurship would be applauded and praised; wealth accumulation as a
way of life would be appreciated. In the less developed countries, people are not economically motivated. Monetary
incentives have relatively less attraction. People have ample opportunities of attaining social distinction by noneconomic pursuits. Men with organizational abilities are, therefore, not c dragged into business. They use their
talents for non-economic ends. The absence of proper economic motives is a general characteristic of agrarian
societies in which people do not attach great value to business talents, industrial leadership etc.
III.
Psychological Factors: Many entrepreneurial theorists have propounded theories of entrepreneurship that
concentrate especially upon psychological factors. These are as follows:
1. Need Achievement: The most important psychological theories of entrepreneurship was put forward in the early)
960s by David McClelland. According to McClelland need achievement is social motive to excel that tends to
characterize successful entrepreneurs, especially when reinforced by cultural factors. He found that certain kinds of
people, especially those who became entrepreneurs, had this characteristic. Moreover, some societies tend to
reproduce a larger percentage of people with high need achievement than other societies. McClelland attributed
this to sociological factors. Differences among societies and individuals accounted for need achievement being
greater in some societies and less in certain others. Analyzing this phenomenon, Paul Wilken has said,
entrepreneurship becomes the link between need achievement and economic growth, the latter being a specifically
social factor.
The theory states that people with high need-achievement are distinctive in several ways. They like to take risks and
these risks stimulate them to greater effort. The theory identifies the factors that produce such people. Initially
McClelland attributed the role of parents, specially the mother, in mustering her son or daughter to be masterful and
self-reliant. Later he put less emphasis on the parent-child relationship and gave more importance to social and
cultural factors. He concluded that the need achievement is conditioned more by social and cultural reinforcement
rather than by parental influence and such related factors.
2. Withdrawal of Status Respect: There are several other researchers who have tried to understand the
psychological roots of entrepreneurship. One such individual is Everett Hagen who stresses the-psychological
consequences of social change. Hagen says, at some point many social groups experience a radical loss of status.
Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship. Giving a brief sketch
of history of Japan, he concludes that it developed sooner than any non-western society except Russia due to two
historical differences. First, Japan had been free from colonial disruption and secondly, the repeated long continued
withdrawal of expected status from important groups (smaurai) in its society drove them to retreatism which caused
them to emerge alienated from traditional values with increased creativity. This very fact led them to the
technological progress through entrepreneurial roles.
Hage believs that the initial condition leading to eventual entrepreneurial behavior is the loss of status by a group.
He postulates that four types of events can produce status withdrawal:
(a)
The group may be displaced by force;
(b)
It may have its valued symbols denigrated;
(c)
It may drift into a situation of status inconsistency; and
(d)
It may not be accepted the expected status on migration in a new society.
He further postulates that withdrawal of status respect would give rise to four possible reactions and create four
difference personality types :
(a)
Retreatist: He who continues to work in a society but remains different to his work and position;
(b)
Ritualist : He who adopts a kind of defensive behavior and acts in the way accepted and approved
in his
society but no hopes of improving his position;
(c)
Reformist: He is a person who foments a rebellion and attempts to establish a new society; and
(d)
Innovator: He is a creative individual and is likely to be an entrepreneur.
Hagen maintains that once status withdrawal has occurred, the sequence of change in personality formation is set in
motion. He refers that status withdrawal takes a long period of time - as much as five or more generations - to result
in the emergence of entrepreneurship.
3. Motives: Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur. Cole is
of the opinion that besides wealth, entrepreneurs seek power, prestige, security and service to society. Stepanek
points particularly to non-monetary aspects such as independence, persons self-esteem, power and regard of the
society.
On the same subject, Evans distinguishes motive by three kinds of entrepreneurs:
(a)
Managing entrepreneurs whose chief motive is security.
(b)
Innovating entrepreneurs, who are interested only in excitement.
(c)
Controlling entrepreneurs, who above all other motives- want power and authority.
Finally, Rostow has examined intergradational changes in the families of entrepreneurs. He believes that the first
generation seeks wealth, the second prestige and the third art and beauty.
4. Others: Thomas Begley and David P. Boyd studied in detail the psychological roots of entrepreneurship in the
mid 1980s. They came to the conclusion that entrepreneurial attitudes based on psychological considerations have
five dimensions:
First came need-achievement as described by McClelland. In all studies of successful entrepreneurs a high
achievement-orientation is invariably present.
The second dimension that Begley and Boyd call locus of control This means that the entrepreneur follows the
idea that he can control his own life and is not influenced by factors like luck, fate and so on. Need-achievement
logically implies that people can control their own lives and are not influenced by external forces.
The third dimension is the willingness to take risks. These two researchers have come to the conclusion that
entrepreneurs who take moderate risks earn higher returns on their assets than those who take no risks at all or who
take extravagant risks.
Tolerance is the next dimension of this study. Very few decisions are made with complete information. So all
business executives must, have a certain amount of tolerance for ambiguity.
Finally, here is what psychologists call Type A behavior. This is nothing but a chronic, incessant struggle to
achieve more and more in less and less of time Entrepreneurs are characterize by the presence of Type A behavior
in all their endeavors.
IV. Political Factors: A football player might possess exceptional talent. But, his contribution to the nation and the
world of sports would remain negligible, if his performance is restricted to the courtyard of his own house. He needs
a football ground to practice on and resources to buy the accessories. He also requires encouragement and support
from those in authority so that he could freely play with others and prove his talent. In the same way, an
entrepreneur, however creative he/she may be, cannot function without the supportive actions of the Government. It
is for the government/society to ensure the availability of required resources for the entrepreneurs and also the
accessibility to them. This is because the successful entrepreneur contributes to the well being of the society.
Policies relating to various-economic aspects like prices, availability of capital, labour and other inputs, demand
structure, taxation, income distribution, etc. affect growth of entrepreneurship to a large extent. Promotive
government activities such as incentives and subsidies contribute substantially to entrepreneurial performance. At
the same time, Government policies like licenses, regulations, favouritism, government monopolies, etc. are
undesirable for the growth of business enterprises. Above all, a Government that is politically stable and united can
affect entrepreneurial activities in a significant manner. Is there a business entrepreneur in your neighborhoods? Try
to gather information on his/her views on various government policies, for example, on taxation, finance, labour etc.
Also ask him/her about the opportunities and growth prospects of a business unit. Write down your observations.
India, all the above mentioned environmental forces have turned in favor of enterprising men and women. There is a
visible change for the better in the highly inactive entrepreneurial field in the country. The tight grip of religious and
traditional, ideas and practices have begun to loosen. Dogmas (settled opinions) and superstitions have lost the hold
they earlier had. It is encouraging the non-commercial classes to consider economic opportunities more
sympathetically. As a result, occupational division based on caste system has undergone tremendous traditional
activities, social approval etc. have become less important. More important now, are the economic factors such as
access to capital and possession of entrepreneurial attitudes and business I knowledge.
Development of infrastructure, changes in government policies in favor of business and industry and of course, rise
in demand for products manufactured are some of the other factors that have led the Indian entrepreneurs to look for
new business opportunities.
Ten Deadly Mistakes of Entrepreneurship
1.
Management mistakes
2.
Lack of experience
3.
Poor financial control
4. Weak marketing efforts

5.
Failure to develop a strategic plan
6.
Uncontrolled growth
7.
Poor location
8.
Improper inventory control
9.
Incorrect pricing
10.Inability to make the entrepreneurial transition

Drawbacks of Entrepreneurship
The drawbacks of entrepreneurship are most likely to in some way centre around the fact that the practice is so
unpredictable. The whole principle of entrepreneurship is that the entrepreneur is taking a chance on exploiting
untapped markets, or producing untried products and no matter how extensive their prior investigation may be, there
can never be that guarantee of certain success.
When an entrepreneur develops a new business idea or tactic, they will in the first instance if they are sensible
compile a detailed business plan. Part of the development of this business plan will be the conducting of a feasibility
study in to the likely market for their product or service, the extent of that market and the frequency with which they
are likely to obtain repeat business from their customers. The drawback of entrepreneurship in this sense is that even
if there are orders placed for the early days of the business, there are no guarantees that the customers will return or
with what frequency, or that new customers can be attracted to the business in the longer term.
Another drawback of entrepreneurship is that even where the entrepreneur has identified a very significant gap in the
market for their product or service, they have no guarantees that someone is not going to come along and provide a
better service or produce a better product at a more competitive price very soon after they begin trading. Even where
products can be patented, ideas can not and any competitor only has to develop the product to a sufficient sense as to
differentiate from the original in order to provide an alternative option for customers.
Entrepreneurship can very often involve the individual going out on a limb and essentially putting all their eggs in
one basket. Where business takes a significant turn for the worse, such as it did for a great many in the Credit
Crunch which manifested itself in 2008, for reasons totally out with their control, the entrepreneur can find
themselves in significant difficulty with no other business options to fall back on.
The drawbacks of entrepreneurship can be that entrepreneurship is almost a sense of gambling. When the cards are
dealt in a desirable fashion, the rewards can be very great. Where, however, even simple fate conspires against the
entrepreneur, the nature of their business can mean that their very commercial existence is placed under significant
threat.
In nutshell, following points are relevant in this context1.
2.
Uncertainty of income
Risk of losing your entire investment
3.
Long hours and hard work
4.
5.
6.
7.
Lower quality of life until the business gets established
8.
9.
10.
11.
Lower quality of life until the business gets established
12.
High levels of stress
13.
Full responsibility
Benefits of Entrepreneurship
In response to economic development at this time, ability and stamina required in responding to these developments
is very significant. This capability would be expected to support or at least able to change the pattern of someone
living in the meet the needs of their claims. They must think how to create employment or at least get a job in the
plans to continue his life. To support all that, we are required to understand about entrepreneurship.
Entrepreneurship is the way of identifying opportunities, creating many job opportunities. Entrepreneurship is often
difficult, young entrepreneurship often fail when they do not have a strong foundation related to the education and
business capital.
A person, who is willing and able to convert an idea or invention into a successful innovation, is regarded as an
entrepreneur. Entrepreneurship forces "creative destruction" in the market and industry, as well as create new
products and business models. In this way, the damage is responsible for the creative dynamics of the industry and in
the long-term economic growth.
Entrepreneurship is about taking risks. Reflects the behavior of the kind of person who is willing to put his career
and financial security and take the risk on the idea, spent much time and capital on a certain business.
Entrepreneurship is widely regarded as important players in the business, particularly as the engine for job creation
and economic growth. Young entrepreneurs have claimed many characters, has an enthusiastic vision, with
persistence and determination, then the employers develop strategies to change the vision into reality. One needs the
inspiration, motivation and fine.
Every successful businessman will bring benefits not only for himself but for the city, region or country as a whole.
Benefits that can be taken from entrepreneurial activities are as follows:
Benefits of personal finance
Self-employment, offer a more satisfactory work and the flexibility of the labor force
Further development of the industry, especially in rural areas or regions disadvantaged by economic change, for
example, because the effects of globalization
Processing materials into local goods so for domestic consumption and for export
Income and increase economic growth
Competition is healthy so that encourage high-quality products
More goods and services available
Development of new markets
Promotion of modern technology in small-scale manufacturing is higher to increase productivity
Freedom from dependence on the work offered by other people
Entrepreneurship given the potential to support economic growth and social, it is the goal of various government
policies to develop a culture of entrepreneurial thinking. This can be done with a variety of ways: by integrating
entrepreneurship into the education system, legislating to encourage risk taking, and the national campaign.
This phenomenon is by Kauffman.org, working to better understand the phenomenon of entrepreneurship, the level
of education and entrepreneurship training to promote entrepreneurial business-friendly policies, and to facilitate the
commercialization of new technologies by entrepreneurs and others, which is very promising to improve the
economic welfare of the nation.
Entrepreneurship Process:
The process of pursuing a new venture is embodied in the entrepreneurial process, which involves more than just
problem solving in a typical management position. An entrepreneur must find, evaluate, and develop an opportunity
by overcoming the forces that resist the creation of something new.
Entrepreneurial process can be defined as the process through which a new venture is created by an entrepreneur.
This process involves finding, evaluating, and developing an opportunity by overcoming the strong forces that resist
the creation of something new.
Steps in entrepreneurial process
The process has four distinct phases:
(1) Identification and evaluation of the opportunity,
(2) Development of the business plan,
(3) Determination of the required resources, and
(4) Management of the resulting enterprise.
Although these phases proceed progressively, no one stage is dealt with in isolation or is totally completed before
work on other phases occurs. For example, to successfully identify and evaluate an opportunity (phase 1), an
entrepreneur must have in mind the type of business desired (phase 4).
Phase-1:
Identify and evaluate opportunity: opportunity identification is the process by which an
entrepreneur comes up with the opportunity for a new venture. Opportunity identification and evaluation is a very
difficult task. Most good business opportunities do not suddenly appear, but rather result from an entrepreneurs
alertness to possibilities or, in some cases, the establishment of mechanisms that identify potential opportunities.
Different Aspects of this step relates to Creativity and Business Idea generation
Recognition of entrepreneurial opportunity
Assessment of entrepreneurial opportunity (in terms of real and perceived value, risk and return
Evaluating entrepreneurial opportunity (in terms of personal & entrepreneurial skills and competencies,
prevailing and future circumstances and competitive environment)
Opportunity Evaluation Process
Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources are often
fruitful, including consumers and business associates. Channel members of the distribution system-retailers,
wholesalers or manufacturers reps-are also helpful. Technically-oriented individuals often identify business
opportunities when working on other projects.
Whether the opportunity is identified by using input from consumers, business associates, channel members, or
technical people, each opportunity must be carefully screened and evaluated. This evaluation of the opportunity is
perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the
specific product or service has the returns needed compared to the resources required.
This evaluation process involves looking atThe creation and length of the opportunity,
Its real and perceived value,
Its risks and returns,
Its fit with the personal skills and goals of the entrepreneur, and
Its uniqueness or differential advantage in its competitive environment.
It is important to understand the cause of the opportunity, as the resulting opportunity may have a different market
size and time dimension. The market size and the length of the window of opportunity are the primarily bases for
determining risks and rewards. The risks reflect the market, competition, technology, and amount of capital
involved. The amount of capital forms the basis for the return and rewards. The return and reward of the present
opportunity needs to be viewed in light of any possible subsequent opportunities as well. The opportunity must fit
the personal skills and goals of the entrepreneur. The entrepreneur must be able to put forth the necessary time and
effort required for the venture to succeed. One must believe in the opportunity enough to make the necessary
sacrifices. The methodology for evaluating risks and rewards, frequently indicates that an opportunity offers neither
a financial nor a personal reward commensurate with the risks involved.
Opportunity assessment plan

Opportunity analysis, or what is frequently called an opportunity assessment plan, is one method for evaluating an
opportunity. It is not a business plan. Compared to a business plan, it should be shorter; focus on the opportunity, not
the entire venture; and provide the basis for making the decision of whether or not to act on the opportunity.
An opportunity assessment plan includes the following: a description of the product or service, an assessment of the
opportunity, an assessment of the entrepreneur and the team, specifications of all the activities and resources needed
to translate the opportunity into a viable business venture, and the source of capital to finance the initial venture as
well as its growth. The assessment of the opportunity requires answering the following questions:
What market need does it fill?
What personal observations have you experienced or recorded with regard to that market need?
What social condition underlies this market need?
What market research data can be marshaled to describe this market need?
What patents might be available to fulfill this need?
What competition exists in this market? How would you describe the behavior of this competition?
What does the international market look like?
What does the international competition look like?
Where is the money to be made in this activity?
Phase-2:
Develop Business Plan: A business plan is the written description of the future direction of the
business. It helps entrepreneur in Putting Ideas together and Preparing B-Plan Draft.
A good business plan must be developed in order to exploit the defined opportunity. This is a very time-consuming
phase of the entrepreneurial process. An entrepreneur usually has not prepared a business plan before and does not
have the resources available to do a good job. A good business plan is essential to developing the opportunity and
determining the resources required, obtaining those resources, and successfully managing the resulting venture.
B-plan Format
(a)
Title Page
(b)
Table of Contents
(c)
Introductory Page (Name and address of business, and promoters, Nature of
Business, Statement of financing needs)
(d)
Executive summary
(e)
Description of Industry- Industry Analysis ( Future outlook and trends, Competitors
analysis, Market segmentation, Industry and market forecast)
(f)
Description of Business (Product(s), Service(s), Size of business, Office equipments
and personnel, Background of entrepreneurs)
(g)
Functional/Operational Plans
Production plan (Manufacturing Process, Physical Plant (Layout and Location), Machinery and Equipments,
Production inputs and output specification (Raw material, tools and consumables, suppliers)
Operational Plan (Descriptions of new business operations, Flow of orders for goods/services, Technology
utilization)
Marketing Plan(4-P Description (Product, Pricing, Place and Promotion elements), Product Forecasting,
Controls)
Organizational Plan (Form of ownership, Organizational structure Design, Job Design & Descriptions (Roles &
responsibilities of members of organization), Manpower plan, Management-Team background)
Financial Plan (Statement of financing needs & Capital structuring, Source of financing details, Statement of
application of funds, Statement of financing working capital needs, Cash Budget, Proforma Income statement and
Balance Sheet, Cash & funds flow projections, Break-even analysis)
(h)
Assessment of Risk and Uncertainty
Identification of Risk-aspects
Evaluate weakness of business
SWOT analysis
Contingency Plan
(i)
Appendix (Backup material)
Letters
Market research Data
Leases or contracts
Price lists from suppliers
3.
Determination of Resource Requirement
Determine existing resources
Identify Resource Gaps and available Suppliers
Develop access to and procure needed resources
4.
Manage the enterprise
Develop Management Style
Understand key variables for success
Identify problems and Potential problems
Implement control systems
Develop growth strategy
Phase 3:
Determine the Resources Required.
Assessing the resources needed starts with an appraisal of the entrepreneurs present resources. Any resources that
are critical must be distinguished from those that are just helpful. Care must be taken not to underestimate the
amount and variety of resources needed. The entrepreneur should also assess the downside risks associated with
insufficient or inappropriate resources.
The next step in the entrepreneurial process is acquiring the needed resources in a timely manner while giving up as
little control as possible. An entrepreneur should strive to maintain as large an ownership position as possible,
particularly in the start-up stage. As the business develops, more funds will probably be needed to finance the
growth of the venture, requiring more ownership to be relinquished. The entrepreneur also needs to identify
alternative sup-pliers of these resources along with their needs and desires. By understanding resource supplier
needs, the entrepreneur can structure a deal that enables the resources to be acquired at the lowest possible cost and
with the least loss of control.
1.
2.
3.
Phase 4:
Manage the Enterprise.
After resources are acquired, the entrepreneur must use them to implement the business plan. The operational
problems of the growing enterprise must also be examined. This involves implementing a management style and
structure, as well as determining the key variables for success. A control system must be established, so that any
problem areas can be quickly identified and resolved. Some entrepreneurs have difficulty managing and growing the
venture they created.
Entrepreneurial Decision Process:
Entrepreneurial Decision Process is about deciding to become an entrepreneur by leaving present activity i.e. a
movement from the present lifestyle to forming a new enterprise. The decision to start a new company occurs when
an individual perceives that forming a new enterprise is both desirable and possible.
The decision to become an entrepreneur to start a new business consist of several sequential stepsThe decision to leave a present career or lifestyle (Pushing and pulling influences active in the decision to leave a
present career or lifestyle
The decision about desirability of new venture formation i.e. the aspects of a situation that make it desirable to start
a new venture and this relates to culture, subculture, family, teachers and peers.
The decision about possibility of new venture formation i.e. factors making it possible to create a new venture like
government, background, marketing, financial, role models.
Desirability of New Venture Formation :- (Aspects of a situation that make it desirable to start a new company)
The perception that starting a new company is desirable results from an individuals culture, subculture, family,
teachers and peers.
American culture places a high value on being your own boss, being a success and making money therefore, it is
not surprising to find a high rate of company formation in the United States.
On the other hand in some countries making money is not as valued and failure may be a disgrace. The rate of
business formation in these countries is not as high.
1.
2.
Many subcultures that shape value systems operate within a cultural framework.
In the U.S. they include Route 128 (Boston), Silicon Valley (California), and North Carolina Triangle. In India
they include Marwari, Gujrati, and Rajasthani Businessmen.
These subcultures support and even promote entrepreneurship.

3.
4.
5.
6.
1.
2.
Studies indicate that a high percentage of founders of companies had fathers and/or mothers who valued
independence.
Encouragement to form a company is also gained from teachers, who can significantly influence individuals.
An area having a strong educational base is also a requirement for entrepreneurial activity.
Peers are important, also, as is an area with an entrepreneurial pool and peer-meeting place.
Possibility of New Venture Formation : - (Factors making it possible to create a new venture)
Although the desire of new venture formation derived from the individuals culture, subculture, family, teachers and
peers needs to be present before any action is taken, the second feature necessary centers around this question What
makes it possible to form a new company?
The government contributes by providing the infrastructure to help a new venture.
The India has the necessary roads, communication and transportation systems, utilities, and
Economic stability
The Indian tax rate for companies and individuals is better than in some European countries.
The entrepreneur must have the necessary background.
Formal education and previous business experience give a potential entrepreneur the skills needed to form and
manage a new enterprise.
Although educational systems are important in providing the needed business knowledge, individual will tend to
be more successful in forming in fields in which they have worked.
3.
The market must be large enough and the entrepreneur must have the marketing know-how to put together the entire
package.
4. The entrepreneur must have the marketing know-how to put together the entire package.
5. A role model can powerfully influence the perception of venture possibility.
6. Finally, financial resources must be readily available.
Although most start-up money comes from personal savings, credit, and friends, but there is often a need for
additional capital.
Risk-capital availability plays an essential role in the development and growth of entrepreneurial activity.
Role of entrepreneurship in economic development
The entrepreneurship has been identified by many economists as a vital force in the process of industrialisation in
particular and economic development in general. Economic development essentially means a change. But, at the
same time, it is very difficult to define precisely the phrase economic development. One should realize that the term
economic development does not convey the idea of total development of the society. It only focuses itself on one
aspect and one dimension of general development. Economic development can be defined as a move towards even
more efficient and differentiated methods of supplying people with the requirements for survival and improvement.
Many a time economic development is interpreted as synonymous with industrialisation because it is viewed by the
poor regions as a superior way of life. But economic development cannot be equated with industrialisation. When
economic development is analyzed with the yard stick of extent of industrialisation, it implicitly undermines the
importance of primary sector like agriculture. The high dependency ratio of people on the primary sector is not the
cause of underdevelopment but the consequence of it. These two sectors are complementary to each other in the
development process. Moreover, economic development is much more than industrialisation, it is an upward
movement of the entire social system. Economic development includes increase in productivity, social and
economic equalization, improved institutions, and attitudes, and a rationally coordinated system of policy measures
and removal of undesirable conditions and systems that perpetuated a state of underdevelopment.
It appears that economic development involves something more than economic growth and it includes both growth
and change. Moreover, economic development is not only a quantitative phenomenon but has qualitative dimensions
too.
The criterion of per capita income can be considered as a good indicator of regional variations in economic
development. As the economic development is essentially a process the increase in per capita income should not
appear as a temporary or short sustained phenomenon. Of course, the increase in per capita income can be
considered as the primary criterion for measuring the extent of development in an area. There are other sub-criteria
which have to be considered along with the primary criterion. The nature of distribution of income in the society is
an integral part of the development. The secondary objectives like level of consumption, level of employment,
diversification against concentration of the economy are also important.
Economic development is not to be considered as an end in itself, but is a means to an end. Economic development
is concerned, ultimately, with the achievement of better nourishment, better education, better health, better living
conditions and an expanded range of opportunities in work and leisure for the people. Therefore, a rise in real per
capita income is a relevant criterion to judge the extent of development in a region as it is a means for the attainment
of desired standards in nourishment, education, health, and living conditions.
The entrepreneur is the key to the creation of new enterprises that energize the economy and rejuvenate the
established enterprises that make up the economic structure. Entrepreneurs initiate and sustain the process of
economic development in the following ways:
1. Capital formation: Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities.
Investment of public savings in industry results in productive utilization of national resources. Rate of capital
formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2.
Improvement in per capita income: Entrepreneurs locate and exploit opportunities. They convert the talent
and idle resources like land, labour and capital into national income and wealth in the form of goods and services.
They help to increase net national product and per capita income in the country, which are important yardsticks for
measuring economic growth.
3.
Improvement in living standards: Entrepreneurs set up industries which remove scarcity of essential
commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in
the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and
increase variety in consumption.
4.
Economic independence: Entrepreneurship is essential for national self-reliance. Industrialists help to
manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries.
Businessmen also export goods and services on a large scale and thereby earn the scarce foreign exchange for the
country. Such import substitution and export promotion help to ensure the economic independence of the country
without which political independence has little meaning.
5.
Backward and forward linkages: An entrepreneur initiates change which has a chain reaction. Setting up of
an enterprise has several backward and forward linkages. For example, the establishment of a steel plant generates
several ancillary units and expands the demand for iron ore, coal, etc. These are backward linkages. By increasing
the supply of steel, the plant facilitates the growth of machine building, tube making, utensil manufacturing and such
other units. Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. They give an
organization its momentum. Entrepreneurial behavior is critical to the long term vitality of every economy. The
practice of entrepreneurship is an important to established firms as it is to new ones.
6.
Generation of Employment: At the beginning of seventh five year plan the backlog of unemployment was
estimated to be around 44 million persons. At present, the number of unemployed in the country is far greater than
what it was during 1985. Emphasis on modernization which usually results in automation, use of high technology,
and technology up gradation initiated during 1980s and structural changes introduced by the Government during
1990s are likely to give much rise to capital-intensive rather than labour intensive industry. It is feared that there
will be very little additional job opportunities within the fold of organized public and private sectors. Most of the job
opportunities in future are likely to be emerging from informal and unorganized sectors of economy.
Entrepreneurship development training which helps in strengthening informal and unorganized sector is expected to
motivate enterprising people to opt for self employment and entrepreneurial career. It will therefore, help in solving
the problem of increasing unemployment to some extent.
7.
Harnessing Locally Available Resources and Entrepreneurship:
India is considered to be very rich in natural resources. In spite of about five decades of planned development a large
number of states have remained economically backward. A few large scale industries started by entrepreneurs from
outside the state in economically backward areas may help as model of pioneering efforts, but ultimately the real
strength of industrialisation in backward areas depends upon the involvement of local entrepreneurship in such
activities: Increased activities of local entrepreneurs will also result in making. use of abundantly available local
resources.
8.
Balanced Regional Growth: Medium and large scale industries can only be started with huge investment
which is either available with well established industrial houses or need to be drawn from public exchequer. Also,
promotion of such industries does not help in reducing disparities of income and wealth. On the other hand, an
important advantage of small scale enterprises is that they can be started with meager financial resources and little
or no previous experience or entrepreneurial background.
9.
Reducing Unrest and Social Tension Amongst Youth: Many problems associated with youth unrest and social
tension is rightly considered to be due to youth not being engaged in productive work. In the changing environment
where we are faced with the problem of recession in wage employment opportunities, alternative to wage career is
the only viable option. The country is required to divert the youth with latent entrepreneurial traits from wage career
to self-employment career. Such alternate path through entrepreneurship could help the country in defusing social
tension and unrest amongst youth.
10.
Innovations in Enterprises: Business enterprises need to be innovative for their survival and better
performance. It is believed that smaller firms have relatively higher necessity and capability to innovate. The smaller
firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and
compelled to innovate: The National Science Foundation, an organization in USA found that small companies
produce four times more innovations per research dollar than do bigger companies. Entrepreneurship development
programmes are aimed at accelerating the pace of small firms growth in India. Increased number of small firms is
expected to result in more innovations and make the Indian industry compete in international market.
11.
Initiating change in the structure of business and society: The role of entrepreneurship in economic
development involves initiating change in the
Structure of business and society. One theory of economic growth depicts innovation as the key, not only in
developing new products, but also in stimulating investment interest. The new Capital created expands the capacity
for growth (supply side), and new spending utilizes the new capacity and output (demand side.) In spite of the
importance of investment and innovation in the economic development of an area, there is still a lack of
understanding of few factors which are as follows:
The product-evolution process is the process through which innovation develops and Commercializes through
entrepreneurial activity, which in turn stimulates economic Growth. It begins with knowledge in the base technology
and ends with products or Services available in the marketplace.
The critical point in the process is the intersection of knowledge and a recognized social need, called the iterative
synthesis. This point often fails to evolve into a marketable Innovation. Most innovations introduced in the market
are ordinary innovations, with little Uniqueness.
Technological innovations refer to new products with significant technological Advancements.
Breakthrough innovations mean the development of new products with some Technological change.
Regardless of the level of uniqueness or technology, each innovation evolves into and develops towards
commercialization through one of three mechanisms: the government, Entrepreneurship, or entrepreneurship.
Entrepreneurship has assisted in revitalizing areas of the inner city. Individuals in inner-city areas can relate to the
concept and see it as a possibility for changing their present situation.
Ethics and Social Responsibility of Entrepreneurs
Business Ethics: A Brief Definition
Ethics is the branch of philosophy concerned with the meaning of all aspects of human behavior. Theoretical ethics,
sometimes called normative ethics, is about discovering and delineating right from wrong. It is the consideration of
how we develop the rules and principles (norms) by which to judge and guide meaningful decision-making.
Theoretical ethics is supremely intellectual in character, and, being a branch of philosophy, is also rational in nature.
Theoretical ethics is the rational reflection on what is right, what is wrong, what is just, what is unjust, what is good,
and what is bad in terms of human behavior. How we see 'ethical behavior' - in terms of what is right and wrong - is
guided by these definitions.
Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical
principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business
conduct and is relevant to the conduct of individuals and entire organizations.
Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and
actions within a company. In the business world, the organizations culture sets standards for determining the
difference between good and bad decision making and behavior. In the most basic terms, a definition for business
ethics boils down to knowing the difference between right and wrong and choosing to do what is right. The phrase
'business ethics' can be used to describe the actions of individuals within an organization, as well as the organization
as a whole.
There are three parts to the discipline of business ethics: personal, professional, and corporate. All three are
intricately related. It is helpful to distinguish between them because each rests on slightly different assumptions and
requires a slightly different focus in order to be understood. We are looking at business ethics through a trifocal lens:
close up and personal, intermediate and professional, and on the grand scale (utilizing both farsighted and peripheral
vision) of the corporation. In spite of some recent bad press, business executives are first and foremost human
beings. Like all persons, they seek meaning for their lives through relationships and enterprise, and they want their
lives to amount to something. Since ethics is chiefly the discipline of meaning, the business executive, like all other
human beings, is engaged in this discipline all the time, whether cognizant of it or not.
Social responsibility: A Brief Note
Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an
obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to
perform so as to maintain a balance between the economy and the ecosystem. A trade-off always exists between
economic development, in the material sense, and the welfare of society and the environment. Social responsibility
means sustaining the equilibrium between the two. It pertains not only to business organizations but also to anyone
whose action impacts the environment. This responsibility can be passive, by avoiding engaging in socially harmful
acts, or active, by performing activities that directly advance social goals. This shows the various ways that
companies can invest in being socially responsible and the value those actions can bring to the company.
A report suggests that social responsibility is a way of conducting business through balancing the long-term
objectives, decision-making, and behavior of a company with the values, norms, and expectations of society. Social
responsibility can be a normative principle and a soft law principle engaged in promoting universal ethical standards
in relationship to private and public corporations.
Companies can demonstrate social responsibility in a myriad of ways. They can donate funds to education, arts and
culture, underprivileged children, animal welfare, or they can make commitments to reduce their environmental
footprint, implement fair hiring practices, sponsor events, and work only with suppliers with similar values.
Social responsibility in business is also known as corporate social responsibility, corporate responsibility, corporate
citizenship, responsible business, sustainable responsible business, or corporate social performance. This term refers
to a form of self-regulation that is integrated into different disciplines, such as business, politics, economy, media,
and communications studies.
Entrepreneurship v/s Ethics and social responsibility
Ethics and social responsibility are very important values in entrepreneurship ventures. This is particularly essential
in decision making process. Ethical conscience reminds entrepreneurs to make trustworthy and profitable
entrepreneurship decisions. Likewise, the social responsibility component sought entrepreneurs to make
entrepreneurial decisions that can enhance benefits and repelling harms to the stakeholders.
The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social
responsibility. A managers attitudes concerning corporate responsibility tend to be supportive of laws and
professional codes of ethics. Entrepreneurs have few reference persons, role models, and developed internal ethics
codes. Entrepreneurs are sensitive to peers pressure and social norms in the community as well as pressures from
their companies.
While ethics refers to the study of whatever is right and good for humans, business ethics concerns itself with the
investigation of business practices in light of human values. The word ethics stems from the Greek ethos, meaning
custom and usage. Development of Our Ethical Concepts Socrates, Plato, and Aristotle provide the earliest writings
dealing with ethical conceptions; earlier writings involving moral codes can be found in both Judaism and
Hinduism.
Ethics and social responsibilities of an entrepreneur is certainly an important issue considering the role of social
responsibility in society and ethics in business. Social responsibility is beneficial for business community and at the
same time for global community. Social responsibility is significant owing to the realism of globalization. The
people of the universe are becoming interconnected more owing to the advancement of technology, transportation
and communication. The world market economy is affecting not only services and goods but values and ideas as
well. Expansion on the global front, enhancing regulatory omission and the factors which is responsible for creating
awareness regarding the significance of making for sectored, macro and operational hazards to both an
organizations and entrepreneurs competitive position and reputation. As small business owners and entrepreneurs,
activities which harm the people and the planet, will spoil the scope for your profits. For this reason there is great
significance for triple bottom line which is profits, planet and people.
The world economy requires innovators and entrepreneurs to both advance and sustain global community. While
ethics and social responsibilities of an entrepreneur and businesses undertake the plan and consider social
responsibility a vital event in their activities, everybody benefits. The effect could be noticed within local
communities and ultimate profit making from their business. With the extension of cooperation for businesses,
governments and NGOs, they encourage in the matter of corporate social responsibility and entrepreneurship and
take steps to improve the mechanism for its potential growth. Therefore, in regards ethics and social responsibilities,
an entrepreneur has to become aware about his role and strive to obey them in perfect manner which would be
beneficial to him as well as the community as a whole
An entrepreneur is actually running his own business and being a businessman he has some obligation of a business
to meet his economic and legal responsibilities. Social responsibility is basically a business intention, beyond its
legal and economic obligation to do the right things and act in ways that are good for society.
While we are talking about the business ethics, there are three things that need consideration:
(1) Avoid breaking criminal law in ones work related activity
(2) Avoid action that may result in civil law suits against the company
(3) Avoid actions that are bad for the company image.
For example, an entrepreneur made a chemical that looks like a pesticide and he started selling it like a pesticide in
the market and earns the profit, this act is against the law.
Link between Ethics and Social Responsibility
You will probably note the link between business ethics and corporate social responsibility (CSR). The two
concepts are closely linked:
A socially responsible firm should be an ethical firm

An ethical firm should be socially responsible
However there is also a distinction between the two:
CSR is about responsibility to all stakeholders and not just shareholders

Ethics is about morally correct behavior
How do businesses ensure that its directors, managers and employees act ethically?
A common approach is to implement a code of practice. Ethical codes are increasingly popular particularly with
larger businesses and cover areas such as:
* Corporate social responsibility
* Dealings with customers and supply chain
* Environmental policy & actions
* Rules for personal and corporate integrity
Knowledge and skills requirement:
Entrepreneurship is a young or immature science. In order to build the body of knowledge that underlies the art of
entrepreneurship we must create academic models that can successfully be applied in industry. The art and science
of entrepreneurship are complementary to each other and, therefore, require simultaneous advances in both theory as
well as practice.
1.
Knowledge Requirement: In simple terms, knowledge means collection and retention of information in
ones mind. Knowledge is necessary for performing a task but not sufficient. For example, a person having the
knowledge of cricket playing could be in a position to describe how to play. But, mere description wil1 not enable
the listener to play cricket unless something more than knowledge is there. We see in real life that people possessing
mere knowledge have miserably failed while actually performing the task. What this implies is that one also needs to
have skills to translate the knowledge into action/practice.
One should have a certain command of knowledge in business, law, finance, as an entrepreneur, accounting, tax, etc.
as an entrepreneur. It is not necessarily to experts in each area, but it is required to understand and grasp knowledge
of his program and relevant programs, and comprehend by analogy.
Knowledge of Academic Technical- The characteristic of modern economy requires an entrepreneur to have a
deep command of the academic knowledge in the career he is embarking on, or he will not be able to analyze the
situation correctly, which is the most prominent in high-tech walks. The entrepreneurs who holding a deep command
of academic technical knowledge always can grasp the developing trend of the things with their sharp eyes, raising
unique opinions and strategies, and work out the corresponding strategies to achieve the success of the enterprises.
Knowledge of Financial Management- The main content of financial management knowledge is the running and
operating of the capital. Simply speaking, financial management is how to manage your money, that is, how to
reasonably and effectively run and distribute your capital to gain more profit. In the modern enterprises, financial
management goes through the whole process of economic activities. It not only reflects the achievements of the
economic activities, playing the role of predicating and deciding, but also exerts the function of controlling and
examining.
Knowledge of Operation Management- Against the market economy situation, the success and lose of the
companies lies in operation. In the gradually complicated and fierce marketing competition, entrepreneurs can not
just run the enterprise with experience and intuition, but to arm them with effective operation management
knowledge and direct the operation activities.
Knowledge of Law- We are living in a society under the rule of law, marketing economy itself is economy under
law. An entrepreneur without any knowledge of law is like a driver who does not know the rule of traffic. Should
luckily there was no accident, the driver will at last be fined or confiscated of the driving license. Meanwhile, as a
legal entrepreneur, when his rights are infringed, he should be good at safeguarding his right with the arm of law.
Knowledge of Finance- Finance is the allocating of the capital, involving the problems about how to gain the
fund needed in development. No matter how capable the entrepreneur is in running, if there is no capital, nothing
will be achieved. So no matter when it is at the beginning or during the process of the business establishment,
collecting funds that is needed is of great importance.
2.
Skills Requirement: Skill is the ability to demonstrate a system and sequence of behavior which results in
something observable, something that one can see. A person with playing ability, i.e., skill can properly identify the
sequence of action to be performed to win the cricket match. Remember, while knowledge of playing cricket could
be acquired by reading, talking or so on, skill to actually play cricket can be acquired by practice i.e., playing on a
number of occasions. This means both knowledge and skill are required to perform a task.
The skills required by entrepreneurs can be classified in to three main areas:
1. Technical skills involve such things as writing, listening, oral presentations, coaching, and technical know-how.
2. Business management skills include those areas involved in starting, developing and managing any enterprise.
3. Personal entrepreneurial skills differentiate an entrepreneur from a manager and include inner control (discipline),
risk taking, innovativeness, persistence, visionary leadership, and being change oriented.
These skills and objectives form the basis of the modular approach to an entrepreneurship curriculum. Today
entrepreneurs are recognizing the need to learn some of the science of management in an MBA program in order to
grow their businesses effectively in the global environment.
Entrepreneurial Competencies
(i)
Initiative- acting out of choice rather than compulsion, taking the lead rather than waiting for others to
start.
(ii)
Sees and Acts on Opportunities- A mindset where one is trained to look for business
opportunities
from everyday experiences. Recall oranges example.
(iii)
Persistence- A never say die attitude, not giving up easily, striving Information seeking
continuously
until success is achieved.
(iv)
Knowing- Knowing who knows, consulting experts, reading relevant material and an
overall
openness to ideas and information.
(v)
Concern for High Quality of Work- Attention to details and observance of established
standards and
norms.
(vi)
Commitment to Work Contract- Taking personal pains to complete a task as scheduled.
(vii) Efficiency Orientation- Concern for conservation of time, money and effort.
(viii)
Systematic Planning- Breaking up the complex whole into parts, close examination of the
parts and
inferring about the whole; e.g. simultaneously attending to production,
marketing and financial aspects (parts)
of the overall business strategy (the whole).
(ix)
Problem solving-Observing the symptoms, diagnosing and curing.
(x)
Self-confidence- Not being afraid of the risks associated with business and relying on
ones capabilities
to successfully manage these.
(xi)
Assertiveness- Conveying emphatically ones vision and convincing others of its value.
(xii) Persuasion- Eliciting support of others in the venture.
(xiii) Use of Influence Strategies- Providing leadership.
(xiv)
Monitoring- Ensuring the progress of the venture as planned.
(xv)
Concern for Employee Welfare- Believing in employee well being as the key to
competitiveness and
success and initiating programmes of employee welfare.
Types of Entrepreneurs
Schumpeter made the entrepreneur the adventurous innovator who acting on his own account, introduces changes
that others do not dare to experiment with. Other writers have, however, identified some other categories of
entrepreneurs.
Arthur H. Cole distinguishes between empirical, rational and cognitive entrepreneurs. The empirical entrepreneur
hardly introduces anything revolutionary and follows the principle of rule of thumb. The rational entrepreneur is
well informed about the general economic conditions and introduces changes that look more revolutionary. The
cognitive entrepreneur is well informed, draws upon the advice and services of experts and introduces changes that
reflect complete break from the existing scheme of things.
In a study of American Agriculture, Clarence Danhof classifies entrepreneurs into four types-innovative, imitative,
Fabian and drone. The innovating entrepreneur is one who assembles and synthesizes information and introduces
novel combinations of factors. He is an aggressive figure and an industrial leader. The imitative entrepreneur is also
known as the adoptive entrepreneur. He simply adopts successful innovations introduced by other innovators. The
Fabians entrepreneurs are timid and cautious. He will imitate other innovations only if he is certain that failure to do
so may damage his business. Finally there is the drone entrepreneur. His entrepreneurial activity may be restricted to
just one or two innovations. He refuses to adopt changes in production even at the risk of reduced returns.
This classification of Danhof brings into focus two important aspects:
(a)
It shows that an economy which is making a lot of technical advancement has in its ranks a large number of
innovating and adoptive entrepreneurs and less number of Fabians and drones.
(b)
Technological advancement may not take place even if innovators are present, if the actual control and
ownership of production is in the hands of Fabians or drones.
Another classification of entrepreneurs is between private and public entrepreneurs. Private entrepreneur is
motivated by profit and as such would not enter those sectors of the economy in which prospects of monetary
rewards are not bright. In general, infrastructure industries fall under this category. For example electricity
generation and distribution is Government owned. This forces the Government to take the initiative to start
enterprises in these sectors. Thus, we have the category of public entrepreneurs. In the less developed countries the
entrepreneurial functions of the Government has greatly widened due to the lack of sufficient private entrepreneurs.
Another classification based on the scale of enterprise is between small scale and large scale enterprises. This
classification is especially relevant in the less developed countries. Private enterprise is usually found in households,
small scale and medium scale industries. The small entrepreneur does not possess the necessary talents and
resources to initiate large scale production and introduce revolutionary technological changes. In the developed
countries most entrepreneurs deal with large scale enterprises. They possess the financial wherewithal and the
necessary expertise to initiate large scale enterprises and introduce novel technical changes. The result is the
developed countries are able to sustain and develop a high level of technical progress. It is this classification which
has led to the wide technological gap between the developed and the less developed countries.
In the initial stages of economic development, entrepreneurs tend to have less initiative and drive. As development
proceeds, they become more innovating and enthusiastic. Similarly, when entrepreneurs are shy and humble the
environment is underdeveloped. Business environment becomes healthy and developed when entrepreneurs are
innovating.
1. Innovating entrepreneurs: Innovative entrepreneurship is characterized by aggressive assemblage of information
and the analysis of results derived from sound combination of factors. Persons of this type are generally aggressive
in experimentation and cleverly put attractive possibilities into practice. An innovating entrepreneur sees the
opportunity for introducing a new technique or a new product or a new market. He or she may raise money to launch
an enterprise, assemble the various factors, choose top executives and set the organization going. Schumpeters
entrepreneur was of this type. Such an entrepreneur introduces new products and new methods of production, opens
new markets and re-organizes the enterprise.
Among the different types of entrepreneurs, the innovating entrepreneur is the most vigorous type of entrepreneur.
Innovating entrepreneurs are very commonly found in developed countries. There is dearth of such entrepreneurs in
underdeveloped countries. A country with little or no industrial tradition can hardly produce innovating
entrepreneurs. Such entrepreneurs can emerge and work only when a certain level of development is already
achieved and people look forward to change and progress. Innovating entrepreneurs played the key role in the rise of
modern capitalism through their enterprising spirit, hope of money making, ability to recognize and exploit
opportunities, etc.
2. Adoptive or imitative entrepreneurs: These kinds of entrepreneurs are characterized by readiness to adopt
successful innovations created by innovative entrepreneurs. These type of entrepreneur are revolutionary
entrepreneurs with the different that instead of innovating the changes themselves, they just imitate the technology
and techniques innovated by others. These entrepreneurs are most suitable for developing countries because such
countries prefer to imitate the technology, knowledge and skill already available in more advanced countries. The
Cochin Shipyard is a good example of the result of imitative entrepreneurship. The Shipyard has been constructed
using the innovative technology provided by the Mitsubishi Heavy Industries Ltd. of Japan. Imitative entrepreneurs
are most suitable for the underdeveloped nations because in these nations people prefer to imitate the technology,
knowledge and skill already available in more advanced countries. In highly backward countries there is shortage of
imitative entrepreneurs also. People who can imitate the technologies and products to the particular conditions
prevailing in these countries are needed.
Sometimes, there, is a need to adjust and adopt the new technologies to their special conditions. Imitative
entrepreneurs help to transform the system with the limited resources available. However, these entrepreneurs face
lesser risks and uncertainty than innovative entrepreneurs. While innovative entrepreneurs are creative, imitative
entrepreneurs are adoptive.
Imitative entrepreneurs are also revolutionary and important. The importance of these humbler entrepreneurs who
exploit possibilities as they present themselves and mostly on a small scale must not be under-estimated. In, the first
place, such adaptation requires no mean ability. It often involves what has aptly been called subjective innovation
that is the ability to do things which have not been done before by the particular industrialist, even though, unknown
to him, the problem may have been solved in the same way by others. By western standards, an imitative
entrepreneur may be a pedestrian figure, an adopter and imitator rather then a true innovator. He is more an
organizer of factors of production than a creator. But in a poor country attempting to industrialized, he is
nevertheless a potent change producing figure. He can set in motion the chain reaction which leads to cumulative
progress. This humbler type of entrepreneur is important in under developed countries for another reason. These
countries are placing great emphasis in their economic planning on small scale industries and decentralized
industrial structure.
3.
Fabian entrepreneurs: Entrepreneurs of this type are very cautious and skeptical while practicing any change.
They have neither the will to introduce new changes nor the desire to adopt new methods innovated by the most
enterprising entrepreneurs. Such entrepreneurs are shy and lazy. Their dealings are determined by custom, religion,
tradition and past practices. They are not much interested in taking risk and they try to follow the footsteps of their
predecessors.
4.
Drone entrepreneurs: Drone entrepreneurship is characterized by a refusal to adopt and use opportunities to
make changes in production methods. Such entrepreneurs may even suffer losses but they do not make changes in
production methods. They are laggards as they continue to operate in their traditional way and resist changes. When
their product loses marketability and their operations become uneconomical they are pushed out of the market. They
are conventional in the sense that they stick to conventional products and ideas. The traditional industries of Kerala
are characterized by drone entrepreneurs. The coir and bamboo industries are still in the hands of laggards who
refuse to innovate.
Entrepreneur vs. Manager
The entrepreneur is a person who is motivated to satisfy a high need for achievement in innovative and creative
activities. His creative behavior and innovative spirit which forms a process of an endless chain is termed as
entrepreneurship. It is not enough for the entrepreneur to buildup the process, but equally important task for him is
to manage the business. He performs entrepreneurial vis-a-vis managerial functions. The entrepreneur enters at a
transitional stage in which what is initially with innovation becomes a routine for him the transition from an
entrepreneurship to management. Also, the emphasis switches from techniques and analytical methods to insight and
to involvement with people. The entrepreneur perceives and exploits opportunity, and the subsequent steps necessary
for organization are pertinent, to management.
The entrepreneur differs from the professional manager in that he undertakes a venture for his personal gratification.
As such he cannot live within the framework of occupational behaviour set by others. He may engage professional
manager to perform some of his functions such as setting of objectives, policies, procedures, rules, strategies, formal
communication network. However, the entrepreneurial functions of innovation, assumption of business risk and
commitment to his vision cannot be delegated to the professional manager. Failure to the professional executive may
mean a little more than locating a new job perhaps even at a higher salary, whereas failure of an entrepreneur in his
efforts would mean a devastating loss to his career. The professional manager has to work within the framework of
policy guidelines laid down by the entrepreneur.
This distinction between entrepreneur and the professional (traditional) manager is presented in Table I.
Table-I
Distinctive Features of Traditional Managers and the Entrepreneur
Features
Managers
Entrepreneur
Primary Motives Want promotion and traditional

Corporate rewards. Power-motivated.
Wants freedom, goal oriented

Self-reliant, and self-motivated.
Time Orientation Respond to quotas and Budgets, weekly,
End goals of 5-10 year growth
monthly, quarterly, annual planning

Horizons, the next promotion or transfer.
Next step along way.
Of business in view as guides.

Takes action now to move the
Action
Delegate action. Supervising and

Reporting take most of energy.
Gets hands dirty. May upset

Employees by suddenly doing their work.
Skills
Professional training. Often business

School trained. Abstract analytical tools,
People-management and political skills.
Trained if in technical business.
Knows business intimately. More

business acumen than managerial
Or political skill. Often technically
Courage and
Destiny
Sees others in charge of his or her

Destiny. Can be forceful and ambitious,
but may be fearful of others ability in
Case of optimism.
Self-confident, optimistic,
Courageous.
Attention
Primly on events inside corporation.
Primarily on technology and market place.
Risk
Careful
Like moderate risk. Invests heavily, but

expects to succeed
Market Research Has market studies done to discover

needs and guide product
Conceptualization.
Status
Cares about status symbols.
Failure and
Mistakes
Strives to avoid mistakes and surprises.

Postpones recognizing failure.
Decisions
Agrees with those in power. Delays

decision until he gets a feel of what
Bosses want.
Who they Serve Please others.
Creates needs. Creates products

that often cant be tested with
market research-potential
Customers dont yet understand them.
Talks to customers and forms own opinions
Happy sitting on an orange crate if job is

getting done.
Deals with mistakes and failures as learning

experiences
Follows private vision. Decisive and actionoriented.
Pleases self and customers.
Attitude Toward Sees system as nurturing and protective,

the system
Seeks position within it.
May rapidly advance in a system,

when frustrated; reject the system
And form his or her own.
Problem-solving Works out problems within the system.

Style
Escapes problems in large and

formal structures by leaving and
Starting his own.
Family History
Entrepreneurial small-business,
professional, or agricultural
Background.
Family members worked for large

Organizations.
Who is an Entrepreneur?
Entrepreneurs play a vital role in the economic development of a country. Economic development of a country
depends primarily on its entrepreneurs. An entrepreneur is often considered as a person who sets up his own
business or industry. He has initiative, drive, skill and spirit of innovation who aims at high goals. The entrepreneur
is the individual that identifies the opportunity, gathers the necessary resources and is ultimately responsible for the
performance of the organization. Entrepreneurs are action oriented, highly motivated individuals who take risks to
achieve goals.
Concept of Entrepreneur:
The story of defining entrepreneur and entrepreneurship will sound like the story of six blind men describing an.
elephant. There is hardly any commonly agreed upon definition among economic pundits.
The word entrepreneur is derived from the French word entreprendre which means to initiate or undertake. In the
early sixteenth century, the Frenchmen who organized and led military expeditions were referred to as
entrepreneurs. The term entrepreneur was applied to business in the early eighteenth century by French Economist
Richard Cantillon. According to him, the entrepreneur buys factor services at certain prices with a view to sell their
products at uncertain prices in the future. Richard Cantillon conceived of an entrepreneur as a bearer of noninsurable risk.
Another Frenchman, J.B. Say, expanded Cantillons ideas and conceptualized the entrepreneur as an organizer of a
business firm, central to its distributive and production functions. Beyond stressing the entrepreneurs importance to
the business, Say did little with his entrepreneurial analysis. According to J.B. Say, an entrepreneur is the economic
agent who unties all means of production, the labour force of the one and the capital or land of the others and who
finds in the value of the products his results from their employment, the reconstitution of the entire capital that he
utilizes and the value of the wages, the interest and the rent which he pays as well as profit belonging to himself. He
emphasized the functions of co-ordination, organization and supervision. Further, it can be said that the entrepreneur
is an organizer and speculator of a business enterprise. The entrepreneur lifts economic resources out of an area of
lower into an area of high productivity and greater yield.
The New Encyclopedia Britannica considers an entrepreneur as an individual who bears the risk of operating a
business in the face of uncertainty about the future conditions. Leading economists of all schools, including Karl
Marx have emphasized the contribution of the entrepreneurs to the development of economies, but Joseph A.
Schumpeter who argues that the rate of growth in an economy depends to a great extent on the activities of
entrepreneurs, has probably put greater emphasis on the entrepreneurial function than any other economist.
In the words of Joseph A. Schumpeter, The entrepreneur in an advanced economy is an individual who introduces
something new in the economy a method of production not yet tested by experience in the branch of manufacture
concerned, a product with which consumers are not yet familiar, a new source of raw material or of new markets and
the like. The function of an entrepreneur according to him is to reform or revolutionize the pattern of production
by exploiting an invention or more generally, an untried technological possibility for producing a new commodity.
According to Schumpeter, an entrepreneur is an innovator, who introduces something new in the economy.
Innovation may be: (a) introduction of a. new product, (b) introduction of new methods of production, (c)
developing new markets and finding fresh sources of raw materials, and (d) making changes in the organization and
management.
Knight described entrepreneurs to be a specialized group or persons, who bear uncertainty; and uncertainty is
defined as the risk which cannot be calculated. The entrepreneur, according to Knight, is the economic functionary
who undertakes such responsibility which, by its very nature, cannot be insured or salaried. He also guarantees
specified sums to others in return for assignments made to them.
Peter F. Drucker, in his book Innovative Entrepreneurs defines entrepreneurs as innovators. Entrepreneurs search
for change and exploit opportunities. According to him Innovation is the specific tool of entrepreneurs, the means
by which they exploit changes as an opportunity for a different business or a different service. It is capable of being
presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search
purposefully for the 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. He further said that an
entrepreneur is one who always searches for changes, responds to it, and exploits it as an opportunity.
Cunningham and Lischerson in their recent work have described six possible schools of thought on entrepreneurs.
The first school of thought i.e. Great Person School says that an entrepreneur is born with an intuitive ability a
sixth sense and this sense helps him in start up stage. The second school of thought, i.e. Psychological
Characteristics School explains that entrepreneurs have unique values attitudes, and needs which drive them and
help them especially in start-up stage. The third school, i.e. Classical School of Thought says that central
characteristic of entrepreneurial behavior is innovation. This characteristic helps the entrepreneur much in start-up
and early growth. Management School is the fourth school of thought and it says entrepreneurs are organizers of
economic venture and they organize, own, manage and assume its risk. Such functional orientation helps them in
early growth and maturity. The fifth school of thought is the Leadership School. According to this school,
entrepreneurs are leaders of people and they have the ability to adopt their style to the needs of people. Such
leadership personality suits them most during early growth and maturity situations. Intrapreneurship School is the
sixth school of thought. Intrapreneurship is the act of developing independent units, to create market and expand
services within the organization. Intrapreneurship is needed by an entrepreneur during the situation of maturity and
change.
Burton W. Folsom, Jr. distinguishes between what he calls a "political entrepreneur" who seeks profit for his
business by using political influence to obtain favors and arrangements with government from a "market
entrepreneur" who seeks to profit without utilizing political influence. Entrepreneur is concerned more than simply
starting a business. The definition of entrepreneurship is a creation process through which entrepreneurs identify
opportunities, allocate resources, and create value. This creation of value is often through the identification of
unmet needs or through the identification of opportunities for change. Entrepreneurs see problems as
opportunities, then take action to identify the solutions to those problems and the customers who will pay to have
those problems solved.
Whatever is the definition, across the world entrepreneurs have been considered instrumental in initiating and
sustaining socio-economic development. There are evidences to believe that countries which have proportionately
higher, percentage of entrepreneurs in their population have developed much faster as compared to countries which
have lesser percentage of them in the society, discover new sources of supply of materials and markets and they
establish new and more effective forms of organizations. Entrepreneurs perceive new opportunities and seize them
with super normal will power and energy, essential to overcome the resistance that social environment offers. In
sum, the concept of entrepreneurs is intimately associated with the three elements-risk bearing, organizing and
innovating.
Features of an Entrepreneur
If we go through the business history of successful entrepreneurs in our country, we come across the names of Tata,
Birla, Gulshan Kumar, Modi, Kirlosker, Dalmia and others who started their business with small size and made good
fortunes. The scanning of their personal features shows that there are certain characteristics of entrepreneurs which
are found usually prominent in them. Successful entrepreneurs are action-oriented, they have the ability to visualize
the steps from idea to actualization. They are both thinkers and doers, planners and workers, get involved-they adopt
a hands-on approach, can tolerate ambiguity-enterprise always consists of action in uncertainty, accept risk but
understand and manage it; overcome rather than avoid mistakes they dont admit they are beaten, see themselves
as responsible for their own destiny-they are dedicated, setting self-determined goals and believe in creating markets
for their ideas, not just in responding to existing market demands.
An entrepreneur is a job-giver and not a job-seeker. This means that he is his own boss. The characteristics which
make him his own boss are given below:
(a)
Strong achievement orientation.
(b)
Unwavering determination and commitment.
(c)
Self-reliance and independence.
(d)
Hunger for success.
(e)
Self-confidence and self-faith.
(f)
Sustained enthusiasm.
(g)
Single-mindedness.
(h)
Strong reality orientation.
(i)
Willingness to accept responsibility.
(j)
Courage.
(k)
Ability to survive defeat.
(l)
Become wealthy and stay humble.
An entrepreneur is a highly achievement oriented, enthusiastic and energetic individual.
Characteristic of successful entrepreneurs: Qualities of Successful Entrepreneurs are list below1. They dream big: - Successful entrepreneurs have the ability to envision a new reality and the will to bring it to
fruition. They have crazy big dreams, even though to some these dreams may not be realistic or practical. But it is
the big dreamers who really succeed. They are possibilities thinker who believe there are possibilities and are not
limited by commonly held boundaries. They look beyond to ask the what ifs questions. They look for answers and
solutions and arent daunted by challenges. In fact, they relish challenges.
2. They have a passion for positive change: - The entrepreneurs who make it big know that they have a unique
contribution to make to society. They start a business, not just to change their own lives, but also to make a
difference in the world and make it a better place. They want their products or services to succeed not only in terms
of profits but to bring about positive change in the communities they live in by solving existing problems or filling
existing gaps. They are motivated by their desire to improve circumstances at the broader level.
3. They have a clear vision of what they want to achieve: - Successful entrepreneurs have the vision for the future
what they want to achieve, what opportunities they need, and how they can accomplish it. Their vision gives them
purpose and helps maintain their focus on what they want the business to achieve. It also helps them overcome the
many humps and challenges they meet along the way.
4. They engage in calculated risk taking: - Contrary to common wisdom, entrepreneurs are not risk addicts. Instead,
they take reasonable risks. While taking risks is part of the entrepreneurship process, those who succeed weigh the
options, see what else is out there, and careful about the types of risks they are willing to take for themselves and
those that might rely on them.
5. They are self-directed and self-motivated:- Entrepreneurs have a strong faith in their ideas, their capabilities and
in themselves. After all, to succeed, they constantly need to ask themselves the hard questions and then come up
with ways to answer them. They have intestinal fortitude or that fire in the belly. They love to be their own boss,
carving their own paths along the way. .
6. They are results-driven: - Successful entrepreneurs are passionate about results. They want their actions to have a
direct impact on results. They want the job done. They also have the ability to conceptualize the whole of a business;
not just its individual parts, but how they relate to each other. They are individuals who always come up with new
ideas.
7. They have a strong desire to be independent:- Entrepreneurs love to be in charge and be their own boss. They
want to be in control. They carve their own path, relying on their own talents, instincts and skills. They dont take
orders from anyone and do not need validation from superiors judging them whether they are worthy of a promotion
or capable of handling more responsibilities. They move and make decisions on their own, without waiting for
someone to push them. While being in charge can be daunting at times, the rewards of seeing the results of all the
hard work are tremendous.
8. They know how to sell. Business is all about selling: - Whether selling their idea to an investor, negotiating with a
bank for a loan, talking to a supplier, or directly selling to customer, entrepreneurs know how to sell. The business is
bound to fail if the entrepreneur does not know how to sell. If they do not have sales skills, they are smart enough to
partner with someone who excels at it.
9. They have a powerful drive to accumulate wealth: - Entrepreneurs appreciate what money could bring to their
lives and embrace it. They know that financial success can afford them with opportunity, freedom, and well-being.
They view starting their own businesses as an opportunity to earn far more than they could ever from working for
others. Win, lose or draw, entrepreneurs want to be master of their own financial destiny.
10. They embrace fear: - Successful entrepreneurs strongly believe in themselves. In fact, many of them are
supremely confident individuals. However, their strong belief in themselves doesnt necessarily mean that they dont
experience self-doubt. They do! They experience fear, but instead of running away from their fears, they embrace
what they fear the most and just plod on.
11. They exhibit tolerance towards ambiguity: - Even though there is no assurance that a business will succeed,
entrepreneurs are not daunted by this uncertainly and instead continue to pursue the idea of starting a business.
12. They see opportunities where others do not: - Those who succeed in business have finely honed business skills
based on their environment, education, experience and innate intuitive abilities. What sets them apart is their
inherent sense of what is right for a business. They have the ability to spot opportunities for growth, with loads of
courage to pursue these opportunities. They love the challenge of pitting their resources and skills against the
environment.
13. They are not afraid to make mistakes: - Successful entrepreneurs are not afraid of making mistakes because they
see it as an opportunity to learn and improve. They dont focus on blame and retribution, and instead work on
finding solutions to rectify the mistake and prevent it from happening again.
14. They seek out help when needed: - Successful entrepreneurs realize that they dont know everything. They will
pull in resources and seek the advice of experts to help them achieve their goals. They know that they key to getting
things done is to find the right people who can do the job. They understand their strengths and weaknesses and
find people who can complement them in areas that they need the most.
15. They have the willingness and capacity to persevere: - Entrepreneurs possess a high level of energy, sustainable
over long hours to make the business successful. They welcome the responsibility that goes to owning a business.
They are tenacious, always finding a way to display persistence or able to dig deep within oneself to find it. When
things dont go their way, they are able to handle thousands of rejections along the journey.
16. Good interpersonal skills: - They recognize that much of their success will depend on how well they deal with
people. While success in entrepreneurship takes rugged individualism, its a team sport at its core.
17. Discipline: - Successful entrepreneurs possess huge doses of discipline. Discipline is important to stay focused
on their objectives and vision. The process of building an idea into a business entails working on a lot of details
some of which the entrepreneur may not want to deal with but it is discipline that makes the entrepreneur work
on completing every task. As an entrepreneur, it is easy to go off strategy, including the allure of not working (for
home-based entrepreneurs, that mean sleeping or watching TV instead of working), and discipline keeps them on the
right track.
18. They keep their focus: - Successful entrepreneurs understand that focus is a key ingredient to the success of their
business. They know the importance of identifying and concentrating on making the unique aspects of their business
as superb as possible. They are clear on what their business stands for, and stick to it. They dont have to grab all
opportunities that come their way or try to do too much too quickly. They keep their eyes on the prize and spend
their resources, time and energy in focusing on the attainment of their goals running and developing a successful,
profitable and viable business. Every day, their focus is how to further enhance their business.
19. They are flexible: - Successful entrepreneurs are always on their toes, ready to make the shift if needed. They
know that as the business grow, the needs of their business changes and they will require help in developing and
executing their vision. Their managerial skills become critical, and their understanding of the market and
competition becomes crucial. They know that sleeping on the job is the worst mistake an entrepreneur can make,
and they always strategize and prepare for change.
20. They love what they do: - Successful entrepreneurs are passionate with what they do. They love what they do,
and their work feels more like fun, play and inspiration. They more they are having fun and loving what they do,
financial rewards come easier. They are energized by the activities and challenges of their business. Even if they fail
often, their passion keeps them going until they get it right.
Before committing yourself to the extraordinary investment of time, energy and money that starting a business
requires, you need to engage in some personal soul-searching. You need to review your pluses and minuses, your
strengths and weaknesses to determine if you are a suitable match for the challenge. Remember, the entrepreneur IS
the business its originator, its motivating force, and its energy. Without the needed ingredients, the business can
fail as quickly as it started.
Concept of Entrepreneurship
The concept of entrepreneurship has been around for a very long time, but its resurgent popularity implies a sudden
discovery, as if we had stumbled onto a new direction for American enterprise. This is a myth, as we shall see,
because the American system of free enterprise has always engendered the spirit of entrepreneurship. America was
discovered by entrepreneurs, and the United States became a world economic power through entrepreneurial
activity. More important, our future rests squarely on entrepreneurial ventures founded by creative individuals.
They are inspired people, often adventurers, who can at once disrupt a society and instigate progress. They are risk
takers who seize opportunities to harness and use resources in unusual ways, and entrepreneurs will thrust us into
the twenty-first century with a thunderous roar.
By definition, entrepreneurship is the practice of starting a new business/venture or reviving an existing
organization. Entrepreneurial actions vary depending on the nature of business. Entrepreneurs seek funding from
venture capitalists and NGOs. Usually, such investors expect higher returns on their investments. The very reason
they invested in the venture of a greenhorn is because they intend to make as much as possible out of the venture.
An Entrepreneurial Perspective
Entrepreneurship is one of the four mainstream economic factors: land, labor, capital, and entrepreneurship.
The word itself, derived from 17th-century French entreprendre, refers to individuals who were
undertakers, meaning those who undertook the risk of new enterprise. They were
contractors who bore
the risks of profit or loss, and many early entrepreneurs were
soldiers of fortune, adventurers, builders,
merchants, and, incidentally, funeral directors.
Early reference to the entrepreneur in the 14th century spoke about tax contractors
individuals
who paid a foxed sum of money to a government for the license to collect taxes in their region.

In the 19th century, entrepreneurs were the captains of industry, the risk takers, and the
decision makers, the individuals who aspired to wealth and who gathered and managed
resources to create new
enterprises.
Notable early French, British, and Austrian economists wrote enthusiastically about
entrepreneurs as the change agents of progressive economies.
Meaning of entrepreneurship has evolved over the centuries
What is meant by entrepreneurship? The concept of entrepreneurship was first established

in
the 1700s, and the meaning has evolved ever since. Many simply equate it with starting
one's own business.
Most economists believe it is more than that.
To some economists, the entrepreneur is one who is willing to bear the risk of a new venture
if
there is a significant chance for profit. Others emphasize the entrepreneur's role as an
innovator who markets his
innovation. Still other economists say that entrepreneurs develop new goods or processes that the market demands
and are not currently being supplied.
Generally, entrepreneurship is a tough proposition as a good number of the new businesses fail to take off.
Entrepreneurial activities differ based on the type of business they are involved in. It is also true that entrepreneurial
ventures create a number of new job opportunities. A large number of entrepreneurial projects look for venture
capital or angel funding for their startup firms in order to finance their capital requirements. Besides, government
agencies and some NGOs also finance entrepreneurial ventures.
Entrepreneurship is often associated with uncertainty, particularly when it involves creating something new for
which there is no existing market. Even if there is a market, it may not translate into a huge business opportunity for
the entrepreneur. A major aspect in entrepreneurship is that entrepreneurs embrace opportunities irrespective of the
resources they have access to.
Entrepreneurship involves being resourceful and finding ways to obtain the resources required to achieve the set
objectives. Capital is one such resource. Entrepreneurs need to think out-of-the-box to improve their chances of
obtaining what they need to succeed. According to management experts, vast majority of entrepreneurs desire to be
in control of their own life and they cant find this beyond entrepreneurship. Studies have demonstrated that people
derive great satisfaction from their entrepreneurial work.
Today, there is the increasing awareness about entrepreneurship. People arent confining themselves to one business.
They are following one business with another. Such entrepreneurs are referred to as serial entrepreneurs.
Sometimes these entrepreneurs become angel investors and invest their money in startup companies. As a person
gains greater insight into business and entrepreneurship, his chances of succeeding in business improve.
Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to
initiate maintain or aggrandize profit by production, or distribution of economic goods and services.
Entrepreneurship is very often associated with adventurism, risk bearing, innovating creativity etc. It is concerned
with making dynamic changes in the process of production, innovation in production, new usage for materials etc. It
is a mental attitude to take calculated risks with a view to attain certain objectives. It also means doing something in
a new and better manner.
The Concept of Entrepreneurship: Like other economic concepts, entrepreneurship has long been debated and
discussed. It has been used in various ways and in various senses, while some call entrepreneurship as risk-bearing
others view it innovating and yet others consider it thrill-seeking.
Few Definitions
Defining entrepreneurship is not an easy task. There are almost as many definitions of entrepreneurship as there are
scholar books on the subjects.
According to Higgins, Entrepreneurship is meant the function of seeking investment and production opportunity,
organizing an enterprise to undertake a new production process, raising capital hiring labour, arranging the supply of
raw materials, finding site, introducing a new technique and commodities, discovering new sources of raw materials
and selecting top managers of day-to-day operations of the enterprise. In this definition entrepreneurship is
described as the function of handling economic activity, undertaking risk, creating something new and organizing
and coordinating resources.
According to Hennery, Entrepreneurship is an attempt to create value through recognition of business opportunity,
the management of risk-taking appropriate to the opportunity, and through the communicative and management
skills to mobilize human, financial, and material resources necessary to bring a project to fruition. This definition
recognizes that entrepreneurship is both an art as well as a science which involves the fusion of capital, technology
and human talent and is a dynamic and risky process.
According to Diamond, Entrepreneurship is equivalent to enterprise which involves the willingness to assume risks
in undertaking an economic activity particularly a new one ____. It may involve an innovation but not necessarily
so. It always involves risk-taking and decision-making, although neither risk nor decision-making may be great
significance. In this definition, entrepreneurship is used to refer to the qualities required to innovate, start a new
enterprise, accept the challenge and bear the risk. Few individuals have these qualities and, therefore, entrepreneurs
are found in limited numbers in any society.
According to A.H. Cole Entrepreneurship is the purposeful activity of an individual or a group of associated
individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods
and services.
Jaffrey A. Timmons defined entrepreneurship as the ability to create and build something from practically nothing.
Fundamentally, a human creative activity, it is finding personal energy by initiating, building and achieving an
enterprise or organization rather than by just watching, analyzing or describing one. It requires the ability to take
calculated risk and to reduce the chance of failure. It is the ability to build a founding team to complement the
entrepreneurs skills and talents. It is the knack for sensing an opportunity where others see chaos, contradiction and
confusion. It is the know-how to find, Marshall, and control resources and to make sure the venture does not run out
of money when it is needed most.
According to Peter F. Drucker, Entrepreneurship is neither a science nor an art. It has a knowledge base.
Knowledge in entrepreneurship is a means to an end. Indeed, what contributes knowledge in practice is largely
defined by the ends, that is, by the practice. In Druckers view, entrepreneurship is considered less risky, if the
entrepreneur is methodical and does not violate elementary and well known rules.
"Entrepreneurship is the discovery of new combinations of resources under uncertain situations that generate
entrepreneurial rent as reward for risk taking." (Rumelt, 1987)
"A firm-creating entrepreneur creates and perhaps operates a new business firm, while an innovating entrepreneur
transforms inventions and ideas into economically viable entities." (Baumol, 1991)
Entrepreneurship is about marrying passion and process with a good dose of perseverance. (Vijay Thandani, CEO
of NIIT Ltd.)
The entrepreneurial steps includes inspiration (the concept), Respiration (financing and process liability), and
perspiration (delivering value to customers).
According to Robert D. Hisrich, Peters and Shepherd, Entrepreneurship is the process of creating something new
with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social
risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.
This definition stresses four basic aspects of being an entrepreneur. First, entrepreneurship involves the creation
processcreating something new of value. The creation has to have value to the entrepreneur and value to the
audience for which it is developed. This audience can be (1) the market of organizational buyers for business
innovation, (2) the hospitals administration for a new admitting procedure and software, (3) prospective students for
anew course or even college of entrepreneurship, or (4) the constituency for a new service provided by a nonprofit
agency. Second, entrepreneurship requires the devotion of the necessary time and effort. Only those going through
the entrepreneurial process appreciate the significant amount of time and effort it takes to create something new and
make it operational. As one new entrepreneur so succinctly stated, While I may have worked as many hours in the
office while I was in industry, as an entrepreneur I never stopped thinking about the business.
The third part of the definition involves the rewards of being an entrepreneur. The most important of these
rewards is independence, followed by personal satisfaction. For profit entrepreneurs, the monetary reward also
comes into play. For some profit entrepreneurs, money becomes the indicator of the degree of success achieved.
Assuming the necessary risks is the final aspect of entrepreneurship. Because action takes place overtime, and the
future is unknowable, action is inherently uncertain. This uncertainty is further enhanced by the novelty intrinsic to
entrepreneurial actions, such as the creation of new products, new services, new ventures, and so on.9 Entrepreneurs
must decide to act even in the face of uncertainty over the outcome of that action. Therefore, entrepreneurs respond
to, and create, change through their entrepreneurial actions, where entrepreneurial action refers to behavior in
response to a judgmental decision under uncertainty about a possible opportunity for profit.
In all above definitions, entrepreneurship refers to the functions performed by an entrepreneur in establishing an
enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what
entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process
involving various actions to be undertaken to establish an enterprise. It is, thus, process of giving birth to a new
enterprise. Innovation and risk bearing are regarded as the two basic elements involved in entrepreneurship.
Thus, entrepreneurship is concerned with the performance and coordination of the entrepreneurial functions. This
also means that entrepreneur precedes entrepreneurship.
Essence of Entrepreneurial Definitions
A. Almost all definitions of entrepreneurship include:
1. Initiative taking.
2. The organizing and reorganizing or social/economic mechanisms to turn resources and
account.
3. The acceptance of risk or failure.
situations to practical
B. To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into
combinations that make their value greater than before, and one who introduces changes, innovations, and a new
order.
C. Entrepreneurship is the dynamic process of creating wealth.
D. Our definition of entrepreneurship involves four aspects:
1. Entrepreneurship involves the creation processcreating something new of value to the entrepreneur and to
the audience.
2. It requires the devotion of the necessary time and effort.
3. It involves assuming the necessary risks.
4. The rewards of being an entrepreneur are independence, personal satisfaction, and monetary
reward.
E. The entrepreneurial experience is filled with enthusiasm, frustration, anxiety, and hard work.
1. For many reasons there is a high failure rate among business owners.
2. The financial and emotional risk can be very high.
What entrepreneurship involves? - Entrepreneurship involves the following:
Confidence in an idea and a willingness to accept the hard work necessary for turning the creativity of dreams into
reality.
Seeing the opportunity presented by change that others have not had the courage to act on.
Taking controllable risks rather than gambling or relying on sheer luck. Costs other than money; time, energy,
reputation, emotional drains.
Reality testing: recognizing realistic limits imposed by the economy or physical resources available.
Knowing and understanding customers and their needs.
A basic understanding of business and products or services. Keeping and interpreting business records.
Careful planning to reduce risks.
Knowing the actions, strengths and weaknesses of competitors.
Having right location, and also right size and right price or lease rate for that location.
Building a team of people with complementary skills and talents.
Sensing opportunities, while others see chaos, contradiction, and confusion.

Finding and controlling resource (often owned by others) to pursue the opportunity.
Having a vision and than having the passion, commitment, and motivation to transmit this.
Vision to others (employees, partners, suppliers and customers).
A willingness to take responsibility and ability to put mind to task and see it through from inception to completion.
Nature and Characteristics of Entrepreneurship: Entrepreneurship is a multi-dimensional concept and it is
unnecessary to consider many factors and perspectives. The distinctive features of entrepreneurship are as follows:
1. Innovation: The process of commercializing an invention is innovation. For example, stern as an alternative
source of energy was invented as early as AD 100. Later, in 1712, when it was used to run engines then the process
was called innovative. In simple words, in business activity, novelty may take any one or a combination of the
following:
a)
New products;
b)
New methods of production;
c)
New markets;
d)
New sources of raw material; or
e)
New forms of organization.
Innovation is a critical aspect of entrepreneurship. Entrepreneurs always try to create new and different values and
get satisfaction in doing so. They try to convert a material into a resource or, combine the existing resources in a new
and more productive manner. The act of innovation thus provides resources with a new capacity to create wealth.
2. Motivation: Motivation comes from the word motive (or goal). It means the urge in an individual to achieve a
particular goal. In other words, it is the need to achieve that motivates a person. You may find many people with
sufficient financial resources and. family support who are interested in independent ventures. Yet, very few actually
start their business. Why is it so? Because they are comfortable in doing routine jobs and have no higher goals in
life. They lack motivation. Entrepreneurs generally are highly active. They struggle constantly to achieve
something better than what-they already have. They like to be different from others and are ready to work hard to
reach their goal. Persons experiencing constant need to achieve always try to understand their strengths and
weaknesses. This enables them to seek external help whenever needed.
Let us take a look at the Vadilal group which is household name today in Gujarat. Vadialal Ice Cream is a premier
brand in the consumer market. You may. be surprised to know that Ramachandra Gandhi and Laxman Gandhi, the
two brothers who founded the Vadilal empire, could not even complete their school education. They started in a
small way by selling homemade ice cream in the city of Ahmadabad. Now, Vadilal is the largest ice cream company
in the country.
How did they do it? They did not stop thinking big. They had the courage to do what they wanted to. Entrepreneurial
persons seek rewards or returns earned through their own efforts and do not depend upon luck. They do not like to
be idle.
3. Risk Taking: Risk-taking implies taking decisions under conditions where the reward on a certain action is
known, but the occurrence of the event is uncertain. While doing so, an entrepreneur becomes responsible for the
result of the decision. This responsibility however cannot be insured against failure.
Imagine that you are a qualified pharmacist and that you have got a large sum of money from your parents. Which of
the following options would you choose?
a)
Invest in a bank deposit with 8 per cent annual interest;
b)
Invest in a company with a possible return of 15 per cent;
c)
Start a medical shop in your locality (because people there have to travel a long distance to get medicines)
with a fairly good chance of marking an immediate return of around 10 percent. (You are also aware that the
business is sustainable and can bring in more returns say 20,30 or 50% in future if you put in your time and effort);
d)
Try your hick in the share market.
Clearly, option c calls for an entrepreneurial quality. Remember that successful entrepreneurs usually choose the
moderate or middle path. They are not gamblers. At the same time, they are hot afraid of taking a decision if there is
a reasonable chance of success.
You must be aware that businessmen spend considerable amount of time in planning their enterprises. They study
the market technology, examine and re-examine the demand, the prices, machinery and processes involved, make
detailed enquiries about sources of finance and think about other business lines. Why do you think they do through
all these processes? In order to minimize the risks involved and avoid difficulties that may arise in the future, as far
as possible:
4.
Organization Building: According to Harbison entrepreneurship implies the skill to build an organization.
Organization building ability is the most critical skill required for industrial development. This skill means the
ability to multiply oneself by effectively delegating responsibility to others. Unlike Schumpeter, Harbisons
entrepreneur is not an innovator but an organization builder who harnesses the new ideas of different innovators to
the rest of the organization. Entrepreneurs need not necessarily be the men with ideas or men who try new
combinations of resources but they may simply be good leaders and excellent administrators.
5.
Managerial-Skills and Leadership: According to Hoselitz, managerial skills and leadership are the most
important facets of entrepreneurship. Financial skills are only of secondary importance. He maintains that a person
who is to become an industrial entrepreneur must have more that he drives to earn profits and amass wealth. He
must have the ability to lead and manage. He identifies three types of business leadership, namely merchant money
lenders, managers and entrepreneurs. The function of the first group is market oriented, that of the second is
authority-oriented while the third group has a addition to these a production-orientation.
The commodity with which a money lender deals is acceptable to everyone but an industrial entrepreneur creates his
own commodity and its acceptability is uncertain. Therefore, the entrepreneur assumes more risk than a trader or a
money lender. Only a strong desire to make profit is not enough to succeed in entrepreneurship. Entrepreneurship
can develop in a society where its culture permits a variety of choices and where social processes are not rigid. The
social conditions should encourage the development of enterprise. There are innumerable cases, in entrepreneurial
history, of firms, which failed because their founders could not function as managers or feared to enlist the services
of managers when required.
CREATING AND STARTING THE VENTURE
PLANNING AS PART OF THE BUSINESS OPERATION
Planning is a process that never ends. In the early stages, the entrepreneur should prepare a preliminary plan. The
plan will be finalized as the enterprise develops. Many different types of plans may be part of any business
operation-financial, marketing, production, and sales plans. Plans may be short term or long term, or they may be
strategic or operational. All of these plans have one purpose: to provide guidance and structure to management in a
rapidly changing market environment.
WHAT IS THE BUSINESS PLAN
A business plan is a written document prepared by the entrepreneur that describes all the relevant external and
internal elements involved in starting a new venture. It addresses both short- and long-term decision making. The
business plan is like a road map for the business' development. The Internet also provides outlines for business
planning. Entrepreneurs can also hire or offer equity to another person to provide expertise in preparing the business
plan. In developing the business plan the entrepreneur can determine how much money will be needed from new and
existing sources.
WHO SHOULD WRITE THE PLAN
The business plan should be prepared by the entrepreneur; however, he or she may consult many sources. Lawyers,
accountants, marketing consultants, and engineers are useful supplemental sources. Other resources are the Small
Business Administration, Service Core of Retired Executives, Small Business Development Centers, universities,
friends, and relatives. To help determine whether to hire a consultant, the entrepreneur needs to make an objective
assessment of his or her own skills.
SCOPE AND VALUE OF THE BUSINESS PLANCWHO READS THE PLAN
The business plan must be comprehensive enough to address the concerns of employees, investors, bankers, venture
capitalists, suppliers, and customers.
Three perspectives need to be considered:
The entrepreneur understands the new venture better than anyone.
The marketing perspective considers the venture through the eyes of the customer.
The investor looks for sound financial projections. The depth of the business plan depends on the size and scope
of the proposed venture.
The business plan is valuable to the entrepreneur and investors because:
1. It helps determine the viability of the venture in a designated market.
2. It gives guidance in organizing planning activities.
3. It serves as an important tool in obtaining financing.
Potential investors are very particular about what should be included in the plan. The process of developing a
business plan also provides a self-assessment of the entrepreneur. This self-evaluation requires the entrepreneur to
think through obstacles that might prevent the venture's success. It also allows the entrepreneur to plan ways to
avoid such obstacles.
HOW DO POTENTIAL LENDERS AND INVESTORS EVALUATE THE PLAN
Because the business plan should address the needs of all the potential evaluators, software packages and Internet
samples should be used only to assist in preparation. As the entrepreneur becomes aware of who will read the plan,
changes will be necessary. Suppliers may want to see a business plan before signing a contract to supply products or
services. Customers may also want to review the plan before buying the product. The business plan should consider
the needs of these constituencies. Potential suppliers of capital will vary in their needs and requirements in the
business plan. Lenders are primarily interested in the ability of the new venture to pay back the debt and focus on
the four C's of credit:
1. The entrepreneur's credit history or character.

2. Their ability to meet debt and interest payments (cash flow.)
3. The collateral or tangible assets being secured.
4. Equity contribution or the amount of personal equity that has been invested by the entrepreneur.
Investors provide large sums of capital for ownership (equity) and expect to cash out within 5 to 7 years. They will
often place more emphasis on the entrepreneur's character than lenders. The venture capitalist will play an important
role in management of the business and wants the entrepreneurs to be pliable and willing to accept this involvement.
These investors will also demand high rates of return and will thus focus on the market and financial projections. If
the entrepreneur does not consider the needs of these sources, the plan may be an internalized document without
consideration of the feasibility of meeting market goals. Most external advisors and potential investors are bound by
a professional code of ethics regarding disclosure.
PRESENTING THE PLAN
It is often necessary for an entrepreneur to orally present the business plan to investors. Typically the entrepreneur
provides a short (20-30 minutes) presentation of the business plan. The entrepreneur must sell their business concept
in a short time period. A venture capitalist or angel group may also ask the entrepreneur to present the plan to their
partners before making a final decision.
INFORMATION NEEDS
Before preparing a business plan, the entrepreneur should do a quick feasibility study to see if there are possible
barriers to success. The entrepreneur should clearly define the venture's goals, which provide a framework for the
business plan. The business plan must reflect reasonable goals.
Market Information
It is important to know the market potential for the product or service. The first step is to define the market. A welldefined target market makes it easier to project market size and market goals. To assess the total market potential,
the entrepreneur can use trade associations, government reports, and published studies.
Operations Information Needs
The entrepreneur may need information on:
Location
Manufacturing operations
Raw materials
Equipment
Labor skills
Space
Overhead
Each item may require some research but is needed by those who will assess the business plan.
Financial Information Needs
Before preparing the plan, the entrepreneur must evaluate the profitability of the venture through the following:
Expected sales and expense figures for the first three years
Cash flow figures for the first three years
Current balance sheets and pro forma balance sheets for the next three years
Determination of expected sales and expenses is based on the market information gathered earlier.
Estimates of cash flow will consider the ability of the new venture to meet expenses at designated times.
Current balance sheet figures show the assets, liabilities, and investments made by the owner.
USING THE INTERNET AS A RESOURCE TOOL
Thanks to technology, entrepreneurs are able to access information efficiently, expediently, and at very little cost.
The Internet can serve as an important source of information in preparing the business plan.
Information on industry analysis, competitor analysis, and measurement of market potential can be located.
In addition, the Internet also provides opportunities for actually marketing the new venture's products.
A web site, or home page, typically describes a firm's history, existing products, background of the founders, and
other information to create a favorable image. The web site can be a vehicle for advertising or for direct marketing.
Many new ventures use web pages to increase sales contacts and reach potential customers. An entrepreneur can
also access competitors' web sites to gain knowledge of their strategy in the marketplace. To gather information
anonymously the entrepreneur can also investigate newsgroups. All that is needed to use these sources is a small
investment in hardware and software.
WRITING THE BUSINESS PLAN
The business plan should be comprehensive enough to give a potential investor a complete understanding of the
venture.
Introductory Page
The title page provides a brief summary of the business plan's contents, and should include:
The name and address of the company
The name of the entrepreneur and a telephone number
A paragraph describing the company and the nature of the business
The amount of financing needed
A statement of the confidentiality of the report

It also sets out the basic concept that the entrepreneur is attempting to develop.
Executive Summary
This is prepared after the total plan is written. It should be three to four pages in length and should highlight the key
points in the business plan. The summary should highlight in a concise manner the key points in the business plan.
Issues that should be addressed include:
Brief description of the business concept
Any data that support the opportunity for the venture.
Statement of you this opportunity will be pursued.
Highlight some key financial results that can be achieved

Because of the limited scope of the summary, the entrepreneur should ascertain what is important to the audience to
whom the plan is directed.
Environmental and Industry Analysis
The entrepreneur should first conduct an environmental analysis to identify trends and changes occurring on a
national and international level that may impact the new venture.
Examples of environmental factors are:
Economy
Culture
Technology
Legal concerns
All of the above external factors are generally uncontrollable

Next the entrepreneur should conduct an industry analysis that focuses on specific industry trends Some examples of
industry factors include:
Industry demand
Competition
The last part of this section should focus on the specific market. This would include such information as who the
customer is and what the business environment is like. The market should be segmented and the target market
identified.
Description of the Venture
The description of the venture should be detailed in this section. This should begin with the mission statement or
company mission, which describes the nature of the business and what the entrepreneur hopes to accomplish. The
new venture should be described in detail, including the product, location, personnel, background of entrepreneur,
and history of the venture. The emphasis placed on location is a function of the type of business. Maps that locate
customers, competitors, and alternative locations can be helpful. If the building or site decision involves legal issues,
the entrepreneur should hire a lawyer.
Production Plan or Operations Plan
If a new venture is a manufacturing operation, a production plan is necessary. This plan should describe the
complete manufacturing process, including whether or not the process is to be subcontracted. If the manufacturing is
carried out by the entrepreneur, the plan should describe the physical plant layout and machinery and equipment
needed. If the venture is not manufacturing, this section would be titled operational plan. The entrepreneur would
need to describe the chronological steps in completing a business transaction.
Marketing Plan
The marketing plan describes how the products will be distributed, priced, and promoted. Potential investors regard
the marketing plan as critical to the venture's success.
Organizational Plan
The organizational plan section should describe the venture's form of ownership. If the venture is a corporation, this
should include the number of shares authorized, share options, and names and addresses of the directors and
officers. It is helpful to provide an organization chart indicating the line of authority.
This chart shows the investor who controls the organization and how members interact. Assessment of Risk
It is important that the entrepreneur make an assessment of risk in the following manner: The entrepreneur should
indicate the potential risks to the new venture. Next should be a discussion of what might happen if these risks
become reality. Finally the entrepreneur should discuss the strategy to prevent, minimize, or respond to these risks.
The entrepreneur should also provide alternative strategies should these risk factors occur.
Financial Plan
The financial plan determines the investment needed for the new venture and indicates whether the business plan is
economically feasible. The entrepreneur should summarize the forecasted sales and expenses for the first three
years. Cash flow figure for three years are needed, with the first year's projections provided monthly. The projected
balance sheet shows the financial condition of the business at a specific time.
Appendix
The appendix contains any backup material not included in the text of the document. Other possible documents
Letters from customers, distributors, or subcontractors
Secondary or primary research data
Leases and contracts
Price lists from suppliers and competitors

USING AND IMPLEMENTING THE BUSINESS PLAN
The business plan is designed to guide the entrepreneur through the first year of operations. It should contain control
points to ascertain progress. Planning should be a part of any business operation. Without good planning the
employees will not understand the company's goals and how they are expected to perform their jobs. Bankers say
that most businesses fail because of the entrepreneur's inability to plan effectively.
The entrepreneur can enhance efficient implementation of the plan by developing a schedule to measure programs
and to institute contingency plans.
Measuring Plan Progress
Plan projections will typically be made on a 12-month schedule, but the entrepreneur should check key areas more
frequently.
1. Inventory control- By controlling inventory, the firm can ensure maximum service to the customer.
2. Production control- Compare the cost figures against day-to-day operating costs.
3. Quality control- Quality control depends on the type of production system used.
4. Sales control- Information on units, dollars, and specific products sold should be collected.
5. Disbursements- The new venture should control the amount of money paid out
Updating the Plan
Environmental factors and internal factors can change the direction of the plan. It is important to be sensitive to
changes in the company, industry, and market.
WHY SOME BUSINESS PLANS FAIL
A poorly prepared business plan can be blamed on:
Goals set by the entrepreneurs that are unreasonable.
Goals those are not measurable.

To be successful
Goals should be specific.
They should also be measurable and should be monitored over time.

The entrepreneur who has not made a total commitment to the business will not be able to meet the venture's
demands of the venture. Investors will not be positive about a venture that does not have full- time commitment.
Investors will typically expect the entrepreneur to make significant financial commitment to the business. Lack of
experience will result in failure unless the entrepreneur can gain knowledge or team up with someone. The
entrepreneur should also document customer needs before preparing the plan.
Legal Issues for the Entrepreneur
WHAT IS INTELLECTUAL PROPERTY?

Intellectual property which includes patents, trademarks, copyrights, and trade secrets represent important assets of
entrepreneur and should be understood even before engaging the services of an attorney. Because entrepreneurs
often don't understand intellectual property, they can ignore steps that should be taken to protect these assets.
Need for a Lawyer
All business is regulated by law. The entrepreneur needs to be aware of regulations that affect the new venture. At
different stages the entrepreneur will need legal advice. The legal expertise required will vary based on factors such
as type of product and organizational status. The entrepreneur should carefully evaluate his or her needs before
hiring a lawyer.
How to Select a Lawyer
Why hire a lawyer?- The entrepreneur does not usually have the expertise to handle possible risks associated with
difficult laws. An attorney is in a better position to understand all outcomes related to any legal action. The lawyer
may work on a retainer basis (stated amount per month,), which provides office and consulting time. This does not
include court time or other legal fees. The lawyer may be hired for a one-time fee, i.e. filing for a patent. Choosing a
lawyer is like hiring an employee-The lawyer you work with should be someone to whom you can relate personally.
When resources are limited, the entrepreneur may offer the lawyer stock in exchange for his or her services
Legal Issues in Setting up the Organization
There are many options an entrepreneur can choose in setting up an organization. Legal advice is also needed to
prepare the agreements necessary to begin a partnership, franchise, or corporation.
PATENTS
A patent is a contract between the government and an inventor. The government grants the inventor exclusivity for a
specified amount of time. At the end, the government publishes the invention, and it becomes part of the public
domain. The patent gives the owners a negative right, preventing anyone from making, using, or selling the
invention.
Types of Patents
1. Utility Patents
A utility patent has a term of 17 years, beginning on the date the Patent and Trademark Office (PTO) issues it.
Patents on any invention requiring Govt. approval are extended by the amount of time it takes the Govt. to review
the invention. The patent grants the owner protection from anyone making, using, and/or selling the invention.
2. Design Patents
Covering new, original, ornamental, and unobvious designs for articles, a design patent reflects the appearance of an
object. These are for a 14-year term and provide a negative right, excluding others from making an article having the
same ornamental appearance. Filing fees are lower than for utility patents.
3. Plant patents
Plant patents are issued for 17 years on new varieties of plants. Patents are issued by the Patent and Trademark
Office (PTO.) This office also administers the Disclosure Document Program, in which the inventor files disclosure
of the invention, giving recognition that he or she was the first to develop the idea. Another program is the
Defensive Publication Program, which lets the inventor protect an idea by preventing anyone else from patenting
this idea, but gives the public access to it.
4. International Patents
With the new GATT (General Agreement on Tariffs and Trade) that took effect on January 1, 1996, any application
by a foreign company will be treated equally to an American firm. Previously American firms were given priority.
Now the decision is totally based on when the filing companies began work on the idea. The GATT pact has been
signed by 124 countries. An additional 144 are due to be included by the end of the century. China is excluded
because of issues related to piracy. The pact will mandate stronger protection for entrepreneurs by requiring
protection for the following terms:
Seven years for trademarks.
Twenty years for patents.
Fifty years for films, music, and software.

There are still some problems with international patents, such as the attitudes in China and other Southeast Asian
countries toward "knock-offs."
The Disclosure Document

The entrepreneur should first file a disclosure document to establish a date of conception. To file, the entrepreneur
must prepare a clear description of the invention along with photos and a cover letter. Upon receipt, the PTO stamps
and returns a duplicate copy establishing evidence of conception. Before actually applying for the patent, the
entrepreneur should retain a patent attorney to conduct a patent search.
The Patent Application
The patent application must contain a complete history and description of the invention as well as claims for its
usefulness. The application is divided into sections:
The Introduction Section contains the background and advantages of the invention and the nature of problems it
overcomes. The description of Invention Section, this section contains a description of the drawings, which must
comply with PTO requirements. A detailed description of the invention follows, including engineering
specifications, materials, and components. In Claims Section, Claims are the criteria by which any infringements
will be determined. Essential parts of the invention should be described in broad terms. The claims must not be so
general that they hide the invention's uniqueness. The application should contain a declaration signed by the
inventor. When the application is sent, the status of the invention becomes "patent pending," providing protection
until the application is approved. A carefully written patent should provide protection, but is also an invitation to sue
or be sued if there is any infringement.
Patent Infringement
Many inventions are the result of improvements in existing products. Copying and improving a product may be
legal. If improvement is impossible, it may be possible to license the product from the patent holder. To ascertain the
existence of a patent, the entrepreneur can now use the Internet. If there is an existing patent that might involve
infringement, licensing may be considered. If there is any doubt on this issue, the entrepreneur should hire a patent
attorney.
ONLINE PATENT ISSUES
The question of whether patents are applicable to e-commerce has been raised lately by stamp.com and Pitney
Bowes. Large corporations, like Pitney Bowes, are suing start-up companies to get compensation for their
intellectual property such as research and development and patents.
TRADEMARKS
A trademark may be a word, symbol, design, or some combination that identifies the source of certain goods. A
trademark can last indefinitely, as long as it continues to perform its indicated function. The trademark is given a 20year registration with 20-year renewable terms. In the fifth to sixth year, you must file an affidavit with the PTO
indicating that the patent is in commercial use. Today the law allows filing a trademark solely on the intent to use the
trademark in interstate commerce. There are benefits to registering a mark that has already been in use.
Categories of trademarks:
Coined marks denote no relationship between the mark and the goods and afford the possibility of expansion. An
arbitrary mark is one that has another meaning in our language. A suggestive mark is used to suggest certain features
or characteristics of a product or service. A descriptive mark must have become distinctive and gained recognition
before it can be registered.
Registering a trademark can offer significant advantages to the entrepreneur.
Registering the Trademark
The PTO is responsible for federal registration of trademarks. To file, the entrepreneur must complete the
application form, which can be downloaded from the PTO website. Filing of the registration involves four
requirements:
a. Completion of the written form.

b. A drawing of the mark.
c. Five specimens showing actual use of the mark.
d. The fee.
An examining attorney at the PTO determines whether the mark is suitable for registration. Once accepted, the
trademark is published in the Trademark Official Gazette to allow any party 30 days opposing. If no opposition is
filed, the registration is issued. The entire process usually takes about 13 months.
COPYRIGHT
A copyright protects original works of authorship. The protection does not protect the idea itself. It allows someone
else to use the idea in a different manner. In 1980 the Computer Software Copyright Act was added to provide
explanation of the nature of software protection under copyright law. Authors of software are protected in a manner
similar to authors of artistic works. The idea is not eligible for protection, but the actual software program is eligible.
The PTO issues registration for software source codes and object codes programs. Protection of material on the
Internet has become an important issue.
The New York Time recently claimed that Amazon.com couldn't use its best-seller list without its permission.
Ownership of stock quotes, judicial decision, and real estate postings is also being questioned.
Copyrights are registered with the Library of Congress. All that is needed is the form, two copies of the work, and
the appropriate fee sent to the Register of Copyrights. The term of the copyright is the life of the author plus 50
years. In some instances, several forms of protection may be available: trademark, patent, and copyright.
TRADE SECRETS
A trade secret is not covered by any federal law but is recognized under common laws in each state.
Employees may be asked to sign a confidential information agreement. The holder of the trade secret has the right to
sue any signee who breaks the agreement. Non-protected ideas could become a serious problem in the future unless
the entrepreneur takes precautions.
To maintain secrecy
Train employees to refer sensitive questions to one person.
Provide escorts for all office visitors.
Avoid discussing business in public places.
Control information that might be presented by employees at conferences or in journals.
Use simple security such as locked file cabinets and shredders.
Have employees and consultants sign non-disclosure agreements.
Debrief departing employees.
Avoid faxing any sensitive information.
Mark documents "confidential" that need to be.

Protection against the leaking of trade secrets is difficult to enforce, and legal action can be taken only after the
secret has been revealed.
LICENSING
Licensing is an arrangement between two parties, where one party has proprietary rights protected by a patent,
trademark, or copyright. This requires the licensee to pay a royalty to the holder of the proprietary rights in return
for permission to copy the patent. Licensing has significant value as a marketing strategy to holders of patents.
Procedure
A patent license agreement specifies how the licensee would have access to the patent. Licensing a trademark
usually involves an agreement where the entrepreneur operates a business using the trademark and agrees to specific
requirements. The agreement must be carefully worded and should involve a lawyer.
Licensing a trademark generally involves a franchising agreement. The entrepreneur operates a business using
the trademark and agrees to pay a fixed sum for use of the trademark.
The franchisee also pays a royalty based on sales volume, buys supplies from the franchiser, or some
combination of these.
Copyrights are also popular licensed property. They involve the right to use or copy books, software, music,
photos, and plays. Celebrities will often license the right to use his or her name or image in a product. Hit movies
can also result in new products. Licensing is also popular around special sports events.
Licensing opportunities are plentiful but should be carefully considered and planned.
A significant player in licensing is Walt Disney, which has been actively engaged in licensing for 65 years.
Licensing can be valuable for a firm that lacks resources to conduct R&D to develop a product.
Technology licensing entails an agreement by which a firm (licensee) acquires rights to product technology from
another firm (licensor.)
Two reasons for licensing are to gain competitive advantage and to improve technical skills.
Benefits
Licensing can increase revenues, without the risk and costly start-up investment. Licensing can also be a way to start
a new venture when the idea may infringe.
PRODUCT SAFETY AND LIABILITY
The Consumer Product Safety Act, passed in 1972, created a five-member commission that has the power to
prescribe safety standards for products. The commission also has the power to identify what it considers to be
substantial hazards and bar products it considers unsafe. The act was amended in 1990 to establish stricter guidelines
for reporting product defects and resulting injuries and deaths. Manufacturers could be subject to fines of $1.25
million for not reporting product liability settlements or court awards.
Any new product should be assessed as to whether it falls under the law. If it does, the entrepreneur has to follow
appropriate procedures. Product liability problems are complex.
Recent attempts to reform the legislation passed in Congress but were vetoed by the President. Claims regarding
product safety and liability usually fall under one of these categories:
1. Negligence extends to all parts of the production and marketing process.
2. Warranty Consumers may sue when advertising overstates the benefits of a product or when the product does not
perform as stated.
3. Strict Liability. A consumer can sue on the basis that the product was defective prior to its receipt.
4. Misrepresentation occurs when advertising or other information misrepresents material facts concerning the
quality of the product.
The best protection against product liability is to produce safe products and to warn consumers of any potential
hazards.
INSURANCE
The entrepreneur should purchase insurance in the event that problems do occur. Most firms should consider
coverage in specific areas as a means of managing risk in the business.
Common types of insurance include:
Property insurance.
Casualty insurance.
Life insurance.
Worker's compensation.
Bonding.
Each of these types of insurance provides a means of managing risk in the new business. Some insurance, such as
disability and vehicle coverage, is required by law and cannot be avoided. Life insurance of key employees is not
required but may be necessary to protect the venture. The entrepreneur should consider the increasing insurance
premiums in cost projections. The entrepreneur should determine what kind of insurance to purchase, how much to
purchase, and from what company. Skyrocketing medical costs have significant impact on insurance premiums,
especially workers' compensation. Insurance companies calculate the premium for workers' compensation as a
percentage of payrolls, type of business, and prior claims. Some states are undertaking reforms in this coverage.
Promoting safety through comprehensive guidelines and being personally involved with safety will help the
entrepreneur control costs. Health care coverage is an important benefit to employees and a significant cost to
businesses. A self-employed entrepreneur has limited options. If you are leaving a corporate position, consider
extending your health care benefits with a COBRA, which allows you to continue on the same health policy for
about three years. Individual health care policies hare available. One rule is to never rely on a handshake if the deal
cannot be completed within one year.
The courts insist that a written contract exist for all transactions over $500. The safest way to conduct business deals
is with a written contract. Any deal involving real estate must be in writing to be valid. Leases, rentals, and
purchases all need written agreements.
Four essential items in an agreement to provide the best legal protection:
1. All parties involved should be named and their roles specified.
2. The transaction should be described in detail.
3. The exact value of the transaction should be specified.
4. Obtain signatures of the persons involved in the deal
KEY TERMS
Intellectual property- Any patents, trademarks, copyright, or trade secrets held by the entrepreneur
Patent- Grants holder protection from others making, using, or selling similar idea
Disclosure document- Statement to U.S. Patent and Trademark Office by inventor disclosing intent to patent idea
Trademark- A distinguishing word, name, or symbol used to identify a product
Copyright- Right given to prevent others from printing, copying, or publishing any original works of authorship
Trade secret- Protection against others revealing or disclosing information that could be damaging to business
Licensing- Contractual agreement giving rights to others to use intellectual property in return for a royalty or fee
Generating the Business Ideas for starting a New Business
SOURCES OF NEW IDEAS
A sound idea for a new product or service, properly evaluated, is essential to successfully launch a new venture.
Some of the more frequently used ideas for new entrepreneur include consumers, existing companies, distribution
channels, the federal government and research and development.
Consumers- Potential entrepreneurs should pay close attention to the final focal point of a new product-the customer.
This can be an informal or formal survey of consumers expressing their opinions. Care should be taken to ensure
that the idea represents a large enough market.
Existing Companies- Entrepreneurs should establish a formal method for monitoring and evaluating the products
and services in the market. This may uncover ways to improve on present products, resulting in new product ideas.
Distribution Channels- Because they are familiar with the needs of the market, channel members often have
suggestions for new products. These channel members can also help in marketing the new product.
Government Offices- The files of the Patent Office contain numerous new product possibilities. The patents can
suggest other new product ideas. Several government agencies and publications are helpful in monitoring patent
applications. New product ideas can also come in response to government regulations.
Research and Development- The largest source for new ideas is the entrepreneur's own research and development.
This can be a formal endeavor connected with one's current employment.
Important Weblink for Methods of Generating New Ideas
Methods of Generating New Ideas
Product Planning and Development Process

Once idea emerges from idea sources or creative problem solving, they need further development and refinement in
to final product or service to be offered. This refining process- the product planning and development process is
divided in to five major stages. Idea stage, concept stage, product development stage, test marketing stage and
commercializing; it result in the product life cycle.
Establishing evaluation criteria
At each stage of product planning and development process, criteria for evaluation need to be established. These
criteria should be broad, yet quantitative enough to screen the product carefully in the particular stage of
development. Criteria should be developed to evaluate the new product in terms of market opportunity, competition
the marketing system, financial factors and production factors. A market opportunity and adequate market demand
must exist. Current competing producers, prices, and policies should be evaluated in their impact on market share.
The new product should be compatible with existing management capabilities. The product should be able to be
supported by and contribute to the company's financial structure. The compatibility of new product's production
requirements with existing plant, machinery, and personnel should be determined. Entrepreneurs should formally
evaluate an idea throughout its evolution.
Idea Stage
Promising new product ideas should be identified and impractical ones eliminated in the idea stage allowing
maximum use of company's resources. In the systematic market evaluation checklist method, each new product idea
is expressed in terms of its chief values, merits, and benefits. This technique can be used to determine which new
products should be pursued. The company should also determine the need for the new product and its value to the
company. Need determination should focus on the type of need, its timing, the users involved, the importance of
marketing variables, and the overall market structure and characteristics. In determining the product's value to the
firm, financial scheduling should be evaluated.
Concept Stage
In the concept stage the refined idea is tested to determine consumer acceptance without manufacturing it. One
method of testing is the conversational interview in which respondents are exposed to statements that reflect
attributes of the product. Features, price, and promotion should be evaluated in comparison to major competitors to
indicate deficiencies or benefits. The relative advantages of the new product versus
competitors should be determined.
Product Development Stage
In this stage, consumer reaction is determined, often through a consumer panel. The panel can be given samples of
the product and competitors' products to determine consumer preference. Participants keep the record of their use of
product and comment on its virtues and deficiencies. The panel of consumers is also given a sample of product and
one or more competitive product simultaneously. One test product may already be on the market, whereas the other
test product is new.
Test Marketing Stage
Although the results of product development stage provide the basis of the final marketing plan, the market test can
be done to increase the certainty of successful commercialization. The last step in the evaluation process, the test
marketing stage, provides actual sales results which indicate the acceptance level of consumers. Positive test results
indicate the degree of probability of a successful product launch and company formation.
E-Commerce and Business Start-Up and Growth
The Internet
The Internet started in the 1970s with a U.S. Defense Department program named ARPA. In the early 1990s the
concept of World Wide Web pages was developed. The Internet is a channel for the creation of profitable companies.
Electronic business (e-business) is any process that a business organization conducts over a computer-mediated
network.
Electronic commerce (e-commerce) is any transaction completed over a computer-mediated network that involves
the transfer of ownership or rights to use goods or services. Factors that facilitate the growth of e- commerce are:
The widespread use of personal computers.
The adoption of intranets in companies.
The acceptance of the Internet as a business communications platform.

Starting an E-Commerce Company
The Internet is especially important for small and medium-sized companies as it lets them minimize marketing costs
while reaching broader markets. An entrepreneur starting an Internet commerce venture needs to address many of
the same strategic and tactical questions as other companies plus some specific online issues. One decision is
whether to run the Internet operations within the company or outsource these operations. If handled in-house,
expensive equipment and software have to be maintained. There are numerous possibilities for outsourcing the
Internet business. The two major components of Internet commerce are front-end and back-end operations.
Front-end operations are encompassed in the website's functionality, such as search capabilities, shopping cart,
and secure payment.
Back-end operations involve integrating customer orders with distribution channels and manufacturing
capabilities.
Website
A website is an online connection between the company and its customers and can be developed in-house or
outsourced. There are several important features of every website.
Each website should have search capabilities.
Other functions include shopping cart, secure server connection, credit card payment, and customer feedback
features.
Orders and other sensitive customer information should be transferred only through secure servers.
An Internet company should also obtain a merchant account, which will allow the acceptance of major credit
cards.
A successful website has three characteristics: speed, speed, and speed. Short download time should be the primary
concern of website developers. A website should be easy to use, customized for specific market target groups, and
compatible with different browsers. If the company is targeting international markets, then translation and cultural
adaptation need to be considered. Probably the most difficult aspect of setting
up an online business is advertising and promoting the web pages. A company can advertise its website through
search engines, banner ads, e-mail, and classifieds. Banner ads can be targeted to the exact audience of the firm. The
entrepreneur should collect e-mail addresses from customers for targeted e-mail campaigns.
The Internet offers many low-cost or free services for small businesses, including Internet access, unlimited e-mail
accounts, online calendar, instant messaging, and online conference rooms.
Tracking Customer Information
Electronic databases support personal marketing targeted at individual clients. The online company can capture
customers' information in many ways. The U.S. government has generally maintained a policy of noninvolvement
with Internet regulation, but the Federal Trade Commission has also pressed for new laws to protect minors.
Relationships and Endorsements by Other Companies
The company needs to establish strong connections with other companies in the supply chain to create an end-to-end
value stream. The entrepreneur should protect its innovations and its relationship with other companies. Another
type of relationship is endorsements by prominent Internet companies and associations. Participation in merchant
networks can bring needed credibility.
Doing E-Commerce as an Entrepreneurial Company
The decision to go online should be made on a case-by-case basis.
The products should be able to be delivered economically and conveniently.
The product has to be interesting for a large number of people.
Online operations have to bring significant cost reductions compared with brick-and-mortar operations.
The company must have the ability to economically draw customers to its website. Conflict between traditional
and online marketing channels can lead to a hostile, competing position of once partnering companies.
KEY TERMS
Product development stage- In this stage, the new product is further developed into a prototype and tested
Product life cycle- This cycle is generally divided into four major stages: product introduction, market growth,
market maturity, and sales decline
Product planning and development process- Generally divided into five major stages: idea stage, concept stage,
product development stage, test marketing stage, test marketing stage, and commercialization stage
International Entrepreneurial Opportunities
THE NATURE OF INTERNATIONAL ENTREPRENEURSHIP
As more countries become market oriented and developed, the distinction between foreign and domestic markets is
becoming less pronounced. International entrepreneurship is the process of an entrepreneur conducting business
activities across national boundaries. It is exporting, licensing, or opening a sales office in another country. When an
entrepreneur executes his or her business in more than one country, international entrepreneurship occurs.
THE IMPORTANCE OF INTERNATIONAL BUSINESS TO THE FIRM

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

Whether international or domestic, an entrepreneur is concerned about the same basic issues-sales, costs, and profits.
What varies is the relative importance of the factors being considered. International entrepreneurial decisions are
more complex due to uncontrollable factors such as the followingEconomics- A domestic business strategy is designed under a single economic system. Creating a business strategy
for multiple countries means dealing with different levels of economic development and different distribution
systems.
Balance of Payments- A country's balance of payments affects the valuation of its currency. This economic
variable will affect how companies do business in other countries.
Type of System- Barter or third-party arrangements have been used to increase business activity with the
Commonwealth of Independent States, the former U.S.S.R. There are still many difficulties in doing business in
developing and transition economies due to:
Gaps in the knowledge of the Western system regarding business plans, marketing, and profits
Widely variable rates of return.
Non-convertibility of the ruble.
Differences in the accounting system.
Nightmarish communications.
Political-Legal Environment- Multiple political and legal environments create different business problems. Each
element of the international business strategy can potentially be affected by multiple legal environments. Laws
governing business arrangements also vary greatly in the 150 different legal systems and sets of national laws.
Cultural Environment- The impact of culture on entrepreneurs and strategies is significant. Understanding the
local culture is necessary when developing worldwide plans.
Technological Environment- Technology varies significantly across countries. New products in a country are
created based on the conditions and infrastructure of that country.
Strategic Issues- Four strategic issues are important to the international entrepreneur:
1. The allocation of responsibility between the U.S. and foreign operations.
2. The nature of the planning and control systems to be used.
3. The appropriate organizational structure for conducting international operations.
4. The degree of standardization possible.
With experience in international operations, entrepreneurs tend to change their approach to responsibility.
Stage 1: In the first stages the entrepreneur typically follows a highly centralized decision-making process.
Stage 2: When success occurs, it is no longer possible to use completely centralized decision-making process.
Stage 3: Decentralization is scaled back and major strategic decisions are again centralized.
To understand what is required for effective planning, reporting, and control, the entrepreneur should consider:
1. Environmental analysis.
2. Strategic planning.
3. Structure.
4. Operational planning.
5. Controlling the marketing program.
The first step in identifying markets is to analyze data in the following areas:
1. Market characteristics.
2. Marketing institutions.
3. Industry conditions.
4. Legal environment.
5. Resources.
6. Political environment.
ENTREPRENEURIAL ENTRY INTO INTERNATIONAL BUSINESS

The choice of entry method depends on the goals of the entrepreneur and the company's strengths and weaknesses.
Exporting- As a general rule, an entrepreneur enters into international business through exporting. Indirect
exporting involves a foreign purchaser in the local market or using an export management firm. For certain
commodities, foreign buyers seek out sources of supply. Export management firms, another indirect method, are
located in many commercial centers.
Direct exporting through independent distributors or through one's own overseas sales office is another entry
method. An independent foreign distributor directly contacts foreign customers and takes care of all technicalities.
Entrepreneurs who do not wish to give up control over marketing can open overseas sales offices and hire their own
salespeople.
Non equity arrangements- Non equity arrangements allow the entrepreneur to enter a market without direct equity
investment in the foreign market.
Licensing involves a manufacturer giving a foreign manufacturer the right to use a patent, trademark, or technology
in return for a royalty. This arrangement is most appropriate when the entrepreneur has no prospect of entering the
market through exporting or direct investment. The process is usually low risk and an easy way to generate
incremental income. Without careful analysis, licensing arrangements have several pitfalls.
Turn-key projects- Lesser-developed countries are able to obtain manufacturing technology without surrendering
economic control through turn-key projects. A foreign entrepreneur builds a facility, trains the workers, and trains
the management to run the installation. Once the operation is on line, it is turned over to local owners. Initial profits
can lead to follow-up sales. Financing is often provided by the local company or government.
Management contracts- Entrepreneurs can contract their management techniques and skills, often following a turnkey project. The management contract allows the purchasing country to gain foreign expertise without turning
ownership over to a foreigner.
Direct Foreign Investment- The wholly owned foreign subsidiary has been the preferred mode of ownership for
direct investment.
Minority interests- The minority interest provides the firm with either a source of raw materials or a captive
market for products. Entrepreneurs have used minority positions to gain a foothold in the market before making a
major investment.
Joint ventures- Two firms get together and form a third company in which they share the equity.
KEY TERMS
Balance of payments- The trade status between countries
Barter System- A method of payment using no monetary item
Direct exporting- Selling goods to another country by taking care of the transaction
Diversified activity merger- Combination of at least two totally unrelated firms
Exporting- Selling goods made in one country to another country
Horizontal merger- Combination of at least two firms doing similar businesses at the same market level
ESTABLISHING ENTREPRENEURSHIP IN THE ORGANIZATION

To establish an Entrepreneurial environment, the organization must implement a procedure. This can be done
internally, but it is easier to use an outsider to facilitate the process. This is particularly true when the environment is
very traditional. There are some steps involved in it.
Step 1: The first step is to secure a commitment to entrepreneurship in the organization by top, upper, and middle
management. Without top management commitment, the organization will never be able to make the necessary
changes. Once top management has committed to entrepreneurship for a sufficient length of time, the concept is
introduced throughout the organization. This is effectively accomplished through seminars. General guidelines need
to be established for Entrepreneurial venture development.
Next, Entrepreneurial leaders need to be identified, selected, and trained
Step 2: Ideas and general interest areas should be identified, along with the amount of risk money that is available.
The overall expectations and target results should be established, specifying time frame, profitability requirements,
and impact of the organization. A mentor/sponsor system needs to be established.
Step 3: A company needs to use technology to make itself faster and more flexible. Technology has allowed small
companies to act like they are big ones. Large companies can use technology to make them responsive and flexible.
Step 4: The organization can use a group of managers to train and share their experiences with other members.
These sessions should be conducted one day per month for a specified period of time. Information about
entrepreneurship and about the company's specific activities should be well publicized.
Step 5: The organization needs to develop ways to get closer to its customers by tapping the data base, hiring from
smaller rivals, and helping the retailer.
Step 6: An organization must learn to be more productive with fewer resources. With middle management cutbacks,
more control has been given to lower levels of the organization. The span of control should be increased.
Step 7: The organization needs to establish a strong support structure. Because they do not immediately affect the
bottom line, Entrepreneurial activities can be overlooked and receive little funding. These ventures require flexible,
innovative behavior, with the Entrepreneurs having total authority over expenditures and access to funds.
Step 8: The support must involve tying the rewards to the performance of the Entrepreneurial unit. This encourages
team members to work harder and compete more effectively. The equity portion of the compensation is particularly
difficult to handle.
Step 9: The organization needs to implement an evaluation system that allows successful units to expand and
unsuccessful ones to be eliminated.
PROBLEMS AND SUCCESSFUL EFFORTS
Entrepreneurship, also called corporate venturing, is not without problems. One study found that new ventures
started within a corporation performed worse than those started independently. Independent start-ups tend to
outperform corporate start-ups.
There are many examples of companies that have successfully implemented entrepreneurship. 3M allows employees
to devote 15 percent of their time to independent projects. After failing to recognize the potential of Wozniak's
personal computer, Hewlett-Packard has taken steps to take advantage of future opportunities. Even IBM has
developed the independent business unit concept.
The problems of entrepreneurship are not insurmountable, and the concept can lead to new products, growth and the
development of an entirely new corporate environment and culture
ENTREPRENEURIAL LEADERSHIP CHARACTERISTICS
ENTREPRENEURIAL LEADERSHIP CHARACTERISTICS
There are certain individual characteristics needed for a person to be successful Entrepreneurs, including:
1. Understanding the environment
2. Being visionary and flexible
3. Creating management options
4. Encourage teamwork while employing a multi-disciplined approach
5. Encouraging open discussion
6. Building a coalition of supporters, and persisting
An Entrepreneur needs to understand all aspects of the environment. Part of this ability is reflected in individual's
level of creativity. Creativity tends to decrease with age and education. The individual must be creative and have a
broad understanding of the internal and external environments of the corporation The Entrepreneurial person must
be a visionary leader-a person who dreams great dreams.
Leadership is the ability to dream great things and communicate them in a way that people say yes to being a part of
the dream. To establish a successful new venture, the Entrepreneurial leader must have a dream and overcome all
obstacles to achieve it.
The third necessary characteristic is that the Entrepreneur must be flexible and create management options. An
Entrepreneur is open to and encourages change. By challenging the beliefs and assumptions of the corporation, an
Entrepreneur can create something new in the organization structure. He or she must possess the ability to encourage
teamwork and use a multi-disciplined approach.
Every new company formation requires a broad range of business skills. The Entrepreneur must be a good diplomat
to minimize disruption. Open discussion must be encouraged to develop a good team for creating something new.
Many corporate managers have forgotten that frank, open discussion is part of the learning process. A successful
venture can be formed only when the team feels the freedom to disagree and to critique an idea. The degree of
openness among the team depends on the degree of openness of the Entrepreneur. Openness leads to a strong
coalition of supporters and encouragers. The Entrepreneur must encourage each team member, particularly during
hard times. A good Entrepreneur makes everyone a hero. Only through persistence will a new venture be created and
successful cCorporate versus Entrepreneurial Culture conducive for entrepreneurship
Smaller, aggressive, entrepreneurial firms are developing more new products and becoming dominant in certain
markets. Many companies are attempting to create the same spirit, culture, and rewards of entrepreneurship in their
organizations.
The typical corporate culture has a climate and reward system that favors conservative decision making. Emphasis
is on gathering large amounts of data as the basis for a rational decision. Risky decisions are often postponed until
hard facts are gathered or a consultant is hired. Often there are so many approvals required that no individual feels
personally responsible for the project.
The guiding principles in a traditional corporate culture are:
1. Follow instructions given
2. Do not make mistakes
3. Do not fail
4. Do not take initiative
5. Stay within your turf and protect your backside
6. This restrictive environment is not conducive to creativity, flexibility, and risk taking
The guiding principles of entrepreneurs
Aspects of an Entrepreneurial culture are quite different:
1. Develop visions, goals, and action plans
2. Be rewarded for actions taken
3. Suggest, try, and experiment
4. Create and develop
5. Take responsibility and ownership
There are differences in the norms of the two cultures.
The traditional culture is hierarchical in nature, with established procedures, lines of authority, and control
mechanisms. These support the present corporate culture, and do not encourage new venture creation.
The culture of an entrepreneurial firm has a flat organizational structure with networking, teamwork, sponsors,
and mentors. Close working relationships help establish an atmosphere or trust that facilitates accomplishment of
visions. Individuals make suggestions across functional areas, resulting in cross-fertilization of ideas. The two
cultures produce different types of individuals and management styles.
Motivation
Traditional managers are motivated primarily by promotion and typical corporate rewards. Entrepreneurs and
entrepreneurs thrive on independence and the ability to create. Entrepreneurs expect their performance to be suitably
rewarded There are also time orientation differences. Managers emphasize the short run, entrepreneurs the long run,
and entrepreneurs somewhere in between. Entrepreneurs use a midpoint mode between delegation of managers and
direct involvement of entrepreneurs.
Entrepreneurs and entrepreneurs are moderate risk takers; managers are much more cautious. Most entrepreneurs
fail at least once, and Entrepreneurs learn to conceal risky projects from management until the last possible moment.
Traditional managers tend to be most concerned about those at higher levels, entrepreneurs serve self and customers,
and Entrepreneurs add sponsors.
CLIMATE FOR ENTREPRENEURSHIP
In establishing an Entrepreneurial environment, certain factors and leadership characteristics need to be present.
The first of these is that the organization operates on the frontiers of technology. Since research and development
are key sources for new product ideas, the firm must operate on the cutting edge of technology and encourage and
supporting new ideas instead of discouraging them.
Second is experimentation, or trial and error, is encouraged. Successful new products usually do not appear fully
developed; instead they evolve. A company wanting to establish an Entrepreneurial spirit has to establish an
environment that allows mistakes and failures. Without the opportunity to fail, few corporate Entrepreneurial
ventures will be developed.
Third an organization should make sure that there are no initial opportunity parameters, such as turf protection,
inhibiting creativity in new product development.
Fourth, the resources of the firm need to be available and easily accessible. Often, insufficient funds are allocated
not to creating something new but instead to solving a problem that have an immediate effect on the bottom line.
Some companies, such as Xerox, 3M, and AT&T have established separate venture capital areas for funding new
internal ventures.
Fifth a multidisciplinary team approach needs to be encouraged. One key to Entrepreneurial success is the existence
of "skunkworks" involving key people. Developing the needed team work for a new venture is further complicated
by the fact that a team member's promotion within the corporation is related to performance in the current position,
not in the new venture. The corporate environment must establish a long time horizon for evaluating the success of
the overall program.
Sixth the spirit of entrepreneurship cannot be forced on individuals; it must be voluntary. Most managers in a
corporation are not capable of being successful Entrepreneurs. Those who do emerge from this self selection process
must be allowed the latitude to carry a project through to completion. An Entrepreneur falls in love with the new
venture and will do almost anything to ensure its success.
The seventh characteristic is a reward system. The Entrepreneur needs to be appropriately rewarded for the energy
and effort expended on the new venture. An equity position in the new venture is one of the best motivational
methods.
Eight a corporate environment favorable for entrepreneurship has sponsors and champions throughout the
organization that supports the creative activity and resulting failures.
Finally the Entrepreneurial activity must be whole-heartedly supported by top management
commercialization result.
MANAGERIALVERSUS ENTREPRENEURIAL DECISIONMAKING
The difference between the entrepreneurial and managerial styles involves five business dimensions.
Strategic Orientation
The entrepreneur's strategic orientation depends on his or her perception of the opportunity. This orientation is most
important when other opportunities have diminishing returns accompanied by rapid changes in technology,
consumer economies, social values or political rules. When the use of planning systems is the strategic orientation,
there is more pressure for the administrative domain to be operant.
Commitment to Opportunity
The entrepreneurial domain is pressured by the need for action and has a short time span in terms of opportunity
commitment. The administrative domain (the ways mangers make decisions) is not only slow to act on an
opportunity, but the commitment is usually for a longer time span.
Commitment of Resources
An entrepreneur is used to having resources committed at periodic intervals, often based on certain tasks or
objectives being reached. In acquiring these resources the entrepreneur is forced to achieve significant milestones
using very few resources. In the administrative domain, the commitment of resources is for the total amount needed.
Administrative-oriented individuals receive personal rewards by effectively administering the resources under their
control.
Control of Resources
The administrator is rewarded by effective resource administration and has a drive to own or accumulate as many
resources as possible. The entrepreneur, under pressure of limited resources, strives to rent resources on an asneeded basis.
Managerial Structure
In the administrative domain, the organizational structure is formalized and hierarchical in nature. The entrepreneur
employs a flat organizational structure with informal networks.
CAUSES FOR RECENT INTEREST IN ENTREPRENEURSHIP
Interest in entrepreneurship has resulted from events occurring on social, cultural, and business levels. There is an
increasing interest in "doing your own thing." Individuals frequently desire to create something of their own. They
want responsibility and want more freedom in their organizations. Frustration can develop and result in the
employee becoming less productive or leaving the organization. This has recently caused more discontent in
structured organizations. When meaning is not provided within the organization, individuals often search for an
institution, such as entrepreneurship, that will provide it.
Entrepreneurship is one method for stimulating and capitalizing on those who think that something can be done
differently and better, such as Xerox Corporation's commitment to Xerox Technology Ventures In large organization
problems occur that thwart creativity and innovation. This growth and diversity that can result are critical, since
large corporations are more efficient in a competitive market than are smaller firms. The resistance against
flexibility, growth, and diversification can be overcome by developing a spirit of entrepreneurship, called
Entrepreneurship, within the existing organization.
There are social, cultural, and business pressures for Entrepreneurship. Hyper competition has forced U.S.
companies to focus on new product development and increased productivity. Reductions in large corporation's staff
are being absorbed in the workforce, particularly in small businesses.
Entrepreneurial endeavors consist of four key elements.
1. New business venturing refers to the creation of new business within an existing organization.
2. Organizational innovativeness refers to product and service innovation with an emphasis on Development and
innovation in technology.
3. Self-renewal reflects the transformation of organizations through the renewal of the key ideas on which they are
built.
4. Proactiveness includes initiative and risk taking, as well as competitive aggressiveness
KEY TERMS
Administrative domain
The ways managers make decisions
Business plan
The description of the future direction of the business
Corporate culture
The environment of a particular organization
Entrepreneurial domain
The ways entrepreneurs make decisions
Entrepreneurial process
The process through which a new venture is created by an entrepreneur
Entrepreneurial culture
The environment of an entrepreneurial-oriented organization
Entrepreneurship
Entrepreneurship within an existing business organization
Opportunity identification
The process by which an entrepreneur comes up with the opportunity for a new venture
Opportunity parameters
Barriers to new product creation and development
Top management commitment
Managers in an organization strongly supporting entrepreneurship

Traditional managers
Managers in a non-entrepreneurial-oriented organization
Window of opportunity
The time period available for creating the new venture
Identifying and Evaluating the Opportunity for Creating New Venture
Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources are often
fruitful, including consumers and business associates. Channel members of the distribution system-retailers,
wholesalers or manufacturer's reps-are also helpful. Technically-oriented individuals often identify business
opportunities when working on other projects. Each opportunity must be carefully screened and evaluated-this is the
most critical element of the entrepreneurial process.
The evaluation process involves looking ata. The creation and length of the opportunity
b. Its real and perceived value
c. Its risks and return.
d. It's fit with the skills and goals of the entrepreneur
e. Its differential advantage in its competitive environment
f. It is important to understand the cause of the opportunity, as the resulting opportunity may have a different market
size and time dimension.
The market size and the length of the window of opportunity are the primarily bases for determining risks and
rewards. The risks reflect the market, competition, technology, and amount of capital involved. The amount of
capital forms the basis for the return and rewards. The return and reward of the present opportunity needs to be
viewed in light of any possible subsequent opportunities as well. The opportunity must fit the personal skills and
goals of the entrepreneur. The entrepreneur must be able to put forth the necessary time and effort required for the
venture to succeed. One must believe in the opportunity enough to make the necessary sacrifices.
Opportunity analysis, or an opportunity assessment plan, should focus on the opportunity and provide the basis to
make the decision, including:
a. A description of the product or service
b. An assessment of the opportunity

c. Assessment of the entrepreneur and the team
d. Specifications of all the activities and resources needed
e. The source of capital to finance the initial venture
The most difficult aspect of opportunity analysis is the assessment of the opportunity.
Government as an Innovator, Start-ups and Economic Development
TYPES OF START-UPS
Life-Style Firms
A life-style firm exists primarily to support the owners and usually has little growth opportunity. This type of firm
may grow after several years to 30 or 40 employees.
Foundation Companies
A type of company formed from research and development that usually does not go public. This firm can grow in
five to ten years from 40 to 400 employees.
High-Potential Venture
A venture has high growth potential and therefore receives great investor interest. The company may start out like a
foundation company, but its growth is far more rapid. After five to ten years the company could employ around 500
employees. These firms are also called gazelles and are most important for the economic development of an area.
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

The role of entrepreneurship in economic development involves initiating change in the structure of business and
society. One theory of economic growth depicts innovation as the key, not only in developing new products, but also
in stimulating investment interest. The new capital created expands the capacity for growth (supply side), and new
spending utilizes the new capacity and output (demand side.) In spite of the importance of investment and
innovation in the economic development of an area, there is still a lack of understanding of few factors which are as
follows:
The product-evolution process is the process through which innovation develops and commercializes through
entrepreneurial activity, which in turn stimulates economic growth. It begins with knowledge in the base technology
and ends with products or services available in the marketplace. The critical point in the process is the intersection
of knowledge and a recognized social need, called the iterative synthesis. This point often fails to evolve into a
marketable innovation.
Most innovations introduced in the market are ordinary innovations, with little uniqueness.
Technological innovations refer to new products with significant technological advancements.
Breakthrough innovations mean the development of new products with some technological Change. Regardless of
the level of uniqueness or technology, each innovation evolves into and develops towards commercialization
through one of three mechanisms: the government, entrepreneurship, or entrepreneurship. Entrepreneurship has
assisted in revitalizing areas of the inner city. Individuals in inner- city areas can relate to the concept and see it as a
possibility for changing their present situation.
GOVERNMENT AS AN INNOVATOR
A government active in commercializing technology is known as an innovative government.
Commercializing technology is frequently called technology transfer.
However, few inventions resulting from government-sponsored research have reached the commercial market. Most
of the by-products from scientific research have little application to any social need. The government lacks the
business skills needed for successful commercialization. Government bureaucracy and red tape also often inhibit the
timely formation of the business. Recently, federal labs have been required to commercialize some of their
technology each year and some are providing entrepreneurial training.
Entrepreneurship
Entrepreneurship refers to entrepreneurship within an existing organization or business structure. Entrepreneurship
can also bridge the gap between science and the marketplace.
Existing businesses have the financial resources, business skills, and marketing and distribution system to
commercialize innovation successfully. Often the bureaucratic structure, emphasis on short-term profits, and
structured organization inhibit creativity. Some corporations have tried to establish an Entrepreneurial spirit in their
organization, some in the form of strategic business units (SBUs.)
Entrepreneurship
The third method for bridging the gap between the science and the marketplace is via entrepreneurship. Many
entrepreneurs have difficult time bridging this gap and creating new ventures. They may often lack managerial
skills, marketing capabilities, or financial resources. They frequently do not know how to interface with banks,
suppliers, customers, and distributors. Yet, entrepreneurship is the most effective method for bridging the gap and
creating new enterprises, these activities affect an areas economy by building the economic base and providing jobs.
ENTREPRENEURIAL CAREERS AND EDUCATION

Since 1985 there has been an increased interest in entrepreneurial careers fostered by factors such as increased
media coverage of entrepreneurs and employment shifts. A conceptual model for understanding entrepreneurial
careers views the career stages as interacting with other stages and events in the individual's life, the life-cycle
approach. This approach conceptualizes entrepreneurial careers in nine categories.
1. Educational environment
2. The individual's personality
3. Childhood family environment
4. Employment history
5. Adult development history
6. Adult family/non-work history
7. Current work situation
8. The individual's current perspective
9. The current family situation
Although there exist a common perception that entrepreneur are less educated than the general population however
studies have found entrepreneurs overall and female entrepreneurs in particular, are far more educated than the
general population. However, this education sometimes does not develop the specific skills needed in the venture,
especially for women entrepreneurs Childhood influences have been explored, particularly in terms of values and
the individual's personality. The traits most frequently researched are the need for achievement, locus of control,
risk-taking, and gender identity. The research on the childhood family environment of the entrepreneur has had
more definite results.
Entrepreneurs tend to have self-employed fathers, and many also have entrepreneurial mothers. The family plays an
important role in establishing the desirability of entrepreneurship as a career. Employment history also has an impact
on entrepreneur careers in both positive and a negative sense. Entrepreneurs tend to have a higher probability of
success when the venture created is in their field of experience. Negative displacement (such as dissatisfaction with
various aspects of ones job) also encourages entrepreneurship.
Although no definite research has been done on the adult development history of entrepreneurs, it appears to also
affect entrepreneur's careers. One's development history has somewhat more of an impact on women, since they tend
to start businesses at a later stage in life. There is a lack of data on adult family/non-work history and the available
data adds little understanding towards entrepreneurial career development.
Entrepreneurs are known for their strong work values, their long workdays, and their dominant management style.
They tend to fall in love with the organization and will sacrifice almost anything in order for it to survive. While in
college, few future entrepreneurs realize that they will pursue entrepreneurship as their major life goal. Relatively
few individuals will start a business immediately after graduation. Entrepreneurship education is a fast growing area
in colleges and universities. While the courses vary by university, there is a great commonality, especially in the
initial few courses.
The skills required by entrepreneurs can be classified in to three main areas:
1. Technical skills involve such things as writing, listening, oral presentations, coaching, and technical know-how.
2. Business management skills include those areas involved in starting, developing and managing any enterprise.
3. Personal entrepreneurial skills differentiate an entrepreneur from a manager and include inner control
(discipline), risk taking, innovativeness, persistence, visionary leadership, and being change oriented. These skills
and objectives form the basis of the modular approach to an entrepreneurship curriculum. Today entrepreneurs are
recognizing the need to learn some of the "science" of management in an MBA program in order to grow their
businesses effectively in the global environment.
ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEURS

The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social
responsibility. A managers attitudes concerning corporate responsibility tend to be supportive of laws and
professional codes of ethics. Entrepreneurs have few reference persons, role models, and developed internal ethics
codes. Entrepreneurs are sensitive to peers pressure and social norms in the community as well as pressures from
their companies.
While ethics refers to the "study of whatever is right and good for humans," business ethics concerns itself with the
investigation of business practices in light of human values. The word "ethics" stems from the Greek thos, meaning
custom and usage.
Development of Our Ethical Concepts

Socrates, Plato, and Aristotle provide the earliest writings dealing with ethical conceptions; earlier writings
involving moral codes can be found in both Judaism and Hinduism. American attitudes on ethics result from three
principle influences: Judeo-Christian heritage, a belief in individualism and opportunities based on ability rather
than social status. Research on business ethics can be broken down into four broad classifications:
1. Pedagogically-oriented inquiry
2. Theory-building without empirical testing
3. Empirical research, measuring the attitudes and ethical beliefs of students and academic faculty
4. Empirical research within business environments
THE FUTURE OF ENTREPRENEURSHIP

In spite of the differences in definition of entrepreneurship, there are common aspects such as risk taking, creativity,
independence, and rewards. Entrepreneurship is currently being embraced by educational institutions, governments,
societies, and corporations. Schools are increasing their emphasis on entrepreneurship in terms of courses and
academic research. In Europe many universities have started programs in entrepreneurship. There has also been an
increase in academic research, endowed chairs and centers of entrepreneurial activity. Governments have also
promoted the growth of entrepreneurship. Individuals are encouraged to form new businesses and provided tax
incentives, roads, and a communications system to facilitate this creative process. Some state governments are
developing strategies for fostering entrepreneurial activity.
The venture capital industry has benefited from lowering of capital gains tax rates and more relaxed rules regarding
pension fund investment. Society's support of entrepreneurship is critical in providing motivation and public
support. The media has played a powerful role in developing public support. Media coverage uplifts the image of the
entrepreneur and growth companies. Articles have appeared in newspapers such as New York Times, The Wall Street
Journal, and the Washington Post. Business magazines such as Barrons, Business Week, Forbes, and Fortune have
provided coverage. Magazines such as Black Enterprise, Entrepreneur, Inc., and Venture focus on issues of the
entrepreneurial process. Television on both a national and local level has highlighted entrepreneurship.
Large companies will continue to have a special interest in Entrepreneurship in the future. The largest 15 companies
account for over 20 percent of the total U.S. research and development. Other companies will create more new
businesses through Entrepreneurship.
KEY TERMS
Product-evolution process- Process for developing and commercializing an innovation
Risk taking- Taking calculated chances in creating and running a venture.
Technological innovation- A new product with significant technological advancement
Technology transfer- Commercializing the technology in the laboratories into new products
NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP
The term entrepreneur comes from the French and translates "between-taker" or "go-between."
Earliest Period
In this period the money person (forerunner of the capitalist) entered into a contract with the go-between to sell his
goods. While the capitalist was a passive risk bearer, the merchant bore all the physical and emotional risks.
Middle Ages
In this age the term entrepreneur was used to describe both an actor and a person who managed large production
projects. In such large production projects, this person did not take any risks, managing the project with the
resources provided. A typical entrepreneur was the cleric who managed architectural projects.
17th Century
In the 17th century the entrepreneur was a person who entered into a contract with the government to perform a
service Richard Cantillon, a noted economist of the 1700s, developed theories of the entrepreneur and is regarded as
the founder of the term. He viewed the entrepreneur as a risk taker who "buy[s] at certain price and sell[s] at an
uncertain price, therefore operating at a risk."
18th Century
In the 18th century the person with capital was differentiated from the one who needed capital. In other words,
entrepreneur was distinguished from the capital provider. Many of the inventions developed during this time as was
the case with the inventions of Eli Whitney and Thomas Edison were unable to finance invention themselves. Both
were capital users (entrepreneurs), not capital providers (venture capitalists.) Whitney used expropriated crown
property. Edison raised capital from private sources.
A venture capitalist is a professional money manager who makes risk investments from a pool of equity capital to
obtain a high rate of return on investments.
19th and 20th Centuries
In the late 19th and early 20th centuries, entrepreneurs were viewed mostly from an economic perspective. The
entrepreneur "contributes his own initiative, skill and ingenuity in planning, organizing and administering the
enterprise, assuming the chance of loss and gain."
Andrew Carnegie is one of the best examples of this definition, building the American steel industry on of the
wonders of industrial world, primarily through his competitiveness rather than creativity.
In the middle of the 20th century, the notion of an entrepreneur as an innovator was established. Innovation, the
act of introducing something new, is one of the most difficult tasks for the entrepreneur. Edward Harriman and John
Pierpont Morgan are examples of this type of entrepreneur. Edward reorganized the Ontario and southern railroad
through the northern pacific trust and john developed his large banking house by reorganizing and financing the
nation's industries. This ability to innovate is an instinct that distinguishes human beings from other creatures and
can be observed throughout history.
DEFINITION OF ENTREPRENEUR
The concept of entrepreneurship from a personal perspective has been explored in this century. This exploration is
reflected in the following three definitions of an entrepreneur:
In almost all definitions of entrepreneurship, there is agreement that we are talking about a kind of behavior that
includes:
Initiative taking
The organizing and reorganizing or social/economic mechanisms to turn resources and situations to practical
account.
The acceptance of risk or failure.

To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into combinations
that make their value greater than before, and one who introduces changes, innovations, and a new order.
To a psychologist, such a person is typically driven by certain forces- the need to obtain something, to experiment,
to accomplish or perhaps to escape the authority of others.
Entrepreneurship is the dynamic process of creating incremental wealth. Our definition of entrepreneurship
involves four aspects:
1. Entrepreneurship involves the creation process.
4. The rewards of being an entrepreneur are independence, personal satisfaction, and monetary reward.
For the person who actually starts his or her own business there is a high failure rate due to poor sales, intense
competition, lack of capital or lack of managerial ability.
THE ENTREPRENEURIAL DECISION PROCESS
(Deciding to become an entrepreneur by leaving present activity)
Many individuals have difficulty bringing their ideas to the market and creating new venture. Yet entrepreneurship
and the actual entrepreneurial decisions have resulted in several million new businesses being started throughout the
world. Although no one knows the exact number in the United States, Indeed, millions of ventures are formed
despite recession, inflation, high interest rates, and lack of infrastructure, economic uncertainty and the high
probability of failure. The entrepreneurial decision process entails a movement from something to something-- a
movement from a present life style to forming a new enterprise.
To leave a present live-style to create something new comes from a negative force--disruption. Many companies are
formed by people who have retired, moved, or been fired. Another cause of disruption is completing an educational
degree. The decision to start a new company occurs when an individual perceives that forming a new enterprise is
both desirable and possible.
KEY TERMS
Breakthrough innovations
A new product with some technological change
Business ethics
The study of behavior and morals in a business situation
Desirability of new venture formation
Aspects of a situation that make it desirable to start a new company.
Entrepreneur
Individual who takes risks and starts something new
Entrepreneur as an innovator
An individual developing something unique
Entrepreneurial decision process
Deciding to become an entrepreneur by leaving present activity
Entrepreneurship
Process of creating something new and assuming the risks and rewards.
METHODS OF GENERATING NEW IDEAS
Even with the wide variety of sources available, coming up with an idea to serve as the basis for the new venture can
still be a difficult problem. The entrepreneur can use several methods to help generate and test new ideas, including
focus groups, brain storming and problem inventory analysis.
Focus groups
Group of individuals providing information in a structured format is called a focus group. The group of 8 to 14
participants is simulated by comments form other group members in creatively conceptualizing and developing new
product idea to fulfill a market need.
Brainstorming
A group method of obtaining new ideas and solutions is called brainstorming. The brainstorming method for
generating new ideas is based on the fact that people can be stimulated to greater creativity by meeting with others
an d participating with organized group experiences. Although most of the ideas generated from the group have no
basis for further development, often a good idea emerges.
Problem inventory analysis
Problem inventory analysis uses individuals in a manner that is analogous to focus groups to generate new product
ideas. However instead of generating new ideas themselves, consumers are provided with a list of problems in a
general product category. They are then asked to identify and discuss products in this category that have the
particular problem. This method is often effective since it is easier to relate known products to suggested problems
and arrive at a new product idea then to generate an entirely new idea by itself.
CREATIVE PROBLEM SOLVING
Creative problem solving is a method for obtaining new ideas focusing on the parameters.
Brainstorming
The first technique, brainstorming, is probably the most well known and widely used for both creative problem
solving and idea generation. It is an unstructured process for generating all possible ideas about a problem within a
limited time frame through the spontaneous contribution of participants. All ideas, no matter how illogical, must be
recorded, with participants prohibited from criticizing or evaluating during the brainstorming session.
Reverse brainstorming
Similar to brainstorming, but criticism is allowed and encouraged as a way to bring out possible problems with the
ideas.
Synectics
Synectics is a creative process that forces individuals to solve problems through one of four analogy mechanisms:
personal, direct, symbolic and fantasy. This forces participants to consciously apply preconscious mechanisms
through the use of analogies in order to solve problems.
Gordon method
Gordon method is a method of developing new ideas when the individuals are unaware of the problem. In this
method the entrepreneur starts by mentioning a general concept associated with the problem. The group responds
with expressing a number of ideas.
Checklist method
Developing a new idea through a list of related issues is checklist method of problem solving.
Free association method
Developing a new idea through a chain of word association is free association method of problem.
Forced relationship
Forced relationship is the process of forcing relationship among some product combination. It is technique that asks
questions about objects or ideas in an effort to develop a new idea.
Collective notebook method
It is method in which ideas are generated by group members regularly recording ideas.
Heuristics
It is method of developing a new idea through a thought process progression.
Scientific method
This is a more structured method of problem solving, including principles and rules for concept formation, making
observations and experiments, and finally validating the hypothesis.
Value analysis
Value analysis is developing a new idea by evaluating the worth of aspects of ideas.
Attribute listing
This is an idea finding technique that requires the entrepreneur to list the attributes of an item or problem and then
look at each from a variety of viewpoints.
Matrix charting
Matrix charting is a systematic method of searching for new opportunities by listing important elements for the
product area along two axis of chart and then asking questions regarding each of these elements.
Big dream approach
Developing a new idea by thinking about constraints is big-dream approach of problem solving.
Parameter analysis
Parameter analysis is developing a new idea by focusing on parameter identification and creative synthesis.
Performing a Feasibility Study
Can You Make Money with Your Business Idea

This guide is a checklist for the owner/manager of a business enterprise or for one contemplating going into business
for the first time. The questions concentrate on areas you must consider seriously to determine if your idea
represents a real business opportunity and if you can really know what you are getting into. You can use it to
evaluate a completely new venture proposal or an apparent opportunity in your existing business.
Perhaps the most crucial problem you will face after expressing an interest in starting a new business or capitalizing
on an apparent opportunity in your existing business will be determining the feasibility of your idea. Getting into the
right business at the right time is simple advice, but advice that is extremely difficult to implement. The high failure
rate of new businesses and products indicates that very few ideas result in successful business ventures, even when
introduced by well established firm. Too many entrepreneurs strike out on a business venture so convinced of its
merits that they fail to thoroughly evaluate its potential.
This checklist should be useful to you in evaluating a business idea. It is designed to help you screen out ideas that
are likely to fail before you invest extensive time, money, and effort in them.
Preliminary Analysis
A feasibility study involves gathering, analyzing and evaluating information with the purpose of answering the
question: "Should I go into this business?" Answering this question involves first a preliminary assessment of both
personal and project considerations.
General Personal Considerations
The first seven questions ask you to do a little introspection. Are your personality characteristics such that you can
both adapt to and enjoy business ownership/management?
Do you like to make your own decisions?
Do you enjoy competition?
Do you have will power and self-discipline?
Do you plan ahead?
Do you get things done on time?
Can you take advice from others?
Are you adaptable to changing conditions?
The next series of questions stress the physical, emotional, and financial strains of a new business.
Do you understand that owning your own business may entail working 12 to 16 hours a day, probably six
days a week, and maybe on holidays?
Do you have the physical stamina to handle a business?
Do you have the emotional strength to withstand the strain?
Are you prepared to lower your standard of living for several months or years?
Are you prepared to loose your savings?
Specific Personal Considerations
Do you know which skills and areas of expertise are critical to the success of your project?
Do you have these skills?
Does your idea effectively utilize your own skills and abilities?
Can you find personnel that have the expertise you lack?
Do you know why you are considering this project?
Will your project effectively meet your career aspirations
The next three questions emphasize the point that very few people can claim expertise in all phases of a feasibility
study. You should realize your personal limitations and seek appropriate assistance where necessary (i.e. marketing,
legal, and financial).
Do you have the ability to perform the feasibility study?
Do you have the time to perform the feasibility study?
Do you have the money to pay for the feasibility study done?
General Project Description
Briefly describe the business you want to enter.
List the products and/or services you want to sell
Describe who will use your products/services
Why would someone buy your product/service?
What kind of location do you need in terms of type of neighborhood, traffic count, nearby firms, etc.?
List your product/services suppliers.
List your major competitors - those who sell or provide like products/services.
List the labor and staff you require to provide your products/services.
Requirements for Success

To determine whether your idea meets the basic requirements for a successful new project, you must be able to
answer at least one of the following questions with a "yes".
Does the product/service/business serve a presently unserved need?
Does the product/service/business serve an existing market in which demand exceeds supply?
Can the product/service/business successfully compete with an existing competition because of an

"advantageous situation," such as better price, location, etc.?
Major Flaws
A "Yes" response to questions such as the following would indicate that the idea has little chance for success.
Are there any causes (i.e., restrictions, monopolies, shortages) that make any of the required factors of
production unavailable (i.e., unreasonable cost, scare skills, energy, material, equipment, processes,
technology, or personnel)?
Are capital requirements for entry or continuing operations excessive?
Is adequate financing hard to obtain?
Are there potential detrimental environmental effects?
Are there factors that prevent effective marketing?
Desired Income
The following questions should remind you that you must seek both a return on your investment in your own
business as well as a reasonable salary for the time you spend in operating that business.
How much income do you desire?
Are you prepared to earn less income in the first 1-3 years?
What minimum income do you require?
What financial investment will be required for your business?
How much could you earn by investing this money?
How much could you earn by working for someone else?
Add the amounts in 5 and 6. If this income is greater that what you can realistically expect from your
business, are you prepared to forego this additional income just to be your own boss with the only prospects
of more substantial profit/income in future years?
What is the average return on investment for a business of your type?
Preliminary Income Statement

Besides return on investment, you need to know the income and expenses for your business. You show profit or loss
and derive operating ratios on the income statement. Dollars are the (actual, estimated, or industry average) amounts
for income and expense categories. Operating ratios are expressed as percentages of net sales and show relationships
of expenses and net sales.
For instance 50,000 in net sales equals 100% of sales income (revenue). Net profit after taxes equals 3.14% of net
sales. The hypothetical "X" industry average after tax net profit might be 5% in a given year for firms with 50,000 in
net sales. First you estimate or forecast income (revenue) and expense dollars and ratios for your business. Then
compare your estimated or actual performance with your industry average. Analyze differences to see why you are
doing better or worse than the competition or why your venture does or doesn't look like it will float.
These basic financial statistics are generally available for most businesses from trade and industry associations,
government
agencies,
universities
and
private
companies
and
banks.
Forecast your own income statement. Do not be influenced by industry figures. Your estimates must be as accurate
as possible or else you will have a false impression.
What is the normal markup in this line of business? i.e., the dollar difference between the cost of goods sold
and sales, expressed as a percentage of sales?
What is the average cost of goods sold percentage of sales?
What is the average inventory turnover, i.e., the number of times the average inventory is sold each year?
What is the average gross profit as a percentage of sales?
What are the average expenses as a percentage of sales?
What is the average net profit as a percent of sales?
Take the preceding figures and work backwards using a standard income statement format and determine
the level of sales necessary to support your desired income level. From an objective, practical standpoint, is
this level of sales, expenses and profit attainable?
Market Analysis
The primary objective of a market analysis is to arrive at a realistic projection of sales. After answering the
following questions you will be in a better position to answer question eight immediately above.
Population
Define the geographical areas from which you can realistically expect to draw customers.
What is the population of these areas?
What do you know about the population growth trend in these areas?
What is the average family size?
What is the age distribution?
What is the per capita income?
What are the consumers' attitudes toward business like yours?
What do you know about consumer shopping and spending patterns relative to your type of business?
Is the price of your product/service especially important to your target market?
Can you appeal to the entire market?
If you appeal to only a market segment, is it large enough to be profitable?
Competition
Who are your major competitors?
What are the major strengths of each?
What are the major weaknesses of each?
Are you familiar with the following factors concerning your competitors:
Price structure?
Product lines (quality, breadth, width)?
Location?
Promotional activities?
Sources of supply?
Image from a consumer's viewpoint?
Do you know of any new competitors?
Do you know of any competitor's plans for expansion?
Have any firms of your type gone out of business lately?
If so, why?
Do you know the sales and market share of each competitor?
Do you know whether the sales and market share of each competitor are increasing, decreasing, or stable?
Do you know the profit levels of each competitor?
Are your competitors' profits increasing, decreasing, or stable?
Can you compete with your competition?
Sales
Determine the total sales volume in your market area.
How accurate do you think your forecast of total sales is?
Did you base your forecast on concrete data?
Is the estimated sales figure "normal" for your market area?
Is the sale per square foot for your competitors above the normal average?
Are there conditions, or trends, that could change your forecast of total sales?
Do you expect to carry items in inventory from season to season, or do you plan to mark down products
occasionally to eliminate inventories? If you do not carry over inventory, have you adequately considered
the effect of mark-down in your pricing? (Your gross profits margin may be too low.)
How do you plan to advertise and promote your product/service/business?
Forecast the share of the total market that you can realistically expect - as a dollar amount and as a
percentage of your market.
Are you sure that you can create enough competitive advantages to achieve the market share in your
forecast of the previous question?
Is your forecast of dollar sales greater than the sales amount needed to guarantee your desired or minimum
income?
Have you been optimistic or pessimistic in your forecast of sales?
Do you need to hire an expert to refine the sales forecast?
Are you willing to hire an expert to refine the sales forecast?
Supply
Can you make a list of every item of inventory and operating supplies needed?
Do you know the quantity, quality, technical specifications, and price ranges desired?
Do you know the name and location of each potential source of supply?
Do you know the price ranges available for each product from each supplier?
Do you know about the delivery schedules for each supplier?
Do you know the sales terms of each supplier?
Do you know the credit terms of each supplier?
Do you know the financial condition of each supplier?
Is there a risk of shortage for any critical materials or merchandise?
Are you aware of which supplies have an advantage relative to transportation costs?
Will the price available allow you to achieve an adequate markup?
Can you obtain the additional data needed?
Are you aware that there is less than a 50-50 chance that you will be in business two years from now?
Starting a Business- A new venture

To start and run a small business you must know and be many things. As one small business owner attending a
conference put it: "When I came here, my business lost the services of its chief executive, sales manager, controller,
advertising department, personnel director, head bookkeeper, and janitor."
This FAQ, based on questions asked by people in small business or contemplating starting, suggests the many facets
of running a small concern that each owner/manager must become familiar with. While the answers to the questions
are hardly exhaustive of any of the subjects, they provide the background for questions you may need to ask before
going into business, as well as suggesting sources of answers to those questions.
Introduction
Almost everyone considering it has dozens of questions about starting a small business. The only foolish questions,
of course, are the questions that aren't asked. Yet, many times we don't have enough information to ask the right
questions.
The questions in this guide are drawn from participants in training courses for new entrepreneurs. Most of the
questioners didn't own, operate, or manage small businesses. Their questions are typical of what's on the minds of
potential business owners. You may have pondered similar questions, as you thought about becoming your own
boss. The questions fell generally into areas such as the steps in setting up a business, marketing, and financing a
new concern. In this guide the questions have been grouped by subject.
Answers to the questions came from experts in the various areas. These experts include a lawyer, an accountant, a
bank loan officer, several small business owners, and market researchers.
These answers, it is hoped, will help you as you approach deciding on becoming a small business owner. The
questions may suggest questions that you should find answers to before you invest your money, time, and effort in a
small business.
Starting Out
1. If you have money but no particular business in mind, how can you get enough information on the best
business to go into?
The best way of choosing your business venture is to look at your experience and educational background. A
thorough review will provide leads on the business field you should enter - do what you know best. Even more
important, you must like the business field you are going to enter to bring the enthusiasm and self-confidence you
need to make the business go.
2. What are the basic survival skills you need to run a business?
The basic survival skills include a working knowledge of basic recordkeeping; financial management; personnel
management; market analysis; break-even analysis; product or service knowledge; tax knowledge; legal structures;
and communication skills.
3. What special obstacles do women entering business face, and how can these obstacles be overcome?
Women are at last making inroads into business, not only as executives but as owners. There are many obstacles,
chief among them the doubts that lenders, suppliers, and in some fields, customers have about women's ability to run
businesses. These can be overcome with self confidence and a strong belief in your ideas. You should not be
discouraged by being rebuffed by people who simply don't understand. As more and more women enter business and
succeed, the process will become easier and easier.
4. What are the most important factors that cause small business failure?
There are, of course, many reasons for the failure of new small businesses. One way of looking at the causes is to
remember that a new business is starting at zero momentum; newly entering a market, having to establish supplier
relations, finding proper financing, and training employees.
To coordinate all these facets and start them simultaneously is a tremendous job. If you don't have experience and
management capability, success won't be very likely. You'll also find that undercapitalized businesses, those without
enough cash to carry them through the first six months or so before the business starts making money, don't have
good survival prospects. In such cases, even businesses with good management can founder. Another very important
thing to consider is keeping your business credit good. There are resources like D&B that will help you watch your
business credit so that you can keep your start-up in success mode.
5. If you're trying to buy a going service business, how can you figure a reasonable price for the business that
takes into account goodwill and business contacts in addition to the value of equipment and inventory?
There are many methods, but basically what you're trying to do is set a value on the assets and earnings record of the
firm. The simplest way is to determine the "payback period," usually two or three years.
That is, the net profit for two years would equal the goodwill value. A more complicated and accurate method called
the "net present value" method, is based on the cost of capital and a risk factor. For that method an accountant's help
would be valuable.
6. What kind of a market study should you do before deciding to buy a radio station?
Determining the price of any business is difficult. For a radio station specifically, you can get the figures on the total
revenue of all stations in the area (that is, advertising revenue). You should also get the percentage of the total
market that the station you're considering has. You must also determine the potential market for the area in
advertising dollars. Finding out the total number of businesses by line and size in the area covered by the station and
their advertising expenditures would give you some insight. Really, you'd study the market like this for buying any
business.
7. How long does it take a new business to establish a good public image?
A good public image takes a long time to establish (and only minutes to lose). There is no set formula, but a good
image depends on:
The service, products, and customer treatment you provide;
The market you're in;
How you stack up against your competitors;
The quality of your public relations and advertising programs.
If you're new to a market - and if you do what you say you're going to - you may establish an excellent reputation in
18 to 24 months.
8. How do you find a good lawyer?
As with most personal services, you must have rapport with your attorney. The best way to determine this is to talk
to lawyers by phone or visit them before you make a selection. Get recommendations from friends, or your banker.
You're looking for someone you can trust and who will take an interest in you and your business.
9. Do you need a lawyer to start a business?
No, but it's wise to get the best advice possible when you're starting out. An attorney is one source of the expertise
you'll need to draw on.
Form of Business
10. What form of business do you recommend for a new business?
Each legal form, sole proprietorship, partnership, or corporation, has its advantages and disadvantages. Each legal
form, sole proprietorship, partnership, or corporation, has its advantages and disadvantages. The one you should
pick depends on your circumstances, including:
Your financial condition,
The line of business you're entering,
The number of employees,
The risk involved,
Your tax situation.
Don't assume, if you plan a one-person business, that sole proprietorship is the way to go. See your lawyer.
The Market
11. How can you find out what the prevailing costs are for a service business in your market area?
One way is simply to call competitors and ask their prices. Their prices will give you a lead. You could ask
competitors' customers for the same information if you didn't want to go directly to the competition.
12. How do you go about determining the market for a mail order business?
The principles of determining market share and market potential are the same no matter how large the geographical
area. You must first determine a customer profile, the size of the market, and the number of competitors. You could
also use a readership survey given to you by a magazine in which you intend to advertise.
Pricing
13. How do you figure markup and markdown?
Markup (markon) is the original amount that the merchandise is marked up. Markup as a percentage (also called
gross margin rate) is figured as a percentage of sales. For example, say the cost of merchandise is $10 and you want
a 20 percent markup; what is the selling price (SP)? By definition we know that markup as a percentage is given as a
percentage of sales. Thus, our cost must be 80 percent of the selling price (100 percent selling price - 20 percent
desired markup).
So, our selling price is $12.50, cost $10.00, and markup $2.50 or 20 percent of the selling price. Markdown
(discount) is a reduction of selling price below the original sale price. Assume the item is marked down to $11.25.
The markdown is $1.25 or a 10 percent markdown ($1.25 markdown divided by $12.50 original selling price).
14. How would you go about establishing price guidelines for a business renting items to customers?
Pricing is based normally on a combination of cost and market competition. Trade associations are a prime source of
such information.
Finances
15. What is the average expected net profit for small business?
Average net profits vary with the type of business - retail, wholesale, service, manufacturing, construction. They also
vary for the type of business structure - proprietorship or corporation. Dun & Bradstreet publish ratios which give
you these figures, as well as lots of very useful cost information.
16. Would you explain the meaning of "rate of return on investment"? How is it different from net profit? Is
it different from return on assets employed?
Net profit (before taxes) is basically total sales for a specific period less cost of goods and operating expenses during
that period. (For a retail business, cost of goods would be your cost of merchandise sold.) Net profit is a function of
both rate of return on investment (ROI) and return on total assets. ROI is net profit divided by capital invested by the
owners of the company.
ROI is used to measure the effectiveness of management in attaining the owners' desired return on their investment.
Generally, the larger the ROI, the more attractive a company is to potential investors.
Return on total assets is the net profit divided by total assets. This measures the net profitability of the use of all
resources of the business. It is another tool for measuring management effectiveness in the use of all resources
borrowed and equity.
17. Does a bank require absolute top credit references from loan applicants?
The better the credit references the greater the possibility of loan approval.
18. If I estimate my start-up cost at $50,000 and can't put up anywhere near the $25,000 that I've been told is
what I should have for my share, am I wasting my time even filling out a loan application?
In all probability you would be, although there are some exceptions. For example, it might be possible to get a loan
under your circumstances if you were buying a business that's already operating well enough to provide sufficient
profits to cover its obligations and the loan. Furthermore, if the applicant is the present manager who has made this
business go, the chances of getting such a loan are much better.
Help!
19. Getting money is difficult; keeping it may be even more difficult. Where can I get assistance in managing
my business?
Your accountant and bank can provide financial counseling which can be very helpful in starting and managing your
business. They can also give you invaluable information on the local area and your market that can be critical in
making decisions in your business.
Test your Entrepreneurial Quotient (EQ)
Here's a fun little quiz to measure your
Entrepreneurial Quotient (EQ)
Have you ever wondered if you have what it takes to succeed in business? Most of us have asked that question more
than once. Although nothing can guarantee your success, multiple studies have found that there are a number of
characteristics that are common among successful business people. These characteristics are listed here.
12 TRAITS OF SUCCESSFUL ENTREPRENEURS
1. Overwhelming desire to achieve and succeed. This desire motivates successful people to push ahead regardless
of the circumstances. It rises above the need to be secure in a job.
2. Perseverance and persistence. Successful entrepreneurs keep going even when the road gets rough, because they
are determined to win. They find creative ways to overcome obstacles, and learn to adapt and change in order to
achieve their goals. If they get knocked down, they get back up and keep going.
3. Self-confidence: Successful business people believe in themselves, yet they are realistic about their own abilities
and limitations. Rather than become paralyzed with fear and doubt, they are certain in their ability to find solutions
and to succeed.
4. Creative problem-solving skills: Entrepreneurs who are successful are problem-solvers. They thrive on finding
new ways of doing things and take problems in stride.
5. Self-motivation and initiative: The victim mentality is never found in winners. They know that success is up to
them and they are willing to work hard and make things happen. They are able to work on their own without a lot of
help.
6. Self-discipline and goal setting: Those who achieve success set goals and have the discipline to consistently
work toward those goals. They are willing to sacrifice time spent on hobbies or other activities in order to make their
business succeed.
7. Ability to make decisions: Successful entrepreneurs enjoy making decisions even in a stressful environment.
They can identify problems, analyze the situation and decide on a course of action quickly when there are no
apparent answers. They are willing to take calculated risks as the need arises instead of waiting around for someone
else to tell them what to do.
8. Respect for money: Business people who have achieved success recognize the value of the dollar. They view
money as a means of accomplishing goals and as a way to measure business success. They are careful not to waste
money by frivolous spending, overpaying for things they need or under pricing their products.
9. Persuasiveness: Operators of successful businesses are excellent communicators. They know how to sell
themselves and their product or service. These people are enthusiastic about their business and know how to inspire
cooperation and confidence.
10. Knowledge and awareness of the market: Successful entrepreneurs know the practical aspects of producing
their product or service. They are able to anticipate developments and make things happen. They are also sensitive to
opportunities to make money that others may miss entirely.
11. Service-oriented: Customers are the lifeblood of every business. Successful achievers enjoy satisfying their
customers, and are willing to do what it takes to attract new customers and retain current ones.
12. High energy level: Successful entrepreneurs are hard to slow down. They are continually moving, mentally
and/or physically.
How do you rate yourself? BE HONEST! If you have ten or more of these traits, you are probably on your way to
success. If you have eight or nine of these traits, you need to work on developing your weak areas and consider
bringing others into your organization who are strong in the areas you are weak. If you have fewer than eight traits,
you will most likely not be happy as a business owner. No survey, however, can determine an individual's ability to
succeed. In the end, it is entirely up to you.
10 Things to Do Before You Start Your Start-up
10 Things to Do Before You Start Your Start-up
What makes an entrepreneur is a complex question. It includes factors from the facts whether your great idea is good
enough? Can it grow in this slow economy? Can it become profitable, and return on any investments it requires?
Well, there's no way to know until you try, right? There are some ways to prepare yourself, test your idea, and
improve it before you actually found a company around it. We've compiled the best examples from recent Inc.
articles and Inc.com guides of tips for the very early steps of building a start-up.
1. Scope out your industry
Or, if you're just starting to think about entrepreneurship in general, find the best industry to fit your style and
talents. For example, this year's burgeoning industries include interactive technology (from mobile app design to
tech-savvy translation), wellness (healthy beverages), and little luxuries, such as baked goods. When you start
honing in on a specialty area, seek out counselors and talk to industry veterans. You can go to SCORE, the SBA, the
Women's Economic Development Agency, or scores more. The Internet, your local library, the U.S. Census Bureau,
business schools, industry associations, can be invaluable sources of information and contacts. For instance, you
might approach business schools in your area to see if one of their marketing classes will take on your business as a
test project. You could potentially get some valuable market research results at no cost.
2. Size-up the competition
Study your competition by visiting stores or locations where their products are offered. Say you want to open a new
restaurant. For starters, create a list of restaurants in the area. Look at the menus, pricing, and additional features
(e.g., valet parking or late night bar). Then check out the diners those restaurants appeal to. Are they young college
students, neighborhood employees, or families? Then, become a customer of the competition. Go into stealth mode
by visiting its website and putting yourself on its e-mail list. Read articles written on them. Sign up for e-mail alerts
about search terms of your choice on Google News, which tracks hundreds of news sources. After you study it,
deconstruct it using Fagan Finder, a bare-bones but very useful research site. Plug the address into the search box.
You will be able to quickly learn, for example, the other sites that link to it, which can reveal alliances, networks,
suppliers, and customers. Business data aggregators such as Dun & Bradstreet and Info USA provide detailed
company information, including financials, although the services are not cheap. Your aim is to understand what your
competition is doing so you can do it better.
3. Second-guess yourself.
"The biggest mistake I see these days is thinking that a business idea will automatically turn into a viable business
model," says Terri Lonier, president and founder of Working Solo, a New Paltz, New York-based business strategy
consultancy, and author of Working Solo: The Real Guide to Freedom and Financial Success with Your Own
Business. Then again, what if the idea really is viable? "A lot of people start with a kitchen table idea," says Marla
Tabaka, a business coach who writes The Successful Soloist blog for Inc.com. "It's a great idea you come up with
your cousin at dinner. But then the business booms, and your growth gets out of control. You need a plan." Another
important consideration is your personal financial resources. Make sure you have a considerable amount of capital
set aside, especially because in a sole proprietorship you assume personal liability for all activities of that business.
If you borrow money and can't repay it, your personal assets are at stake.
4. Think about funding- Think a lot.
Can you bootstrap your company? Or are you going to need a small business loan? Might an entrepreneur in the
family be able to invest, or should you look for venture capital or an angel investor? Money is a big topic for
entrepreneurs, and you'll want to know your options early on. In order to get investors to open up their checkbooks,
you'll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny
and give up a percentage of your company. That's why it's a good idea to first ask yourself whether you really need a
professional investor at all, says David Henkel-Wallace, a serial entrepreneur who has raised $60 million from VCs.
"If you're starting a web software or mobile software company, you might be able to bootstrap it, which has the
advantage that you get to keep all the money you earn," says Henkel-Wallace. "You could also look into borrowing
from friends and family or even take out a second mortgage for the same reason." If you decide your business
can only get to the next level with the aid of a professional investor, then you need to figure out what a potential
backer looks for in a budding company, says Martin Babinec, who raised six rounds of funding through the business
process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. Start
doing your research now, and don't talk to investors until you have a strategy that involves foreseeable future
liquidity.
5. Refine your concept.
Adrienne Simpson initially intended to run a traditional moving company out of her home in October 2002. The idea
came to her after relocating her mother from Georgia to Michigan. "I thought I'd put everything in a box, put it on a
truck and send her on her way. Oh, no! Mom started walking me through her home, pointing at things saying, 'I'll
take that, let's sell that, and I want to give that away,'" she recalls. By the second year of operation, Simpson shifted
gears to make her Stone Mountain, Georgia-based company, Smooth Mooove, specialize in transporting seniors
and their beloved petsand providing such value-add services as packaging, house cleaning, room reassembly,
antique appraisals, estate sales, and charity donations. Her crew does everything: put clothes in the closets, hang
drapes, make the bed, fill the refrigerator. But even still business was stalling. "I knew how to run an existing
company, but I didn't know how to run a start-up," says Simpson, who worked 20 years for Blue Cross/Blue Shield
and 10 years with Cigna Healthcare. Seeking money and marketing advice, Simpson went to the U.S. Small
Business Administration (SBA) office in Atlanta and was connected to SCORE (Service Corps of Retired
Executives) counselor Jeff Mesquita. "When you position your company you have to think outside of the box in
terms of what makes you different from the competition," says Mesquita. "Adrienne described that what she does is
move seniors from A to Z, so, when they arrive to their new home it is like walking into a hotel room." The only
thing her clients have to bring is the clothes on their back (and maybe their pet under their arm). That's when
Mesquita suggested the business name change to Smooth Mooove Senior Relocation Services. That same night,
Simpson went to a networking event. When people asked 'what do you do?' and her response was 'I have a senior
relocation service.' Right away people said 'Oh, you move seniors." The business took off from there.
6. Seek advise from friends, mentors or anyone, really
A mentor can be a boon to an entrepreneur in a broad range of scenarios, whether he or she provides pointers on
business strategy, helps you bolster your networking efforts, or act as confidantes when your work-life balance gets
out of whack. But the first thing you need to know when seeking out a mentor is what you're looking for from the
arrangement. What can your mentor do for you? Determining what type of resource you need is a crucial first step in
the mentor hunt. Lois Zachary, the president of Leadership Development Services, a Phoenix, Arizona-based
business coaching firm, and author of The Mentee's Guide: Making Mentoring Work for You, recommends starting
with a list. You may want someone who's a good listener, someone well connected, someone with expertise in, say,
marketing, someone accessible. Ideally you could find a mentor with all of these qualities, but the reality is you may
have to make some compromises. After you enumerate the qualities you're looking for in a mentor, divide that list
into wants and needs. Who's best as a mentor? Look within your family, friends, business community, academic
community, and even at your competitors well, not your direct competition, but you get the idea.
7. Pick a name
Naming your business can be a stressful process. You want to choose a name that will last and, if possible, will
embody both your values and your company's distinguishing characteristics. But screening long lists of names with
a focus group composed of friends and family can return mixed results. Alternatively, a naming firm will ask
questions to learn more about your culture and what's unique about you - things you'll want to communicate to
consumers. One thing that Phillip Davis, the founder of Tungsten Branding, a Brevard, North Carolina-based
naming firm, asks entrepreneurs is "do you want to fit in or stand out?" It seems straightforward. Who wouldn't want
to stand out? But Davis explains that some businesses are so concerned about gaining credibility in their field, often
those in financial services or consulting, that they will sacrifice an edgy or attention-getting name. "However, in the
majority of cases, clients want to stand out and that's a better approach when looking at your long-term goals. Even
the companies that say 'I just want to get my foot in the door' will usually begin wishing that they stood out more
once they pass that first hurdle." Read more.
8. Get a grasp on marketing strategies
You don't need to be a marketing whiz, but if you're trying to build an idea from the ground-up, you'll likely need to
build an accompanying marketing strategy from the ground up. In doing so, you need to be clear on who your
customers are, because you don't have any time to waste on marketing to those who aren't. "That's really the biggest
challenge, determining who exactly your customers are," Lonier says. "Many times [business owners] think they
understand who they are, but you need to be willing to interview and test potential customers, particularly in the
early days of a company, in order to be able to build those relationships." One way to make marketing easier is
through joint-venture marketing, Tabaka says. When she owned a coffeehouse in Naperville, Illinois, she realized
that her company and a major drugstore in the same shopping center could work together and support each other's
marketing goals. Another important and relatively easy way to get your name out into the market is building your
web presence through social media like Twitter and Facebook. Be sure you familiarize yourself with and utilize
Search Engine Optimization (SEO) to make it easier for people to find your website.
9. Do a little test-run
"The best way to test your idea is if you're employed full-time and can sell your product or service in the
marketplace on weekends," says Sapp. If the business is already your day job, then you have to move quickly to test,
verify, and tweak your model," he adds. Try surveys, polls, and focus groups to gain insight into attitudes about your
business idea. Solicit feedback on the cheap by using online survey tools available through such services as
Zoomerang.com, Surveymonkey.com, and Constantcontact.com. The goal is to get to know your customers
intimately. What turns them on? What causes them to tune out? Are they impulse buyers or do they like to deliberate
over their buying decisions? There are a lot of products that people like but don't buy, says Sapp. The price might
not be right, for example. "Use social media to hone in on certain groups that can become your focus group," says
Susan Friedmann, a nichepreneur coach, in Lake Placid, New York and author of Riches in Niches: How to make it
Big in a Small Market. "Check out chat rooms, communities on social networks like Ning or Face book, industry
groups within LinkedIn," she says. "What are people discussing? Letters to the editor or articles in trade publications
are resources for finding out about challenges in that particular industry. What are people writing about? What do
people want to know about?" Knowing the answers to these types of questions may help you refine your idea.
10. Start searching for future talent
This might sound premature, but don't forget that your business is supposed to grow someday. Keep your eyes
peeled all the time for people who might fit into your organization even if you can't afford to pay them yet. No
matter how small the internet has made the world, experts still recommend in-person networking as the No. 1 way to
recruit talent. "I've done a lot of placing people into positions, and I have never used a job board as a way to do
that," says Rich Sloan, co-founder of Startup Nation. 'Personal [interaction] is so much more powerful and important
to me." So, if you meet someone interesting or knowledgeable at a networking event, or even if you get particularly
impressive service somewhere, be it a museum gift shop or helpline, ask that person a bit about themselves, what
kind of business they see themselves in five years and the best people around will stick in your mind for when you
need them.
Entrepreneur Characteristics: Personal Qualities of an Entrepreneur
Entrepreneur Characteristics: Personal Qualities of an Entrepreneur

What makes an entrepreneur is a complex question. It includes factors from the environment in which an individual
was raised, his or her family situation, and his or her personality traits. This question has been the subject of a great
deal of both study and research. The following discussion is a summary of my own observations plus some of the
conclusions of others.
About 20 or 25 years ago if you asked almost any expert to describe a successful entrepreneur, you would probably
have been given a list similar to this:
* Male
* Only child
* About 35 to 45 years old
* Bachelor's or master's degree in engineering
* Protestant
* Born in the Midwest
* Father owns a hardware store
* As a youth, delivered newspapers and sold lemonade
Should you be concerned if you do not fit this stereotype? Absolutely not. Very few of these are factors that
determine whether an entrepreneur succeeds or fails.
However, much recent research and many of my own observations seem to indicate that there are qualities
commonly found in successful entrepreneurs, and there are things that you can do if you are concerned about any
you may lack. Many writers on this subject seem to be primarily concerned with the qualities found in successful
entrepreneurs. I look at the questions a little differently and believe it is equally as important to consider those traits
that successful entrepreneurs usually do not have and those traits that simply do not matter.
Personal qualities common in successful entrepreneurs
Motivation to achieve -- In almost every case, successful entrepreneurs are individuals who are highly motivated to
achieve. They tend to be doers, people who make things happen. They are often very competitive. Many researchers
have concluded that the most consistent trait found in successful entrepreneurs is the sheer will to win, the need to
achieve in everything they do. They don't want to come in third, they don't want to come in second, they want to
come in first.
The habit of hard work -- Starting a company is hard work. Let no one kid you about that. Some time ago a student
reported that one of his other professors said that unless you are prepared to work hard you should not start a
company. He asked my opinion, I said the statement was nonsense. I think the correct way to say it is that unless you
already work hard you should not start a company. There is a big difference. Starting a company is unlikely to turn a
lazy oaf into a raging bull. In his excellent book, Winners, published by Holt, Rinehart and Wilson, Carter
Henderson quotes Nolan Bushnell, founder of Atari game company and Pizza Time Theater, as saying it all comes
down to one critical ingredient, "Getting off your ass and doing something." In summary, entrepreneurs are almost
always very hard workers.
Nonconformity -- Entrepreneurs tend to be independent souls, unhappy when forced to conform or toe the line.
They are people who find it difficult to work for others, who want to set their own goals. It is hard to imagine
anyone who is more nonconformist than Steve Jobs and Steve Wozniak, the founders of Apple Computer, or Bill
Gates, founder of Microsoft.
Strong leadership -- Starting a new company can be a harrowing experience full of uncertainty and risk.
Successfully bringing a small organization through these trying periods requires a lot of leadership skills.
Street smarts -- I do not know quite how to put this. Shrewd or sharp might be a better word. Paul Hawken
describes it as "trade skill" in his excellent book Growing a Business, published by Simon and Schuster. We all
know owners of some very successful businesses who were lucky to finish high school and never even considered
college. Yes, they always seem to make the right moves. Call it common sense, instinct, whatever you want.
Successful entrepreneurs seem to have intuitive good judgments when making complex business decisions.
Personal qualities not found in successful entrepreneurs
Compulsive gambling -- Almost without exception people who start companies are not gamblers. They are attracted
to situations where success is determined by personal skill rather than chance. They strongly prefer that their destiny
be determined by hard work and conscious decisions rather than by the roll of the dice.
High risk-taking - Contrary to popular opinion, entrepreneurs do not take excessive risks. Through careful product
and market selection, creative financing, building a good team, and thorough planning, the real risk of starting a new
business can be quite low. In the world of small business, optimism is truly cheap and high risk- takers die an early
death.
Irrelevant factors
Age -- This simply does not matter any more. During the 1950s, 60s and 70s the large majority of people starting
companies were in their 30s and 40s. Not true during the 1980s or today, Steve Jobs and Steve Wozniak were both in
their early 20s when they started Apple Computer. At the other extreme Ray Kroc was 59 when he started the
McDonald's restaurant chain.
Sex -- Here again, it just does not matter. Until recently, entrepreneurship was considered by many to be the last
bastion of male dominance in the business world. This is no longer true. More businesses are now being started by
women than are being started by men. I know many women who have started successful companies in recent years
and I do not mean only gift shops or snack bars. I mean building contracting, bicycle manufacturing, printing,
software, real estate agencies, newspaper publishing, market research, law firms, accounting firms, and on and on.
Marital status -- This is almost, but not quite, irrelevant. For a woman, being pregnant or having several preschool
children may not be the best time to take the step into entrepreneurship. For a man who is the sole support of the
family, having two or three children in college may not be the best time. But this in no way means they should not
start a business. It means that perhaps they should have it done several years earlier or wait a few years longer. The
question is when to start a business--not whether.
Educational level -- Knowledge and skill are very important. How you acquire them is less important. Too many
college degrees may be a handicap rather than an asset. One researcher suggested recently that one of the biggest
handicaps you can have when you start a business is a PhD. For example, Bill Gates, founder of Microsoft, the
country's largest software company, quit Harvard after his sophomore year.
Other -- After writing this section, something gnawed at me. Somehow I felt that I had overlooked an important
personal quality. It occurred to me that intelligence is not on my list. People with below-average intelligence should
probably not start businesses, but it is not necessary to be a genius. Somehow or other, being smart-whatever that
means-ought to be better than being dumb, but I do know quite a few very average people who have started some
very successful companies. I watched a television program recently on which the founder of a major company with
sales in hundreds of millions of dollars was interviewed. He said he had graduated last in his high school class of
230 students. Then he added that he did not think he graduated at all, but they just wanted to be rid of him. As I said
earlier, if you do not fit the mold, don't panic. Every entrepreneur is an individual with different skills, different
strengths and weaknesses, and different personality traits. Your smartest strategy as you start or develop your
business is to be aware of your own special set of skills, strengths and weaknesses, and build on these.
Upside/Downside: Reward and Risk
Conventional wisdom is that starting a company is an extremely risky proposition. Data from many sources show
that a high percentage of new businesses in the United States fail within the first few years. These statistics put fear
in the heart of anyone thinking about launching an enterprise. I urge you not to be too concerned; it's not as bad as
many people seem to think. In fact, the odds can really be quite good.
First of all, the above quoted data includes all startups: corner grocery stores, gasoline stations, trendy restaurants,
and similar businesses that have a notoriously high attrition rate. Conclusion: Avoid these businesses entirely and
your chances of surviving will increase dramatically.
Secondly, many people starting businesses are doomed almost before they begin because of poor initial strategy. The
most frequent error, in my view, is to select an offering (either product or service) that is distinguished from
competitors only by price. Instead, if you find ways to concentrate, differentiate, and innovate in every aspect of the
business rather than selling price alone, the odds of success will be better.
Risks and rewards come in many forms. The most obvious are financial, but for many entrepreneurs the financial
issues are of less importance than others. The two I want to discuss first are professional and emotional. What
different people consider acceptable risk will vary substantially. More things than money must be considered.
The professional rewards of starting a company and succeeding are obviously very great and do not need further
discussion.
The most important professional risk of starting a business and failing is the possibility of suddenly becoming
unemployed. The question to ask is how two or three years of managing an unsuccessful startup company would
compare to the same two or three years with your former employer when it comes to reentering the job market. My
belief is that the broad experience and extensive contacts that come with being the head of a company, even though
it fails, would make it easier to find a job. If this is true, or even almost true, it means that the professional risks of
starting a company are low.
Emotional risks and rewards are another matter-the rewards can be very great but the risks may also be great both
for you and your family. Let us look first at the reward side. I started a company from scratch. We had two
employees in addition to the four founders. Eight years later, at the time of our merger with Harris Corp., RF
employed about 800 people; today it is closer to 1,200. Most of these employees have a spouse and children. There
is a multiplier on top of these when you consider the company's supplier and merchants in the community where our
employees spend their income. All-in-all I estimate that the company I started in a basement supports 10,000 to
12,000 people in the Rochester area. Is this an emotional reward? You better believe it is!
Starting RF Communications was financially rewarding to the founders. My living standard and lifestyle moved
upward considerably but not nearly as far as my income, so suddenly I had resources available for other purposes.
As a result of the success of RF Communications I was able to donate an athletic field to each of the two private
high schools my children attended plus a dozen or so scholarships that will help other young people get a similar
education.
On the downside the emotional risks associated with starting a business can be great whether the business succeeds
or fails. Consider how your complete dedication to and immersion in the new venture will affect your marriage and
family. When you spend every waking hour dealing with business problems it may not leave much emotional energy
to deal with family problems. Are your spouse and children prepared and able to make the emotional investment
needed for you to start a business? If you venture goes down, will you be able to prevent your marriage and family
from going down as well?
These are scary questions that deserve a lot of attention. While the emotional rewards of entrepreneurship can be
very great, so can the risks. Each person must assess whether and how they can handle these.
In addition to these two areas, where the risks and rewards must be carefully balanced, there is a long list of others
where only reward is possible and the risk is zero. These include things such as the wish to be your own boss, the
desire to be involved in all aspects of the business, getting away from the politics, red tape, and bureaucracy of the
large company, and many more. If these things are important to you, and they usually are, there is only an upside.
The above discussion covers many issues but it does not cover many other important ones that may determine
whether the new business succeeds or fails, such as: writing a business plan, picking products and markets,
controlling cash flow, getting orders, and many others. These are addressed in other parts of this Web page or in
books, such as mine, which spend many chapters covering these other issues.
Entrepreneurial Skills
There is one thing to keep in mind. Not all Entrepreneurs have these skills. Some have them and some dont. That
being said skills and characteristics can be broken down into three different categories.
Innate Characteristics Natural or characteristics that you are born with.
Learned Characteristics Characteristics that have been developed with much practice.
Experiential Characteristics Characteristics that have been developed through different interactions and
occasions in the entrepreneurs life.
We have discussed the many different types of skills and characterstics that other Entrepreneurs have, now it is time
to see what you possess.
What makes someone a successful entrepreneur? It certainly helps to have strong technology skills or expertise in a
key area, but these are not defining characteristics of entrepreneurship. Instead, the key qualities are traits such as
creativity, the ability to keep going in the face of hardship, and the social skills needed to build great teams. If you
want to start a business, it's essential to learn the specific skills that underpin these qualities. It's also important to
develop entrepreneurial skills if you're in a job role where you're expected to develop a business, or "take things
forward" more generally.
Team building is the most important characteristic of an entrepreneur. When you are identifying and listing the
characteristics of an entrepreneur, team building should be stressed. Teamwork is a critical team building skill,
which entrepreneurs must cultivate to be successful Entrepreneurial skills need to be developed through the course
and not just in this section. The Entrepreneurial ego ( attitude or view ) is a critical characteristic of those who
become successful entrepreneurs. Some of the characteristics that are typically associated with entrepreneurs are:
o
a spirit of adventure
a strong need to achieve and seek personal accomplishment
self confidence and self reliance
trust of other people
goal orientation
innovation, creativity and versatility
persistence
hard working and energetic
a positive attitude
a strong sense of personal awareness
willingness to take initiative
a strong sense of commitment
high energy level
ability to seek out and use feedback
integrity and reliability
patience
ability to deal with failure
leadership
an ability to inspire and
an understanding of different cultures
Entrepreneurial characteristics and skills can be divided into three types;
Innate Characteristics - Natural or characteristics that you are born with.
Learned Characteristics - Characteristics that have been developed with much practice.
Experiential Characteristics - Characteristics that have been developed through different interactions and
occasions in the entrepreneur's life.
There are many different types of skills or characteristics that entrepreneurs may possess that are unappealing, and
will do more harm than good. Those include;
invulnerability
machismo/feminism
impulsiveness
over-controlling
perfectionism
Entrepreneurship and small business matter
Entrepreneurship and small business are related but certainly not synonymous concepts. On the one hand,
entrepreneurship is a type of behavior which concentrates on opportunities rather than resources (Ste-venson and
Gumpert, 1991). This type of behavior can happen in both small and large businesses but also elsewhere. On the
other hand, small businesses can be a vehicle for both Schumpeterian entrepreneurs intro-ducing new products and
processes that change the industry and for people who simply run and own a busi-ness for a living (Wennekers and
Thurik, 1999). The latter group includes many franchisees, shopkeepers and people in professional occupations.
They belong to what Kirchhoff (1994) calls the economic core. That both entrepreneurship and small businesses
matter is not a new observation. In particular, they are im-portant where they overlap. This is in the area of new
small and often fast growing businesses. However, the way in which they matter has evolved over time. During the
first decades of the last century, small busi-nesses were both a vehicle for entrepreneurship and a source of
employment and income. This is the era in which Schumpeter (1912) conceived his Theory of Economic
Development. Here Schumpeter emphasizes the role of the entrepreneur as prime cause of economic development.
He describes how the innovating entre-preneur challenges incumbent firms by introducing new inventions that make
current technologies and prod-ucts obsolete. This process of creative destruction is the main characteristic of what
has been called the Schumpeter Mark I regime.
During the post-war years small business still mattered, but increasingly less on the grounds of eco-nomic
efficiency, and more for social and political purposes. In a time when large firms had not yet gained the powerful
position of the 1960s and 1970s, small businesses were the main supplier of employment and hence of social and
political stability. Scholars, such as Chandler (1977), Galbraith (1967) and Schumpeter (1942), had however
convinced the economists, intellectuals and policy makers of that era that the future was in the hands of large
corporations and that small business would fade away as the victim of its own ineffi-ciencies. Policy in the United
States was divided between allowing for the demise of small business on eco-nomic grounds, on the one hand, and
preserving at least some semblance of a small-enterprise sector for so-cial and political reasons, on the other. Small
business, it was argued, was essential to maintaining American democracy in the Jeffersonian tradition. Certainly,
passage of the Robinson-Patman Act (Foer, 2001), which has been accused of protecting competitors and not
competition (Bork, 1978), and creation of the United States Small Business Administration were policy responses to
protect less-efficient small businesses and maintain their viability. These policy responses are typical for a
Schumpeter Mark II regime. In Capitalism, Socialism and Democracy, Schumpeter (1942) focuses on innovative
activities by large and established firms. He describes how large firms outperform their smaller counterparts in the
innovation and appropria-tion process through a strong positive feedback loop from innovation to increased R&D
activities. This proc-ess of creative accumulation is the main characteristic of what has been called the Schumpeter
Mark II re-gime.
The aim of the present short contribution is to show that since the 1970s the world has changed con-siderably, and
that this change has had consequences for the current policy debate. Our paper deals with some aspects of the recent
scientific literature on the relation between entrepreneurship and small business, on the one hand, and economic
growth, on the other. In particular, it gives a summary of some work of the EIM/CASBEC research group in the
Netherlands. It refers to scientific analyses showing that countries that are lagging behind in the process of
restructuring will pay a penalty in terms of forgone growth. It also pays attention to the Global Entrepreneurship
Monitor (GEM), a new and large multinational project focusing on the collection and analysis of internationally
comparable data on the rate of entrepreneurial activity.
The world has changed
In today's world small businesses, and particularly new ones, are seen more than ever as a vehicle for
entrepreneurship contributing not just to employment and social and political stability, but also to innovative and
competitive power (Wennekers and Thurik, 1999). In short, the focus has shifted from small businesses as a social
good that should be maintained at an economic cost to small businesses as a vehicle for entrepre-neurship. With this
shift came the renewed perception of the important role of entrepreneurship. Indeed, re-cent econometric evidence
suggests that entrepreneurship is a vital determinant of economic growth (Audretsch and Thurik, 2000; Audretsch,
Carree, van Stel and Thurik, 2002; Carree and Thurik, 1999; Car-ree, van Stel, Thurik and Wennekers, 2001;
Audretsch, Carree and Thurik, 2001). According to Audretsch, Carree, van Stel and Thurik (2002), a cost in terms of
forgone economic growth will be incurred from a lack of entrepreneurship. The positive and statistically robust link
between entrepreneurship and economic growth has now been verified across a wide spectrum of units of
observation, spanning the establishment, the enter-prise, the industry, the region, and the country.
Thus, while small business has always mattered to policy makers, the way in which it has mattered has drastically
changed. Confronted with rising concerns about unemployment, job creation, economic growth and international
competitiveness in global markets, policy makers have responded to this new evi-dence with a new mandate to
promote the creation of new businesses, i.e., entrepreneurship. See Reynolds, Hay, Bygrave, Camp and Autio
(2000). Initially, European policy makers were relatively slow to recognize these links but since the mid-1990s have
rapidly built momentum in crafting appropriate approaches. See EIM/ENSR (1993 through 1997) and Audretsch,
Thurik, Verheul and Wennekers (2002). Yet, without a clear and organized view of where and how entrepreneurship
manifests itself, policy makers are left in un-chartered waters without an analytical compass. This explains the
variation in their responses (European Commission, 2000 and 2001).
Evidence of the change
There is ample evidence that economic activity moved away from large firms to small firms in the 1970s and 1980s.
The most impressive and also the most cited is the share of the 500 largest American firms, the so-called Fortune
500. Their employment share dropped from 20 per cent in 1970 to 8.5 per cent in 1996 (Carlsson, 1992 and 1999).
European data dealing with the size distribution of firms were not available in a systematic manner until recently.
However, Eurostat has begun publishing yearly summaries of the firm size distribution of (potential) EU-members at
the two-digit level for the entire business sector. The efforts of Eu-rostat are supplemented by the European Network
of SME Research (ENSR), a cooperation of 19 European institutes. This organization publishes a yearly report of
the structure and the developments of the small business sectors in nineteen European countries. See EIM/ENSR
(1993 through 1997) and European Com-mission (2000). Additionally, the annual GEM project mentioned before
will contribute to our view on the size and significance of the change because it assembles unique data on new
business start-ups in a large and increasing number of countries across various phases of economic development.
See Reynolds, Hay, By-grave, Camp and Autio (2000).
Lastly, there is the COMPENDIA data set of EIM of business ownership rates of 23 OECD countries in the period
1974-1998 (Audretsch and Thurik, 2000 and Audretsch, Thurik, Verheul and Wennekers, 2002). It shows that there
has been considerable disparity among OECD countries in business ownership rates both across countries and over
time. It also shows that the countries with the lowest rate of business ownership are Luxembourg, Denmark,
Norway, Austria, Sweden and Finland. For these countries, several of which are Scandinavian, the rate of business
ownership is below 8.5% in 1998. By comparison, the weighted sample average in 1998 is approximately 11%. By
contrast, in four countries, Greece, Italy, Portugal and Australia, the business ownership rate exceeds 15%. Note that
the majority of these countries is Mediterra-nean. Taken as a whole the number of business owners in the 23
countries grew from about 29 million in 1972 to about 45 million in 1998. The proportional growth of the labor
force has been lower in this period so that the rate of business ownership increased from 10% to 11%. Clearly, the
United States is the country with the highest number of business owners: about 32% of the total 45 million business
owners in the 23 countries in 1998 are situated within the United States, about the same percentage as in 1984.
Countries that increased in business ownership rate by more than 3 percentage points in the period of 1984 through
1998 include Ire-land, Canada, New Zealand, Portugal and Iceland. The former three countries experienced a growth
of the business ownership rate in the period prior to 1984. There are four countries suffering a decline in the business ownership rate in both periods: Denmark, France, Luxembourg and Norway. Although Japan only had a decline
in business ownership in the second period (1984-1998), this decline is particularly noteworthy since its share in
total business owners dropped from more than 20% in 1972 to 15% in 1998.
Causes of the change
Acs and Audretsch (1993) and Carlsson (1992) provide evidence concerning manufacturing indus-tries in countries
in varying stages of economic development. Carlsson advances two explanations for the shift toward smallness. The
first deals with fundamental changes in the world economy from the 1970s on-wards. These changes relate to the
intensification of global competition, the increase in the degree of uncer-tainty and the growth in market
fragmentation. The second explanation deals with changes in the character of technological progress. Carlsson
shows that flexible automation has various effects resulting in a shift from large to smaller firms. The pervasiveness
of changes in the world economy, and in the direction of techno-logical progress result in a structural shift affecting
the economies of all industrialized countries. Also Piore and Sable (1984) argue that the instability of markets in the
1970s resulted in the demise of mass production and promoted flexible specialization. This fundamental change in
the path of technological development led to the occurrence of vast diseconomies of scale.
This shift away from large firms is not confined to manufacturing industries. Brock and Evans (1989) show that this
trend has been economy-wide at least for the United States. They provide four more reasons why this shift has
occurred: the increase of labor supply leading to lower real wages and coinciding with an increasing level of
education; changes in consumer tastes; relaxation of (entry) regulations and the fact that we are in a period of
creative destruction. Loveman and Sengenberger (1991) stress the influence of two trends of industrial restructuring:
that of decentralization and vertical disintegration (the breaking up of large plants and businesses) and that of the
formation of new business communities. These intermediate forms of market coordination flourish owing to
declining costs of transaction. Furthermore, they emphasize the role of public and private policies promoting the
small business sector. Audretsch and Thurik (2000) point at the necessary shift towards the knowledge based
economy being the driving force behind the move from large to smaller businesses. In their view globalization and
technological advancements are the major determinants of this challenge of the Western countries. See Loveman and
Sengenberger (1991), Acs, Carlsson and Karlsson (1999) and Carree et al. (2001) for a further documentation of
industrial changes and their causes.
Consequences of the change
The causes of this shift are one thing. Its consequences cover a different area of research. Acs (1992) began the
discussion. He distinguishes four consequences of the increased importance of small firms: a vehi-cle for
entrepreneurship, routes of innovation, industry dynamics and job generation. His claims are that small firms play an
important role in the economy serving as agents of change by their entrepreneurial activ-ity, being the source of
considerable innovative activity, stimulating industry evolution and creating an im-portant share of the newly
generated jobs. Baumol (1993) amply deals with the role of entrepreneurial activi-ties and the different effects it
may have. The role of smallness in the process of innovative activities is in-vestigated extensively by Acs and
Audretsch (1990) and Audretsch (1995). The discussion of the relation between the role of small firms and industry
dynamics is spread out: examples can be found in Audretsch (1995). Cohen and Klepper (1992) focus on the role of
the number of firms and diversity for obtaining pro-gress. Audretsch and Thurik (2001) observe that the change is of
major importance and talk about the shift from the managed to the entrepreneurial economy.
Clearly, there are many more consequences of the increased share of small firms than the four men-tioned by Acs
(1992). For instance, an increase in the share of small firms may lead, ceteris paribus, to a lower orientation towards
exports, a lower propensity to export employment, a qualitative change in the de-mand for capital and consultancy
inputs, more variety in the supply of products and services or in the manner and aims of conducting research and
development. The literature of the consequences of smallness is com-plemented by some empirical exercises by
Carree and Thurik (1998 and 1999) for some European countries. They show that a rise in the share of smallness in a
certain economy, respectively a high share of smallness in a certain industry generates additional output in the entire
economy, respectively industry. Schmitz (1989) provides a theoretical model with a similar result. Audretsch and
Thurik (2000) show that an increase of the rate of entrepreneurship (number of business owners per labor force)
leads to lower levels of unemployment in 23 OECD countries in the period 1984 through 1994.
The relationship between growth and entrepreneurship has been shrouded with ambiguity. There is assumed to be a
two-way causation between changes in the level of entrepreneurship and that of the level of economic development:
a Schumpeter effect of entrepreneurship enhancing growth and a refugee or shopkeeper effect of low growth
levels stimulating self-employment. Audretsch, Carree and Thurik (2001) try to reconcile the ambiguities found in
the relationship between unemployment as the inverse of eco-nomic growth - and entrepreneurship. In Reynolds,
Hay, Bygrave, Camp and Autio (2000) a more direct ap-proach is taken correlating growth and entrepreneurial
activity. The latter approach is simpler in a methodo-logical sense but more sophisticated in that a wider variety of
countries is observed and that entrepreneurial activities are measured appropriately. Despite their entirely different
approaches both studies show a positive correlation between entrepreneurship and economic growth.
The growth penalty

In short, a series of studies has identified that the industry structure is generally shifting towards an increased role
for small enterprises. However, the extent and timing of this shift is anything but identical across countries. Rather,
the shift in industry structures has been heterogeneous and apparently shaped by country-specific factors (Carree,
van Stel, Thurik and Wennekers, 2001). Apparently, institutions and poli-cies in certain countries have facilitated a
greater and more rapid response to globalization and technological change, along with the other underlying factors,
by shifting to a less centralized industry structure than has been the case in other countries (Audretsch, Thurik,
Verheul and Wennekers, 2002). An implication of this high variance in industry restructuring is that some countries
are likely to have industry structures that are different from optimal.
But what determines this "optimal" structure? It is beyond the scope of this note to define or even dis-cuss this
(Audretsch, Carree, van Stel and Thurik, 2002). For an intuition we have to refer to the field of in-dustrial
organization. There is a long-standing tradition in this field devoted towards identifying the determi-nants of
industry structure. As early as 1948, Blair(1948) stated that technology is the most important deter-minant of
industry structure. Scherer and Ross (1990) and Chandler (1990) expand the determinants of opti-mal industry
structure to include other factors as well as the underlying technology. Dosi (1988, p. 1157), in his systematic review
of the literature in the Journal of Economic Literature, concludes that Each produc-tion activity is characterized by
a particular distribution of firms. When the determinants of the underlying industrial structure are stable, the
industry structure itself would not be expected to change. However, a change in the underlying determinants would
be expected to result in a change in the optimal industry struc-ture. Certainly, Chandler (1990) and Scherer and Ross
(1990) identified a shift in optimal industry structure towards increased centralization and concentration throughout
the first two-thirds of the previous century as a result of changes in the underlying technology along with other
factors.
While the evidence suggests that the restructuring paths of industry vary considerably across coun-tries, virtually
nothing is known about the consequences of lagging behind in this process. Do countries with an industry structure
that deviates considerably from the optimal industry structure forfeit growth more than countries deviating less from
the optimal industry structure? This question is crucial to policy makers, be-cause if the opportunity cost, measured
in terms of forgone growth, of a slow adjustment towards the optimal industry structure is low, the consequences of
not engaging in a rapid adjustment process are relatively triv-ial. However, if the opportunity cost is high the
consequences are more alarming. Audretsch, Carree, van Stel and Thurik (2002) try to identify the impact of
deviations in the actual industry structure from the optimal industry structure on growth. They use a data base
linking industry structure to growth rates for a panel of 18 European countries spanning five years to test the
hypothesis that deviations from the optimal industry structure result in reduced growth rates. They find that
deviations from the optimal industry structure, meas-ured in terms of the relative importance of small firms, have
had an adverse effect on economic growth rates. This evidence suggests that those countries that have shifted
industry structure towards a larger share of small firms in a more rapid fashion have been rewarded by higher
growth rates.
In other words, the evidence shows the importance of initiatives like the EIM/CASBEC research pro-gram and the
Global Entrepreneurship Monitor in supporting the policy debate to focus more and more on the role of
entrepreneurship for economic growth. Despite various research initiatives "remarkably little is known about the
relationship between entrepreneurship and economic growth, including how it works, what determines its strength
and the extent to which it holds for diverse countries" (Reynolds, Hay, Bygrave, Camp and Autio, 2000, p.11). The
richness of the newly arising data material in terms of the variety of coun-tries, the variety with which
entrepreneurship can be measured and the large amount of explanatory variables will in due time provide policy
makers with indispensable insight in macroeconomic policies and instru-ments needed to foster solid economic
growth.
Why become an Entrepreneur?
Why become an Entrepreneur?
Courtesy-bonnie
Owning ones own business is the American/Indian Dream, isnt it? It certainly has been mine since selling my
artwork and crafts on the side of the road as a kid. Being an entrepreneur means taking on many risks, sleepless
days, bootstrapping and plenty of coffee. So why would you want to do this? Ill tell you why!
The risks and rewards are all your own- Owning up to every good idea or bad mistake is a motivator. Successes
can boost your confidence, while failures will motivate you to work harder. Entrepreneurship can be a bit like
gambling but if you believe in yourself and you have a viable product and/or service you will do just fine.
The rules are your own as well! You know the phrase bend the rules? Does that phrase sometimes make you
uncomfortable or do you wish you could tell your boss to just bend the rules once in a while? Well in your own
business the rules are your own. You do what you need to keep your customers satisfied and you make rules that
ensure your employees know what to expect working for your company.
The ability to be as transparent as possible-Being able to represent your brand as honest as possible is a great
perk to an entrepreneur. I think anyone can agree that a long lasting business relationship is one that is built on trust
and honesty.
You choose your collaborative partners- Over the years, Ive come across some talented designers, developers,
copywriters, photographers, companies, etc. that I thought, If I could only work with or collaborate with these
people. Working for someone else I didnt have that chance and now I do! Being an entrepreneur you have that
chance to pick and choose your vendors, affiliates and mentors.
No follow the leader- Thats because you are the leader! In February, Chef Kevin Meehan left his corporate
Executive Chef position at Caf Pinot to open up his own concept, Kali Dining. Why? Meehan wanted to find
success on his own terms, and he has certainly found it! His "roving" dinner parties have been sold out since he
started them. If you have leadership skills and an entrepreneurial spirit then owning your own business would be
right for you.
Work/Life freedom- Ok so this one is a bit of a stretch since owning your own business takes time and money. On
the other hand if you had an emergency, kids soccer game or needed vacation you can take it. When some
companies don't really give you that choice, entrepreneurship opens up a door to make a choice when you
professional and personal life collide.
Being an entrepreneur isnt for everyone- There are definitely many risks, long hours and sacrifices, but thats
what makes it worth it. I thrive on entrepreneurship and working with entrepreneurs such as you. If you need some
marketing help for your business, contact Laboratory 13 today and get started with free consultation.
THE INDIVIDUAL ENTREPRENEUR
I. ENTREPRENEURIAL FEELINGS
A. There is no true entrepreneurial profileentrepreneurs come from many educational backgrounds, family
situations, and work experiences.
B. Locus of Control.
1. Entrepreneurs must be able to sustain the drive and energy required to form something new and to manage the
new enterprise.
2. While research results are inconsistent, internal control seems to be a characteristic of entrepreneurs.
3. Internal beliefs appear to differentiate entrepreneurs from the general public, but not from managers since both
tend toward internality.
C. Feelings about Independence and Need for Achievement.
1. The entrepreneur also has the need for independence, to do things in his or her own way and time.
2. Another controversial characteristic is the entrepreneurs need for achievement.
3. McClelland concluded that a high need for achievement leads individuals to engage in entrepreneurial behavior,
although other studies have been inconsistent.
D. Risk Taking.
1. Risk taking seems a part of the entrepreneurial process.
2. Although many studies have focused on risk taking in entrepreneurship, no conclusive relationship has been
established.
II. ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS
A. Only a few background characteristics have differentiated the entrepreneur from managers.
B. Childhood Family Environment.
1. The impact of birth order and social status has had conflicting research results.
2. Some studies have found that entrepreneurs tend to be firstborn; others find no relationship.
3. There is strong evidence that entrepreneurs, both male and female, tend to have self-employed or entrepreneurial
parents.
a. Having a father or mother who is self-employed provides a strong inspiration in the example of independence and
flexibility of self-employment.
b. This feeling of independence is often further enforced by an entrepreneurial mother.

4. The overall parental relationship may be the most important aspect of the childhood environment in
establishing the desirability of entrepreneurial activity.
5. Parents of entrepreneurs need to be supportive and encourage independence, achievement, and responsibility.
a. This supportive relationship appears to be most important for females.
b. Female entrepreneurs tend to grow up in middle- to upper-class environments, where families are child-centered,
and are similar to their fathers in personality.
C. Education.
1. Education appears important in the upbringing of the entrepreneur, in the level of education obtained, and in
playing a major role in coping with problems.
2. Although formal education is not necessary for starting a new business, it does provide a good background.
3. Few women entrepreneurs have degrees in engineering, science, or math.
4. The ability to communicate clearly in written and spoken work is also important.
D. Personal Values.
1. Studies have failed to indicate that entrepreneurs can be differentiated on personal valued from managers,
unsuccessful entrepreneurs, or the general public.
2. Studies have shown that the entrepreneur has a different set of attitudes about the nature of management.
3. Five consensus characteristics have been found:
a. Superior product quality.
b. Quality service to customers.
c. Flexibility, or the ability to adapt to changes in the marketplace
d. High-caliber management.
e. Honesty and ethics in business practices.
4. Ethics and ethical behavior are also very important to entrepreneurs.
E. Age.
1. Entrepreneurial age, as contrasted to chronological age, is the age of the entrepreneur reflected in the experience.
2. Entrepreneurial experience is one of the best predictors of success.
3. In chronological age, most entrepreneurs start their careers between ages 22 and 55.
4. There are milestones years every five years.
5. Generally, male entrepreneurs start their first venture in their early 30s, while women tend to do so in their middle
30s.
F. Work History.
1. Dissatisfaction with ones job often motivates the launching of a new venture.
2. Previous technical and industry experience is also important once the decision to start a business made.
3. Experience in the following areas is particularly important: financing; product or service development;
manufacturing; development of distribution channels; and preparation of marketing plan.
4. As the venture becomes established, managerial experience and skills become more important.
5. Entrepreneurial experience is also important.
III. MOTIVATION
A. While motivations may vary, the reason cited most often for becoming an entrepreneur is independencenot
wanting to work for anyone else.
B. Other motivating factors differ between male and female entrepreneurs.
1. Money is the second reason for mens starting a venture.
2. Job satisfaction, achievement, opportunity, and money are the rank order reasons for women.
IV. ROLE MODELS AND SUPPORT SYSTEMS
A. One of the most important factors influencing entrepreneurs in their career choice is the choice of role models.
1. Role models can be parents, relatives, or successful entrepreneurs in the community.
2. Role models can also serve in a supportive capacity as mentors during and after the new venture is launched.
a. This support system is most crucial during the start-up phase.
b. It is important that an entrepreneur establish connections and eventually networks early in the venture formation
process.
3. As contacts expand they form a network with density (extensiveness of ties between two individuals) and
centrality (the total distance of the entrepreneur to all other individuals.)
a. The strength of ties between the entrepreneur and any individual is dependent on the frequency, level, and
reciprocity of the relationship.
b. An informal network for moral and professional support benefits the entrepreneur.
B. Moral-Support Network.
1. It is important for the entrepreneur to establish a moral support network of family and friends.
2. Most entrepreneurs indicate that their spouses are their biggest supporters.
3. Friends can provide advice that is more honest than that received from others; also encouragement, understanding,
and assistance.
4. Relatives can also be sources of moral support, particularly if they are also entrepreneurs.
C. Professional-Support Network.
1. The entrepreneur also needs advice and counsel which can be obtained from members of a professional support
network.
2. Most entrepreneurs indicate that they have mentors.
a. The mentor is a coach, sounding board, and advocate.
b. The individual selected needs to be an expert in the field.
c. An entrepreneur can initiate the mentor-finding process by identifying and contacting a number of experts.
d. The mentor should be periodically apprised of the progress of the business so that a relationship can gradually
develop.
3. Another source of advice is a network of business associates.
a. Self-employed individuals who have experience in starting a business are good sources.
b. Clients and buyers are also important as they provide word-of-mouth advertising.
4. Suppliers are good components of the professional-support networkthey help to establish credibility with
suppliers and provide good information on trends in the industry.
5. Trade associations are good network additions, as they keep up with new developments and can provide overall
industry data.
6. Affiliations with individuals developed in hobbies, sporting events, civic involvements, and school alumni groups
are excellent sources of referrals, advice, and information.
D. Each entrepreneur needs to establish both a moral- and a professional-support network to share problems with
and gain overall support.
V. MALE VERSUS FEMALE ENTREPRENEURS
A. Women are now starting new ventures at a higher rate than men.
1. Women are starting businesses in the U.S. at twice the rate of all businesses.
2. Women now own about 6.2 million small businesses, employing 9.2 million people.
B. In some respects female entrepreneurs possess very different motivations, business skills, and occupational
backgrounds.
1. Factors in the start-up process for male and female entrepreneurs are different, especially in such areas as support
systems, sources of funds, and problems.
2. Men are motivated by the drive to control their own destinies.
3. Women tend to be more motivated by the need for achievement arising from job frustration.
C. Departure points and reasons for starting the business are similar for both men and women.
1. Both generally have a strong interest and experience in the area of their venture.
2. For men, the transition to a new venture is easier when the venture is an outgrowth of a present job.
3. Women often leave a previous occupation with a high level of frustration and enthusiasm for the new venture
rather than experience.
D. Start-Up Financing.
1. Males often have investors, bank loans, or personal loans in addition to personal funds as sources of start-up
capital.
2. Women usually rely solely on personal assets or savings.
3. Obtaining financing and lines of credit are major problems for women.
E. Occupations.
1. Both groups tend to have experience in the field of their ventures.
2. Men more often have experience in manufacturing, finance, or technical areas.
3. Most women usually have administrative experience, often in service-related fields.
F. Personality.
1. Both men and women tend to be energetic, goal-oriented, and independent.
2. Men are often more confident and less flexible and tolerant than women.
G. The backgrounds of male and female entrepreneurs tend to be similar.
1. Women are a little older when they embark on their careers.
2. Men often have studied in technical- or business-related areas, while women tend to have liberal arts education.
H. Support Groups.
1. Men usually list outside advisors as most important supporters, with spouse being second.
2. Women list their spouses first, close friends second, and business associates third.
3. Women usually rely more heavily on a variety of sources for support and information than men.
I. Nature of the Venture.
1. Women are more likely to start a business in a service-related area.
2. Men are more likely to enter manufacturing, construction, or high-technology fields.
VI. MINORITY ENTREPRENEURSHIP
A. The differences in behavior of various groups must be understood in the context of the environment and
economic opportunities available, making research difficult.
B. Most literature dealing with minority entrepreneurship has focused on the characteristics of the group under
study.
1. In terms of ownership, one study found:
a. The lowest participation rate is for African-Americans.
b. The second highest but fastest growing rate is for Hispanics.
c. The highest rate is for Asians.
2. Studies have also found differences in education, family background, and age when starting the venture.
C. Studies have found differences between ethnic groups in benefiting from community resources.
D. Entrepreneurship has increased among Asians, African Americans, Hispanics, and Native Americans.
1. Hispanic-owned businesses make up 5.8% of businesses.
2. Asian-American owners make up 4.4%.
3. African-Americans own 4.0% and American Indians 1%.
4. This 15.8% minority share is up from 6.8% in 1982.
VII. ENTREPRENEURS VERSUS INVENTORS
A. An inventor, an individual who creates something for the first time, is a highly driven individual motivated by
his or her own work and personal ideas.
1. An inventor:
a. Tends to be well-educated.
b. Has family, educational, and occupational experiences that contribute to free thinking.
c. Is a problem solver.
d. Has a high level of self-confidence.
e. Is willing to take risks.
f. Has the ability to tolerate ambiguity and uncertainty.
2. A typical inventor places a high premium on being an achiever, and is not likely to view monetary benefits as a
measure of success.
B. An inventor differs from an entrepreneur.
1. An entrepreneur falls in love with the new venture, while the inventor falls in love with the invention.
2. The development of a new venture based on an inventors work often requires the expertise of an entrepreneur to
commercialize it.
E-COMMERCE AND BUSINESS START-UP AND GROWTH
A. The Role of E-Commerce.
1. Both business-to-business and business-to-consumer e-commerce sales continue to increase.
2. The largest e-commerce growth occurs during the fourth quarter holiday season, although there has been growth
in all quarters.
3. Factors that facilitate the growth of e-commerce are:
a. The widespread use of personal computers.
b. The adoption of intranets in companies.
c. The acceptance of the Internet as a business communications platform.
B. Using E-Commerce Creativity.
1. The Internet is especially important for small and medium-sized companies as it lets them minimize marketing
costs while reaching broader markets.
2. An entrepreneur starting an Internet commerce venture needs to address many of the same strategic and tactical
questions as other companies plus some specific online issues.
a. One decision is whether to run the Internet operations within the company or outsource these operations.
b. If handled in house, expensive equipment, software, and support services have to be maintained.
c. There are numerous possibilities for outsourcing the Internet business.
3. The entrepreneur can hire web developers to design the web page or use an e-commerce software package.
4. The two major components of Internet commerce are front-end and back-end operations.
a. Front-end operations are encompassed in the websites functionality, such as search capabilities, shopping cart,
and secure payment.
b. Back-end operations involve integrating customer orders with distribution channels and manufacturing
capabilities.
C. Website.
1. The use of websites by entrepreneurial firms is increasing.
a. Yet the majority of small businesses do not feel they have the business ability to build their own website.
b. The entrepreneur needs to structure the website to effectively engage the target market.
c. The material must be fresh and updated regularly.
2. There are several important features of every website.
a. Each website should have search capabilities.

b. Other functions include shopping cart, secure server connection, credit card payment, and customer feedback
features.
c. Orders and other sensitive customer information should be transferred only through secure servers.
d. The site should also have an e-mail response system for customer feedback.
3. A successful website has three characteristics: speed, speed, and speed.
a. A website should be easy to use, customized for specific market target groups, and compatible with different
browsers.
b. If the company is targeting international markets, then translation and cultural adaptation need to be considered.
4. The website address should appear on all marketing materials.
D. Tracking Customer Information.
1. Electronic databases support personal marketing targeted at individual clients.
2. However, care must be taken to follow the laws protecting the privacy of individuals.
3. The U.S. government has generally maintained a policy of noninvolvement with Internet regulation, but the
Federal Trade Commission has also pressed for new laws to protect minors.
E. Doing E-Commerce as an Entrepreneurial Company.
1. The decision to go online for the first time and develop an e-commerce site needs to be strategic one.
a. The products should be able to be delivered economically and conveniently.
b. The product has to be interesting for a large number of people, and the company must be ready to ship the product
out of its geographical location.
c. Online operations have to bring significant cost reductions compared with brick-and-mortar operations.
d. The company must be able to economically draw customers to its website.
2. Conflict between traditional and online marketing channels can lead to a hostile, competing position of once
partnering companies.
Creativity and the Business Idea
1. SOURCES OF NEW IDEAS
A. A sound unique idea for a new product or service, properly evaluated, is essential to successfully launch a new
venture.
B. Consumers.
1. Potential entrepreneurs should continually pay close attention potential customers.
2. This can be an informal or formal survey of consumers expressing their opinions.
3. Be sure that the idea represents a large enough market.

C. Existing Products and Services.
1. Potential entrepreneurs should establish a formal method for monitoring and evaluating the products and services
in the market.
2. This may uncover ways to improve on present products, resulting in new product or service ideas.
D. Distribution Channels.
1. Because they are familiar with the needs of the market, channel members often have suggestions for new
products.
2. These channel members can also help in marketing the new product.
E. Federal Government.
1. The files of the Patent Office contain numerous new product possibilities.
a. The patents can suggest other new product ideas.
b. Several government agencies and publications, such as the Official Gazette, monitor patent applications.
2. New product ideas can also come in response to government regulations.
F. Research and Development.
1. The largest source for new ideas is the entrepreneurs own research and development.
2. This can be a formal endeavor connected with ones current employment or an informal lab in the garage.
II. METHODS FOR GENERATING IDEAS
A. There are several methods to help generate and test new ideas as a basis for the new venture.
B. Focus Groups.
1. Focus group interviews involve a moderator leading a group through an open in-depth discussion rather than
simply asking questions.
2. The moderator focuses the discussion on the new product area in either a directive or nondirective manner.
3. The participants are stimulated by comments from other group members in developing a new product idea.
4. The focus group is also an excellent method for initial screening of ideas and concepts.
C. Brainstorming.
1. Brainstorming allows people to be stimulated to greater creativity by participating in organized group exercises.
2. When using brainstorming four rules are followed:
a. No criticism is allowed by anyone in the group.
b. Freewheeling is encouraged.
c. Quantity of ideas is desired.
d. Combinations and improvements of ideas are encouraged.
3. Brainstorming sessions should be fun with no one dominating or inhibiting the discussion.
D. Problem Inventory Analysis.
1. Problem inventory analysis uses individuals in a manner similar to focus groups, but instead of generating new
ideas, consumers are given a list of problems for a general product category.
2. They are then asked to identify products in this category that have those problems.
3. It is often easier to relate known products to suggested problems in the creation of new product ideas.
4. Problem inventory analysis should be used primarily to identify product ideas for further development.
5. Results from product inventory analysis must be carefully evaluated as they may not actually reflect a new
business opportunity.
III. CREATIVE PROBLEM SOLVING
A. Creative problem solving is important in identifying a new product, but personal creativity declines with age,
education, lack of use, and bureaucracy.
1. Creativity generally declines in stages.
2. Latent creative potential can be stifled by perceptual, cultural, emotional, and organizational factors.
B. Brainstorming, the most widely used technique, can generate possible ideas about a problem in a limited time
through spontaneous contributions of participants.
1. Once the problem statement is prepared, 6 to 12 individuals are selected, with no group member being an expert
in the field of the problem.
2. All ideas are recorded, with no criticism allowed.
C. Reverse Brainstorming.
1. Reverse brainstorming is similar to brainstorming, except that criticism is allowed.
2. Since the focus is on the negative aspects of a product or service, care must be taken to preserve group morale.
3. The process usually involves identifying everything wrong with an idea, then a discussion of ways to overcome
the problems.
D. Brain writing.
1. Brain writing is a form of written brainstorming.
2. It is silent, written generation of ideas by a group of people.
3. Participants write their ideas on special forms that circulate within the group.
E. Gordon Method begins with group members not knowing the exact nature of the problem.
1. The entrepreneur starts by mentioning a general concept associated with the problem and the group responds with
ideas.
2. The actual problem is then revealed, enabling the group to make suggestions for implementation.
F. Checklist Method.
1. A new idea is developed through a list of related issues.
2. The entrepreneur can use the list of questions to guide the development of an idea.
G. Free Association.
1. One of the simplest methods to generate new ideas is free association.
2. A word related to the problem is written down, then another, with each word adding something to the thought
process.
H. Forced Relationships.
1. Forced relationships try to force relationships among some product combinations.
2. The steps in the process:
a. Isolate the elements of the problem.
b. Find the relationships between these elements.
c. Record the relationship in an orderly form.
d. Analyze the relationships to find ideas.
e. Develop new ideas from these patterns.
I. Collective Notebook Method.
1. A small notebook is prepared including a statement of the problem, blank pages, and background data.
2. Participants consider the problem and its solution, recording ideas several times a day.
3. A list or summary of the best ideas becomes the topic of a final creative focus group.
J. Attribute Listing.
1. Attribute listing is an idea-finding technique requiring the entrepreneur to list the attributes of a problem and look
at each from a variety of viewpoints.
2. Unrelated objects can be brought together to form new combinations and possible uses.
K. Big-Dream Approach.
1. The big-dream approach requires the entrepreneur to dream about the problem and its solution, thinking big.
2. Ideas should be conceptualized without any constraints.

L. Parameter Analysis.
1. Parameter analysis involves parameter identification and creative synthesis.
2. Parameter identification analyzes variables in the situation to determine their relative importance.
3. The relationship between parameters that describe the underlying issues is examined and a solution developed
(creative synthesis.)
M. Opportunity Recognition.
1. Some entrepreneurs have the ability to recognize a business opportunity which is fundamental to the
entrepreneurial process.
2. The keys to recognizing an opportunity lies in the knowledge and experience of the individual entrepreneur.
3. Other important factors are entrepreneurial alertness and entrepreneurial networks.
IV. PRODUCT PLANNING AND DEVELOPMENT PROCESS
A. Once ideas emerge they need further development and refinement.
1. The production planning and development process is divided into five major stages.
2. This process results in the start of the product life cycle.
Stage 1: Establishing Evaluation Criteria.
1. Criteria for evaluation should be all-inclusive and quantitative enough to screen the product carefully.
2. A market opportunity and adequate market demand must exist.
3. Current competing producers, prices, and policies should be evaluated in their impact on market share.
4. The new product should have synergy with existing management capabilities.
5. The proposed product should be supported by and contribute to the companys financial well-being.
6. The compatibility of new products production requirements with existing plant, machinery, and personnel should
be evaluated.
7. Entrepreneurs should formally evaluate an idea throughout its evolution.
Stage 2: Idea Stage
1. Promising new product ideas should be identified and impractical ones eliminated.
2. In the systematic market evaluation checklist method, each new product idea is expressed in terms of its chief
values, merits, and benefits.
3. This technique can be used to determine which new product alternatives should be pursued and which should be
discarded.
4. The company should also determine the need for the product and its value to the company.
5. Need determination should focus on the type of need, its timing, the users involved, the importance of marketing
variables, and the overall market structure and characteristics.
6. In determining the products value to the firm, financial scheduling should be evaluated.
Stage 3: Concept Stage
1. In the concept stage the refined idea is tested to determine consumer acceptance.
2. One method of testing is the conversational interview in which respondents are exposed to statements that reflect
attributes of the product idea.
3. Features, price, and promotion should be evaluated in comparison to major competitors.
Stage 4: Product Development Stage.
1. In this stage, consumer reaction to the physical product is determined, often through a consumer panel.
2. The panel can be given samples of the product and competitors products to determine consumer preference.
Stage 5: Test Marketing Stage.
1. A market test can be done to increase the certainty of successful commercialization.
2. The test marketing stage provides actual sales results, which indicate the acceptance level of consumers.
The Business Plan: creating and starting the venture
PLANNING AS PART OF THE BUSINESS OPERATION
A. Planning is a process that never ends.
1. In the early stages, the entrepreneur should prepare a preliminary business plan.
2. The plan will be finalized as the enterprise develops.
B. Many different types of plans may be part of any business operationfinancial, marketing, human resource,
production, and sales plans.
1. Plans may be short term or long term, or they may be strategic or operational.
2. All of these plans have one purpose: to provide guidance and structure to management in a rapidly changing
market environment.
II. WHAT IS THE BUSINESS PLAN?
A. A business plan is a written document prepared by the entrepreneur that describes all the relevant external and
internal elements involved in starting a new venture.
1. It addresses both short- and long-term decision making for the first three years of operation.
2. The business plan is like a road map for the business development.
B. In developing the business plan the entrepreneur can determine how much money will be needed from new and
existing sources.
III. WHO SHOULD WRITE THE PLAN?
A. The business plan should be prepared by the entrepreneur; however, he or she may consult many sources.
1. Lawyers, accountants, marketing consultants, and engineers are useful supplemental sources.
2. Other resources are the Small Business Administration, Service Core of Retired Executives, Small Business
Development Centers, universities, friends, and relatives.
3. The Internet also provides outlines for business planning.
4. Entrepreneurs can also hire or offer equity to another person to provide expertise in preparing the business plan.
B. To help determine whether to hire a consultant, the entrepreneur needs to make an objective assessment of his or
her own skills.
C. Through this self-assessment, the entrepreneur can identify what skills are needed and where to obtain them.
IV. SCOPE AND VALUE OF THE BUSINESS PLANCWHO READS THE PLAN?
A. The business plan must be comprehensive enough to address the concerns of employees, investors, bankers,
venture capitalists, suppliers, customers, advisors, and consultants.
B. Three perspectives need to be considered:
1. The perspective of the entrepreneurthe entrepreneur understands the new venture better than anyone.
2. The marketing perspective considers the venture through the eyes of the customer.
3. The eye of the investorthe investor looks for sound financial projections.
C. The depth and detail of the business plan depends on the size and scope of the proposed venture.
D. The business plan is valuable to the entrepreneur and investors because:
1. It helps determine the viability of the venture in a designated market.
2. It gives guidance to the entrepreneur in organizing planning activities.
3. It serves as an important tool in obtaining financing.
E. Potential investors are very particular about what should be included in the plan.
F. The process of developing a business plan also provides a self-assessment of the entrepreneur.
1. This self-evaluation is similar to role-playing, requiring the entrepreneur to think through obstacles that might
prevent the ventures success.
2. It also allows the entrepreneur to plan ways to avoid such obstacles.
V. HOW DO POTENTIAL LENDERS AND INVESTORS EVALUATE THE PLAN?
A. Because the business plan should address the needs of all the potential evaluators, software packages and Internet
samples should be used only to assist in preparation.
B. As the entrepreneur becomes aware of who will read the plan, changes will be necessary.
1. Suppliers may want to see a business plan before signing a contract to supply products or services.
2. Customers may also want to review the plan before buying the product.
3. The business plan should consider the needs of these constituencies.
C. Potential suppliers of capital will vary in their needs and requirements in the business plan.
1. Lenders are primarily interested in the ability of the new venture to pay back the debt including interest within a
designated period of time.
2. Lenders focus on the four Cs of credit:
a. The entrepreneurs credit history, or character
b. Their ability to meet debt and interest payments (cash flow.)
c. The collateral or tangible assets being secured.
d. Equity contribution, or the amount of personal equity that has been invested by the entrepreneur.
3. It is also important for the entrepreneur to develop a strong personal relationship with the loan officer of the bank.
4. Investors provide large sums of capital for ownership (equity) and expect to cash out within 5 to 7 years.
a. They will often place more emphasis on the entrepreneurs character than lenders.
b. The venture capitalist will play an important role in management of the business and wants the entrepreneurs to
be compliant and willing to accept this involvement.
c. These investors will also demand high rates of return and will thus focus on the market and financial projections.
D. If the entrepreneur does not consider the needs of these sources, the plan may be an internalized document
without consideration of the feasibility of meeting market goals.
E. Most external advisors and potential investors are bound by a professional code of ethics regarding disclosure.
VI. PRESENTING THE PLAN
A. It is often necessary for an entrepreneur to orally present the business plan to investors.
1. Typically the entrepreneur provides a short (20-30 minutes) presentation of the business plan.
2. The entrepreneur must sell their business concept in a short time period.
B. A venture capitalist or angel group may also ask the entrepreneur to present the plan to their partners before
making a final decision.
VII. INFORMATION NEEDS
A. Before preparing a business plan, the entrepreneur should do a quick feasibility study to see if there are possible
barriers to success.
1. The entrepreneur should clearly define the ventures goals, which also provide a framework for the business plan.
2. Goals that are too general or that are not feasible make the business plan difficult to control and implement.
3. The business plan must reflect reasonable goals.
B. Market Information.
1. It is important to know the market potential for the product or service.
a. The first step is to define the market.
b. A well defined target market makes it easier to project market size and market goals.
2. In order to build a strong marketing plan, the entrepreneur will need to gather information on the industry and
market.
a. This process can be visualized as an inverted pyramid, starting with very broad based data and information.
b. This information can then be used in the industry analysis and marketing planning sections of the business plan.
3. The information gathering process.
a. General environmental trends should be evaluated, including household income trends, population shifts, and
employment trends.
b. The next step is the assessment of trends in the national industry.
c. The next two stages consider trends in the local market.
d. General local economic trends should be considered.
e. The final step is an analysis of the local competitive environment.
f. After all of this analysis has been completed the entrepreneur is ready to clarify the product or service offering,
actual market positioning, and market objectives.
4. To assess the total market potential, the entrepreneur can use trade associations, government reports, and
published studies.
C. Operations Information Needs.
1. The entrepreneur may need information on:
a. Location.
b. Manufacturing operations.
c. Raw materials.
d. Equipment.
e. Labor skills.
f. Space.
g. Overhead.
2. Each item may require some research but is needed by those who will assess the business plan.
D. Financial Information Needs.
1. Before preparing the financial plan section of the business plan, the entrepreneur should prepare a budget,
including possible expenditures and revenue sources for the first year.
a. Revenues from sales must be forecast from market data.
b. The entrepreneur will need to identify benchmarks in the industry that can be used in preparing the formal proforma statements.
2. The entrepreneur can use secondary sources that provide percentage norms for such costs in projecting operating
costs.
3. Sources for benchmarks include:
a. Publications such as Financial Studies for the Small Business.
b. 10K reports for similar public competitors.
c. Trade associations and trade magazines.
4. Some investors require five-year projections.
VIII. USING THE INTERNET AS A RESOURCE TOOL
A. Thanks to technology, entrepreneurs are able to access information efficiently, expediently, and at very little cost.
1. The Internet can serve as an important source of information in preparing the business plan.
2. Information on industry analysis, competitor analysis, and measurement of market potential can be located.
B. In addition, the Internet also provides opportunities for marketing strategy through its website.
1. Online sales increased 52% in 2002.
2. The online audience has increased and represents a much broader cross section of consumers.
C. An entrepreneur can also access competitors web sites to gain knowledge of their strategy in the marketplace.
D. The entrepreneur can also investigate newsgroups.
1. There are newsgroups of customers having the same interest in a topic.
2. The entrepreneur can use Usenet to identify the most appropriate newsgroups.
3. Members of the newsgroup can be asked specific questions about their needs, competitive products, and potential
interest in the new ventures products and services.
E. All that is needed to use these sources is a small investment in hardware and software.
IX. WRITING THE BUSINESS PLAN
A. The business plan should be comprehensive enough to give a potential investor a complete understanding of the
venture and will help the entrepreneur clarify his or her thinking about the business.
1. The business plan can take hundreds of hours to prepare.
2. Many entrepreneurs incorrectly estimate the length of time writing a business plan takes.
B. Introductory Page.
1. The title page provides a brief summary of the business plans contents, and should include:
a. The name and address of the company.
b. The name of the entrepreneur(s), a telephone number, fax number, e-mail address, and website.
c. A paragraph describing the company and the nature of the business.
d. The amount of financing needed.
e. A statement of the confidentiality of the report.
2. It also sets out the basic concept that the entrepreneur is attempting to develop.
C. Executive Summary.
1. This section is prepared after the total plan is written.
2. It should be two to three pages in length.
3. The summary should concisely the key points in the business plan.
4. Questions that should be addressed include:
a. What is the business concept or model?
b. How is this business concept or model unique?
c. Who are the individuals starting this business?
d. How will they make money and how much?
5. If strong growth is expected, the executive summary should also include an exit strategy such as an IPO.
6. Any supportive evidence that might strengthen the case should be included.
7. Remember that this section is only meant to highlight key factors and provide a strong motivation to the potential
investor to read it in its entirety.
D. Environmental and Industry Analysis.
1. The entrepreneur should first conduct an environmental analysis to identify trends and changes occurring on a
national and international level that may impact the new venture.
2. Examples of environmental factors are:
a. Economy.
b. Culture.
c. Technology.
d. Legal concerns.
e. All of the above external factors are generally uncontrollable.
3. Next the entrepreneur should conduct an industry analysis that focuses on specific industry trends such as:
a. Industry demand.
b. Competition.
4. The last part of this section should focus on the specific market.
a. This would include such information as who the customer is and what the business environment is like.
b. This information is significant to the preparation of the marketing plan section.
C. Description of the Venture.
1. The description of the venture should be detailed in this section.
2. This should begin with the mission statement or company mission, which describes the nature of the business and
what the entrepreneur hopes to accomplish with that business.
3. Key elements should be described in detail, including the product or service, location, personnel, background of
entrepreneur, and history of the venture.
4. The emphasis placed on location is a function of the type of business.
a. In assessing the space the business will occupy, the entrepreneur should consider parking, access from the
roadway, access to customers and suppliers, and zoning laws.
b. An enlarged local map is helpful.
5. Maps that locate customers, competitors, and alternative locations can be helpful.
6. If the building or site decision involves legal issues, the entrepreneur should hire a lawyer.
E. Production Plan.
1. If a new venture is a manufacturing operation, a production plan is necessary.
2. This plan should describe the complete manufacturing process, including whether or not the process is to be
subcontracted.
3. If the manufacturing is carried out by the entrepreneur, the plan should describe the physical plant layout and
machinery and equipment needed.
4. If the new venture does not include any manufacturing functions, this section would be eliminated.
F. Operations Plan.
1. All businessesmanufacturing or non-manufacturingshould include an operations plan as part of the business
plan.
2. This section goes beyond the manufacturing process and describes the flow of goods and services from
production to the customer.
3. This would be a convenient place to discuss the role of technology in the business transaction process.
4. If the venture is not manufacturing, this section would be titled operational plan.
5. The entrepreneur would need to describe the chronological steps in completing a business transaction.
G. Marketing Plan.
1. The marketing plan describes how the products will be distributed, priced, and promoted.
2. Potential investors regard the marketing plan as critical to the ventures success.
H. Organizational Plan.
1. The organizational plan section is the part of the business plan that describes the ventures form of ownership.
2. If the venture is a partnership, the terms of the partnership should be included.
3. If the venture is a corporation, this should include the number of shares authorized, share options, and names and
addresses of the directors and officers.
4. It is helpful to provide an organization chart indicating the lines of authority.
5. This chart shows the investor who controls the organization and how members interact.
I. It is important that the entrepreneur make an assessment of risk in the following manner:
1. The entrepreneur should indicate the potential risks to the new venture.
2. Next should be a discussion of what might happen if these risks become reality.
3. Finally the entrepreneur should discuss the strategy to prevent, minimize, or respond to these risks.
J. Financial Plan.
1. The financial plan determines the investment needed for the new venture and indicates whether the business plan
is economically feasible.
2. Three financial areas are discussed:
a. The entrepreneur should summarize the forecasted sales and expenses for the first three years.
b. Cash flow figures for three years are needed, with the first years projections provided monthly.
c. The projected balance sheet shows the financial condition of the business at a specific time.
K. Appendix.
1. The appendix contains any backup material not included in the text of the document.
2. Possible documents:
a. Letters from customers, distributors, or subcontractors.
b. Secondary or primary research data.
c. Leases, contracts, and other agreements.
d. Price lists from suppliers and competitors.
X. USING AND IMPLEMENTING THE BUSINESS PLAN
A. The business plan is designed to guide the entrepreneur through the first year of operations.
1. It should contain control points to ascertain progress.
2. There is a tendency among entrepreneurs to avoid planning.
3. Planning should be a part of any business operation.
4. Without good planning the employees will not understand the companys goals and how they are expected to
perform their jobs.
5. Bankers say that most businesses fail because of the entrepreneurs inability to plan effectively.
6. The entrepreneur can enhance efficient implementation of the plan by developing a schedule to measure programs
and to institute contingency plans.
B. Measuring Plan Progress.
1. Plan projections will typically be made on a 12-month schedule, but the entrepreneur should check key areas
more frequently.
2. Inventory control. By controlling inventory, the firm can ensure maximum service to the customer.
3. Production control. Compare the cost figures against day-to-day operating costs.
4. Quality control depends on the type of production system used.
5. Sales control. Information on units, dollars, and specific products sold should be collected.
6. Disbursements. The new venture should control the amount of money paid out.
C. Updating the Plan.
1. Environmental factorssuch as the economy, customers, or competitorsand internal factorssuch as loss of
key employeescan change the direction of the plan.
2. It is important to be sensitive to changes in the company, industry, and market.

XI. WHY SOME BUSINESS PLANS FAIL
A. A poorly prepared business plan can be blamed on:
1. Goals set by the entrepreneurs that are unreasonable.
2. Goals that is not measurable.
3. An entrepreneur who has not made a total commitment to the business.
4. An entrepreneur who has no experience in the planned business.
5. An entrepreneur who has no sense of potential threats to the business.
6. No customer need was established for the proposed product.
B. Setting goals requires the entrepreneur to be well informed about the type of business and the competitive
environment.
1. Goals should be specific.
2. They should also be measurable and should be monitored over time.
C. The entrepreneur who has not made a total commitment to the business will not be able to meet the ventures
demands of the venture.
1. Investors will not be positive about a venture that does not have full-time commitment.
2. Investors will typically expect the entrepreneur to make significant financial commitment to the business.
D. Lack of experience will result in failure unless the entrepreneur can gain the needed knowledge or team up with
someone.
E. The entrepreneur should also document customer needs before preparing the plan.
The Entrepreneurial Process- Contd...
The entrepreneurial process involves finding, evaluating, and developing an opportunity by overcoming the strong
forces that resist the creation of something new.
Phase 1: Identify and Evaluate the Opportunity
1. Opportunity identification: Most good business opportunities result from an entrepreneur being alert to
possibilities.
a. Fruitful sources include consumers and business associates.
b. Channel members in the distribution systemretailers, wholesalers, or manufacturers repsare also helpful.
c. Technically-oriented individuals often identify business opportunities when working on other projects.
2. Each opportunity must be carefully screened and evaluatedthis is the most critical element of the
entrepreneurial process.
3. The evaluation process involves looking at:

a. The length of the opportunity.
b. Its real and perceived value.
c. Its risks and returns.
d. Its fit with the skills and goals of the entrepreneur.
e. Its uniqueness or differential advantage in its competitive environment.
4. The market size and the length of the window of opportunity are the primarily bases for determining risks and
rewards.
a. The risks reflect the market, competition, technology, and amount of capital involved.
b. The amount of capital forms the basis for the return and rewards.
c. The return and reward of the present opportunity needs to be viewed in light of any possible subsequent
opportunities as well.
5. The opportunity must fit the personal skills and goals of the entrepreneur.
a. The entrepreneur must be able to put forth the necessary time and effort required for the venture to succeed.
b. He or she must believe in the opportunity enough to make the necessary sacrifices.
6. Opportunity assessment should focus on the opportunity and provide the basis to make the decision, including:
a. A description of the product or service.
b. An assessment of the opportunity.
c. Assessment of the entrepreneur and the team.
d. Specifications of all the activities and resources needed.
e. The source of capital to finance the initial venture.
Phase 2: Develop a Business Plan
1. A good business plan must be developed in order to exploit the opportunity defined.
2. This plan is essential to developing the opportunity and in determining the resources required, obtaining those
resources, and successfully managing the venture.
Phase 3: Determine the Resources Required
1. Assessing the resources needed starts with an appraisal of the entrepreneurs present resources.
2. Any resources that are critical need to be differentiated from those that are just helpful.
3. Care must be taken not to underestimate the amount and variety of resources needed.
4. Acquiring needed resources, while giving up as little control as possible, is difficult.
a. The entrepreneur should try to maintain as large an ownership position as possible, particularly in the start-up
stage.
b. As the business develops, more funds will probably be needed, requiring more ownership be relinquished.
c. Alternative resource suppliers should be identified, along with their needs and desires, in order to structure a deal
with the lowest cost and loss of control.
Phase 4: Manage the Enterprise
1. The entrepreneur must use them to implement the business plan.
2. This involves implementing a management structure, as well as identifying a control system.
ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEUR
ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEUR
A. The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social
responsibility.
1. A managers attitudes concerning corporate responsibility tend to be supportive of laws and professional codes of
ethics.
2. Entrepreneurs have few reference persons, role models, and developed internal ethics codes.
3. Entrepreneurs are particularly sensitive to peer pressure and social norms in the community as well as pressures
from their competitors.
4. Internationally, U.S. managers have more individualistic and less communitarian values than managers in
European countries.
B. While ethics refers to the study of whatever is right and good for humans, business ethics concerns itself with
the investigation of business practices in light of human values.
1. Business ethics has emerged as an important topic.
2. The word ethics stems from the Greek thos, meaning custom and usage.
C. Development of Our Ethical Concepts.
1. Socrates, Plato, and Aristotle provide the earliest writings dealing with ethical conceptions; earlier writings
involving moral codes can be found in both Judaism and Hinduism.
2. American attitudes on ethics result from three principle influences:
a. Judeo-Christian heritage.
b. Belief in individualism.
c. Opportunities based on ability rather than social status.

3. Research on business ethics can be broken down into four broad classifications:
a. Pedagogically-oriented inquiry.
b. Theory-building without empirical testing.
c. Empirical research, measuring the attitudes and ethical beliefs of students and academic faculty.
d. Empirical research within business environments.
TYPES OF START-UPS
TYPES OF START-UPS
A. A lifestyle firm is privately held and usually achieves only limited growth.
1. This type of firm may grow after several years to 30 or 40 employees.
2. A lifestyle firm exists primarily to support the owners and usually has little growth opportunity.
B. Foundation Companies.
1. A foundation company is a type of company formed from research and development and lays the foundation for a
new business area.
2. This firm can grow in five to ten years from 40 to 400 employees.
3. This type of start-up rarely goes public and draws little outside investor interest.
C. High-Potential Venture.
1. This type of venture receives the most investor interest.
2. The company may start out like a foundation company, but its growth is far more rapid.
3. After five to ten years the company could employ around 500 employees, with $20-30 million in revenues.
4. These firms are also called gazelles and are most important for the economic development of an area.
Some Construct of the concept of Entrepreneur
Some Construct of the concept of Entrepreneur
A. Almost all definitions of entrepreneurship include:
1. Initiative taking
2. The organizing and reorganizing or social/economic mechanisms to turn resources and situations to practical
account.
3. The acceptance of risk or failure.
B. To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into
combinations that make their value greater than before, and one who introduces changes, innovations, and a new
order.
C. Entrepreneurship is the dynamic process of creating wealth.

D. Our definition of entrepreneurship involves four aspects:
1. Entrepreneurship involves the creation processcreating something new of value to the entrepreneur and to the
audience.
4. The rewards of being an entrepreneur are independence, personal satisfaction, and monetary reward.
E. The entrepreneurial experience is filled with enthusiasm, frustration, anxiety, and hard work.
1. For many reasons there is a high failure rate among business owners.
2. The financial and emotional risk can be very high
15 most essential qualities of an entrepreneurs
1. Initiative.
It refers to the entrepreneur has to initiates a new idea initiates a business activity.
2. Looking for opportunities:
An enterprising entrepreneur is always on the look out for opportunities, as and when these arise and have to avail
these opportunities for profit earning.
3. Information seeker:
He is always searching for the information from all quarters in his pursuit of reaching business goals. Entrepreneur
has to attain valuable information regarding the market trend, demand position competitors, policies, taste,
preferences of customers, technological changes etc.
4. Persistence.
He is not cowed down by failures and believes in Try Try again. He has to work even in adverse situation.
5. Quality conscious:
He has a strong urge to excel to beat the existing standards. He pays due consideration to improve the quality of
product and supply to customers at reasonable rates.
6. Commitment to work:
He is prepared to put in everything, at his command, for accomplishing his goal. A committed entrepreneur will get
the height of success later or sooner.
7. Efficiency seeker:
He is to make an earnest effort for completing the desired task and that too within minimum cost and time. He has to
install new technology and technique to improve the efficiency.
8. Proper planner:
He is firm believer in meticulous planning and proper execution for the attainment of desired goals. He plans his
activities very carefully in light of opportunities, treats strong and week points.
9. Problem solver:
He is all time busy in finding out ways and means for tiding over his difficult times. He has to solve the enterprises
problem creatively and innovating ways.
10. Self confidence:
He has full confidence on his strengths and abilities. He has faith in himself then he cans faith on others.
11. Assertive:
He is ready to put his firm foot ahead for promotion of interests of his venture.
12. Persuasive:
He has convincing ability and can make people do what he wants them to do. He must have a communication
quality.
13. Efficient monitor:
He keeps an eye over the work thereby ensuring that everything happens the way he wants that it should happen.
14. Employees well-wisher:
He is ready to undertake all necessary measures aimed at promoting welfare of workers, working in his enterprise.
15. Effective strategist:
He is out to devise most effective strategies aimed at promoting the objectives of his enterprise.
How to develop entrepreneurship qualities?
Competency results in superior performance. It has proved in Kakinada Experience that the entrepreneurial
competency can be injected in human beings through education and training. Practice helps in developing
competencies. Competency finds expression in human behavior.
Entrepreneurship is regarded as a concept of alertness towards profit opportunities. It is the ability of the
entrepreneur which mobilize resources a combine them to initiate change in production.
In most of time it is seen that some entrepreneurs are doing exceedingly well. They successfully manage enterprises
and make them a grand success. While asking these entrepreneurs who did well in their field, it seems the qualities
they possess.
It is the knowledge and skill of the entrepreneur who motivate the inner urge to achieve targets. A motive is regarded
as the inner state that energizes, activates moves and directs behavior goals.
Entrepreneurship Development Institute of India has conducted a survey and has revealed the inner urges as
entrepreneurial competencies.
There is a growing need for development of competencies. Every entrepreneur should possess some core
competencies to be successful in his field. There are:
i. He should possess the capacity of superintendence. He must have the quality in assembling various means of
production to secure maximum return at minimum cost.
ii. He should have the ability to control smooth flow of goods and monitor application of funds in such a manner so
as to secure maximum advantage.
iii. He should be capable of introducing new products and services. It is regarded as the innovative skill of
entrepreneurs.
iv. He should be good organizer. He should be competent enough to beer all risks associated with the enterprise.
v. He should be a goal oriented person and therefore, he acts in the capacity of a director.
Besides the above factors necessitating the need for developing competencies, the followings are some additional
factors which necessitate need for developing competencies:
Quality of leadership to tackle professional problems.
He should be a person with optimistic outlook to accommodate change management.
He should be competent enough to mange funds and Marshall the resources available.
He should be capable enough in seizing business opportunities.
He should have the capacity of taking effective decision and co-ordinates various functions of the
enterprise.
He must have the ability to accept changes and initiate changes.
How to really become a successful entrepreneur?

It is seen that an entrepreneur should possess certain competencies or abilities which helps him to attain superior
performance.
So it is highly desirable that an entrepreneur should possess some of competencies which are developed through
training, guidance and experience. It is therefore; wrong to say that entrepreneurs are born not made.
Entrepreneurs are made because there are some traits or competencies which are developed because of education,
training and experience of entrepreneurs.
The followings some of traits whose presence facilitate an entrepreneur to become successful. He should be
regarded as a man with self competency. He gives a better monitoring for action of direct competitors when he is
self confident.
The quality of self confidence can be developed when he has updated knowledge about competitors. This can be
developed when he finds a suitable answer to the following questions:
Who are direct competitors and where is there location?
What are distinctive qualities they possess?
What are their financial resources and how their cost structure can be compared with us?
What are their primary weaknesses and how we can accommodate those deficiencies?
What are various strengths of competitors and how our company is capitalizing them?
In addition to development of self-competency, an entrepreneur should possess the followings major traits, to
become a successful entrepreneur.
He ensures doing things before being asked for.
He makes confrontation of his problems before others.
He seizes unusual opportunities to start a new business.
He acts to build friendly relationship with customers.
He makes personal sacrifices to complete the job.
He should be action oriented.
He should be a man with opportunity recognition.
He should have a strong desire to achieve success.
He should be a man with self starting ability.
He should have independent thinking and operation.
He should have risk propensity ability.
Man of creativity and innovation.
Focus on niche areas to succeed.
He should be a man of realism and sense of humour.
How to judge the Performance of Entrepreneurs?

The main criteria to judge performance of entrepreneurs are as follows:
1. Gestation Period:
Gestation period is the time gap between the date of incorporation and the date of commencement of commercial
production. The Gestation period of two to three years is regarded as satisfactory by the financial institutions.
2. Financial Result:
In order to judge financial health of units, return on capital employed, net profit over sales, net profit over net worth
and other rations were used.
3. Capacity Utilization:
Capacity utilization depends upon the availability of required inputs like raw materials, power, labour etc. and
market for the finished capacity. About 50% of entrepreneurs used 80% capacity. Most of the entrepreneurs could
break even at 6-% of the installed capacity.
4. Expansion and diversification:
Expansion refers to the increased production of the same product whereas diversification refers to production of new
type of products. All the forms achievi9ng full capacity utilization tied for expansion and some of them opted for
diversification.
5. Value added by manufacture:
It refers to the gross value of output minus value of raw materials and other inputs used in the production process. It
can be used as an indicator of entrepreneurial abilities such as preparedness to assume higher degree of risk and
ability to plan and operate relatively large firms.
6. Growth of offspring enterprise:
The number of ancillaries that have originated from a unit was taken as a manifestation of growth.
7. Other factors:
Large number of other factors such as sales turnover, size of employment generated, volume of exports, research and
development activity, import substitution etc. can be used to judge entrepreneurial performance.
What are the business promotional duties of an Entrepreneur?

Promotional functions denote a type of functions associated with promotional activities. Promotional activities are
idea generation, scanning of best idea from among various alternatives, determination of objective, product analysis,
assembling the requirements and financing the proposition.
1. Discovery of an idea:
The first promotional function of entrepreneur is the conception of a new idea. He visualizes that there are
opportunities for a particular type of business and it can be profitably run.
The idea may be to exploit a new area of natural resources or more profitable ventures in an existing line of
business. He develops this idea with the help of technical experts in that field.
If they are convinced that profitable avenues are available in that line of business then the idea is taken forward for
more exhaustive analysis.
2. Detailed Investigation:
The entrepreneur will estimate total demand for the product. There may be certain concerns already in that type of
business and so he will determine his share of demand. After determining the prospective demand for goods he will
think of arranging finances for the venture.
The possible sources of finances are discussed in detail. The availability of power, labor, raw materials and
machinery is also considered.
The cost structure of the product is analyzed to find out profitability from the venture. An expert opinion is sought of
the viability of the project.
The work of estimation becomes more difficult if the proposed line of business is new. The estimates should be
based on proper analysis of different factors. A guess work creates problems later on.
3. Assembling the Requirements:
After making sure that the proposition is practical and profitable, the entrepreneur proceeds to assemble the
requirements. He persuades some more persons to join hands with him by becoming directors of founder members.
If he has invented something new, he should get it registered in his name. He may also acquire some patent rights.
The entrepreneur selects the factory site, decides about plant and machinery and contacts suppliers or raw materials,
etc.
He does not purchase all these because it involves huge sums of money. Instead of going for outright purchase he
uses option methods.
The contracts are finalized by paying option money and the ultimate purchase is done only when the company is
incorporated. If the company fails to come up, the entrepreneur only loses option money.
4. Financing the Proposition:
The entrepreneur decides about the capital structure of the enterprise. The requirements of finances are estimated
first. Then the sources from which this money will come are determined.
How much share capital will be issued, the type of the shares to be issued, and the nature of loans, whether
debentures or borrowing from financial institutions for a longer period all are finalized.
Generally commercial banks are helpful only in financing working capital requirements. The financial institution for
a longer period. The financial requirements for short period and long period are estimated separately.
Features, functions and qualities of an entrepreneur
An entrepreneur is regarded as an agent who buys factors of production at certain price in order to combine them
into a product with a view to sell at an uncertain price in future.
He is the person who takes decision in a state of uncertainty and he does things in a new and better way. He always
dreams of innovation through various opportunities in the environment.
Features:
A close analysis of various definitions on entrepreneur reveals the following essential characteristics:
1. Calculated risk taker
2. Emphasis on innovation where new products, new methods of production is decided.
3. Organizing skill
4. Creative thinking and decision making
5. A man of self-confidence
6. He must have human relation ability
7. Desire for high achievement
8. Enough courage to face adversities in future.
Functions:
Entrepreneur discharges a number of functions which are primarily discussed on the basis of the following headings.
i. Entrepreneurial functions consisting of organization building, risk taking and innovation.
ii. Promotional functions consisting of discovery of idea, detailed investigation; assembling of requirements and
financing the proposition.
iii. Managerial functions consisting of planning, organizing staffing, directing, coordinating and controlling.
iv. Commercial functions representing production, finance marketing, accounting and personnel.
Qualities of Successful Entrepreneur:
All entrepreneurs are not successful in undertaking an assignment. Only a few of them becomes successful
entrepreneur. A successful entrepreneur is one who possesses the following characteristics
i. He must have sound knowledge on the organization.
ii. He should be a man with administrative ability.
iii. He should be a man with administrative ability.
iv. Ability to secure operation and judge people
v. Ability to listen and social sensibility
NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP
Nature of Entrepreneurship:
Entrepreneurship collectively has the power to change the destiny of a family, city, state or the country as a
whole. For example in our own nation, the rate of economic growth in Punjab and Haryana has been very
high. Had all the states fared as well as these two states, India could have become one of the strongest
economic powers in the world today. Why has the economic development in these two states been so rapid
whereas other states like Bihar, Orissa, etc with much more natural resources lagged behind?,
This may be because Punjab and Haryana have built-up a very strong entrepreneurial base whereas other
states have not been able to do so.
The people of these two states have an entrepreneurial bent of mind. However, the value system of the people
in other economically backward states is against entrepreneurship. They search for jobs. They live their lives
under the safety umbrella of monthly salary. It is quite heartening that the entrepreneurial bug has bitten
people of states like Andhra Pradesh, Karnataka and Tamilnadu etc., which will speed up the economic
growth of the country in current decade.
Who is an entrepreneur? He is an opportunity seizer and not the opportunist. He will look to the future and seize
business opportunities, He not only seizes opportunities but many a time converts problems into opportunities. Let
me cite an example. Some time back, Newsweek reported a classic case of entrepreneurship. This follows:
In a unique transaction the government of Hong Kong has recently begun exporting night soil, a traditional AngloAsian euphemism for human excrement to Communist China. Though sales are small right now, Hong Kongs
Urban Service Department which struck the deal with China Resources Ltd., hopes to make as much as $250,000
this year from the abundantly available commodity. Much of the night soil is to be used in the Kwangtung
Provinces methane-gas tanks for fuel and lighting needs in local communes, but some will also be aged and spread
on Chinese soil as fertilizer. Environmentalists will be pleased to note that the agreement should help prevent
fouling of the waters around Hong Kong.
This is a unique case of entrepreneurship. Hong Kong has converted the pollution and environmental problems into
opportunities of earning foreign exchange for the country.
Development of Entrepreneurship in the Country:

The entrepreneurship was earlier restricted to certain communities like Marwaris, Baniyas etc. Recently the State
Industrial Development Corporations and Small Scale Industries institutes have made some efforts to train
entrepreneurs. These corporations have conducted short-term courses to develop entrepreneurial capabilities in
selected trainees. But there seems to be something wrong with these projects.
Reasons for limited success in Nurture Entrepreneurship:
There is general lack of entrepreneurs in the country, Governments effort not withstanding, especially in the rural
India, people prefer jobs to self-employment. There is need for research and re-strategizing these development
schemes.
There seems to be a problem with selection process itself. Firstly, the candidates selected for such courses are those
who have failed to get jobs and hence have nowhere else to go. Added to this is the widespread value system within
the country where the first preference for any qualified man is to get a job, preferably a government job.
Secondly, such people who are unable to get jobs on their own. Therefore, they do not have the experience of
working in an organized way. These people have limited ability to perceive the project and build up the enterprise.
Therefore, they are more likely to fail. On the other hand such instances of failure strengthen the belief among the
people that it better to opt for a job than to take up entrepreneurship.
We can conclude that these institutions and their programs should target at those who can get jobs or who already
have jobs but are dissatisfied and would like to take up entrepreneurship as a career.
Another source of ample supply of entrepreneurs could be management institutes. For producing Entrepreneurs at
these business schools, we need to reorient the management education in India. These management institutions at
present are producing administrative managers whereas developing countries like ours need entrepreneurs. These
institutes could take a few initiatives such as:
Entrepreneurship should be made a compulsory subject in all management schools. In addition, cases on
successful entrepreneurs should be developed and run in these management courses.
Project work related to a proposed entrepreneurial venture should be introduced. It can be a feasibility report. At
Asian Institute of Management, Manila the student does not pass unless he submits a Xerox copy of the cheque
issued by the bank approving the feasibility report.
Regular talks by successful entrepreneurs should be organized at these institutes. Many of these emerging
entrepreneurs from sunrise industry should be called for such talks. Students should be encouraged to generate ideas
for launching new era ventures, specially new technology area successful entrepreneur-alumni will be more
impactful making in nurturing entrepreneurship in management student.
These institutes should start Entrepreneurship Centres to do research on the subject and recommend policy
measures to strengthen entrepreneurship in management students. Such a centre has been established at one of the
Indian Institutes of Technology to convert engineers into entrepreneurs.
All these steps will make million entrepreneurs bloom!
A word of caution:
Entrepreneurs should preferably start with trading/marketing activities. The temptation of building a plant in the
beginning should be avoided. Such plants have proved a Waterloo for many entrepreneurs. It is better to start as a
trader or a service provider. It would require less capital. Risk would be on a limited scale. Once he has the feel of
the market, he could possibly integrate backwards to production activities. They should remember that nobody could
become Tata or Birla overnight.
Factors Influencing Entrepreneurship

Entrepreneurship is a function of several factors. Four sets of factors that primarily influence entrepreneurship are as
follows:
Individual
Environmental
Socio-Cultural
Support System
The individual. Individuals who initiate, establish, maintain and expand new enterprises generate
entrepreneurship in a society.
Environment. This factor is constituted by the socio-political and economic policies of the government and
financial institutions and the opportunities available in a society as a result of such policies.
Socio-cultural factors. Entrepreneurs grow in the traditions of families and societies and internalize certain
values and norms from these sources. The contribution from these socio-cultural factors, in the process of
transmission, gets filtered through the individual whom it seeks to influence.
Support system. Support systems that work for the development of entrepreneurs include financial and
commercial institutions, research, training, extension and consultancy services, as also large industrial units
interested in developing ancillary industries.
While the individual, the environment and the support systems directly influence entrepreneurship, the socio-cultural
milieu contributes through the individual and the support systems. Broadly speaking, support systems and sociocultural factors also constitute the environment. Thus, actually there are only two factors, on which entrepreneurship
development depends. These are the Personal characteristics of the individual and the environment.
THE INDIVIDUAL
The three main factors, which influence the individuals behavior are his motivational factors, factors concerning
various skills that the entrepreneurship possesses, and the factors relating to his knowledge of several relevant
aspects that are likely to contribute to success in Entrepreneurial roles.
The motivational factor in itself has three major elements:
Entrepreneurial motivation,
Personal efficacy and
Coping capability.
Entrepreneurial Motivation:
Achievement motivation, power motivation and extension motivation are important for entrepreneurship. In
addition, personal efficacy a sense of being effective and having control over the situation is related to other
motivational factors. An entrepreneurial role produces stresses of different varieties and the prospective entrepreneur
must have the capability of coping with these stresses.
Personal Efficacy: The following two sets of skills are important for an entrepreneur:
Project development. An entrepreneur plans to establish an enterprise. In order to be effective he should know
how to conceive the project, the stages through which he should go to establish it, the information he may have to
collect, the factors he may have to consider in taking investment decisions, etc.
Enterprise management. Once an enterprise is started, its proper management, which is crucial to its survival
and growth, has to be ensured. Management skills relate to accounting and financial control, marketing, production
planning and inventory control, and to managing the people who work in the enterprise. Many new entrepreneurs
fail in the absence of these management skills.
Coping Capability: The enterprise once stared needs to be sustained and grow at least to meet the demands of the
competitive business environment and a suitable strategy and plans needs to be made by the entrepreneur.
ENVIRONMENT
Knowledge about the economic-political environment, more particularly about the economic policies of the
government and the financial as well as commercial institutions, is important for the small entrepreneur, which
industries are being encouraged for the small entrepreneur, which industries are being given assistance of various
kinds, etc., are information relevant to the prospective entrepreneur. He should know what raw materials are
available and where. He would have to be well informed about the infrastructure-transportation facilities, power,
market, etc., in the proposed locations of his enterprise.
He should be conversant with what help and assistance financial, material as well as consultancy is available and
from what sources. He should know the sources through which he could approach these agencies for assistance. He
should also know about the schemes of banks and other financial institutions. He should know about the various
schemes of the industries department of state governments and about the effort being made to help new
entrepreneurs by voluntary agencies like Small Industries Associations and the like.
The entrepreneur has to make a choice while setting up an enterprise. The choice can be more rewarding if there is a
wide range of alternatives available to him. This is possible if the entrepreneur has adequate knowledge about the
various alternatives industries, and more detailed knowledge about the industry which he wants to set up and also
about other related industries which have a bearing on the one he selects to start. This knowledge would cover
aspects like required investments, marketability of products, skills required for the enterprise, raw materials and
other materials needed, competitors in the field, etc. He should also know about the manufacturing processes, choice
of products and about their commercial feasibility.
Once he selects a particular industry, in-depth knowledge about the technological aspects of that industry would be
of vital importance. He should know the details about the processes of manufacture, and the various technologies
available for those processes. He should also know the costs and benefits of respective technologies so as to help
him in making the appropriate choice.
SOCIO-CULTURAL FACTORS
Socio-cultural factors like the family background and the norms and values of the immediate social circle contribute
substantially to entrepreneuship development. The values and attitudes an individual has, are a function of the sociocultural milieu in terms of developing normative behavior (norms of behavior) in the individual. The individual
works under some pressure of the values inherited from his family. Behaviors which reflect inclinations towards
initiative and risk taking, dependence or independence (self reliance), working with ones own hands on tasks
requiring manual handling, etc., are a result of the socialization process in the family, the school and society.
Behavior rewarded through appreciation, encouragement, and other extrinsic as well as intrinsic devices get
reinforced, and related values and norms develop. Thus, training through socialization is important. These two
factors, normative and socialization are discussed below:
Normative Behavior
The following aspects of normative behavior are relevant for entrepreneurship.
Family expectations and pressures:

The pressure of expectations from the family plays an important role in developing entrepreneurs. When the family
expects an individual to undertake some independent work, to earn enough for the family to maintain their standard
of living, to employ or involve other members of the family in business etc., the individual may respond by
searching for ways of meeting such expectations and pressures. In certain cases the individual may react to these
pressures even negatively. But usually there are positive responses.
Familys role in small business

Working for oneself is better than working for somebody else was clearly driven home by my Chinese Professor at
the Asian Institute of Management, Manila, Philippines. We were discussing a case on entrepreneurship. He asked
Alex, my classmate, How much profit your company is making?
It made about 10 million Pesos last year, Alex replied.
How many managers are there in your company, the Chinese Professor asked.
Ten, Alex replied.
How much each of the managers are getting, the professor asked.
They are all getting different salaries but on an average they are getting around 30,000 Pesos a year, Alex replied.
(One Peso was equivalent to a rupee. This incident happened 25 years back in 1975) That means the managers
together are getting ten times 30,000 Pesos i.e. 300,000 Pesos per year. And because of your managerial capability
the company is making 10 million Pesos. Are you not being exploited? Why dont you make those one million
Pesos, your share, yourself? Why do you allow your managerial capabilities to be exploited by others? Why dont
you exploit it yourself, the professor went on. Alex had no reply. Neither had we.
The institute flooded us with cases on entrepreneurship and family managed companies in the hope of making us
entrepreneurs. At that stage I could not imagine that one-day I would be running, a family managed company myself
and that also reasonably successfully.
At this stage I would like to narrate a unique feature observed by me in the Philippines, where I saw some husbandwife teams of entrepreneurs. Husband and wife, classmates during college days would plan an enterprise. Husband
would take up a job. The wife would start a small stores. Such stores are called sarisari stores in the Philippines. The
income of the husband would support the family. Wifes earnings from business would be ploughed back to expand
the business. When the enterprise acquires a respectable size, the husband would resign his job to become the
president of the company, the wife taking up the Finance Directors position. What was surprising was that this
pattern repeated itself many times broadening the base of entrepreneurship in the country.
The objective of narrating this experience is two-fold:
Similar pattern can be adopted in India. It is not necessary that husband takes up the job. In our environment the
wife can take up a job, the husband starting the enterprise.
The family has a very important role to play in building up an enterprise. I would cite a live case.
A young graduate was awarded the dealership for cooking gas in Assam by a public sector undertaking under its
plan of giving dealerships to unemployed engineers and graduates. Let us call him Sham. Sham being new in
business took an experienced businessman as a partner. All formalities like constructing a godown etc. were
completed by Sham and the dealership started. After a few months, he realized that his partner was not being fair to
him. With the intervention of a common friend, the partner left. In his place, Sham took his sister, a postgraduate
student, to look after the accounts. Today the business of Sham is booming.
Initial few years for any small sector enterprise are very crucial. Overhead expenditure should be kept to the bare
minimum during this crucial period. Family members could help a new entrepreneur to keep his overhead
expenditure low. Moreover, they will do the allotted work with certain devotion and commitment, so necessary in
building up the enterprise in the beginning. The only relative who should be kept away from business is the son-inlaw.
Our national slogan should be: Let millions of family managed companies bloom in India! They will create jobs and
eliminate poverty.
Risk-taking:
Risk taking norms are important for the success of entrepreneurs. It has been reported that a successful entrepreneur
takes moderate risks. He does not gamble, nor does he opt to play safe.
Independence:
Equally important is the norm of self-reliance. The value attributed to independence is important for
entrepreneurship. Instead of waiting for suggestions or directions from others, an entrepreneur works out plans on
his own, searches and explores resources, and experiences an inner urge to make the enterprise a success. This
makes him self-reliant and independent.
Work.
Value regarding work has been found an important factor in the entrepreneurship. The one major factor that
distinguishes the entrepreneurial from the non-entrepreneurial culture, is the willingness to work with ones own .
Socialization.
The values supporting or influencing entrepreneurship are developed through the process of socialization. The
family and other social institutions play a crucial role in training individuals to show certain behavior. Ones
predisposition towards independence and initiative as well as risk-taking, primarily results from such socializing
influence. The friendship of an entrepreneur has moved many people towards entrepreneurship.
Training in independence has been found to contribute to the development of achievement motivation leading to
entrepreneurship. When a boy is encouraged to do things on his own, and seeks guidance and help only when
needed, he is being trained for independence. Overprotection and over guidance in childhood or later in the work
organisation lead to dependence, which reduces entrepreneurial qualities.
Similarity training in taking initiative and risk, is an important factor in promoting values that are supportive to
entrepreneurship. When failure of an individual gets severely punished, it is quite likely that he develop what is
called fear of failure motive or the motive to avoid all possibilities of failure is not to take risks. Risk-taking
behaviour on the contrary blossoms when an individual is encouraged and helped to set realistic challenging goals
and to pursue them with perseverance.
SUPPORT SYSTEMS
Possibility of the success of an entrepreneur generally is enhanced by efficient and effective operation of the support
systems. Several agencies and organizations operate to help and support the entrepreneur. Pareek has listed the
following as examples of support system:
Corporations specially set-up to develop entrepreneurship and small industries in a region;
Financing institutions including banks;
Extension services of the department of industries (including SISIs): Non-governmental organizations of small
industries or entrepreneurs, consultants, private agencies doing research, or providing services to entrepreneurs,
training institutions, etc. Educational institutions working in the field of entrepreneurship like Institutes of
Technology, Institute of Management, Universities, Engineering Colleges, etc.:
Development administration in the district;
Large industrial establishments interested in developing ancillary industries thereby helping small units to grow
and develop.
Entrepreneurs often have to interact with these support systems. The way these systems function may encourage or
discourage them. They may reinforce one kind of behavior. The style of working of these systems, therefore, is a
crucial factor in promoting entrepreneurship. The quality of interaction with the entrepreneur is determined to a
great extent by their working style, which reflects their concern for effectiveness of their expected role. The style
will also demonstrate the norms prevailing in the organisation, norms regarding collaboration, help, result
orientation, etc. The support systems, thus, can promote entrepreneurship through reinforcing behavior and adopting
norms of internal working which are in harmony with them.
A Study of Environmental Factors Related to Business entrepreneurship

A research was recently conducted in Bombay, where an attempt was made to isolate environmental factors related
to entrepreneurship in order to facilitate a better understanding of the developmental process of an entrepreneur.
Entrepreneurial Behavior (EB) is a function of an individuals personality characteristics and environmental factors.
This could be represented as
EB=f(P,E)
where
P=Personality charcteristics
E=Environmental factors.
These environmental factors could be either nurturant or impediments to entrepreneurial development.
The concern of this study was, therefore, to derive an understanding of the determinants of entrepreneurial success
from the experiences of entrepreneurs. Greater emphasis was laid on determining environmental factors at the micro
level that correlated with entrepreneurial development and success rather than those at the macro level. The factors
that were concentrated on were:
Social/psychological factors including family, peer group formal and informal association, etc.
Financial.
Material availability.
Technology availability/applicability.
At the macro level, the study tried to establish the relationship between the state of the national economy and the
development of entrepreneurial success was measured based on:
Increase in profits.
Increase in turnover.
Increase in assets.
Extent of diversification.
The sample for this study comprised of entrepreneurs who were members of the Small Scale Industries Federation.
There were over 700 members listed. Of these, the history and other relevant data of 51 members were obtained.
The research design included the administration of a structured questionnaire followed by some open-ended
questions to each of these 51 respondents. In addition to this, 12 of these respondents were interviewed after a period
of three months and cases were constructed on the basis of these interviews. The conclusions drawn from these cases
were to further validate the findings of the study.
For the purpose of this study, an entrepreneurs life was divided into two stages: First stage: Initiation and
subsequent success of an entrepreneur, the following variables were studied:
(i)
Educational background,
(ii)
Age
(iii)
Friends
(iv)
Community
(v)
Prior occupational status
(vi)
Family size
(vii)
Parents
(viii)
Marital status and wives
(ix)
Joint family status
(x)
Migration
(xi)
Peer group
(xii)
Association membership
(xiii)
Financial status of family
(xiv)
Economic environment
(xv)
Availability of material
(xvi)
Availability of technology.
Educational Background:
The earlier notion that those lacking educational qualifications were usually the ones who went in for business was
not borne out, as 41.18 per cent of entrepreneurs were professionally qualified, 27.45 per cent were graduates and
the rest non-graduates S.S.C. and below. No significant relationship could be determined between the educational
background and entrepreneurship of persons.
Age
The mean age at which entrepreneurs started an enterprise was found to be 24.6 years, and most entrepreneurs
(82.35 per cent) thought of starting business before the age of 30. A maximum concentration was determined
between the ages of 20 to 30 years. This indicates that the ideal time for imparting entrepreneurial education would
be somewhere between 18 to 25 years of age, so that once the various alternatives available are highlighted, it would
be easier for an entrepreneur to start a new venture before the age of 30. It may also be noted that not a single
entrepreneur of the sample studied started business between the age 40 to 50. It, therefore, appears that once middle
age sets in, there is a tendency not to take any risks and to postpone the idea of entrepreneurship till after retirement,
which is borne out by the fact that two entrepreneurs entered business between the age of 50 and 60. The average
age at which, entrepreneurs actually started business was found to be 28 years. Comparing this with the average age
at which they first thought of starting a business (24.6) it would appear that it takes about 3 1/2 years for a business
to commerce after the idea is first conceived by the entrepreneur. Also, 37 of the 51 entrepreneurs started the
business before the age of 30. Again, there were no fresh business ventures between the ages of 41 and 50. Only
about 20 per cent of the entrepreneurs started their business between the ages of 31 and 40. This leads to the
conclusion that since there is a gap of 3 to 4 years between the time when the idea of starting the business is
conceived and the business is actually started, it is desirable that sowing the seeds of the idea of entrepreneurship, in
the form of training, should be undertaken before the age of 25.
Friends
The influence of friends was found to pay a significant role (to the extent of 29.4 per cent of entrepreneurs surveyed)
in the development of the idea of entrepreneurship. Thus it would be advisable to determine some details about
friends while selecting prospective entrepreneurs for intensive training as an entrepreneur friend would most likely
move him towards entrepreneurship, leading to a larger percentage of those trained taking up the entrepreneurial role
with commitment. Also as an entrepreneur friend is likely to induce people towards entrepreneurship, it is
recommended that Entrepreneur clubs be established by agencies associated with the development of
entrepreneurship, Such a step would speed up the development of entrepreneurship so vital for economic
development.
Community
The community, family members and relatives were also found to make a significant contribution in inculcating
entrepreneurial thinking in people and leading them towards entrepreneurial activities as 13 of the 51 entrepreneurs
surveyed quoted this as a determining factor.
Prior Occupational Status

As regards the status of entrepreneurs before their entry into business, it was found that 70.59 per cent were
previously employed, 21.57 per cent studying and 7.84 per cent unemployed. This indicates three possible routes to
entrepreneurship:
Looking out for opportunities while studying and starting a business immediately after the completion of ones
studies. In many cases, they join the family business after completing their studies, get some sort of apprenticeship
and ultimately leave the family firm to start their own venture.
Being unemployed and taking to entrepreneurship as a last resort. It is, however, felt that the casualties in this
category of entrepreneurs will be the highest. All entrepreneurship development programmes initiated by the
government also concentrate on this category of people.
Putting in some years of service and possibly after accumulation of capital, leaving their jobs to take up
entrepreneurial roles. Of the 36 falling in this category, 13 worked in large companies, 11 in medium and 11 in small
companies. One was working in the State Government, 17 of these people left their jobs due to dissatisfaction in the
same. Thus, it is possible to locate prospective entrepreneurs amongst those working in commercial undertakings.
Such prospective entrepreneurs would be either dissatisfied with their jobs or will be having a very high
achievement motivation. In some cases, due to the attractive policies which would spur them towards
entrepreneurship where there are opportunities for making more money. Unfortunately, the last categories of
perspective entrepreneurs have not been attracted at all in our entrepreneurship development programmes. It is felt
that there is need for development of new entrepreneurship development program to attract working persons to opt
out of their jobs and take to entrepreneurship. Such options will create job opportunities for the unemployed and
would also provide people with some working experience including managerial experience the opportunity to take
up entrepreneurial roles. There has however been no significant relationship demonstrated between past work
experience of the entrepreneur and his success as an entrepreneur.
Family Size
With regard to the size of families of entrepreneurs, only 13.72 per cent could be considered to have come from
small families having one or two children. The largest concentration of entrepreneurs was in families having five
children (23.53 per cent). The percentage of families producing entrepreneurs having five or more children was as
high as 54.9 per cent. One possible explanation for this phenomenon could be that biggest families might have
financial difficulties spurring the children towards economic activities with higher determination. In other words,
these children had a higher N.Ach. It could also be argued that they had the feeling that they could expect the
support of brothers/sisters in time of need, in situations where something went wrong with their business. However,
family size was in no way related to entrepreneurial success.
Parents
Parents of entrepreneurs, except for one respondent, all fathers of entrepreneurs had crossed the age of 40 at the time
of their entry into business. This confirms our earlier finding that there is a certain age group, which is most
appropriate for the development of entrepreneurship. It is quite probable that they gave mature advice to their
children because of their age and experience. Parents educational background was found to have no correlation with
the development of entrepreneurship. Families can throw up entrepreneurs, where parents have very little education.
They can also be thrown up by families where parents are educationally qualified. Data also indicated that
entrepreneurs could be produced by families where the father was in service rather than in business. However, a very
large percentage (58.82 per cent) of entrepreneurs did come from families where the parental profession had
influence on the development of entrepreneurship. It was not however found to correlate with later entrepreneurial
success. No correlation was depicted either between an individuals entrepreneurship and his brothers profession.
Thus, the same family environment may produce different individuals. These changes may come from peer group or
certain personal characteristics.
Wife
An entrepreneur requires support, especially at the beginning of the entrepreneurial venture. A wife is in the vantage
position to provide this support, both emotional and financial. With the exception of 6 cases (11.77 per cent) of
relatively early marriages all the entrepreneurs surveyed had been married at ages normal for urban population.
However, there were as many as 8 (15.68 per cent) bachelors amongst interviewed entrepreneurs. This could be
related to the risk taking capability of bachelors. But for a solitary exception of a non-matric wife, all other wives of
the entrepreneurs surveyed were reasonably well educated. This was in contrast to the background of mothers of
these entrepreneurs. It can be concluded that an educated wife is an asset to an entrepreneur as she can assist her
husband or take up a job should the need arise.
Despite this educational background of the wives, it was however found that not many of the wives of entrepreneurs
were employed (56.86 per cent). However, they were safely devices for the lean period. The risk-taking capability
was reinforced in the entrepreneurs by the educational background of their wives and their capability to take up jobs.
The educational background of the wives of the entrepreneurs was not found to have correlation with the success of
the entrepreneurs.
Joint Family
Is the joint family set-up a hindrance to entrepreneurship? It is often felt that the joint family system especially of
Hindu families is an impediment to the nurturance of entrepreneurship. The findings of this study however were
found to disprove this notion, as of the total number of entrepreneurs interviewed, as much as 45.10 per cent were
from joint families. The joint family status was not found to have a bearing on the later success of an entrepreneur.
Migration
An attempt was made to determine whether migration from place to place had any effect on the nurturing of
entrepreneurship. No relationship could be determined between these two factors at the initiation stage. However,
migration from place to place was found to correlate with later success. Thus the feeling that such movement serves
to inculcate a coping capability in entrepreneurs, which is a desirable quality for success has been found to be
correct.
Peer Group
With regard to peer groups, it was initially felt that they would have a significant effect on the thinking and behavior
of entrepreneurs. This belief was subsequently borne out by the findings of this study, where as much as 56.86 per
cent of those interviewed had at least one entrepreneur friend. From this it can be concluded that the peer group has
a definite impact on the development of entrepreneurship. People with entrepreneur friends are more likely to
become entrepreneurs. The finding could also be used while selecting prospective entrepreneurs for intensive
entrepreneurial development programmes or other support from governmental agencies. No relationship was
however found between having an entrepreneur friend and later success of entrepreneurs.
Association Membership
Entrepreneurs interviewed were also asked whether they held a membership of any associations at the time of their
entry into business. Only 7 respondents replied in the affirmative, the remaining 44 replied that they were not
members of any association at the time of their becoming entrepreneurs. Two of the respondents had, however,
become association members subsequent to their entry into business. Of these, one was a member of the Federation
of Small Scale Industries and the other a member of Chemical Allied and Export Promotion Council. For
development of entrepreneurship, this is yet another area where effective steps should be taken which would nurture
entrepreneurship. It is suggested that entrepreneur clubs be started with the support of the Government and the Small
Scale Industrial Development Corporation. These clubs could have as members both entrepreneurs as well as those
with entrepreneurial ambitions. This mixing of entrepreneurs and would-be-entrepreneurs should create greater
awareness regarding entrepreneurship and more of the prospective entrepreneurs or those interested in
entrepreneurship would become actual entrepreneurs. However, this would be only for the initiation of entrepreneurs
and may not necessarily lead to success. In fact, the membership of an Association was not found to have a
relationship with the success of an entrepreneur.
Financial Status of Family

For isolating the environmental factors conducive to the nurturance of entrepreneurship, details were collected
regarding the financial position of not only the family but also the in-laws family (in case of married entrepreneurs)
at the time they took to entrepreneurship. The objective was to find out whether the overall financial condition of the
family and in laws family had any relationship with an individuals movement towards entrepreneurship. It was
found that while 23.53 per cent of entrepreneurs came from rich families, the rest were from middle class and low-
income groups. The concentration is however in the middle class families with 35.29 per cent of the entrepreneurs
from lower income groups, i.e., below Rs 10,000 per annum. In fact 66 per cent of the entrepreneurs were found to
be from a middle class background. This leads us to conclude that the willingness to take risks is not very high in the
low income groups but is fairly high in the middle class which perhaps in inspired by a desire to get into the higher
income groups. For people coming from lower middle and lower income groups, such movement towards
entrepreneurship would mean relatively higher risk. Still as much as 17.65 per cent of the entrepreneurs were found
to come from the lower income families with an income of over Rs. 1 lakh per annum were mostly engaged in
business and the children were born in what may be called business environment. The Indian tradition of taking up
hereditary professions must have also contributed towards children of such families becoming entrepreneurs came
from business environment. This may be explained by the possibility that those coming from higher income groups
would take larger risks, which would be necessary for bigger success in business. This finding is somewhat contrary
to the socio-economic objective of the government, which feels concerned at the rich becoming richer and the poor
becoming poorer. Hence, the concentration of entrepreneurial development programmes should be on lower and
lower middle income groups. But, can we find something common in the background of these 14 entrepreneurs from
these groups which would help us in our search of right material for development into entrepreneurs? There was
nothing very distinctive about their background. Three of them had lived in a joint family set-up whereas the
remaining 11 separately. Two of them were the only issues of their parents whereas the others had brothers/sisters
ranging form one to seven. But, there was one distinctive feature. Their wives were mostly illiterate. Out of these 14,
three had working-wives, one as a teacher, the second giving private tuition and the third looking after her own
business. It can be concluded that the entrepreneurs risk taking capability was reinforced by his wifes education.
This aspect could also be utilized while selecting prospective entrepreneurs.
Regarding the financial position of the wifes family, it was found that 16.28 per cent of the married entrepreneurs
had married into rich families 79.07 per cent had married into middle class families and only 4.65 per cent into
lower income groups. Out of the total of 51 entrepreneurs, 16 had received financial aid from their relatives in
amounts ranging from Rs. 5,000 to Rs. 50,000, 12 had received aid from friends in amounts varying from Rs. 1,000
to Rs. 50,000. This indicates that most of the entrepreneurs surveyed had accumulated some capital of their own
before starting their venture. 68.63 per cent of these entrepreneurs had accumulated capital of above Rs.10,000
before starting out. In contrast, very few depended on help form wife, relatives or friends. No relationship could be
determined between the receipt of financial aid from friends or relatives at the time of starting an enterprise and the
success of the entrepreneur.
Economic Environment
An attempt was made to determine whether environmental factors at a macro level namely the particular economic
condition prevalent in the year of their becoming entrepreneurs were related to their entrepreneurial ventures. A
critical examination of the responses revealed that a larger number of people took to entrepreneurship when
economic conditions were difficult. While inflation is a curse for a consumer, it is not so for an entrepreneur. The
demand rising faster during an inflationary period spurs many people to take to business. The purchasing power of
money coming down would also induce working people to move towards entrepreneurship. The stability of the
national economic environment in the year of starting an enterprise was not found to relate to entrepreneurial
success.
Availability of Material
Easy availability of materials was expected to move individuals towards entrepreneuship. This belief was not,
however, borne out by responses of the entrepreneurs only. (7.84 per cent) claimed that easy availability of materials
in their areas of stay was an aid to their becoming entrepreneurs. It may, therefore, be concluded that though easy
availability of materials may spur a few individuals towards entrepreneurship, it is not a necessary condition. There
are a large number of people who become entrepreneurs against heavy obstacles. They seized the environmental
opportunities in different areas not necessarily restricting themselves to the easy availability of a particular raw
material. Though, easy availability of raw material is a good reason for starting an industry, it may be worthwhile to
isolate such materials and give specific support to certain selected entrepreneurs to develop industries related to
these materials.
Availability of Technology
Regarding availability of technology in the area of the entrepreneurs stay facilitating his movement towards
entrepreneurship, again only 4 of the entrepreneurs surveyed replied in the affirmative. Thus, some people may
become entrepreneurs due to the easy availability of technology in nearby areas, but it is not a necessary condition
for entrepreneurship.
Developmental Theory of Entrepreneurship

The research described earlier indicates a possibility of formulation of a developmental theory of entrepreneurship.
Although the various aspects of the developmental process of entrepreneurship require detailed verification, the
process appears quite clearly as an extension of the process of occupational choice in the individual which in turn is
a part of individuals total striving for an adequate life adjustment.
Process of occupational choice

The general process of the occupational choice can be shown as follows:
Fantasy period
Tentative decision making

period
Stage of exploration and

preparation for implementing
the
decision
Free expression of a wish

without any consideration of
expediency
Interest: Includes all vocations,

which appeal to the individual.
Preference: Involves comparison

of the relative attractiveness to
the subject out of several
vocation.
Crystallized choice very close to

the decision
This would be true for any occupation except for a few exceptional cases where decisions about the occupational
choice are taken under traumatic conditions. With this one cycle of the occupational choice process is over.
In the case of entrepreneurship one visualizes the beginning of another cycle. This cycle is shown as follows:
Stability stage
Commitment
Trial stage
There can be cases where an individual on failure in the trial stage goes back to the stage of exploration and
preparation for implementing a new decision-may be for taking up a job.
Model for Entrepreneurship Development
As entrepreneurship is closely related to the economic development it would be desirable to augment the supply of
entrepreneurs in the country to speed up its economic development. Hence, the support to entrepreneurship
development should not be restricted only to the second cycle. It would be worthwhile to give support from
childhood itself. For this both the cycles should be combined to give a model for Entrepreneurship Development.
This model is shown below:
First cycle
Second Cycle
N-Achievement stories in text books
Family support
Organizat
ion
developm
ent
consultan
cy
Trail stage
Commit
ment and
stability
stage
Support system of
government
Organizat
ion
developm
ent
consultan
cy
Entrepreneur
Fantasy
Tentative
Exploration
decision
stage
&
making
Implementstage
stage
N-Achievement stories through
ation
Entrepreneurship
journals &
Institution
providing
information about
the opportunities
existing for the
entrepreneurs.
mass media
First cycle
Second Cycle
The above discussion leads towards the stages of a Developmental Theory of Entrepreneurship, consisting of the
following five stages:
Fantasy stage. This is dependent on many environmental and experiential factors. Stories with Achievement
Motivation themes could spur fantasies of being entrepreneurs.
Tentative decision making stage. At a certain stage, say after completing education or while working a person
tries converting the fantasies into realities, evaluating them and making a tentative decision of becoming an
entrepreneur. As per this study mean age at which this stage gets over was 24.60 years.
This detail about entrepreneurial opportunities should be fed to the prospective entrepreneurs under this stage. The
Entrepreneurs Club suggested earlier can be of benefit to people under this stage. Similarly journals/magazines on
entrepreneurial opportunities and other institutions providing such information would help the prospective
entrepreneurs in their movement towards an entrepreneurial career.
Stage to exploration to implement the decision. The person then tries to further explore details about types of
business to be undertaken, sources of finance, etc. As per the study the mean age at which this stage was over 28
years. Thus on an average entrepreneurs took 3.4 years in stage 3.
Trial stage. The entrepreneur launches the project but keeps an escape route like keeping a lien on the job,
having a working wife, etc. This is the most crucial stage for the entrepreneurship development.
Commitment and stability. His commitment as an entrepreneur is complete.
The most crucial stage for an entrepreneur is stages 4, i.e., trial stage. Many prospective entrepreneurs go back to the
exploration stage for finding alternative occupational choice. Problems of this stage could be lack of marketing
facilities, lack of finance, inability to cope up with the strains of entrepreneurial role, etc. It is here that the
entrepreneurs should get full support from family as well as the other support systems of the government in solving
their problems of this stage.
Conclusion: The research provides a framework for launching a national entrepreneurship development program in
the country for its rapid economic development. Its importance should be realized from the fact that entrepreneurs
generate wealth, others generally consume it. Entrepreneurship base needs to be expanded for and Indias dream of
prosperity to become a reality.
Concept of Entrepreneur, Entrepreneurshipship and Enterprise: Advantages of Entrepreneur
Concept of Entrepreneur, Entrepreneurshipship and Enterprise: Advantages of Entrepreneur
The concept of Entrepreneurship is comparatively new and dynamic. What is Entrepreneurship?
Entrepreneurship can be described as a creative and innovative response to the environment. Such responses
can take place in any field of social endeavour business, agriculture, education, social work and the like.
Doing new things or doing things that are already being done in a new way is, therefore, a simple definition of
entrepreneurship. In this book, however, we shall concentrate on business entrepreneurship.
It would also be advisable to understand the individual qualities of an Entrepreneur this would help us understand
the concept better. The following eleven qualities/ attributes are considered to be some of the important ones for a
successful entrepreneur on the basis of the research and experience of Behavioural Science Centre, Delhi and
various other institutions involved in selection of candidates for entrepreneurial development programmes
conducted by them:
High level of motivation,
Moderate Risk-taker
Self-confident with positive self concept,
Excellent Leadership qualities
Good Business acumen
Managerial competence
Problem solving attitude
Flexibility and adaptability
Realistic approach to planning
Independence of thought and action
Ability to perceive opportunities and threats
Entrepreneurs are quick to see possibilities for achievement. They are not blinded, as mangers in large, sedate
organizations often are, by the in-grown culture in which they are embedded.
As we are aware, the new ideas for new products and services often originate in unexpected places. Entrepreneurs
are the first one to embark on these innovative ideas.
There are several examples such as
Credit cards were not invented by banks
Instant photography was not started by a large camera manufacturer
Large office equipment manufacturer did not create the Xerographic office-copying machine.
Entrepreneurs are the people who see the need gap and hence capitalize on the same. An entrepreneur grabs such
novel ideas, developed it and pursued its success doggedly with unflagging spirit. Therefore, these people are
successful in their venture and are entrepreneurs in the true sense of the word. Thus, entrepreneurs are self-starters
and doers who have organize and build successful enterprises.
On the other hand we can not call an entrepreneur an opportunist because it is not only the selfish interest that drives
him but he is also meets the need of the people. The opinion of various experts in the area.
Global views on Entrepreneurship:
Dr. Joseph A. Schumpeter, the well known experts on entrepreneurship has placed special emphasis on the concept
of innovation as being the criterion that distinguishes enterprise from other forms of endeavour, apart from the other
qualities of an entrepreneurial venture. He called those who led enterprises, entrepreneurs. As per him, nobody is an
entrepreneur all the time; one behaves as an entrepreneur only when carrying out innovations. He added that what
counts in entrepreneurship is getting things done. For example, the early English Entrepreneurs demonstrated a key
factor of the enterprising person the innovative personality. They were involved in developing inventions for
commercial use and in applying new scientific discoveries to productive purposes. In their efforts, they set a
standard basic value for entrepreneurs who were to follow - that innovation must be the central characteristic of
entrepreneurial endeavour.
However, as per Dr. David C. McClelland, one of the key researchers in the area of entrepreneurship, Achievement
motivation is one of the most important factors contributing to the success of an entrepreneur. In recent years,
penetrating studies on
The Enterprising Personality by David C. McClelland and his associates have led to a
much clearer understanding of the characteristics of entrepreneurs. Their findings are summarized below:
The need for achievement Prime among the psychological drives that motivate entrepreneurs is a high need for
achievement, usually identified as N. Ach. This need can be defined as a want of drive within the person that
motivates behavior toward accomplishment. Accomplishment, defined in an entrepreneurial context, is the
fulfillment of a goal embodying a reasonable challenge to the individuals competence. A task seen as an easy one
therefore, carries no challenge and hence it is not motivating.
Desire for responsibility Entrepreneurs desire personal responsibility for accomplishment. They prefer to use their
own resources in their own fashion in working toward goals. They want to be accountable personally for the results.
They will, however, perform well in a group as long as they can personally influence the results in some specific
way.
Preference for moderate risks Entrepreneurs are not gamblers. They prefer to set goals that require a high level of
performance, a level that they believe will demand exertion but that they are confident to meet.
Perception of probability of success Confidence in ability to achieve success is a significant quality of

entrepreneurial personalities. They study the facts that can be gathered and form judgements based on them. When
facts are not fully available they fall back on their high level of self-confidence and proceed with the task.
Stimulation by feedback Entrepreneurs want to know how are they doing, they want to get a feedback whether
it is good or bad. They are stimulated to higher levels of performance by learning how effective their efforts are as
the task progresses.
Energetic activity Entrepreneurs exhibit a much higher level of energy than an average person. They are active
and mobile. They are engaged for a high proportion of the time, in getting tasks done in novel ways. They tend to be
acutely aware of the passage of time. This awareness stimulates them to energetic engagement with their work.
Future orientation Optimistically oriented toward the future, entrepreneurs plan and think ahead. They search for
and anticipate possibilities that lie beyond the present.
Skill in organizing
Entrepreneurs show unusual skill in organizing both work and people for achieving goals.
They are highly objective in choosing individuals for specific tasks. They will choose the expert over a friend for the
sake of getting the job done efficiently.
Attitude toward money

For entrepreneurs, financial gain is secondary in importance to achievement. They
value money, but not for money itself. They view it rather as a concrete symbol of a challenging objective
accomplished a testimony to their competence.
There is considerable research on what promoted entrepreneurship in different societies. The important factors that
influence its development according to the various researches are summarized in Table 1.1.
TABLE 1.1 FINDINGS OF SOME RESEARCHES
#
1.
Author
Middle Ages
17th century
2.
Factors that contribute to development of entrepreneurship

Actor and person in charge of large-scale production projects.
Person bearing risks of profit (loss) in a fixed-price contract with government.
3.
Richard
Cantillon 1725
Person bearing risks is different from one supplying capital.
4.
Jean Baptiste
Say
Separated profits of entrepreneur from profits of capital.
1803
5.
Schumpeter,
1934
Suitable environment, intuition in grasping the essential factors. Entrepreneur is

an innovator and develops untried technology.
Weber, 1961
Protestant Ethic which emerged from the religious belief system of Calvinistic
Puritanism, and which is absent in oriental religious belief system.
7.
Peter Drucker
1964
entrepreneur maximizes opportunities
8.
Staley and
Morse, 1965
Quality of services in industrial advice, managerial training and
Levine, 1969
Status mobility system where status is attained through outstanding performance,

initiative, reliance and achievement training.
6.
2
3
9.
4
Industrial research.
10.
McClelland,
1969
11.
Christopher,
1969
High demand for product; and experience in the lines of Business/industry.
12.
Hagen, 1971
Creative personality. High need for achievement, need for order and need for
autonomy. Widespread creative problem solving ability, and a tendency to use it.
Positive attitudes towards manual and technical labor; and the physical world.
13.
Cochran,
1971
Attitude toward occupation, the role expectations held by sanctioning groups.
Need for achievement through self study, goal setting, and

Inter-personal support. Keen interest in situations involving moderate risk;
desire for taking personal responsibility; concrete measures of task performance;
anticipation of future possibilities; organizational skills; energetic and/or novel
instrumental activity.
14.
15.
Kilby, 1971
Perception of market opportunities, gaining command over scarce resources, and

marketing of products. Dealing with public, bureaucratic concessions, licenses,
taxes, and management of human relations within the firm and with customers
and suppliers. Financial and production management, technological knowledge.
(Kilby gives low priority to need for achievement
and moderate risk
taking.)
Karl Vesper
entrepreneur seen differently by economists, psychologists, business persons, and

politicians
1980
16.
17.
Gifford Pinchot
1983
Intrapreneur is an entrepreneur within an already established organization.
Nafziger, 1971
Perceived challenge to status; migrants, new religious sects, and reformed

groups, move towards entrepreneurship.
Fox, 1973;
Mines,1973;
Papane, 1973
Economic opportunities, and political conditions.
10
18.
11
There are four major currents of thought regarding forces behind entrepreneurial growth. These are
(i)
the psychological
(ii)
the sociological
(iii)
the economic and
(iv)
the managerial ones.
The psychologist emphasizes certain inner, psychic concerns as the prime movers for risk-bearing and innovation.
The sociologist stresses the societys value and status hierarchy as the main force governing entrepreneurial activity.
The economist considers the structure of economic incentives found in the market environment as relevant.
A managers emphasis is on perception of market opportunities as also operational skills to run the enterprise.
These approaches based on each scholars field of specialization focus on the prime determinants of entrepreneurial
supply. A scholar, having bias for his own specialization, perceives the entrepreneur responding to limited factors in
his own domain and, therefore, none of these approaches independently appears to be adequate to explain the
emergence of entrepreneurs.
An Enterprise: The economist would define enterprise as a place where with the joint efforts of land, labor, capital
and management the production is undertaken for the commercial gain. However, in this we would be concentrating
the management or the Entrepreneur. Enterprise also stands for the smart, energetic and goal oriented activity that
entrepreneur undertakes in setting a venture.
Link between N-ach and economic development
Link between N-ach and economic development
Entrepreneurs are different from other people due to their high achievement motivation.
The link in the key hypothesis is between need for achievement and economic development. Was there any
evidence to support the belief that high need for achievement would tend to direct individuals towards business
success? Among a group of American College students, a study was done to see what occupations would these
people opt for; those with the highest need for achievement linked significantly more to entrepreneurship than by
those with the lowest need for achievement. The results showed that boys with a high need for achievement were
more inclined toward business occupations than those with a low need for achievement. Similar although less
definite liking was found among the boys of Kaiserslatern, Germany. There was yet no evidence that high N-Ach.
boys would enter those occupations, or that they would perform better in them than low N-Ach. boys.
The evidence presented so far is a summary of the information available at the time this study was begun.
Mccleland has established a correlation between entrepreneurship and economic development. It has also been
proved that entrepreneurship can be inculcated through training programmes. Many counties have taken up this
project for children so that large number of entrepreneurs could emerge when these grow up by opting for selfemployment in business rather than knocking doors of the government agencies like employment exchanges to give
them jobs.
Research Investigation to relate N-ach and economic development:
It seems desirable here to describe the research projects that were designed to study the relationships that have just
been discussed. Such a summary will indicate how we propose to try to answer the questions raised.
Three types of research have been used. These were as follows:
Groups of people, measuring N-Ach. in relation to total rates of economic development.

Individual measures of motives, interests, values and performance of both mothers and their sons in various
countries.
The motives and behavior of actual businesspersons.
The first type of study was made possible by the fact that the technique used to measure N-Ach. in individuals
(analysis of the content of stories) could just as easily be applied to imaginative products of any sort.
For example, it could be applied to samples of folk tales from various primitive cultures to see whether the tales
containing large amounts of achievement content came from tribes, which showed a higher level of economic
activity. It could also be applied to the brief imaginative stories used to teach children to read in the third and fourth
grades of school. Scores based on the childrens reading books could then be taken as approximate indicators of the
level of N-Ach. in the country; the scores could also be compared at various time periods with economic
development of the same time periods. Similarly, the system used for measuring whether achievement content was
more frequent prior to periods of rapid economic growth in countries like England and Ancient Greece. In all these
studies, it was possible to score the stories and other materials not only for N-Ach. but for other motives, values, or
factors of any sort that might be associated with economic development.
The second type of study was focused more directly on the individual. It was designed to trade both the origins
of N-Ach. in the values and attitudes of the parents, and the effects of N-Ach. in adolescent boys on their
occupational interests and performance under certain conditions. The identical study was conducted in four widely
different countries to guarantee that the relationships found were not due to values or social institutions found in one
particular country.
Germany was one of the countries chosen for the study because it is an advanced western economy in which social
structure and values are different from those in the United States.
Japan was chosen because it is a country outside the Western tradition that has shown considerable economic
development;
India because it is a non-western developing country that has shown less economic growth than
Japan
Brazil because it is a developing country within the western cultural tradition. The tests were designed to show the
values of mothers and their adolescent sons, the N-Ach. of the boys, and the degree to which boys with high N-Ach.
would be more apt to behave like businessmen and to consider favorably a future career in business.
In the third type of study, businessmen who were already established in their careers were tested to see whether
they had higher N-Ach. and showed more business behavior than other comparable groups of men. If they did, it
could be reasoned that their N-Ach. had contributed to their successful career in business, because boys with high NAch. were already behaving in the same way before they began their career. Again to be sure of avoiding cultural
tendencies, over 750 businessmen and professionals were studied in four countries: the United States (the prime
example of an advanced industrial economy), Turkey (a developing country), Italy (a country well developed in
some regions but not in others), and Poland (a Communist country). From these comparative studies, we hoped to be
able to find out whether N-Ach. is related to business success regardless of cultural and institutional factors and the
level of economic development.
While these research plans were designed primarily to study the importance of N-Ach. in economic development,
they also permit an investigation of the importance of need for power (N-power), which might be more important
for business success in a country where there is very little development. We also have measures of their need for
affiliation (for association or fellowship). The need for affiliation (N-Affiliation) might be more important in a
complex industrial economy like the United. While the chief interest in these studies was originally the N-Ach.
hypothesis, this research was comprehensive enough to discover any other factors which, with N-Ach. or without it,
might precede or accompany economic growth.
Research Conclusions: Almost every one of these results could have been interpreted in some other way.
Nevertheless, the evidence is based on experience and observation; and looked at as a whole, the evidence tends to
support the belief that achievement motivation is an important factor affecting the rate of economic
development.
Achievement language is a source of motivation for economic development in individuals, groups, communities and
nations. Research by psychologists has indicated that when think idly or are made to react to neutral stimuli, their
thought process are likely to indicate some dominant concerns and psychological needs. When people were aroused
by deprivation and were shown ambiguous pictures they perceived objects relating to the need that was aroused in
them. For example people deprived of food started seeing food-related objects in such ambiguous pictures. This
made psychologists to conclude that:
The Fantasy material of people is indicative of the dominant needs and concerns acting in them and their
personality.
Such needs and concerns are likely to be projected by them when they are asked to produce imaginative material
in response to neutral stimuli; and
An analysis of their fantasy material so produced can reveal their dominant concerns or motive profiles.
Based on these conclusions, behavioral scientists started researching to develop techniques, which will help in
assessing and quantifying these concerns or motives in people.
The first experiments with the need for achievement involved a Thematic Appreception Test (TAT). Commonly
referred to as TAT. Here an individual is shown a series of ambiguous pictures. Different sets of pictures are used for
tapping separately achievement, affiliation and power imageries.
While administering TAT, the test is introduced to the subject as a test of imagination and creative thinking. Each
picture is exposed for a brief of 20 seconds. This is followed by a write up of 5-7 minutes for an individual to write
a story. Then the next picture is exposed followed by story writing, as in the previous case. The process continues till
stories on all the six pictures are written.
Before the picture is exposed to the respondents, they may have to be instructed on the following lines:
You are now going to participate in a test of imagination and thinking. This test assesses how well and creatively
you can write stories in response to somewhat ambiguous pictures. You will be shown a set of 6 pictures one by one
with a 5-minute interval after each picture. During these five minutes you have to write a story based on picture, you
have seen. For writing story, you may have to think about:
Who are the people?
What happened in the past?
What is being done now?
Advantages of Developing and Encouraging Entrepreneurship:
Developing and encouraging Entrepreneurship is very vital for the growth and economic advancement of region.
Hence it becomes imperative for the Developing Nation to do so. Let us now see how do entrepreneurs add to
economic advancement;
1.
Employment Generation: The entrepreneurial ventures are generally started in small-scale, utilizing the labor
intensive techniques. Therefore, these venture generate a lot of employment for the regional manpower. These
ventures not only generate employment but also stop the displacement of labor due to over crowding on the
agricultural land.
2.
Distribution of Economic power: Small-scale Business are the seed-bed for entrepreneurship therefore they help
in equitable distribution of economic power instead of it getting concentrated in the hands of certain big
industrialists.
3.
Optimum utilization of regional resources: The small-scale entrepreneurs generally rely on the regional
resources for their production needs. For example; they utilize local labor and raw material for their entrepreneurial
venture resulting in optimum utilization of local resources.
4.
Meeting the demand gap by seizing appropriate opportunity: Entrepreneurs have the knack of seizing the
opportunities existing in the environment as pointed out earlier. Therefore they always study the demand gap keenly
and utilize their entrepreneurial ventures too meet such demand gaps.
5.
Export potential: Whenever entrepreneurial ventures are the results of innovations, they create an opportunity for
export. As we are aware a number of entrepreneurial ventures are the results of innovation. Hence, they always add
to the export potential.
6.
Regional Development: Regional development is one of the key advantage of entrepreneurial ventures. This is
very important for a nation like ours where the regional development disparities are very wide.
Conclusion: It could now be concluded that entrepreneurs help in economic development. Therefore, there is a need
to nurture them in the society. We have a number of examples to prove that entrepreneurial character of the society
has helped in regional and national development. For example mid-ninetieth century British society and Japan as a
nation. In our own country regions like Punjab and Haryana are good examples.
How to be an entrepreneur
INTRODUCTION
"In general, entrepreneurs are risk-bearers, coordinators and organizers, gap-fillers, leaders, and innovators or
creative imitators. Although this list of characteristics is by no means fully comprehensive, it can help explain why
some people become entrepreneurs while others do not. Thus, by encouraging these qualities and abilities,
governments can theoretically alter their country's supply of domestic entrepreneurship" - David C Burnett,
technopreneurial.com
Do a search for 'entrepreneurial' on amazon.com and you'll be confronted by an impressive 81 choices when it
comes to reference material, 48 choices when it comes to professional and technical books and 176 books on
business and investing.
Yet, if becoming an entrepreneur is down to a mysterious 'X' factor, surely these volumes and tomes with case
studies and lessons from business leaders serve no real purpose? Or, is it the case that an entrepreneurial tendency,
like genius, is a case of one percent inspiration, 99 percent perspiration?
How to be an entrepreneur?
Will formal educational components or running classes help spawn a new generation of entrepreneurs? Formal
education isn't really that important, opines Chang, who thinks that 'spoon feeding' may actually end up killing an
individual's entrepreneurial spirit rather than encouraging it. While not disagreeing with the value of formal courses,
Chang reckons lessons aren't that important since there's no rocket science behind becoming an entrepreneur: "All
you need is a basic business sense of Revenue - cost = Profit!" he points out.
Net Values Karamjit Singh on the other hand is all for making entrepreneurial studies a part of the educational
curriculum but suggests it only be offered to those who show a keen interest in it.
Lesson or no lessons, the business world is replete with examples of successful businessmen and heads of worldclass companies that made it with sheepskins on the wall and without - look no further than the Ambanis, Tatas,
Bajaj and so on. Perhaps what truly makes an entrepreneur is not in education, in socio-economic status or a
mysterious 'x' factor, but in a willingness to make the attempt, to take the first step. As Thomas Alva Edison, founder
of General Electric and inventor of the light bulb put it: " I have far more respect for the person with a single idea
who gets there than for the person with a thousand ideas who does nothing."
Let us now have a look at the quick start routes available to an entrepreneur.
INCUBATION OF ENTREPRENEUR
A researcher has a breakthrough in the lab but doesn't quite know how to commercialize the discovery as a
lifesaving product. A welfare mother has an idea for a business, but the bank offers no encouragement and certainly
no money. A town loses a major company, and no amount of effort can attract another firm to take its place. What
now?
In hundreds of communities in the United States and thousands around the world, the answer to that question has
been a business incubation program. Business incubation helps:
Create new businesses

Accelerate their growth
Create more jobs
Diversify the job base
Make local economies more robust
Build a business environment that supports new companies
Business incubators, which provide comprehensive support to companies in their startup stages, help entrepreneurs
achieve their dreams, and help communities develop more vibrant economies. The incubation process begins with an
analysis of what a company needs and ends with that company "graduating" to become solid and independent. In
between, the company receives tailor-made services that point it toward success.
The aim of the incubator is to give these new entrepreneurs the help they need. Client companies obtain such
services as hands-on help forming a business team, access to financing, flexible space in which to grow, legal,
marketing, and fiscal advice, and seminars on special topics.
Creating Businesses, Therefore Jobs A business incubator provides business assistance to early-stage companies, has
staff who deliver and coordinate business assistance services, and leads companies to become self-sufficient. No two
incubators accomplish the goals in the same way. In fact, it is flexibility and ingenuity that have made incubators
work in rural, urban, and suburban communities. Adaptability is why business incubation has been effective for
technology, service, manufacturing, and "mom-and-pop" companies.
Increasing Company Success
Incubators provide a whole menu of services to companies accepted into the program. These might include
marketing assistance, help in getting ready for financing (or perhaps an in-house loan program), innovation
assessment, legal direction, help with intellectual property issues, one-on-one mentoring, use of lab space, help with
building a management team, venture capital forums, and much more.
What types of business assistance make a fledgling company strong? There is no one answer, which is why
incubation programs first assess incoming companies to determine their strengths and weaknesses. Incubators also
set policies about what a company must already have in place, such as a business plan. Or they might look for
tangible signs of a client's personal and financial readiness: Does someone in the client's household have a "day
job." Is the client willing to invest some of his or her own assets in the venture? Does the client have a concrete
understanding of the time and strain involved in launching a brand-new company?
Working for all Types of Entrepreneurs
Incubator companies come in all sizes and represent every industry imaginable. The entrepreneurial spirit cuts
across every line: regional, gender, religions, ethnic, economic, ability----you name it. When you look at the success
stories of incubator graduates, it's evident that they're in no danger of becoming stereotyped. Nor do incubator
clients' origins predict how far they'll go. As one incubator director puts it, every program should seek to turn out
major leaguers. Incubators that have brought every resource to bear have done just that.
Moving Ideas from the Lab to the Marketplace
Technology incubators are the fastest growing segment of the industry and a diverse force covering every type of
business from software to heart surgery. Like all incubators, they foster growth of new companies--but with
particular challenges. Technology entrepreneurs may need access to specialized facilities, for instance, or a beta test
site for their technology. Intellectual property protection is the key, as is the ability to finance very-early-stage
product or process development---not something that conventional financiers care to do.
Revitalization
Nothing rattles a community more than the loss of jobs due to Government cutbacks and corporate downsizing.
Business incubation programs can be a viable part of strategies in those communities to rebuild the business
substructure, and they sometimes take the lead. Communities in transition that have developed strong incubation
programs report gratifying returns on their investments.
One of the most valuable assets business incubation gives to the community is a more diverse base of companies. A
successful incubation program can help ensure a town will not be left hanging if one company moves out.
Bringing Special Focus
The most common incubators are known as mixed-use or general incubators. These accept many types of
companies. As the industry matures, however, it's spawning more targeted programs. These may appear for practical
purposes. For example, to accept biotechnology companies, an incubation facility must be appropriately specialized.
Industry-specific incubators also make concrete business sense. Some communities garner a competitive advantage
by clustering related businesses. Thus is born the arts, multimedia, environmental, software, wood products, retail,
garment, or high technology incubator.
STARTING WITH A SHOESTRING BUDGET
Does starting a business with a small amount of money sound too good to be true? No! There are many
entrepreneurs who have successfully started their own businesses with little money. Some as low as Rs. 5000, yet
they are now raking in money from their businesses.
The lesson is about doing things right! Of course, the ideal scenario is to start a business with enough money to
enable you to move more aggressively and expand your business faster. But even if you do not have money, that
should not prevent you from starting your own business. If you have great idea and a viable business plan, you can
use Other Peoples Money (OPM) to start your business. Or if you do not have access to OPM, you better learn how
to tighten your belt and bootstrap your fledging business. Remember, while you may not be spending money, you
still have to pay with something your time and energy.
Below are some of the rules that you need to follow to successfully launch a business with very little cash:
Think twice before borrowing. It would be ideal if you will not have to borrow money to start your business. After
all, you want your own business to give you an additional source of income, if not the main paycheck. You do not
need another bill to pay.
But sometimes, you really have to borrow money to keep going. A major reason why many small businesses fail is
inadequate capital. If you really have to, you must be prepared to take on the right kind of debt. Not all debt is bad
debt. You have to ensure that before taking on a debt, you must see a way to pay it back through your business.
Be lean and mean. If you have limited capital, set aside any thoughts of a fancy store or great office. Start homebased and explore the advantages of working at home. Or if you must be out there selling your products, rent a
small section at a flea market or fair. You may consider renting at the mall only when you see money coming in.
In terms of legal structure, you can save tons of money by starting as a proprietorship. A Corporation is expensive to
set-up, requires vast amounts of record-keeping, and will tax you twice as an individual working for the business
and as a corporation.
Choose your business carefully. Your choice of business will spell the difference between making your business a
success on a shoestring budget or not. Some businesses, such as a file storage facility, require enormous
capitalization. Other businesses, like a wedding coordination business or a computer consulting business can be
started on a thin budget. Choose a business that can be started even with little capital. If your dream business
requires a significant investment to start, you may want to downsize your dreams first and start a business that you
could afford to start. It may be a smaller version of your original vision, or another business interest altogether. This
will allow you to acquire the needed entrepreneurial skills, learn how to start and run a business, and save enough
capital for your dream business. Even if you are not able to save enough, your track record as a businessperson can
make it easier to borrow loans from banks.
Make sure that there is demand for your business. If you do not have enough resources, you have little room for
trial and error. Invest only in your best ideas. Your business can only survive if it generates enough demand to
sustain it. Be sure that the business you are about to start can give the results that you desire. Otherwise, you may
even lose the very few resources that you have.
Look Big. Many home business entrepreneurs are faced with the dilemma: Should I tell my customers that I work
solo from my kitchen"; or Should I pretend that I am running a well-oiled machine? In most businesses, your
success hinges on how customers perceive your venture. Letting customers know that you a one-person home
business may be the kiss of death for your fledging enterprise. Customers prefer dealing with a business that shows
professionalism and ability to deliver what it promises, qualities often associated with large businesses.
Looking big does not necessarily mean spending tons of money. You can start with sharp looking business cards and
stationery. If you have a web site, you can create one that looks just like one of the big boys. Your phones must be
answered professionally as possible, making sure that no dogs can be heard on the background. As Steven Krauss
further advises: Until you do get big and have some money I have two words of advice for you: fake it!
Be creative. You will only survive as a boots trapper if you are able to use your wit and creativity to extend the
meager resources that you have. As you start your business, you need to think ways to get things done, as cheaply
and efficiently as possible. The less cash outlay, the better. After all, splurging on one aspect of your business say,
buying a top of the line laptop computer may leave you with nothing to market your business. You need to be
creative and resourceful in finding ways of stretching your thin budget. Need a business card? Vista Print offers 250
cards for free. If you need a web site, go to the public library, borrow books on Web design, and begin learning how
to create Web sites.
One reality of having little cash is that you have little recourse in doing things. You do not have the luxury of a 30man Web design team, or a battalion of sales people to sell your products. You have to force yourself to learn new
things, and find ways to bring in the buck. If you want to survive, you need to rise above being a cash-dependent
entrepreneur to a wit-dependent businessperson.
Run your business with a passion. Starting a business is hard, doubly so if you have a limited capital. It is like
going to a battle full of heart but with little ammunition. It doesnt mean that you cant win, but you have to act
smartly, maximize your resources, and go after your goal with a burning passion. If you are passionate in what you
do, you tend to work harder and go that extra mile. After all, you need to put in more time and effort to compensate
for the lack of capital.
In your clothing business, for example, you will have to do the designing, sewing, finding and selling to buyers, and
writing the press release to market the business. If you lack passion, you will not have the strength or the patience to
do all these, and more. Passion will help you sustain your enthusiasm and energy to do what is required to get the
business off and running. It is what sets successful boots trappers apart from other start-up entrepreneurs.
Your customers are your gold mine. You may not have the resources to aggressively seek out new customers. Nor
do you have the deep wallet to offer grandiose customer loyalty programs. But if you take care of your customers
really, really well, then your customers will take care of you. Customers go back to businesses that offer them
quality and timely service, help them make informed choices and make their lives easier.
Every business owner knows that the customer is king. If you do not have the money to easily acquire new business,
you will make sure that you always roll out the red carpet for those that you already have.
FRANCHISING
Franchising may be defined as an arrangement whereby the manufacturer or sole distributor of a trademarked
product or service gives exclusive rights of local distribution to independent retailers in return for their payment of
royalties and conformance to standardized operating procedures.
Person offering franchise is known as the Franchisor. The Franchisee is the person who purchases the franchise and
is given the opportunity to enter a new business with a better chance to succeed than if he/she were to start a new
business from scratch.
Franchising represents an opportunity for an entrepreneur to enter into business. In Franchising, the entrepreneur is
trained and supported in marketing by the franchisor and will be using a name that has an established image. It is
also an alternative means by which an entrepreneur may expand his/her business by having others pays for the use
of the name, process, product, services and so on.
Advantages of franchising: (to the franchisee) one of the most important advantages of buying a franchise is that
the entrepreneur does not have to incur all the risks associated with creating a new business. The other advantages
are as follows:
Product Acceptance: The franchisee usually enters into a business that has accepted name, product or service. Here
the franchisee does not have to spend resources trying to establish the credibility of the business. That credibility
already exists based on the years the mother franchise has existed. e.g.: An entrepreneur who tries to start a
sandwich shop would be unknown to the potential customers and would require significant effort and resources to
build credibility and a reputation in the market. Whereas if he becomes the franchisee of Subway, the customers
know him right from the start as credibility of Subway already exists.
Management Expertise: Another important advantage to the franchisee is the managerial assistance provided by the
franchisor. Each franchisee is given training on all aspects of operating the franchisee like training in accounting,
personnel management, marketing and production. e.g.: MacDonalds, for example, requires all of its franchisees to
spend time at its school, where everyone takes classes in these areas.
Capital Requirements: Starting a new venture can be costly in terms of both time and money. The franchise offers an
opportunity to start a new venture with upfront support that could save the entrepreneur significant time and possibly
capital. The only initial capital required to purchase a franchise generally reflects a fee for the franchise,
construction costs and the purchase of equipments.
Knowledge of Market: The established franchise business offers the entrepreneur years of experience in the business
and knowledge of the market. The knowledge is usually reflected in a plan offered to the franchisee that details the
profile of the target customer and the strategies that should be implemented once the operation has begun.
Operating and Structural controls: the franchisor, particularly in food business identifies purveyor and suppliers that
meet the quality standards established. In some instances, the suppliers are actually provided by the franchisor.
Administrative controls usually involves financial decisions relating to costs, inventory, cash flow and personnel
issues such as criteria of hiring/firing, scheduling and training to ensure consistent service to the customers. These
controls are usually outlined in a manual supplied to the franchisee upon completion of the franchise deal.
Advantages of franchising: (to the franchisor) Expansion Risk: The most obvious advantage of franchising for an
entrepreneur is that it allows the venture to expand quickly using little capital. He can do so by authorizing and
selling franchises in selected locations. The capital required for this expansion is much less than it would be without
franchising.
Also operating a franchised business requires fewer employees than a non-franchised business. This allows the
franchisor to maintain low payrolls and minimizes personnel issues and problems.
Cost Advantages: The mere size of the franchised company offers many advantages to the franchisees. The
franchisor can purchase supplies in large quantities, thus achieving economies of scale that would not have been
possible otherwise. The franchisee is usually required to purchase these items as a part of the franchise agreement
and they usually benefit from lower prices. The other big cost advantage of franchising a business is the ability to
commit larger sums of money to advertising. Each franchisee usually contributes a percentage of sales (1 2 %) to
an advertising pool. This pooling of resources allows the franchisor to conduct advertising in major media across a
wide geographic area. Otherwise if not franchised, the company would have had to provide for the entire advertising
budget.
Disadvantages of franchising:
Franchising is not always the best option for an entrepreneur. Anyone investing in a franchise should investigate the
opportunity thoroughly. Problems between the franchisor and franchisee are common and have recently begun to
receive more attention from govt. and trade associations.
The disadvantages to the franchisee usually center on the inability of the franchisor to provide services, advertising
and location. When promises made in the franchise agreement are not kept, the franchisee may be left without any
support in important areas.
The franchisee may also face the problem of a franchisor failing or being bought out by another company. This
causes many franchises to fail and eventually go in losses and finally closedowns.
On the other hand franchisor also incurs certain risks in choosing this expansion alternative. At time the franchisor
may find it very difficult to find quality franchisees. Poor management, in spite of all the training and controls, can
cause individual franchise failure and therefore can reflect negatively on the entire franchise system. Also as the
number of franchises increases, the ability to maintain tight controls becomes more difficult.
Types of franchises:
There are 3 available types of franchises.
1. The first type is the dealership, a form commonly found in the automobile industry. Here, manufacturers use
franchises to distribute their product lines.
These dealerships act as the retail stores for the manufacturers. The franchisee is benefited by the advertising and
management support given by the franchisor.
2. The most common type of franchise is the type that offers a name, image and method of doing business like
MacDonalds, Subway, KFC and Holiday Inn.
3. The third type of franchise offers services. These include personnel agencies, income tax preparation companies,
and real estate agencies. These franchises have established names and reputations and methods of doing business. In
some instances, such as real estates, the franchisee has actually been operating a business and then applies to
become a member of the franchise.
Investing in a franchise- Franchising involves many risks to an entrepreneur. Franchising, like any other venture, is
not for the passive person. It requires efforts and long hours, as any business does, since duties such as hiring,
scheduling, buying, accounting and so on are still the franchisees responsibility.
The entrepreneur should conduct a self-evaluation to be sure that using a franchise venture is right. Answering the
following questions can help one determine if its the correct decision:
Are you a self-starter?
Do you enjoy working with other people?
Do you have the ability to provide leadership to those who will work for you?
Are you able to organize your time?
Can you take risks and make good business decisions?
Do you have the initiative to continue the business during it ups and downs?
Are you in good health?
If you answered yes or maybe to most of the above questions, chances are you are making the right decision to
enter a new franchise venture.
ANCILLARISATION
Ancillary Industries are units, which produce parts, components, sub assemblies, and tooling and supply to one or
more large units assembling complete products.
In legal framework Ancillary Industries are defined as: - Undertakings having investments in fixed assets in plants
and machinery not exceeding Rs. 15 lakhs and engaged in
(a) The manufacture of parts, components, sub assemblies, tooling or intermediates; or
(b) The rendering of services, and supplying or rendering or proposing to supply or render 50% of their production
or the total service as the case may be, to other units for the production of other articles.
The programme of ancillarisation includes motivation of public and private sector units to offload production of
components, parts, sub assemblies, tools, intermediates, services etc. to ancillary units.
The programme of ancillary development has specific advantages both for large as well as small industries and also
for the total economy of the country.
Advantages to large scale are in the form of: (a) Savings in investments,
(b) Inventories,
(c) Employment of labor,
(d) Getting items of desired specifications.
While, Advantages to ancillary units (Small Scale Units) are: (a) Getting assured market for their products,
(b) Availability of technical assistance,
(c) Improved technology from the parent units.
There are special facilities extended to ancillary industries: (a) Technical assistance through the ISI,
(b) Supply of machinery under the Hire Purchase Scheme of NSIC; and
(c) Allotment of factories in Industrial Estates.
A great difficulty was being experienced by most of the ancillary units in getting timely payments from their parent
units. In order to provide help, in this regard, an Act has been passed under which interest is payable on the delayed
payments by large undertakings. For providing advisory assistance, State Level Ancillary Advisory committees have
been set up in almost all the States to provide infrastructure facilities and to recommend measures for the promotion
of ancillary industry in the State.
Small Industry Development Organization (SIDO) is a nodal agency of the Central Government and Ancillary
Division at Headquarters continued its function for the promotion of ancillarisation programme in the country.
Constant liaison has been maintained with Administrative Ministries both at Central & State Levels, Department of
Public enterprises, public/private sector undertakings and other industrial developmental agencies through various
programmed such as Vendor Development Programmes, Buyer- Sellers Meet, Ancillary Exhibition, Seminars,
Workshops, State Level Ancillary Advisory Meetings, Plant Level Committee Meetings and PSUs and visit to
public/private sector undertakings for the promotion of small ancillary & sub-contracting units.
Sub-contracting exchanges are functioning as a part of major SISIs in the country at important cities for the
promotion of fruitful and lasting contracts between large & medium undertakings and small scale ancillary units.
The spare capacity for different facilities as available with the competent small scale units are registered with these
SCXs. These SCXs also obtain such items from large units which are required by them and can be manufactured in
the small scale sector. These SCXs organize contacts between Buyers & Sellers by way of organizing Vendor
Development Programmes, Buyers & Sellers Meet and Exhibition, etc. Thus, the programme helps in the overall
improvement of the economy of the country.
The lists of some ancillary industries are as follows: (1) Industrial Machinery
(2) Agricultural and Earth Moving machinery
(3) Machine tools and small tools
(4) Electrical and mechanical instruments
LEVERAGED BUYOUTS
A leveraged Buyout {LBO} occurs when an entrepreneur uses borrowed funds to purchase an existing business
venture for cash. Most LBOs occur because the existing the entrepreneur purchasing the venture believes he or she
could run the company more efficiently than the current owners. The current owner is frequently an entrepreneur or
the other owner who wants to retire. The owner may also be a large corporation desiring to divest itself of a
subsidiary that is too small or that does not fit its long term strategic plans.
The purchaser needs a great amount of external funding since the personal financing resources needed to acquire the
firm are limited. Since the issuance of additional equity as a means of funding is usually not possible, capital is
acquired in the form of long term debt financing and the assets of the firm being acquired serve as collateral. Banks,
venture capitalists & insurance companies are the most active providers of debt needed by LBOs.
In most LBOs, the debt capital exceeds the equity by 5:1, at times, 10:1. Hence, LBOs usually involve a financially
stable and sound company. Most LBOs involve companies with a long track record of solid earnings, a strong
management team and a strong market share position. This helps in reducing the failure of an LBO.
How does an entrepreneur determine whether a specific company is a good candidate for LBO???
1. Determine whether the present owners asking price is reasonable. Many subjective and quantitative techniques
can be used, viz, competitiveness of the firm, stage in product life cycle, management abilities, price to earnings
{P/E} ratio, etc.
2. After a reasonable purchase price is determined, he must assess the firms debt capacity. This is important as he
wants to raise as much of the capital needed as possible in the form of long term debt.
Once that is determined, development of appropriate financial packages takes place. It must meet the need &
objectives of the providers of the funds and the company & entrepreneurs situation.
LESSONS LEARNED THAT ARE THE RECIPE FOR START-UP SUCCESS
Large companies are downsizing. Reengineering is a common event. In response, people are seriously considering
their own small or home business to avoid the dependence on an uncertain corporate world. In fact, a new small
business is started every 11 seconds throughout the U.S. Many fail, but you can improve your odds by learning from
the experiences of others. Here are "nine steps to success" that are based on many "real-life" lessons of successes
and failures.
Get Smart! Get Advice! You cannot be an expert on everything. Get assistance from as many sources as possible.
Talk to your attorney, accountant, banker, friends, family and the competition.
Plan: A major reason for business failure is lack of planning. Failing to plan is a plan for failing. Prepare a strategic
plan for your business that clearly defines your mission, your present situation, your strategies, and where you want
to be in the next three to five years.
Protect Yourself: Before you start operations, make certain you are insured and protected legally. Select a business
legal structure (talk to your attorney) and develop an insurance program (talk with an independent insurance agent).
Hire Later: Delay hiring employees as long a possible. The legal complexities of hiring and maintaining employees
(even one!) can be daunting and take up a lot of time. A better option is to "outsource."
Use Technology: Operating without a computer will put you at an immediate disadvantage. It is simply too
valuable as a time-saving tool. Don't be overwhelmed at the apparent complexity of a computer. Once you begin, it
is quite easy to use. You will want a computer to take advantage of the Internet to send e-mail messages and search
the World Wide Web for information.
Persist: There will be good times and bad times. Be persistent and stubborn view any failure as a learning
experience and an opportunity for additional success.
Visualize Success: Keep your goals in mind and expect that you will achieve them. Don't lose sight of your goal
keep pushing.
Act on a Good Idea: Even a great idea is worthless if you don't do something with it.
Sample Business Plan Outline
Title Page
Name of company, date, contact information, etc.
Table of Contents
Executive Summary
1.
Business Concept
2.
Company
3.
Market Potential
4.
Management Team
5.
Distinct Competencies
6.
Required Funding and its Use
7.
Exit Strategy
Main Sections
I. Company Description
Mission Statement
Summary of Activity to Date
Current Stage of Development
Competencies
Product or Service
o
Description
Benefits to customer
Differences from current offerings
Objectives
Keys to Success
Location and Facilities
II. Industry Analysis
Entry Barriers
Supply and Distribution
Technological Factors
Seasonality
Economic Influences
Regulatory Issues
III. Market Analysis
Definition of Overall Market
Market Size and Growth
Market Trends
Market Segments
Targeted Segments
Customer Characteristics
Customer Needs
Purchasing Decision Process
Product Positioning
IV. Competition
Profiles of Primary Competitors
Competitors' Products/Services & Market Share
Competitive Evaluation of Product
Distinct Competitive Advantage
Competitive Weaknesses
Future Competitors
V. Marketing and Sales
Products Offered
Pricing
Distribution
Promotion
o
Advertising and Publicity
Trade Shows
Partnerships
Discounts and Incentives
Sales Force
Sales Forecasts
VI. Operations
Product Development
o
Development Team
Development Costs
Development Risks
Manufacturing (if applicable)

o
Production Processes
Production Equipment
Quality Assurance
Administration
Key Suppliers
Product / Service Delivery
Customer Service and Support
Human Resource Plan
Facilities
VII. Management and Organization
Management Team
Open Positions
Board of Directors
Key Personnel
Organizational Chart
VIII. Capitalization and Structure
Legal Structure of Company
Present Equity Positions
Deal Structure
Exit Strategy
IX. Development and Milestones

Time may be specified on a relative scale rather than specific calendar dates. Milestones may include some or all of
the following:
Financing Commitments
Product Development Milestones
Prototype
Testing
Launch
Signing of Significant Contracts
Achievment of Break-even Performance
Expansion
Additional Funding
Any other significant milestones
X. Risks and Contingencies

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

Appendices
May include:
Management Resumes
Competitive Analysis
Sales Projections
Any other supporting documents
Patents, Trademarks and Copyright

Patents, Trademarks and Copyright
1. Identify a lit of five items, which have been patented and find out under what provisions of Law they have
been patented.
Im still in the process of preparing an answer for this.
2. When was the India Patent Act enacted? What are the major provisions of the Act?
Patents are usually granted for a product or service invented. The definition for Invention is defined under the
Patents Act 1970. This definition is amended from time to time.
An invention means a new product or process involving an inventive step and capable of industrial application
An invention should meet the following criteria to be eligible for being patented.
1.
It must be novel
2.
It should have an inventive step and
3.
It is capable of industrial application
The invention must be a machine, article or substance produced by manufacture or the process of manufacture of an
article. It can also be for an improvement of an existing article or of a process of manufacture. In case of medicine or
drug and certain classes of chemicals no patent is granted for the product. In these cases, only the process of
manufacturing the substance is patentable. However, product patents would be available for drugs and food
materials from 2005 as Indias obligations under the TRIPs (Trade Related Aspects of Intellectual Property Rights)
Agreement.
In India, the following products or services or processes can not be patented. They are
1.
The products or services which are not inventions.
2.
Invention relating to atomic Energy.
3. What are the essential conditions for a material to be patented?

1.
2.
New compounds having practical economic utility. The following are examples.
a.
additives
b.
compounds with useful <biological properties
c.
intermediates
d.
dyestuffs
e.
polymers
New compositions composed of known compounds formulated for special users. The following are
examples
a.
insecticides
3.
4.
5.
b.
pharmaceuticals
c.
elastomeric compostions
New uses
a.
Use claims like use of substance X as .. (e.g., insecticide, herbicide etc.)
b.
process claims
c.
substance for use claims
New processes : For preparing useful products novelty resides in

a.
the product
b.
reagents used
c.
the catalyst
d.
reaction conditions, and
e.
combination steps
New methods of treatment (chemical) of

a.
industrial materials (including plants)
b.
humans/animal, if the treatments is non-therapeutic (but USA allows therapeutic methods)
4. What does a Trademark convey?

The term Trade Mark is usually applied to
a word
a name
a symbol
a logo
a device
or a combination of the above
used by
a manufacturer
a trader
an individual
or a company
for transacting a business. The trademark conveys a certain meaning or an association to the client.
The trademark helps the customer in identifying a particular commodity and helps in distinguishing the same from
other.
5. Identify at least Five Trademarks of different agencies and find out what meaning they convey?
Answer for this question is yet to be prepared.
6. Under what provisions of Law are the Trademarks registered?
In order to protect the rights of using that Trademark, the individual or the company can get it registered under the
civil laws of the country. Once registered, they retain the ownership for use of the Trademark and can prohibit others
from using them. Misuse of Trademark by others could lead to interference with the goodwill the individual or the
company has established in a given market. Hence infringement on the trade mark or counterfeiting them may
attract necessary provisions of law and become punishable offences.
7. Which of the Governmental agencies are involved in registering a Trademark?
Answer for this question is yet to be prepared.
8. What is the normal procedure adopted in registering a Trademark?
The normal legal procedure adopted in registering a trade mark is as follows.
1.
The trademark should be capable of being graphically represented.
2.
The trademark should be capable of differentiating the goods or services for different undertakings.
3.
It should be used in relation to goods or services and should be able to indicate a connection in the course
of trade between them.
The process involves the following steps.

1.
The applicant submits a form along with the trademark (for instance the words in the slogan that should be
protected or a copy of the logo or color that should be associated with their undertaking and requires a
protection) and the goods and services to be registered.
2.
After receiving the form, the trademark office validates the trademark against the trademarks that are
already registers to see any conflicts. They also validate whether the trademark is unique for the goods and
services indicated.
3.
Once approved, there will be time period to see if any third parties can file an opposition against the
trademark.
4.
Once registered, the trademark is valid for 10 years. It can then be renewed for 10 more years after the
payment of renewal charges.
9. What are the limitations of using a Trademark?

After registering the trade mark, exclusive right will be provided to the person or enterprise registering the
trademark. However the trademark has the following limitations.
1.
The protection granted will be very less for the trade marks containing personal names, generic words
and place names. These are considered as too restrictive.
2.
The exclusive right for a trade mark is applicable only to a particular trade or market area where it is used.
3.
In general, the trademark protection is extended only to the sale of goods or services of the same type or
class.
4.
Though the trademarks are regarded as a type of property, no rights to them can be transferred apart from
the product or services represented by the trademark.
10. What is Intellectual Property Act? When was it enacted in India and under what provisions of the
constitution?
Answer for this question yet to be prepared
11. What types of items are covered under Copyright Act?
Copyrights are the legal provisions made to facilitate a creative individual to retain the ownership or the creative
piece of work. It may relate to
an article
a book
a drawing
a painting
a composing
a music
or for that matter any creation that is intellectually oriented and displays the exclusive competence of the
individual
agency
or a company.
12. What types of exemptions are available for using the material overed under Copyright Act?
The following exemptions are available for using the material under Copyright Act.
The usage must be fair.
User of scientific papers for research or classroom teaching.
The material can be reproduced on print for textual reproduction, after taking
after taking the necessary permission
payment of fee
or attribution.
The Need of Competitive Analysis of the Market for an Entrepreneur

The Need of Competitive Analysis of the Market for an Entrepreneur
1. Why is a competitive analysis of the market necessary?
A competitive analysis of the market is necessary for the following reasons:
1.
To get an insight into the status of the market for the entrepreneurs product or the service.
2.
To get a real and a pragmatic picture of the strength and marketability fo the product in comparison to the
like in the market.
3.
To understand the market forces and their influence on the vulnerability fo the products or services
marketed by a particular entrepreneur.
2. What information does the entrepreneur get through competitive analysis?

A competitive analysis of the market is necessary to know the following:
The vector dimensions of the market
The potential entrants into the market
The direction of change in the consumer trend
The direction of change in the type and quality of the products
The potential buyers in the market
The threat of substitutes or new products.
3. How does the entry of the new entrepreneurs affect the existing entrepreneurs?
The entry of the new entrepreneurs affect the existing entrepreneurs either in terms of
a new idea
a new package
a new service
lower cost etc.
This might destabilize the existing entrepreneurs dominance in the market.

This threat could enter in the following models:
Through large-scale capital interventions
Through large-scale volume interventions
Through large-scale distribution interventions
Through establishing a distinct competency
4. How does high capital investment enterprises affect a small entrepreneur?

High capital investment enterprises affect a small entrepreneur in the following ways:
The small entrepreneurs lose their monopoly market, if the product/service is unique in nature.
The market life of small entrepreneurs product is reduced.
It results in disequillibria in the market for the small entrepreneur.
The quantum of capital investment may be so large that the moderate or small-scale entrepreneur might
find it extremely difficult to compete them due to lack of investments matching the new entrant.
when the high capital investment enterprise is a multi-national player, the investment might be so large that
it severely affect the indigenous entrepreneur.
6. How does the volume of flow of goods in the market affect a new entrepreneur?
The volume of flow of goods in the market affect a new entrepreneur in the following ways:
When the volume is more from any single entrepreneur, it creates a disequillibria in the market.
The new entrepreneur might lose his market as the consumers would incline towards a product or service
that is easily accessible.
The new entrepreneur would not be able to provide the needed supply to the market.
This might even throw the new entrepreneur into greater risk, if such inflow is not anticipated before
entering the market.
7. What marketing strategies you would suggest to a new entrepreneur facing the challenge of mass
production and distribution in the market?
I suggest the following marketing strategies for an entrepreneur facing the challenges of mass producton and
distribution.
They should capitalize the estabilished brand name to retain their customers.
Brining in innovative products will help them to sustain their market share, though the regular products and
services are available abundantly in the market.
They should have a strategic plan to ensure that their market share is sustained.
They should start building a well organized distribution systems.
They should have a good hold in the market and try to penetrate into the market.
8. Why a good network of the distribution systems essential for an entrepreneur?

A good network of the distribution systems is essential for an entrepreneur due to the following reasons.
1.
Access to the potential market becomes easy.
2.
Brings a fair advantage in the market over the others, though his product may not hae that defined quality
as that of the other entrepreneurs.
3.
Helps the entrepreneur to maintain the hold he has in the market vis-a-vis that of the counterparts
4.
Drives the peneration in the market and helps the entrepreneur to have a hold on the market, there by
leading to the success of the entrepreneur.
9. What impact does branding have on a market?

1.
Branding helps the products to remain as unique without any competition.
2.
It creates a recognition for the product among the consumers.
3.
Branding helps in increasing the reputation or the status of the entrepreneur thus creating more weightage
for any new ventures.
4.
Establishing a brand makes it difficult for the competitors to establish a competition.
5.
For an entrepreneur without a brand image, it requires more effort to establish competence and
sustainability for his product.
6.
When an entrepreneur enters the market with recognized brands it becomes easy to grab the market shared
by an established entrepreneur.
10. What suggestions you would offer to a new entrepreneur who has to fight against an established brand of
consumer good?
The following suggestions will be of help for a new entrepreneur who has to fight against an established brand of
consumer goods.
1.
They should strategically plan and try to penetrate into the market. Being more innovative will be of great
help to divert the customers who are accustomed to an already estabilished bran.
2.
They should try to establish their own brand or image or service.
3.
They should demonstrate a strong competence and sustainability of their product or service.
11. How does the power of buyers affect an entrepreneur?

Depending upon the power of buyer, they may be classified as industries, wholesale agents or people dealing with
customer services.
In such cases there are limited buyers for the goods produced. Under these circumstances, the buyer always has an
advantage. The buyer tends to dictate terms to the entrepreneurs with regard to the quality, cost, quantity and time of
deliver to the entrepreneurs.
On many occasions, the entrepreneurs have to hold stocks of their goods or produce to meet the requirements of the
buyers.
When the buyer is strong and the number of producers are more, it leads to a healthy competition among the
producers leading to certain terms with the buyer.
12. In the event of a limited supply of raw material, what precautions you would suggest to a new
entrepreneur to keep his product line alive?
In the event of a limited supply of raw material, the new entrepreneurs should exercise the following precautions to
keep their product line alive.
1.
They should try to maintain adequate inventory of the raw material.
2.
Strategic planning and forecasting of the demand for their product or services, well in advance, can help
them to meet customer demands.
3.
They should ensure that a back up plan is already available so that whey the supply from one vendor is
affected, itll be available from the other.
13. How does the emergence of substitutes affect the existing market of a given product? What suggestions
you would offer to an entrepreneur to meet the challenge?
As the market is hightly competitive, entrepreneurs tend to innovate and introduce new types of products, to suit to
the taste or the fancy of the consumers.
This leads to the creation of the new products, alternatives, substitutes to make their way into the market.
The emergence of the new substitutes, alternatives might pose a potential threat or a competition to the existing
market stability of the entrepreneur.
To meet these challenges, the entrepreneurs may adopt the following strategies.
Keep a close watch on the market and keep their product or service up to date with the market and
consumer trend.
Try to ensure that they upgrade and release better product or service into the market before the competitors.
Keep studying the consumer behaviour and change their product or service accordingly.
Establish a good brand in the market.
Entrepreneur and Understanding a Market
1. Why does an entrepreneur need to know about the market?

An entrepreneur need to know about the market because of the following reasons:
A deep understanding of the market is a crucial requirement for venturing into an enterprise.
A feasibility plan, which includes an analysis of the market is required to be prepared by the entrepreneur.
It is important to study the various inputs that have designed the market and contributors to the market.
The data available in the text books may not be relevant for his requirement. So, he has to go into various
sources that would facilitate him to understand the information with a reasonable amount of exactitude.
2. What are the sources from which entrepreneur can obtain information about the markets?
The following are the sources from which entrepreneur can obtain information about the markets.
Government sources and information Bureau.
Interaction with potential customers.
Existing entrepreneurs.
Business Magazines and publications.
Annual General Body reports of industries and reports.
Other sources including Research.
3. Name atleast five government agencies from which information regarding the opportunities for a new
enterprise could be obtained?
The following are the government agencies from which information regarding the opportunities for a new enterprise
could be obtained.
Government Gazettes
Offices of the Industrial Development councils
Export & Import promotion council
Small Scale Industries Development Corporations
Entrepreneurship Development Institutes
Chambers of Commerce and Industries
Nationalized & Scheduled Banks
4. What type of information could be obtained from potential customers?

The following information could be obtained from potential customers.
Customer response to the product feed.
Customers expectations regarding the quality and quantity of the product.
Pricing patterns conducive to the customers
Cutomers attitude to competitions in the market
Packaging patterns for the products
Timing and delivery patters to the market
5. How can we get an idea about the competition in the market?

We can get an idea about the competition in the market by doing a comprehensive study of the exising entrepreneurs
in the market who would provide the competition to our product or service. Collecting the data pertaining to the
following will help in the analysis.
Who are the existing competitors?
What is that they produce?
Where is the souce of their raw materials?
What is the quality consideration of their product?
What is the consumers response to their product?
How is their pricing pattern?
What is their distribution channel?
It study will be more fruitful if the entrepreneur himself conducts the role-play of a customer and shops the
competitor product or service, use it and arrive at his own conclusion.
6. Identify at least three Newspapers and three magazines dealing with business trends. List what type of
information you could obtain from them.
The Newspapers dealing with business trends are: (Write three or more)
1.
Business Standard
2.
Financial Express
3.
The Economic Times
4.
The Hindu Business Line
5.
Mint
6.
Financial Chronicle
The three magazines dealing with business trends are: (Write three or more)
1.
Business Today
2.
Forbes India
3.
Outlook business
4.
Business world
5.
BusinessWeek
We can obtain the following information from these newspapers and magazines.
Business news about the entire spectrum of industries, services and markets.
Professional analysis about

o
the markets
the business houses
their distribution
the changing consumer needs
the prospects of new consumer goods
and several other things.
The analysis of the financial dynamics facilitating the entrepreneur to make his own calculations with
regard to the investment.
Professional consultancy to the new entrepreneurs
The status of the stock exchange based on the fluctuations of the market to the global political and
economical situations.
7. Listen to the Business news atleast on two channels for three days. Make a summary of the highlights.
What type of information you could obtain from them.
(Students are required to prepare the latest summary of highlights after listening to the news channels. As this
information will be varying, Im leaving it for the students to prepare the answer to this part).
We can obtain the following information from the business news on these channels.

o
the markets
the business houses
their distribution
1. Why does an entrepreneur need to know about the market?

An entrepreneur need to know about the market because of the following reasons:
A deep understanding of the market is a crucial requirement for venturing into an enterprise.
A feasibility plan, which includes an analysis of the market is required to be prepared by the entrepreneur.
It is important to study the various inputs that have designed the market and contributors to the market.
The data available in the text books may not be relevant for his requirement. So, he has to go into various
sources that would facilitate him to understand the information with a reasonable amount of exactitude.
2. What are the sources from which entrepreneur can obtain information about the markets?
The following are the sources from which entrepreneur can obtain information about the markets.
Government sources and information Bureau.
Interaction with potential customers.
Existing entrepreneurs.
Business Magazines and publications.
Annual General Body reports of industries and reports.
Other sources including Research.
3. Name atleast five government agencies from which information regarding the opportunities for a new
enterprise could be obtained?
The following are the government agencies from which information regarding the opportunities for a new enterprise
could be obtained.
Government Gazettes
Offices of the Industrial Development councils
Export & Import promotion council
Small Scale Industries Development Corporations
Entrepreneurship Development Institutes
Chambers of Commerce and Industries
Nationalized & Scheduled Banks
4. What type of information could be obtained from potential customers?

The following information could be obtained from potential customers.
Customer response to the product feed.
Customers expectations regarding the quality and quantity of the product.
Pricing patterns conducive to the customers
Cutomers attitude to competitions in the market
Packaging patterns for the products
Timing and delivery patters to the market
5. How can we get an idea about the competition in the market?

We can get an idea about the competition in the market by doing a comprehensive study of the exising entrepreneurs
in the market who would provide the competition to our product or service. Collecting the data pertaining to the
following will help in the analysis.
Who are the existing competitors?
What is that they produce?
Where is the souce of their raw materials?
What is the quality consideration of their product?
What is the consumers response to their product?
How is their pricing pattern?
What is their distribution channel?
It study will be more fruitful if the entrepreneur himself conducts the role-play of a customer and shops the
competitor product or service, use it and arrive at his own conclusion.
6. Identify at least three Newspapers and three magazines dealing with business trends. List what type of
information you could obtain from them.
The Newspapers dealing with business trends are: (Write three or more)
1.
Business Standard
2.
Financial Express
3.
The Economic Times
4.
The Hindu Business Line
5.
Mint
6.
Financial Chronicle
The three magazines dealing with business trends are: (Write three or more)
1.
Business Today
2.
Forbes India
3.
Outlook business
4.
Business world
5.
BusinessWeek
We can obtain the following information from these newspapers and magazines.

o
the markets
the business houses
their distribution
7. Listen to the Business news atleast on two channels for three days. Make a summary of the highlights.
What type of information you could obtain from them.
(Students are required to prepare the latest summary of highlights after listening to the news channels. As this
information will be varying, Im leaving it for the students to prepare the answer to this part).
We can obtain the following information from the business news on these channels.

o
the markets
the business houses
their distribution
Help and Support to Entrepreneurs

1. What are the characteristics of those entrepreneurs who are self-sufficient?
The following are the characteristics of the entrepreneurs who are self-sufficient.
These are the entrepreneurs who just get on with it. They like to do things their way.
They have enough courage and ego drive to go it alone.
They do not need much help from others.
The can
o
initiate
sustain
and extend
the process on their own way.
They can overcome barriers with confidence.
2. Who are the entrepreneurs that need help and support?

The following are the entrepreneurs that need help and support.
Entrepreneurs who respond to help and support.
Entrepreneurs who have to be pushed.
Both of these require help and support to the same entend. However, the extent of convincing needed by both of
them varies.
While those who respond to help and support are naturally amenable to advice and intervention, those who need to
be pushed need coaxing to realize their potential.
3. Why should we help and support entrepreneurs?
We should help and support entrepreneurs for the following reasons.
Entrepreneurs ignite economic growth of the society. By helping and supporting them, well be
contributing the economic growth of the country.
When they get enough help and support from the society and government, this encourages other
entrepreneurs to be motivated and attracts people towards entrepreneurship.
When they get help and support, entrepreneurs incline towards innovating and introducing much better
products and services.
Encouraging entrepreneurs and helping them to sustain in the business creates more and more employment
opportunities in the society.
4. Discuss the different stages of growth of an enterprise?

The following are the different stages of growth of an enterprise.
Embrio Stage Nurture Stage Fledgling Stage Take off stage Viable Growing Enterprise.
1.
1. Embrio Stage : In this stage the entrepreneur perceives an opportunity and decides to examine its
commercial potential. He focuses on the vision.
2.
2. Nurture Stage : In this stage the commercial potential is identified, and the resultant product or service
is established with greater certainty. In this stage, the entrepreneur focuses on the opportunities to produce
products and services effectively exploiting the opportunities.
3.
3. Fledgling Stage : In this stage the product or service is released into the market and the enterprise will
start trading the product. In this stage the focus is shifted from opportunities to products or services.
4.
4. Take off stage : By this stage, the enterprise is grown. It becomes a viable venture reaching at least one
break-even point. The focus will be on marketing and profitability.
5.
5. Viable Growing Enterprise : In this stage, the enterprise becomes very well established. It will be ready
to grow and expand. The profit generated by the enterprise will be adequate to meet all commitments and
for reinvestment. The focus shifts to diversification and expansion of the enterprise.
5. What are the three basic types of education support available to prospective and practicing
entrepreneurs?
The following three basic types of education support available prospective and practicing entrepreneurs.
1.
Type I : Teach entrepreneurship as an academic subject, with emphasis on imparting a body of knowledge.
These courses promote awareness among young people and kindle in them a strong need to develop
entrepreneurial
skills
attitudes
values
These courses sow the seeds of self-employment in the minds of students.

2.
Type II : Teach a range of topics in entrepreneurship. Their main focus is to prepare the students with a
viable business plan. Apart from entrepreneurship these courses also include
marketing
finance
management
business communication etc.
These courses empower the entrepreneurs by updating their knowledge and upgrading their skills.
3.
Type III : R & D laboratories where in the research and development is performed in the area of
Entrepreneurship where in the generation and promotion of the ideas is fostered and promoted. The
commercial exploitation of the R & D laboratories is achieved through technology transfer.
6. Discuss any four ways in which institutions extend help to entrepreneurs.

Institutions extend help to entrepreneurs in the following ways.(Write any four of the following)
1.
Assessing the business proposal to establish the potential of the identified opportunity for commercial
exploitation.
2.
Guidance in the preparation of the project report.
3.
Providing information about difference financial institutions to raise capital.
4.
Consultancy services in meeting the legal and statutory requirements.
5.
Guidance to acquire infrastructure such as power, water etc.
6.
Providing technical know-how and support.
7.
Consultancy services for expansion and diversification programmes.
8.
Network support for training of personnel.
7. Write a short note on business incubator.

Definition : A business incubator is an entrepreneurship support mechanism that helps in developing a business idea
into a viable venture by providing technical support to the entrepreneur.
It consists of a unit of trained people. They help the entrepreneur to evaluate his business idea and guide him/her
through information inputs. Usually the duration for which a business is associated with the incubator varies from 1
to 3 years. Once the business is matured, the entrepreneur will take it forward.
Once in a while conferences are conducted where in the entrepreneurs get an opportunity to meet the experts in the
area and get help from them.
8. How do governments provide incentives to entrepreneurs?
The government provide incentives to entrepreneurs by providing conducive conditions for entrepreneurial growth
by providing facilities such as
1.
Tax holiday
2.
Subsidies
3.
Soft loans
9. What is the legal support available ready-made to entrepreneurs?

Ready-made legal support is available to the entrepreneurs through the following laws.
1.
Company Law
2.
Employment Law (Labour Law)
3.
Patent Law etc.
The legislative sector through the following laws guide the entrepreneurs in legal matters relating to
the status of the enterprise
statutory requirements regarding hiring and maintaining labour
the use of trade mark for products and services
10. How do entrepreneurs contribute to social development?

Entrepreneurs contribute to social development through social uplifting programmes such as
a.
Administration of old age homes and orphanages
b.
Building colleges, schools and hospitals.
c.
Complete maintenance of museums and heritage sites
d.
Developing rural areas by providing employment
e.
Environment campaigns launch etc
Barriers to Entrepreneurship
1. Why should we have some knowledge about barriers to entrepreneurship?
We should have some knowledge about barriers to entrepreneurship because of the following reasons.
1.
An understanding of the inhibiting factors or barriers will help prospective entrepreneurs to develop a
strategy to overcome them.
2.
A systematic study of the barriers will lead to a proper understanding of the fields or areas in which they
occur.
3.
Once the barriers are clearly identified, the society, government and other supporting agencies can develop
effective programmes to tackle the issues to create a conducive entrepreneurial climate.
4.
An insight into the barriers will lead to insight into the entrepreneurs personality that is so essential in the
process of entrepreneurship.
2. Give two examples of barriers arising out of social environment?

The following are the examples of barriers arising out of social environment.(Write any two).
1.
A society putting premium on safety and security in matters of securing a livelihood, such a value can
become a strong social barrier to entrepreneurship.
2.
In some societies, the business is considered as a profession of lower hierarchy. Business people are
considered inferior to office-goes, engineers, doctors etc. Such a social response to entrepreneurs can be a
big hurdle in developing and nurturing entrepreneurs.
3.
A society denyiing access to self-esteem will be placing hurdles in the path of an entrepreneur.
4.
Social factors such as
insistence on conformity
an excessive protective attitude among children during their formative years
discouragement to mobility
will all thwart the following essential values of entrepreneurship.
creativity
innovative spirit
sense of adventure.
3. how can the economic environment create barriers for an entrepreneur?

The economic environment can create barriers for an entrepreneur because of the following reasons.
1.
The capital for setting up the new venture is not accessible for the entrepreneur
2.
Non-availability of labour at reasonable cost.
3.
If the labour market is unreliable and and is fraught with undescipline and selfishness, it will also become a
barrier for entrepreneurship.
4.
Shortfall in the availability of raw materials in the desired quality and quantity.
5.
Inadequate infrastructure to transport the raw material to the factory.
6.
Non-availability of easy access to the market for the finished goods.
4. Do you think there are cultural barriers to entrepreneurship in our society? Discuss with examples?
Yes. I agree that there are cultural barriers to entrepreneurship in our society.
This is evident from the fact that the cultural values in our society are bound by
conventionalism
status-quo
rituals
strong cultural taboos etc.
All these may curb the entrepreneurial spirit.

For instance, in the past, some societies in India discouraged people from going abroad believing that crossing the
sea was a cultural taboo.
Similarly certain field of work were considered unsuitable for people of culture.
Such strong cultural dictats can act as barriers to entrepreneurship.
5. Cite any two ways in which political environment can work against the interest of entrepreneurs?
The political environment can work against the interest of entrepreneurs in the following ways (You can choose any
two of the following)
1.
A political environment that is characterised by instability and insecurity will discourage entrepreneurs.
2.
Political policies can retard the growth of entrepreneurial ventures in a country.
3.
Excessive interference in the form of controls, delays etc. from the government can discourage prospective
entrepreneurs.
6. Briefly discuss the personal barriers to entrepreneurship.

The personal barriers to entrepreneurship can be classified into two types.
1.
Motivational : Once the venture starts functioning, the obstacles faced in the initial stages can make the
entrepreneurs to lose their commitment and consequently their level of motivation dips. The entrepreneurs
who lack toughness and perseverance often quit.
2.
Perceptional : Certain perception barriers cn hamper the progress of the entrepreneur. Lack of a clear
vision and misunderstanding can result in faulty perception. If the entrepreneur demands everything to be
clear and well-defined in order to develop a perception, it will lead to disappointment. As entrepreneurs
world is basically disorderly and ambiguous, the people who excessively depend on order will find it a
barrier to entrepreneurship.
1. What are entrepreneurial competencies? Name any three.
Entrepreneurial competencies are the skills necessary for an entrepreneur to
venture into an enterprise
organize and manage an enterprise ably and competently
realize the goal for which the enterprise is established
These competencies help and entrepreneur to successfully venture into an enterprise.

These can be broadly classified under the following categories.(Choose any three of the following competencies)
Behavioral competencies
i.
Initiative
ii.
Systematic planning
iii.
Creativity and innovation
iv.
Risk taking and Risk Management
v.
Problem solving
vi.
Persistence
vii.
Quality performance
viii.
Information management
ix.
Persuation and influencing abilities
Enterprise launching competencies
Enterprise managing competencies.
2. What do you understand from the term Behavioral Competencies?

1.
Behavioral competencies are certain basic competencies to be acquired by the entrepreneur.
2.
The behavioral competencies acquired will determine the type of behavior exhibited by the entrepreneur in
performing various tasks in the discharge of his functions.
3.
Some of these competencies are latent in the entrepreneur, which ned to be identified, nurse and nurtured.
4.
Others are acquired through training and practice.
5.
These are basic competencies that need to be acquired by all the entrepreneurs irrespective of the size,
location, economic and social dimension.
The behavioral competencies include the following.

i.
Initiative
ii.
Systematic planning
iii.
iv.
v.
Problem solving
vi.
Persistence
vii.
Quality performance
viii.
ix.
3. Why are behavioral competencies important for an entrepreneur

Behavioral competencies are important for an entrepreneur because of the following reasons.
Theyre the basic competencies required by an entrepreneur

o
To venture into an enterprise.
To organize an enterprise
To manage an enterprise
Run the enterprise competitively
Realize the goals for which the enterprise is established
Take the enterprise to the success levels
4. What are entrepreneurial competencies? Name any three.

The following are the various behavioral competencies required by an entrepreneur.
1.
Initiative
2.
Systematic planning
3.
4.
5.
Problem solving
6.
Persistence
7.
Quality performance
8.
9.
5. Why is speed of performance required on the part of an entrepreneur?

The entrepreneur puts lot of effort and in making a decision to take an initiative.
Once he is decided to take an initiative he has to take the initiative ahead of others.
Speed is an important factor in the success of the enterprise because if the entrepreneur is slow in implementing the
initiative, chances are there that someone else will move forward and implement it.
This calls for
Alertness
Agility
and dynamism on the part of the entrepreneur.
Due to these reasons speed of performance is required on the part of the entrepreneur.
6. What is the difference between creativity and innovation?
Creativity
Innovation
1. Creativity is the ability to bring something new into 1. Innovation is the process of doing new things or bring new
existence.
new ideas or new process or new products or new services
into reality.
2. Creativity is pre-requisite for innovation.
2. Innovation is a process that transforms creative ideass into

useful realities.
3. A creative individual may just have a vision but

3. An innovator may have the right ability to transform the
may not have the necessary resources or the drive to ideas into products and services, but may suffer from
convert the idea into action.
shortage of creative thoughts and ideas.
7. A good entrepreneur combines the quality of a creative individual and an innovator Justify the statement.
In many cases, a good entrepreneur adopts new ideas or services so that he will be the first to implement
them.
The entrepreneur may not have new and creative ideas. He might only use the creative ideas and innovative
products and services to meet the challenges of a situation. He might take advantage of the utility of an idea
or a product to create wealth.
He uses the ideas and services only to solve the problems on the hand to achieve the objective.
Competency in creativity and innovation are sometimes basic traits of certain individuals and help in
achieving the goals.
Thus we can say that a good entrepreneur combines the quality of a good entrepreneur and an innovator.
8. What are the areas involving risk in creating and managing an enterprise?
The following are the areas involving risk in creating and managing an enterprise.
The design of the product or service and its acceptability.
The resources availability.
The availability of market.
The variance in consumer expectations.
The speed of change in the types and patterns of the products and services.
The demand-supply situation.
The finance flow in the market.
The performance of tools and equipment.
The social and political climate for sustainability of the products.
9. In taking and managing a risk, the entrepreneur does not behave like a gambler Do you agree?
While venturing into new ideas and services, the entrepreneur treads into areas of uncertainty. Thus the entrepreneur
is exposed to risk. Hence risk taking and risk management are important aspects of entrepreneurial competencies.
There are several areas and elements which throw potential challenge to the entrepreneur. Therefore, he has to take
crucial risk-prone decisions in the process of discharging his responsibilities.

However, unlike gamblers, an entrepreneur takes a calculated and perceived decision in the light of the facts and
circumstances available at his disposal. So, we can say that, in taking and managing a risk, the entrepreneur does not
behave like a gambler.
10. What are the general practices an entrepreneur should adopt to acquire the skills of risk management?
The following are the general practices an entrepreneur should adopt to acquire the skills of risk management.
1.
Analysis of various policies, programs and situations
2.
Identification of roadblocks in the road map of the enterprise
3.
Consideration of alternatives
4.
Plan of action for alternatives
5.
Crisis management
6.
Possibility of the new ideas or services being hijacked by other powerful individuals or systems.
11. What are the standard problem solving competencies required for an enterprise?
The following are the standard problem solving competencies required for an enterprise.
a.
Acquiring the necessary mindset which will help to understand that the problems are part of the process and
start working on the problems in the context of the process to which the problems belong to.
b.
Basic understanding of the phenomenon that normally problems are always caused.
c.
Clear understanding of the fact that every problem has a solution and one must seek for the solution.
d.
Decision making capability to choose the relevant, contextual and pragmatic solution, among the available
multiple solutions for a problem.
e.
Explore the alternate strategies till the solutions for the imminent problems are found.
f.
Find or look for resources that would help to solve the problems in an amiable way.
g.
Generating new ideas, products, services, visions so that the problems of the similar type do not occur in
future.
12. Dicision-making skills are crucial for a successful entrepreneur What are those skills?
The following are the decision-making skills that are crucial for a successful entrepreneur.
a.
Absolutely complete knowledge of the entire system of the enterprise.
b.
Broad understanding of the software, hardware and human-ware of the sytem.
c.
Complete knowledge of the types of resources involved and their flow and mobility.
d.
Different types of speed breakers in the flow of the operations, their magnitude and direction.
e.
Expert leve understanding of the urgency, the time and the impact of the decisions.
f.
Futuristics of the decision.
g.
General impact of the decisions taken on the clients and the society in which the enterprise servives.
13. Why is persistence important for an entrepreneur?

In general, entrepreneur pursuits are new and need very close attention. So, it calls for appropriate climate building
and acceptability and required intense perseverance on the part of the entrepreneur.
The entrepreneurship is a complex activity covering various parameters of the society. So, it is very difficult for any
enterprise to be successful in the first attempt. Therefore, the failures or roadblocks to success and achievement
should not deter the entrepreneur. He needs to have the quality of perseverance. Behavioral skills to persist even
when the failure is visible are one of the qualities of a successful entrepreneur. The ability of persistence is
indicative of the confidence of the entrepreneur in his system, tools and techniques.
Thus we can say that persistence is important for an entrepreneur.
14. What is the persistence of an entrepreneur indicative of?
The persistence of an entrepreneur is an indicative of the following.
The faith of the entrepreneur in the system.
The exactitude of the tools used in the system.
The confidence in the quality of the product or the service.
The understanding of the entrepreneur about the market.
The conviction of the entrepreneur to succed.
Entrepreneurial Motivation
Entrepreneurial Motivation
1. State a few social motives the human beings possess
Definition: Motivation is regarded "as the inner state that energizes activities and directs or channels behavior
towards the goal". It can also be seen as a process that arouses action, sustains the activity in progress and that
regulates the pattern of activity.
The motives can be categorizes as social and psychological motives.
Few of the social motives are
Self esteem
Social acceptability
Competence building
Wealth generation
Self actualization
Motives are not necessarily the gifts of heredity but are the outcome of the individuals interactions with others or
the society.
2. Illustrate with an example how the environment can act as a motivator for action.
Environment acts as a primary motivating factor for the individuals, as every person is in constant interaction with
other persons or with the society. So, they are reminded of their goals continuously. This motivates individuals to
take appropriate action to pursue their careers and emerge as leaders or entrepreneurs or choose any other careers.
For instance, the denial of entry into a luxury hotel in Mumbai motivated the found of TATA group, Jamsetji
Nusserwanji Tata, to swear and build a bigger and better hotel in India and with that motivation he built the Taj
Mahal Palace & Tower, the first luxury hotel in India.
3. Why do we say that motivation is an inner state that energizes action?
Motivation is regarded as the inner state that energizes activities or action and directs or channels behavior towards
the goal. I can also be seen as a process that arouses action, sustains the activity in progress and that regulates the
pattern of activity.
We can see the motivation not only in humans but also in animals and plants, for the sake of survival. We see that
animals fighting each other for food, shelter etc. This kind of behavior is observed in plants too.
In humans, the kind of motivation energizes them to take appropriate action to emerge themselves as leader or
managers or executives or entrepreneurs.
Thus we can say that motivation is an inner state that energizes action.
4. Give an example to show that motivation is the source for initiation of action.
Motivation is always the source of initiation of the action towards the achievement of the goals. Therere numerous
examples of achievers who took action towards their goal, through the motivation.
Example 1: The denial of entry into a luxury hotel in Mumbai motivated the found of TATA group, Jamsetji
Nusserwanji Tata, to swear and build a bigger and better hotel in India and with that motivation he built the Taj
Mahal Palace & Tower, the first luxury hotel in India
Example 1: Govind Jaiswal was son of a common Rickshaw puller. The insults and taunts that he received from the
rich, in his surroundings, motivated him to take a decision to achieve IAS, the most prestigious position India.
Failure to achieve IAS rank in his first position didnt discourage him. The high cost of living in Delhi didnt stop
him. He spent around 18 hours a day to achieve his dream of becoming an IAS officer and made it.
5. What are the important features of a motivational process?
Motivation is essentially a process. It can be well expressed in the form of a model. The important features of the
model are
Needs or expectations.
Behaviour
Goal
Feedback
6. Why do we say that motivation is a process that reduces the disequilibria in the mind?
Motivation is essentially a process. It can be well expressed in the form of a model. The important features of the
model are
Needs or expectations.
Behaviour
Goal
Feedback
Thus we can say that every individual possesses an urge or a need, or multitude of needs, desires or expectations
which act as activators for the motivation. These activators are characterized by the following two factors:
Emergence of need, desire or expectation
The anticipation of action.
In the first instant, the emergence of a need or a desire creates disequilibria in the individual. Then it develops a
strung urge for the reduction of the equilibrium and return to normalcy.
Thus we can can say that motivation is a process that reduces disequilibria in the mind.
7. What is the link between motivation and action?
There are many individuals who have a dream, a vision and an idea. But they are not able to translate them into
action, because they lack the necessary motivation for taking the first step towards realizing their goals or dreams.
However, people who have acquired the necessary motivation will be able to take the necessary steps towards the
action and pave the path to achieve their goal or dream. The occurrence of certain incidents like getting inspired, the
insulting words but some one or the encouragement from someone will motivate a person to take an action. Certain
motivating events will bring in sudden action, even in persons, who have not taken any action towards their goals
until that moment.
Thus we can say that both motivation and action have a strong link where in motivation acts as a process that
arouses action.
8. What is meant by Achievement Syndrome?
Achievement syndrome can be defined as the pre-disposition or inclination of an individual to accomplish
something important and unique in a competitive situation.
It comprises understanding and appreciation of the following elements and can be best described through the
following diagram.
Clarity of goal
Visualizing the need
Taking action towards the goal
Anticipation of success or failure
Perceiving and seeking help to overcome the roadblocks
Accepting the positive or the negative feelings arising out of success or failure
9. What are the characteristics of the persons with a High Need Achievement?
The following are the characteristics of a person with a High Need Achievement.
a.
Accepting to shoulder the responsibility of the task and ready to take ownership of end result, whether it is
success or failure.
b.
Bears moderate risk, which can be overcome by his efforts, of the challenging task.
c.
Clarity of the goal to assess various alternatives available and take the path of moderate risk.
d.
Delve for improvement of his efforts, by seeking continuous feedback of how he is doing.
e.
Ensures that they persist on a given task until it is completed, despite failures or obstacles.
f.
Failures will motivate them to innovate alternative approaches to achieve their goals
g.
Gives greater importance to interpersonal-relations, especially with acknowledged persons in their fields, to
achieve their goals.
h.
High importance is given to the accomplishment of even a small task and believes that it is going to help
them in achieving their long-term goal.
i.
Individuals with high-end achievement live more In process and shows tolerance to ambiguity.
j.
Jumps readily into action, are restless and like to take initiative. Theyre pioneers and adventurers.
k.
Keen to set the standards high and are adventurous. Ventures into new goals as soon as one goal is
achieved.
l.
Looks at the life as adventurous and are restless and energetic and are always striving persons who seek and
enjoy challenges.
10. Why do persons with high nAch tend to be mobile?

Persons with nAch tend to be mobile as described below.
They are active, restless and like to take the initiative.
Pioneers and adventurers: They are willing to leave their home and venture into the unknown.
They tend to travel considerably and visit new places.
The mobility and flexibility of nAch person is evident in terms of ideas as well as physical action.
11. Why do people with high nAch adopt different approaches to achieve the goals?
The following characteristics depict the fact that people with high nAch adopt different approaches to achieve the
goals.
They tend to be innovative with different approaches to achieve the goals.
Theyre always prepared to try out alternatives.
Theyre goal oriented than technique-oriented. For them, the method of choice is the method which will
work best. So, if the common sense approach fails, they will invent new ones
They are ingenious at adapting and modifying whatever is at hand to solve the problems or achieve the
objective.
Entrepreneurial Attitudes
1. It is said that Attitudes determine altitudes Do you agree? Give reasons for your answer.
Yes. I agree.
Attitudes form the nucleus of the growth and development profile of an individual.
Attitudes provide 1
i.
the necessary motivation
ii.
the drive
iii.
a sense of perseverance
iv.
commitment
v.
confidence
Apart from this attitude also provide the development of the necessary competencies. Due to this reason, even the
psychologists insist on the development of the right attitude among the younger generation.
Thus we can say that Attitudes determine the altitudes..
2. Why are positive attitudes essential for growth?
Positive attitudes are essential for growth because of the following reasons.
Positive attitudes inculcates in a person
a high degree of motivation
the energy and capacity to push ahead
the qualities of head and heart.
All of these help them in facing problems and decision-making.

They also help them to stay optimistic under tough conditions. Thus, by imbibing optimistic behaviour in a person,
the positive attitudes help them to exhibit the drive and energy to progress towards the realization of their goal.
Thus we can say that positive attitude is essential for growth.
3. State any three inputs that show that education helps in building right and positive attitudes.
Im still in the process of preparing an answer for this question.
4. What are the attitudes that show the entrepreneurial predisposition?
The following attitudes that show the entrepreneurial predisposition.
1.
Tendency to use imagination
2.
Tendency to take risk
3.
Tendency for freedom of expression and action
4.
Tendency to look for economic opportunities
5.
Tendency to find satisfaction on successful completion of task
6.
Tendency to believe that they can change the Environment
7.
Tendency to take initiative
8.
Tendency to analyze the situation and plan action
9.
Networking
10. Valuing the customer

11. Being in control of the business
5. Why are positive attitudes essential for an entrepreneur?
Positive attitudes are essential for an entrepreneur because of the following reasons.
Positive attitudes inculcates in a person
a high degree of motivation
the energy and capacity to push ahead
the qualities of head and heart.
All of these attitudes help a person in facing problems and decision-making.

They also help them to stay optimistic under tough conditions. Thus, by imbibing optimistic behaviour in a person,
the positive attitudes help them to exhibit the drive and energy to progress towards the realization of their goal.
Thus we can say that positive attitudes are essential for an entrepreneur.
6. Imagination is crucial to the success of enterprise Why?
Imagination is crucial to the success of an enterprise in the following ways.
Imagination helps the entrepreneur to
analyse the facts
perceive a given situation
identify the strength and weakness of a system
find the opportunities for innovation, growth and development
integration of imagination with intuition helps in the innovation of a new meaning or a new product or a
new service.
Imagination when integrated with intuition make a new meaning, a new product or a new service.
7. Why should an entrepreneur have the right attitude for facing uncertainty?
The entrepreneurs should have a tendency to take a certain amount of risk irrespective of the nature of the enterprise
that they establish. They tend to travel towards unknown paths, explore adventurous routes and meet challenges with
a smile and conviction. They love facing certain uncertainties. However, they do not risk their enterprise in this
process, but calculate the amount of risk they can afford to take.
As this entire process involves uncertainties, entrepreneurs should have the right attitude for facing the uncertainty.
8. Why is risk taking an important attitude to be developed in an entrepreneur?
Risk taking is an important attitude to be developed in an entrepreneur because of the following reasons.
It tends them to travel towards unknown paths.
It motivates them to explore adventurous routes.
It prepares them to meet the challenges with a smile and conviction.
It prepares them to love certain uncertainities.
It enables the entrepreneurs to develop the habit of calculating the amount of risk involved and save their
enterprise from getting into risk.
9. Why do entrepreneurs value independence?

Entrepreneurs value independence because of the following reasons.
By nature they have a tendency to enjoy freedom of expression and action.
It frees them from working under someone and the routine task of getting instructions and then acting upon
them.
It gives them the freedom to think on their own and act accordingly.
10. Entrepreneurs cannot be mere onlookers; they need to have initiative. critically analyze the need for
initiative for entrepreneurs.
Entrepreneurs cannot be mere onlookers; they need to have initiative
Entrepreneurs can not just dream about a goal. They should take the initiative to achieve the goal. As one has to
work for achieving anything, the entrepreneurs should have a strong tendency to take initiative to put their plan/goal
into action. Taking the initiative helps them to convert their dream into reality. If someone is a mere onlooker, theyll
not be able to get the things done proactively and will not be able to define the task ahead of them. Only by taking
initiative, theyll become the source of energy for any activity.
11. Why do entrepreneurs need the ability to influence the environment?
Entrepreneurs need the ability to influence the environment because of the following reasons.
To change the environment, to make it favorable to their goal, rather than leaving everything to luck, or
forces beyond their control.
It gives them the confidence that anything and everything can be achieved through their own work.
It helps them to develop a tendency to think that in any given situation they can change and influence the
environment.
12. Why are innovations economically important?.

Innovations are economically important because of the following reasons:
Innovations accelerates the growth of economy.
Innovations bring in more opportunities of employment and economic development.
Innovation helps in development of entire new businesses. It also helps in development of business areas
such as technology.
It reduces the cost of operation of the business, there by increasing the profits. The profits are further
invested to improve the business or start a new business altogether.
13. Do you think that the pursuit of excellence is an important entrepreneurial attitude? Examine its need.
The pursuit of excellence is an important entrepreneurial attitude because of the following reasons.
It inculcates in entrepreneurs the value for outstanding performance
It helps in successful completion of the task, whether theyre performing well or not.
It helps in development of a tendency to complete the task against all odds by mobilizing resources and by
taking help from various resources.
14. What is networking? Why is it essential for an entrepreneur?

Networking is an entrepreneurial attitude which enables entrepreneurs to test, evaluate and assess ideas as well as to
collect and collate further information from different sources.
It helps entrepreneurs in the following ways:
To get experts who can help them to launch their business.
To know then they need experts and how to use them effectively.
Inculcates the skills and competencies for effective team work.
To persuade and convince people to see their point of view and to get people interested in their ideas
15. Valuing the customer is an important requisite for the entrepreneur. Why?
Valuing the customer is an important requisite for an entrepreneur because of the following reasons:
The sucess of the enterprise does not just lie on a single transaction with the customer but it lies in
encouraging the customer to return again and again.
Customer is usually the backbone for any business and the cutomer satisfaction and customer trust are
critical for the running of the business.
The success of a business rests to a great extend on the ability of the entrepreneurs to listen to the customer
to find out quickly what the customer wants.
The feedback from the customer is of immense importance because it helps the entrepreneurs in bringing
about the changes in the entire process of entrepreneurship.
15. How does an entrepreneur differ from a manager?
ENTREPRENEURS AND MANAGERS

The Entrepreneur
The Manager
1. Creates
Maintains
2. Innovates
Adminsters
3. Focuses on the business.
Focuses on processes and systems
4. Builds a team
Supervises and controls the team
5. Looks for opportunities
Searches for problems to solve
6. Does the right things
Does things right.
7. The entrepreneur exercise the control by developing their own key

indicators of performance that they monitor carefully.
Manager is a status quo man who

administers through controls
Entrepreneurial Values
Entrepreneurial Values
1. How do we define values?
In a civilized society, qualities like honesty, truthfulness, cooperation, integrity etc are important for happy and
healthy living.
They are a set of beliefs or ideas that provide standards which guide behaviour.
Such guiding principles established in a cultured society are called values.
2. What are the prominent entrepreneurial values?
The following are the prominent entrepreneurial values.
1.
Innovativeness and Creativity
2.
Independence or ownership
3.
Quest for Outstanding Performance or Achievement
4.
Respect for Work
3. What is the difference between creativity and innovativeness?.

Creativity: Creativity is the ability to see new ways of doing things and discovering new opportunities.
Innovativeness: Innovativeness is the ability to make the opportunities work in practice by working out new
combinations and seeing the new idea through to the end.
4. Entrepreneurs are not satisfied with the status quo and they are bent upon disturbing it. Discuss the
statement with an example.
Entrepreneurs, by the root characteristic of their innovative spirit and creativity, are capable of spotting and
opportunity and initiating a change. Theyre never satisfied with the existing products or services and always strive
to introduce better products or services by making the existing ones obsolete.
The emergence of the cellular phone is a best example of the nature of the entrepreneurs not satisfied with the status
quo of the land line phone and bent upon disturbing it by innovating a cordless and then ultimately the cell phone.
5. Select any three actions of the entrepreneurs that emerge from their innovative spirit and explain with an
example each.
The following are the actions that emerge from the innovative spirit of the entrepreneur.(You can write any three of
the following).
1.
Experimenting with new ideas
2.
Enjoying the change
3.
Facing uncertainity in order to try out new ideas
4.
Not giving up or becoming upset when errors are made in doing the new work.
5.
Valuing unconventional behaviour
6.
Find problems to solve
7.
Finding new use of existing methods or equipments.
8.
Demonstrating originality
9.
Working on a problem which causes great difficulty for others.
10. Looking for unstructured work assignments

11. Providing critical inputs for new ideas
12. Providing evaluation of proposed ideas
6. How do independence and a sense of ownership act as a driving force for entrepreneurs?
Entrepreneurs derive great satisfaction in their sense of Ownership. The following constitute the ingredients of the
Ownership factor.
Commitment
Sense of complete identification
and sincere hard work too achieve their mission
Entrepreneurs need to be independent to savour the sense of achievement.

The sense of Independence or ownership creates a very strong and positive ego which involved in the action plan of
all significant entrepreneurial ventures. This enables entrepreneurs to develop a mission concept which drives them
to achieve their goal with a clear vision. Such an orientation stems from the entrepreneurs propensity to act in an
atmosphere of freedom, it implies that the entrepreneurs likes to be the master of their destiny. Thus we often here
budding entrepreneurs proclaiming that they could not work under anyone and they would be their own masters.
This trait of self-reliance is an important asset because it provides confidence and courage to innovate.
7. Why is an entrepreneur described as an overcomer? What value does it indicate?
An entrepreneur is often described as an Overcomer due to the following characteristics.
Theyre always ready to face and resolve the challenges.
The set for themselves certain standards of excellence and can deal with unexpected obstacles with
confidence.
Most companies experience three or four life-threatening crises in their early years; to survive this period,
the true entrepreneur deals with these crises and wins through.
Sometimes they turn problems into opportunities
They are persistent and work harder when things go wrong.
They try not to be beaten and find another way to solve the problem.
Thus an entrepreneur, due to his quest for excellence is an overcomer who can resolve problems even under
pressure.
All this indicates the value of performance of high order.
8. How does respect for work become a value for entrepreneurs?
The entrepreneurial culture respects and values the work. Harwork constitutes an important value for all
entrepreneurs. Successful entrepreneurs believe that they achieve anything through hard work. This value provides
goal direction which encourages entrepreneurs to pursue a path and career in which the rewards and incentives are
linked to the degree and quality of efforts made. This fact is evident from the surveys conducted in USA where in
the persons who became entrepreneurs substantially increased their working hours. In India too, we see that even
small merchants put in more than 12 hours in work each day.
All this proves that the respect for work becomes a value for entrepreneurs.
Entrepreneurial Pursuits and Human Activities
Entrepreneurial Pursuits and Human Activities
1. Entrepreneurial opportunity lies in meeting human needs. Discuss.
Human needs represent a wide range.
Economical
Physical
Political
Psychological
Spiritual
Social
To satisfy these needs, every human being is continuously engaged in a variety of activities. For performing these
activities, people need
Certain tools and techniques
Means and methods
Products and services
Facilities and environment.
This creates perpetual entrepreneurial opportunity in the society for
continuous innovation
Production
Distribution
Maintenance
Modification
Improvement
in such and services to enable people to perform the required human activities. Thus the entrepreneurial
opportunities and human activities are positively associated in terms of nature, growth and continuity. In other
words, entrepreneurial opportunity lies in meeting human needs.
2. Entrepreneurial opportunities are positively correlated to human activities. Justify the correlation.
Entrepreneurial opportunities are positively correlated to human activities.
Essentialy the purpose of human activities is to satisfy human needs. These needs are not common for each
human and they vary. accordingly the human activities are also varied. As the human activities directly
affect the entrepreneurial opportunities, even the entrepreneurial opportunities also vary and are very huge
in number. As the nature of human activity is to face continuous change and therefore dependent on new
goods and services to adjust with the changing environment.
At the beginning of the civilization, the human activity was primarily to move in-groups and focussed on
animal hunting and food gathering to satisfy elementary needs.
As the development started, people started to settle in villages and the human activities were centralized
around
agricultural and animal husbandry practices
supply of tools and implements
innovative ways and means to process agricultural and natural products.
During the mercantile era, all innovations, goods or services found their use outside the local boundaries.
To attract and disperse these products and services, from far and wide, fairs and festivals were frequently
held in town.
During the industrial revolution, the invention of machine, scientific and technological advancement in
the last quarter of 18th century induced drastic changes in the area of manufacturing, farming and transport.
Production of huge quantity of goods in comparatively very short time in a factory by a large number of
persons working under one roof has been its main feature.
3. Explain how the village economy in early days provided opportunities for entrepreneurial activities.
Developments witnessed the emergence of villages as more permanent human settlements and cultivation as major
occupation. During these days human activity is spread enormously in generating surplus through
Selected agricultural and animal husbandry practices
Supply of tools and implements
innovative ways and means to process agricultural and natural products.
More organized forms emerged for exchange of surpluses and services. Certain commodities like
Shells
Salt
or specific volume of grains
were used as medium of exchange at common places which later on developed as market places.
This stage, which is often described as an era of village economy, focussed on a high percentage of human activities
which were devoted to
innovation
production
and distribution
for the following.
processed goods
tools
implements
and other articles of domestic use
All of these activities were done with private initiatives.

Thus the village economy in early days provided opportunities for entrepreneurial activities.
4. Why do first generation entrepreneurs favour micro-enterprises or small-scale industries?
First generation entrepreneurs favour micro-enterprises or small-scale industries because
the investment
operation
scale of product
and operation
for these is comparatively low. Thus they suit best for them in terms of availability of the resources at their hand.
Even the risk involved in these is also less. For the experience of the first generation entrepreneurs, they suit best.
Over a period of time these small-scale industries or micro-enterprises have the capability to grow vertically and
mature as medium and large enterprises.
5. How can the entrepreneurs be classified based on the type of enterprise?
Based on the type of enterprise, the entrepreneurs can be classified as follows:
1.
Innovating entrepreneurs: They are generally aggressive in experimentation and put attractive
possibilities into practice. They quickly introduce
new products
process of production
new technology
explore new market
etc. Their number grows with the development of respective countries.

2.
Adaptive or imitative entrepreneurs: They are ready to adopt successful innovations created by
innovative entrepreneurs. They just imitate the technology and practices.
3.
Fabian entrepreneurs: They are very cautious and skeptical while practicing any change. Their dealings
are determined by customs, religion, tradition and past practices.
4.
Drone entrepreneurs: They are characterized by refusal to adopt any change in production, technology or
market. They seldom survive long.
6. Why are innovative entrepreneurs generally aggressive?

Innovating entrepreneurs are generally aggressive. This is evident from the fact that they are more inclined towards
experimentation and put attractive possibilities into practice. They quickly introduce
new products
process of production
new technology
explore new market
etc. Their number grows with the development of respective countries.

7. Who are Fabian entrepreneurs?
Fabian entrepreneurs are entrepreneurs who are very cautious and skeptical while practicing any change. Their
dealings are determined by customs, religion, tradition and past practices.
8. How are drone entrepreneurs different from Fabian entrepreneurs?
Fabian Entrepreneurs
Drone Entrepreneurs
They are very cautious and skeptical while practicing They are characterized by refusal to adopt any change in
any change.
production, technology or market.
Their dealings are determined by customs, religion,
tradition and past practices.
Their dealings are determined by fear or lack of futuristic

vision
Survival is assured.
They seldom survive long.
9. What are the features of adaptive entrepreneurs?

Adaptive or imitative entrepreneurs are ready to adopt successful innovations created by innovative entrepreneurs.
However they not aggressive to experiment with the new possibilities. They just imitate the technology and practices
after it has been successfully practiced by the innovative entrepreneurs.
Entrepreneurship Growth and Development
Entrepreneurship Growth and Development
1. How does entrepreneurship differ from self-employment?
The following are the major differences between entrepreneurship and self-employment with respect to Innovation
Scope and Stage.
BASIC
ENTREPRENEURSHIP
SELF-EMPLOYMENT
Innovation
Entrepreneurship necessarily involves the task of Self-employment refers to full time involvement in
sensing opportunities and innovating products and own occupation in which one may or may not
services.
innovate a product or services.
Scope
All entrepreneurs are self-employed.
All self-employed persons may not necessarily be

entrepreneurs.
Stage
Entrepreneurship is the terminal stage of

entrepreneurial growth.
Self-employment is the middle stage of

entrepeneurial growth.
Employment A lot of employment is generated.

It is a matter of attitude.
Only self-employment, additional employment

may or may not exist.
It is a matter of habbit.
2. Why is income generation rated as only the initial level of entrepreneurial activity?
Income-generation refers to activities which are often taken up on part time or casual basis and are practiced for the
purpose of raising additional-income.
The scope of income generation is very narrow. All income generating persons may or may not be entrepreneurs.
However, income-generation will become the initial-stage of entrepreneurial growth when it acts as an
encouragement for the person to become self-employed and there by ultimately leading them to entrepreneurship.
Thus we can say rate "income generation" as only the initial level of entrepreneurial activity.
3. Why are entrepreneurs called creative destroyers of tradition?

Entrepreneurs are called creative destroyers of tradition due to the following factors:
Entrepreneurship is inextricably linked to innovation and growth. And entrepreneurs are agents of change
and they use innovation as a tool.
They are always looking for an opportunity to offer a better product, a better service, a better process and a
better programme. Once they accomplish this the existing product or service or process or programme
becomes obsolete.
Thus they act as creative destroyers of tradition
.
4. How can we say that every individual is a potential entrepreneur?
Entrepreneurship is defined as the process of using human resource to innovate ideas, products and services and
putting them to social use. Since every individual is endowed with a certain resource, we can say that every
individual is a potential entrepreneur.
However, due to the fact that not every individual gets an opportunity to fully develop their human resource to
realize their potential, we see that there are fewer entrepreneurs in the society than non-entrepreneurs.
5. What steps should the entrepreneur take before launching a venture?
The entrepreneur should take the following steps before launching a venture.
a.
Acquire indepth economic insight.
b.
Build the capacity to scan the environment.
c.
Clearly sense the opportunity.
d.
Decide to select a venture suitable to the individual entrepreneur.
e.
Establishing a plan to execute the project.
f.
Facilitate the assessement and mobilization of the resources.
g.
Go for the final launch of the entrepreneur
6. How can an entrepreneur raise the expectancy of his success?

Entrepreneurs can raise the expectancy of their success by acquiring the following abilities.
Irrespective of the size of the venture, big or small, they should acquire efficient management of
Men
Money
Material
Market
Efficiency of these resources is a key factor for the success. However, the required level of expertize in managerial
ability in production, marketing, finance and personnel vary as per the size and nature of the enterprise. It also calls
for managerial growth and sustenance.
By acquiring these abilities, prospective entrepreneurs can raise the expectancy of their success.
7. How does entrepreneurship development contribute to wealth generation?
Entrepreneurship involves innovating a better product or a better service or a better process or a better
programme.
This involves efficient mobilization of Men, Material, Money and Market.
Thus the resources which were lying unutilized will be brought into efficient usage there by contributing to
the flow of cash, by opening new markets or increasing the demand in the existing markets.
This drive to be innovative contributes to the wealth generation process.
8. What factors were responsible for explosion of enterprise activities in India?

The following are the four major factors responsible for enterprise activities in India.
Globalization : This opened up global markets for both goods and services.
Availability and fast flow of fund : The availability and accessibility of funds is increased enormously
with more and more new financial markets, both indeginously and globally.
Technology breakthrough : The growth and acceptance of new technology created unlimited
entrepreneurial opportunities to meet global demands of goods and sercices.
Revolution in information technology : Revolution in IT brought in unimaginable speed, low cost, easy
access to information. This as opened up various opportunities in IT, telecommunications, entertainment,
pharma, healthcare and mindware.
9. Explain the process of entrepreneurship development.

The process of entrepreneurial development consists of creating an entrepreneurial person by
i.
Imbibing entrepreneurial quality and motivation.
ii.
Developing capacity of sensing, selecting, planning and establishing an enterprise.
iii.
Acquiring ability to successfully manage the set enterprise.
The main methodology can be best classified into simulatory, support services and sustaining. This is best explained
through the following diagram.
10. Name the stimulatory activities in the entrepreneurship development cycle.

The following are the simulatory activities in the entrepreneurship development cycle.
1.
Training and education in entrepreneurship.
2.
Publicising entrepreneurial opportunities.
3.
Making available techno-economic information.
4.
Offering incentives and recognition.
5.
Creation of forum for entrepreneurs.
6.
Easy availability of information.
11. Explain the factors that contribute to the creation of an environment conducive to entrepreneurship
development
Four major factors that contributed to creation of an environment conducive to entrepreneurship development are.
Globalization : This opened up global markets for both goods and services.
Availability and fast flow of fund : The availability and accessibility of funds is increased enormously
with more and more new financial markets, both indeginously and globally.
Technology breakthrough : The growth and acceptance of new technology created unlimited
entrepreneurial opportunities to meet global demands of goods and sercices.
Revolution in information technology : Revolution in IT brought in unimaginable speed, low cost, easy
access to information. This as opened up various opportunities in IT, telecommunications, entertainment,
pharma, healthcare and mindware.
12. Identify the support services in entrepreneurship development cycle.?

The following are the support services in entrepreneurship development cycle.
a.
Obtaining funds.
b.
Getting land, shed and other utilities.
c.
Acquiring machine and equipment.
d.
Facilities procuring raw materials.
e.
Marketing linkages
f.
Management consultancy
g.
Providing common facilities
h.
Technology flow and adoption.
i.
Availing information.
13. Entrepreneurs should have the ability to scan the environment. Why?
The entrepreneurs should have the ability to scan the environment because of the following reasons.
They should be able to sense the opportunities that could be turned into potential ventures. This requires a
careful observation of their surroundings.
This gives them the ability to put their efforts in venture into only those innovations which have good
marketability.
This gives them the capability to identify the availability of the resources required to proceed with the
venture.
Scanning the environment helps them to identify the strategies required to efficiently utilize the available
resources.
Characteristics of an Entrepreneur
Characteristics of an Entrepreneur
1. How does a small business differ from an entrepreneurship?
Small Business
Entrepreneurship
1. They lack innovation. The investment 1. Theyre backed by innovation. Entrepreneurs converts a threat or a
is done in small trades or products or
challenge into an opportunity. They also scan the social or commercial
services.
environment for new ideas, products or services.
2. Theyre usually started with small
investment and have limited scope for
growth and development.
2. Theyve very good planning and vision and possibilities of future

growth and development are more.
3. When there is an anticipation of a loss, 3. Under such situations and entrepreneur would analyze the situation and
the small business owner will shift his
improve his quality so that he meets the target.
trade or service.
4. May or may not create job
opportunities.
4. Scope for creating more employment opportunities.
2. What is the corporate intrapreneurship? Give two examples?

Corporate intrapreneurship is an activity related to the innovations of some companies or corporate ventures leading
to establishment of new ventures, new subsidiaries or new divisions. This results in when managers of some leading
companies exhibit a sense of enterprise combining their resources systems, in unusual ways to get new products,
new ventures or to provide new services.
One of the examples is the penetration of TATA into communications sector.
Other example is the establishment of retailing outlets by Aditya Birla Group and Reliance.
3. Why is the individual sense of enterprise of an employee in a corporate organization not deemed as
entrepreneurship?
In corporate intrapreneurship, managers of some leading companies exhibit a sense of enterprise combining their
resources, systems, in unusual ways to get new products, new ventures or to provide new services. They will not
venture any of their personal capital or held any personal risk, in doing so. They do these actions as part of their
regular activity in gratifying the customer needs, managing market or boosting the sales.
Though, all the above actions indicate the features of entrepreneurship, these individuals cannot be branded under
the category of entrepreneurs.
4. Give two examples of opportunistic entrepreneurship?
An opportunistic entrepreneur is one who is not only technically competent, but has educated himself in nottechnical subjects such as history, economics, law etc.
One of the examples is that of a small building developer and contractor, who has acquired sophisticated skills in
management, precise bidding, accounting and budgeting and systematic market research.
Another example is that of a software developer who gets an insight into the subject international software export
laws, corporate auditing, accounting and finance and uses this knowledge to establish an innovative software
enterprise.
5. Why is an entrepreneur called an incubator of new ideas?
We can call an entrepreneur an incubator of new ideas due to the following factors:
An entrepreneur is not a routine businessman. He may not have even resources to start an enterprise. But he
has new ideas to experiment and innovate.
He is full of energy to see his ideas put into action.
He is keen to generate a new vision, new products, new services and new methods of operating system.
The entrepreneur is a creative individual. He creates opportunities for innovation, experimentation and
production.
6. Why should an entrepreneur have a high achievement orientation?

An entrepreneur should have a high achievement orientation for the following reasons.
In order to plan his methods and work in a focussed manner to achieve his goal.
To achieve success through non-routine methods
To accomplish things which are otherwise difficult, while obtaining job satisfaction through aggressive
pursuit of his actions.
To pursue achievement through establishing certain standards and benchmarks of excellence.
7. Why should an entrepreneur be familiar with the skills of problem solving?

Entrepreneurship is always an exercise in adventure. That means that the entrepreneur should always be ready to
meet challenges, resistance and problems. He should be ready to welcome those problems and attempt to solve them
by application of mind, experience and through consultancy. Escaping from the problem does not qualify him as an
entrepreneur. Problems will never bring discouragement for an entrepreneur but instead they act as source of
inspiration for him.
8. A high sense of initiative is a prerequisite for an entrepreneur Comment?
A high sense of initiative is a prerequisite for an entrepreneur because of the following reasons
His path is not defined but he should be the path finder. He would love to follow his own directions and
instructions, not those of others.
He has to find new ways of addressing routine problems so that he can optimize on his time, money and
resources.
To take advantage of the challenges and convert them into opportunities
9. Commitment and faith are required for the success of an enterprise why?
One of the most important features of the entrepreneurs is their faith in the task they have taken up. If they
lack faith, then they wont be able to put in the required effort for the success of the enterprise.
The faith acts as an unshakable motivating factor in executing the task.
To intensify this, they should have commitment towards the task they have undertaken and feel that the
assignment they have undertaken is exclusively because of their own choice and hence they need to own
the responsibility of the task.
Thus the commitment and faith are required for the success of an enterprise.
10. Why should an entrepreneur have the quality of persistence?.
An entrepreneur should always be persistent so as
Not to be deterred by the failures.
To learn from the experiences and continue to work towards their goal through persistence.
To obtain feedback from the existing systems, take the criticism in the correct perspective and continue to
act with the sense of courage and conviction.
11. Why does an entrepreneur seek a sense of independence?

An entrepreneur seeks a sense of independence because
It is the way he usually love to work.
It gives him the choice to take his own decisions and avoid intervention from others.
It helps him to achieve his goal of self-starting and being a master of his own.
12. What are the myths associated with entrepreneurship?

The following are some of the myths associated with the entrepreneurs.
Myth Entrepreneurs are gamblers: Entrepreneurs invest their time and money on unpredictable situations and try
to assimilate others money or assets by unfair practices.
Fact: Entrepreneurs take risk, are adventurous and exploit opportunities but are not gamblers. They work hard and
are rewarded for their enterprise and work.
Myth Entrepreneurs are born: Entrepreneurs are born with certain generic traits, which resemble the
characteristics of an entrepreneur.
Fact: Though it is true only in some cases, all the characteristics of the entrepreneurs can be acquired, by careful
study, observation and practice. Proper training also helps them to acquire the entrepreneurial skills.
Myth Entrepreneurs are high-tech professionals: Only those with high technical education can shape themselves
as entrepreneurs.
Fact: Technology will help but is not a basic requirement for a person to become an entrepreneur. If a person has the
ability to grasp the entrepreneurial skills, it is enough for that person to become an entrepreneur, though he is not a
high-tech professional.
Myth Entrepreneurs have to be rich: It is one of the common myths that if one has to become an entrepreneur,
then one must be from a sound economic background or from rich families.
Fact: Entrepreneurs doesnt have to be from rich family. One must understand the place where the resources are
available and work out a strategy to mobilize the resources to ones own advantage. Money does not assure success
nor does facilitate creativity and innovation.
Myth Entrepreneurs should have good knowledge of English: Some people believe that to become an
entrepreneur, one must have a very sould knowledge in English.
Fact: English or any other language is not at all a barrier for an entrepreneur. It is only attittude that is trainable. Any
one can acquire these competencies through ones own mother toungue. One should acquire a reasonable amount of
communicative skills so that one can communicate with others easily.
Entrepreneurial Functions
1. Why is the relation between entrepreneur and entrepreneurship described as that of a soul and a body?
In order to be an entrepreneur, the individual performs various functions. Among the various functions performed,
the following functions, also known as entrepreneurial functions, are specifically considered as the characteristics of
an entrepreneur.
1.
Sensing an entrepreneurial opportunity.
2.
Converting ideas into Reality.
3.
Developing the business plan.
4.
Resourcing
5.
Establishing an enterprise.
6.
Managing the enterprise
7.
Growth and development.
All these functions are known as entrepreneurial functions. The success and the quality of the output of the
performance of the entrepreneur depends on how well he performs these functions. Therefore these functions
performed describe the intensity fo the relationship fo the entrepreneur with the enterprise. For this reason, we can
say that the relationship between the entrepreneur and entrepreneurship can be described as that between the body
and the soul.
2. How does sensing an opportunity critical for a successful entrepreneur?
The various activities performed in the society are aimed at meeting the needs like economic, psychological, a few
social, a few political and some others cultural or spiritual. They are met by foot, clothes, habitat, changing life
styles, transport, entertainment and other modes. However all these requirements change continuously depending on
the local conditions and impact of science and technology, time and place.
These changes demand fresh adjustments, modifications, inuputs, patterns and innovations. An entrepreneur should
be able to supply and supply these adjustments modifications, input, innovations. The sensing of the opportunity is
critical for the entrepreneur because of the following reasons.
To foresee the chanes.
Understand the significance and magnitude of these changes.
Anticipate the quality and time of arrival of these changes.
Understand the needs of the users of these changes.
Any lack in any of the above competencies can adversely affect the success of the enterprise. Thus sensing the
opportunity, as it is quintessential for the success of the enterprise, is critical for a successful enterprise.
3. How does sensing an opportunity help an entrepreneur in making right decisions?
Sensing an opportunity help an entrepreneur in making right decisions in the following ways.
Hell be able to sense and get enough time evaluate the enterprise opportunity.
Hell have significant amount of time to assess the strength of the opportunity and then make a decision
regarding whether to go or not.
Hell be able to distinguish between the realy and the perceived value fo the opportunity and take necessary
measures.
Ability to see the risks and their returns and take measures to eliminate or reduce the impact.
Guage himself regarding his ability to fit in the personal skills and goal in the contecxt of the opportunity.
Hell be able to estimate the differential advantage of the enterprise in a competitive environment and
decide whether to go ahead or not.
4. What attributes are required on the part of an entrepreneur to sense the opportunities?
In order to sense the opportunities, the following attributes are required on the part of the entrepreneur.
Imagination.
Intuition.
Innovativeness.
Creativity.
Communicability.
Market sensivity.
Responsiveness.
5. Why should an entrepreneur sense the opportunities faster than any one else
An entrepreneur should sense the opportunities faster than any one else because of the following reasons.
To sense and evaluate the enterprise opportunity and take a go or no go decision.
To get enough time to assess the strength of the opporunity and decide whether to go ahead or leave it for
others.
To have enough time to distinguish between the real and the perceived value fo the opportunity and make a
right decision.
Get an understanding of the risks and their returns and have take measures to eliminate or reduce the
impact.
To have enough time to evaluate fit in the personal skills and goal in the context of opportunity.
In order have enough time to estimate the differential advantage of the enterprise in the competitive
environment.
6. An entrepreneur is not merely a dreamer Why? What else are his attributes?
Like many others an entrepreneur is not just a dreamer. An entrepreneur is not only bestowed with the quality of
anticipating the changes, but he pusues his dreams to make them reality, by being innovative. He is an innovator of
ideas, products, practices, services to meet the perceived opportunity, thus making his dreams come true.
Few additional things that an entrepreneur has to do, apart from dreaming, are as follows:
1.
Perceiving the opportunity
2.
Collecting relevant information related to the opportunity
3.
Studying the needs of the market and the consumer
4.
Gathering relevant information and expertise related to the tools and techniques required to design the idea,
product or service.
5.
Acquiring necessary skills to handle the idea, product or service.
6.
Studying the socio-economic environment where the idea, product or service is marketed.
It is important that an entrepreneur should carry out an opportunity analysis for converting the ideas or dreams into a
reality. For this, the entrepreneur could carry out an opportunity assessement plan. The assessment plan is focussed
analysis to estimate the need of the opportunity and is different from business plan.
From all the above analysis, we can say that an entrepreneur is not merely a dreamer.
Apart from possessing the attribute of being an innovator, he should possess the following additional attributes too.
Imagination
Intuition
Creativity
Communicability
Market sensitivity
Responsiveness
7. Ability to gather information is vital for establishing an enterprise Do you agree with the statement? Give
reasons for your answer?
Yes, I agree with the statement that the ability to gather information is vital for establishing an enterprise.
The following are the supporting facts.
To establish the enterprise, an enterprise must gather
The required knowledge
Information related to the technology
Information related to the availability of the resources.
Information related to the mobilization of the resources.
Information related to the planning, coordination and organization.
Information related to procuring the moneary investment.
Information on how to seek legal opinions, government permission, and clearance from various agencies.
Information on how to formalize the several ideas and how to put them into action.
Gathering all this information requires keen acument, sharp intellect, patience and interpersonal skills. Thus we can
say that this ability of the entrepreneur to gather information is vital for establishing an enterprise.
8. Why is the entrepreneur required to draw a business plan for his enterprise?
The sucess of an enterprise depends on proper visualization, designing and marketing. To achieve these, an
entrepreneur has to draw a business plan for his enterprise. The business plan incorporates the sensivities of time,
place and the needs. The business plan has to be comprehensive and concise to provide a route map for the follow
up of the project.
Usually the various activities performed for establishing an enterprise are as follows.
Broad understanding of the quantity and quality of the proposed products and services
Costing
Detailed Market studies
Evaluating the list of proposed products and/or services
Feasibility report
Growth profile of the scheme
Having the details regarding Sources of inputs
Information related to scheme of manufacture or provision of the services
Anticipated problems and their management
The success of an enterprize depends on the planned execution of all these activities. Having a business plan will
help in successful and planned execution of all these activities, thus contributing to the success of the enterprise.
9. What are the salient features of a business plan that should be drafted by an entrepreneur?
The salient features of a business plan that should be drafted by an entrepreneur are as follows.
a.
Adminograph
b.
c.
Costing
d.
e.
f.
Feasibility report
g.
h.
i.
j.
The business plan incorporates the sesitivity of time, place and needs. It acts as a roadmap for the follow up of the
project.
10. Why is the business plan of an entrepreneur called a road map for the success?.
Usually the various activities performed for establishing an enterprise are as follows.
a.
Adminograph
b.
c.
Costing
d.
e.
f.
Feasibility report
g.
h.
i.
j.
The success of an enterprize depends on the planned execution of all these activities, keeping in mind the sesitivity
of time, place and needs. Having a business plan will help in successful and planned execution of all these activities,
thus contributing to the success of the enterprise. So, we can call call the business plan of an entrepreneur a road
map for the success of the enterprise.
11. What does resourcing mean?
Resourcing refers to the identification and assessment of various resources that are input into the system which have
a bearing on the quality, quantity, cost and continuity of the product or the service being offered. Resourcing is an
important and vital aspect of entrepreneurial functions.
The types of resources to be taken care of will include the following:
Materials
Money
Machines
Market availability
Technology
Human Resouces
It is not limited to the above list, but more can be brought into the purview of the resources depending upon the
locality, the type of product or service being offered.
12. What are the different types of resourcing to an enterprise?
the different types of resourcing to an enterprise are as follows:
Materials
Money
Machines
Market availability
Technology
Human Resouces
Resourcing is not just limited to the above list, but more can be brought into the purview of the resources depending
upon the locality, the type of product or service being offered.
13. What precautions should be taken in establishing and enterprise?
As the establishment of the enterprise is the prime or the cucial activity fo the entrepreneur, he must take the
following precautions during this process.
Ensure that knowledge, technology and the resources are readily available at his disposal.
Means for the mobilization of the resources.
Proper planning, coordination and organization.
Ensure that the requirement amount of money and the necessary knowledge are available at his disposal.
Seek legal opinions
Get government permissions
Clearance from various agencies
Formalization of several ideas and put them into action.
Exhibit keen acumen, sharp intellect, patience, and interpersonal skills in the task of establishing an
enterprise.
14. What are the essential qualities required for an entrepreneur to establish an enterprise?
To establish and enterprize, the entrepreneur should posses the following qualities
He should exhibit keen acument, sharp intellect, patience and interpersonal skills.
He should have/develop good public relations to seek legal opinions, government permission and clearance
from various agencies.
He should be exhibit execution of formalization of sevaral ideas and put them into action.
Skills in planning coordination and organization.
15. What are the important features in managing the enterprise?

The most important feature in manging the enterprise is the personal involvement of the enterpreneur, in order to
have a very good understanding of how various resources are being managed.
Other features in managing the enterprise are as follows:
Organisation of goods and services
Ensuring production
Ensuring quality
Ensuring supply
Marketing the product or services
Ensuring returns on investment
Exercising contol on the supply line for continuity
Managing the finances
Watching the competition
16. What is the catchword for growth and development for an entrepreneur?
The catchword for the growth and development for an entrepreneur is Pursuit of Excellence.
The consistent pursuit excellence will not let him remain at his starting point or remain static. Hell always be
striving for growth and development. The following activities of an entrepreneurs head and heart will help him to
achieve this.
Hell be looking for growth potential of his products and services.
He has to pursue higher goals and improved quality
He has to expand his market
He has to watch for the competitors so that his products and services have a fair advantage in the market
because of their quality and need gratification
Entrepreneurship, Employment and Education

Entrepreneurship, Employment and Education
1. Family environment builds up an attitude for entrepreneurship How far do you agree with the statement?
Give reasons for your answer.
A study to correlate the effect of family environment on building up of entrepreneurial attitude in a person has
revealed a strong relationship between the childhood family environment and the parents who were entrepreneurs
themselves and were self-employed. The impact of the family environment is significant on the learner.
When a person is grown up in such an environment, the person happens to be in constant interaction with the matters
related to the management of the enterprises or where decisions are taken to promote the enterprise. The in turn
builds positive attitude which would promote the continuance and enrichment of this environment. It also creates an
acceptability of such an environment and the process of entrepreneurship becomes more credible and valid in their
mind.
2. Analyse the case history of two prominent entrepreneurs who have inherited their family business and have
shown remarkable results through their sense of enterprise.
Im still working on this.
3. What are the inputs that a family does not provide to develop the quality of entrepreneurship?
Though the family environment helps in building the entrepreneurial attitude in a person, it will not be able to
provide the following.
The basic knowledge of how to handle men and material and to maintain the success for a life long.
The ability to think analytically and critically and the knowledge to be more organized and subsequently to
be self-confident.
Certain basic technical skills which are critical in establishing, developing and managing an enterprise.
Ability to maintain interpersonal relationship with various stakeholders
The intelligent, emotional and skill quotients of an individual to develop a strong work culture.
The self-actualization required to maintain a high level of motivation, perseverance and commitment.
The ability to create a vision and understand the direction and magnitude of growth.
4. Education is an important tool for building entrepreneurial attitudes. How far do you agree with the
statement?
Education is an important tool for building entrepreneurial attitudes. It helps a person to be a successful entrepreneur
by helping one with the following abilities.
Education teaches a person to learn the basic knowledge of how to handle men and material and to
maintain the success for a life long.
It gives the person the ability to think analytically and critically and imparts the knowledge to be more
organized and subsequently to be self-confident.
Education gives basic technical skills which are critical in establishing, developing and managing an
enterprise.
Education gives the ability to maintain interpersonal relationship with various stakeholders.
Education gives the intelligence, emotional and skill quotients to an individual to develop a strong work
culture.
Education gives the self-actualization required to maintain a high level of motivation, perseverance and
commitment.
Education gives the ability to create a vision and understand the direction and magnitude of growth.
5. Identify any three inputs of education that facilitate the growth of entrepreneurial attitudes.
Education provides many inputs that facilitate the growth of entrepreneurial attitudes. The following are few:
Education provided the knowledge: Through education, an entrepreneur learns the basic knowledge of
how to handle men and materials. Education also provides him with the knowledge required to expand his
success and maintain it for a longer term. Through the knowledge acquired, an entrepreneur will be able to
assimilate any knowledge required in the future and will become a life long learners.
Education begets confidence: Information will be handy for an educated entrepreneur. Education teaches
him to think analytically and critically. It teaches him the importance of organizing things and make him
more organized. Hell be able to analyze the pros and cons of any situation and make decisions. This will
make an entrepreneur more confident and helps for his success.
Education helps in developing technical skills: Through education, an entrepreneur learns the basic
technical skills required to establish, develop and manage an enterprise. Few of these skills which will help
him are the communication skills, writing skills, organizing skills, decision-making skills, risk-taking skills,
negotiating skills or networking skills. If any other additional skills are required, education will help them
to acquire those skills easily in a phased manner.
6. Technical skills are important for starting an enterprise Analyse the type of technical skill you think are
important for an enterprise.
Technical skills are very essential for establishing, developing and managing an enterprise. The basic technical skills
like communication skills, writing skills, organizing skills, decision-making skills, risk taking skills, negotiating
skills or networking skills will help an entrepreneur though various phases of establishing, developing and managing
an enterprise. The required skill set is not just limited to only these, but during the course of time and depending on
the requirement, an entrepreneur will require other specialized skills.
For instance, the entrepreneur may require to communicate with various government officials, technical resources
and other stake holders. Possessing good communication skills will help him not only to achieve his goal but also to
build a strong relation with the stake holders for any future requirements.
The decision-making skills will help him to make the right decision at the right time. The extent to which an
enterprise is an expert in decision-making skills will determine the success of the enterprise.
For running a successful enterprise, an entrepreneur is required to acquire these skills in a phased manner or to
develop them in ones own self through a process of skill transfer.
7. Does education help in building an individual and social vision for entrepreneurship?
Yes. Education plays a vital role to help an entrepreneur in building an individual and social vision for
entrepreneurship in the following ways.
By helping an individual in developing the mental faculties, which will help in building the necessary
vision for the enterprise.
This will in turn help the entrepreneur to better understand the direction and the magnitude of growth of the
enterprise and increase the clarity of the vision.
All this will lead to the development of a well-defined path and course of direction, ultimately leading to
the success of the enterprise.
8. Why is self-actualization important for a successful entrepreneur?

Self-actualization is important for a successful entrepreneur for the following reasons.
It helps him to maintain a high level of motivation, perseverance and commitment, which will help in the
long term success of the enterprise.
It gives him the ability to analyze the situation carefully and critically, take decisions and sustain the
entrepreneurial motivation among several odds.
It gives the required qualities and skills so that the entrepreneur does not have to look out for support for
everything.
It helps one to act as ones own resource for development.
It helps them to possess, develop and sustain the required competencies for the success of the enterprise.
9. Why do you think entrepreneurship education is important at the school level?

General education helps a person to accumulate enough knowledge but general education itself is not enough to
make people productive. The skills and competencies acquired through general education can be put to best use only
if when they know how to put their skills or competencies to use to help the society. This can only be achieved
through entrepreneurship education right from the school level. Acquiring entrepreneurship education right from the
school level makes a person capable of identifying the opportunities and generate new products and services as per
the needs of the society. It not only helps them but also motivates them to find the new opportunities.
Due to the above reasons, I think that entrepreneurship education is important at the school level.
10. Entrepreneurship education is basically an exercise in human resources development Critically examine
the validity of the statement
Resources are usually acquired or developed by individuals in the form of knowledge, skills and competence.
These resources must be used to generate ideas, objects, processes and services which society can use to meet its
needs and to attain progress.
In return, the society pays back to the individuals in the form of money and materials or recognition and status; or
psychological satisfaction which it offers to individuals for their means of living.
Entrepreneurship education helps an individuals to achieve this effectively. Thus we can can that entrepreneurship
education is basically an exercise in human resources development.
Resources are usually acquired or developed by individuals in the form of knowledge, skills and competence.
These resources must be used to generate ideas, objects, processes and services which society can use to meet its
needs and to attain progress.
In return, the society pays back to the individuals in the form of money and materials or recognition and status; or
psychological satisfaction which it offers to individuals for their means of living.
Entrepreneurship education helps an individuals to achieve this effectively. Thus we can can that entrepreneurship
education is basically an exercise in human resources development.
Need and Importance of Entrepreneurship

Need and Importance of Entrepreneurship
1. Give any two reasons to show that entrepreneurship facilitates the rate of development of a country?
entrepreneurship facilitates the rate of development of a country by significantly contributing to the following
factors.
By increasing the rate of growth in GDP of a country
Increasing productivity.
Growing employment opportunity.
Increasing economic diversification.
Optimum use of local resources
Continued innovation in techno managerial practices
Improving in international competitiveness.
2. Entrepreneurship helps in conserving the outflow of national wealth Do you agree? Give two points to
vindicate your answer.
The developing countries usually have a limited national wealth. However, they need to spend this wealth to import
goods and services. Also, to trade with other countries, they need foreign exchange. Entrepreneurship helps in
conserving the outflow of the national wealth in the following ways.
As entrepreneurship is a low-cost strategy of economic development, job creation and technical innovation.
Thus they enable the production locally and reduce the need of import.
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product,
commercializing an invention, adopting a technology and enveloping a new market. They will even help in
generation of foreign exchange, thus conserving the outflow of national wealth.
3. Entrepreneurship is an exercise in low-cost strategy Analyse the statement.

Entrepreneurship is a low-cost strategy for
Economic development.
Job creation.
Technical innovation
The entrepreneurs bear the costs and risks of launching a new venture, developing a new product, commercializing
an invention, adapting a technology and developing a new market, there by offering a highly leveraged strategy of
development.
Entrepreneurship alone results in generating wealth and employment, in increasing GDP and the overal development
of society. Governments need to spend a lot of money if they have to provide employment and to establish
enterprises. But by encouraging entrepreneurs and by supporting them government can achieve these targets easily.
So entrepreneurship is called an exercise in low-cost strategy.
4. What is the sweat equity of an Entrepreneur.
Entrepreneurship contributes to the increasing national production through
Its low cost strategy of economic development
Job creation
Technical innovation
Entrepreneurs bear the costs and risks of
Launching a new venture.
Developing a new product
Commercializing an invention
Adapting a technology
Developing a new market
All these factors which the entrepreneur bears upon himself offers highly leveraged strategy of development and
contributes to the increased national production.
So, all these bearings of costs and risks, by the entrepreneur, can be considered as Sweat Equity of the
entrepreneur. Even if the entrepreneurs receive government assistance, they will keep on adding considerably more
value through their Sweat Equity
5. Entrepreneurship is not only an exercise in self-employment, but it is employment generative Justify
Wage-employment has the following drawbacks.
It does not necessarily generate resources.
It can be organized only with existing usable wealth.
It has a strong tendency of self-saturation. So, once availed, it blocks the employment opportunities for
others for another 10 years assuming an average 3 promotions in a 30-year service career.
Entrepreneurship or self-employment overcomes these problems as
Adds to the GNP
It has unique characteristics of self-generation.
In other words, entrepreneurship offers employment to others. As it is economic activity, it also leads to the
emergence of other economic activities. This creates unending employment oppotunities.
Thus, Entrepreneurship is not only an exercise in self-employment, but it is employment generative.
6. What are the disadvantages of the absence of local entrepreneurs for a society.
In the absence of local entrepreneurs for a society, enterprises are organized by the entrepreneurs coming from
outside. This leads to
The draining of the wealth generated out of the local resources to the areas of the entrepreneurs origin.
A large share of the profits earned by the entrepreneurs will not be reinvested in the area of the enterprise.
backward development of the areas, especially in the developing contries
the leech effect be developed in the areas where enterprises are established.
Non-availability of the wealth which would have been re-invested in the welfare of the area of profit
generation.
Reduction in the standard-of-living of the area of profit generation.
Absence of balanced area development in the nation.
7. Identify two states where there is the absence of local entrepreneurship and analyze the reasons for the
same?.
Im still in the process of preparing an answer for this question.
8. What is meant by balanced area development? How does entrepreneurship help in achieving the same?.
OR How does entrepreneurship lead to balanced area development?
The development of a country majorly depends upon
Industrial activities.
Economic activities activities.
When any area prospers in the above activities, it also results in the development of the following welfare activities.
Development of roads
Transport
Communication
Health
Education
Entertainment etc.
When the industrial and business activities are evenly distributed all over the country and not centralized in only few
areas, it is called as balanced area development.
As entrepreneurs establish the enterprises, this will result in balanced area of development, as the enterpreneurs try
to make the best use of the available resources in their local area. This results in sprouting of enterprises all across
the country, resulting in the development of the above welfare activities and overall development of the country.
9. Promotion of entrepreneurship in society leads to channeling the youth energy Why?.

Due to excessive unemployment, the youth in India are diverting their attention to violence and other anto-social
activities. One of the prime factors for the increase in unemployment is that the youth in India are excessively
dependent on wage/salary employment and not the pursuit of entrepreneurship. This often results in channelling of
youth energy to self-destruction and non-productive areas. Thus the nation is losing its most valuable youth energy.
Entrepreneurship can harness such youth energy. The entrepreneural pursuit is challenging and creative and can
harness the extra vigour that is abundantly available with the educated youth. As the entrepreneural opportunities are
limitless, they open up new opportunities for the unemployed youth. Especially in developing countries, where in
the youth lacks self-confidence, entrepreneurship plays a vital role in developing their self-confidence. Thus the
promotion of entrepreneurship in society amonth the youth leads to entrepreneurisation of the society, thereby
leading to the channelization of the youth energy.
10. Why are the entrepreneurs called risk bearers?.
The markets in which the entrepreneurs operate has little tolerance for
Miscalculation about business opportunities
For lack of commitment
Laziness or incompetence
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product, commercializing
an invention, adopting a technology and enveloping a new market. Entrepreneurs either succeed or make a
developmental contribution or they fail and disappear from the market place. For this reason, they are called as risk
bearers.
11. Entrepreneurs facilitate in healthy competitiveness in the market State two reasons to justify the above.
1. The markets in which the entrepreneurs operate has little tolerance for
Miscalculation about business opportunities
For lack of commitment
Laziness or incompetence
Entrepreneurs, by bringing sinsitivity to the discipline of the market, make the markets more competitive by
reducing both static and dynamic inefficiencies.
2. Entrepreneurs facilitates a variety of innovative collaboration, merger and fusion. This helps in improving the
international competitiveness.
12. What is Franchising?
Franchising is an efficient way of importing marketing and retail know-how. Business format franchising is like
entrepreneurship with training wheels. It offers immediate levels of risk, cost and return to potential but least
experienced entrepreneurs.
12. Examine the merits and demerits of franchising?
Merits
Frachising provides an opportunity to take advantage of an established brand
No need of innovating a new product.
The cost and time is of the investor is reduced.
Demerits
The investor will be implementing someone elses idea and no freedom to implement his own idea.
A major portion of the profit has to be transferred to the franchisor. No freedom to implement their own
finacial planning and budgeting.
More depenndency on the franchisor. All the goodwill earned will be lost once the franchisor stops
supporting a particular franchisee.
13. For a developing country Entrepreneurship is vital. How would you relate the above statement to India?
Identify any three major bottlenecks in promoting entrepreneurship in India.
Entrepreneurship has a tendency to automatically contribute to the development of a country in the following ways
in India.
The entrepreneurship makees the society an enterprising one, thus reducing the dependancy on the wageemployment.
Makes the society more self-confident and capable of solving its problems on its own and feel concerned
for change and growth and value work.
India has many resources lying unutilized e.g. human resources. Entrepreneurship will help in locating
these resources and mobilizing them to meet the challenges.
Bottlenecks in promoting entrepreneurship in India
Inadequate infrastructure and the high cost of transportation.
Difficulty involved in procuring a loan for investment.
Lack of Entrepreneurship friendly policy framework and strategy.
Entrepreneurship Concepts
Entrepreneurship Concepts
1. Who is an entrepreneur?
Basically an entrepreneur is an innovator, job and wealth generator.
In addition to the above he is also
Change agent
Problem solver
Pace setter
Excellence seeker
Marketing executive
Concept promoter
2. Why is an entreneur called a change agent?

Whenever and wherever problems occur, the individual seeks to eliminate the problems so that the would could be a
better place to live in, a life worth living. In order to make it happen, one has to think of such processes that would
yield products and services that would enable and bring happiness, joy, comfort and peace. Therefore he seeks such
ventures that would bring about this change. He loos for opportunities for converting the challenges into comforts.
So, he is called as change agents
3. What are the important features of entrepreneurship?
Entrepreneurship is basically an activity that helps in sensing the opportunities, resourcing innovation and
realizing the pay-off through the actions performed by him or her.
During thiis process the individual scans an environment for opportunities, identifiies them, examines the feasibility
of converting (or changing) that opportunity into a possible enterprise for production, drafts plan of action and then
engages oneself in such activities that would cause the product.
Thus they change the opportunities into an product or services.
4. An enterprise is a process of converting a challenge into an opportunity Do you agree? Justify your
answer.
Yes, I agree.
Entrepreneurship is basically an activity that helps in sensing the opportunities or identifying the challenges,
resourcing innovation and realizing the pay-off through the actions performed by him or her.
During thiis process the individual scans an environment for opportunities, identifiies them, examines the feasibility
of converting (or changing) that opportunity into a possible enterprise for production, drafts plan of action and then
engages oneself in such activities that would cause the product.
The enterprise thus formed converts the challege into an opportunity.
5. How does Entrepreneurship help in building up the professional profile of an individual?
The spirit of Entrepreneurship helps the individuals to grow. It brings out the multi-faceted talent in him.
Entrepreneur has to face many challenges in setting up and running of the enterprise. To be successful Entrepreneur
has to plan, communicate, manage various aspects of the market. In doing so, he becomes a complete professional.
6. How can we say that an entrepreneur contributes to social development?
Entrepreneurs contribute to social development through the following activities.
For Individual
1.
They provide new employment opportunities
2.
They improve the standard of living of the people.
For Investors
1.
They provide investment opportunities for the investors and generate the wealth and distribute it to
the investors. Thus helping the investors to grow their wealth.
For the nation

1.
They contribute to the GDP of the nation directly.
2.
They contribute to the area development by re-investing in projects.
3.
They will be responsible for industrial and technical developments.
7. Why has an entrepreneur to be a pacesetter?

Entrepreneurship is basically an activity that helps in sensing the opportunities or identifying the challenges,
resourcing innovation and realizing the pay-off through the actions performed by him or her.
During thiis process the entrepreneur scans an environment for opportunities, identifiies them, examines the
feasibility of converting (or changing) that opportunity into a possible enterprise for production, drafts plan of action
and then engages oneself in such activities that would cause the product.
Thus the entrepreneur is the first person to conver a challenge into an opportunity and paves way for the others to
follow, either by copying or imitating his innovative idea. Thus becoming the pace setter.
8. How does the entrepreneur contribute to the growth of the Gross National Product?
Entrepreneurs make the society sensitive to the productivity.
The increase in the productivity, cost effectiveness and persuit of excellence increases the Gross National Product.
9. An Entrepreneur converts the demand into supply. Comment.
1.
Entrepreneur identifies demand of a product in the changing needs or traditions or customs or lifestyles of
people in the society.
2.
He meets the demand by producing goods or services.
3.
This results in more Entrepreneurs entering into the market and producting similar products or services
to meet the same need. Hence there will be many options for a consumer in the market.
4.
This results in demand getting converted to supply.
10. Identify at least two entrepreneurs who have influenced the society with tehir ideas Explain how it has
been possible for them.
Dhirajlal Hirachand Ambani : He was working with Arab merchanges as a normal worker. He left his job and
moved to Mumbai(in 1958) to start his own business spices. He later started the textile business and opened his own
mill. He started Reliance Industries which was contributing to around 5% of the central governments tax revenue.
Phanindra Sama : When he was unable to get a bus ticket when he wanted to travel from Bangalore to his home
town, during a festive season, he sensed the problem of ticket information not reaching the passengers. Later on he
learned that though the tickets were available, due to the lack of availability of information, with the agents, many
passengers are not getting the tickets. He converted this challenge into an opportunity and started his website
redbus.in, the setting the pace for selling the bus tickets online. He was recently select as high impact entrepreneur.
11. How does an entreneur differ from an inventor.
An entrepreneur is an innovator and is different from an inventor in the following ways.
Inventor
Entrepreneur(Innovator)
Invents new methods and new services.
Combines new methods/services and applies innovation to produce

better products/services.
He is largely concerned with the technical

aspects of the matter he deals with.
He is largely converned with the economic, social and marketing

dimensions of the subject matter.
He keeps the commercial prospects of his

innovation as the last preference.
He examines the commercial and economic viability of his product

in the market.
12. An entrepreneur converts a source into a resource Exemplify.

A source becomes a resource only when it acquires a utilitarian dimention bestowing it with an economic value.
For instance, air, water, land and minerals are present in abundance in the form of sources. The become a resource
only when they acquire a utilitarian dimension and are used in creating new utilitties. The entrepreneurs have the
capacity to create new utilities and values for them, or in increasing their existing economic value. The also have the
capacity to convert them into new productive configurations.
13. How does Peter Drucker envisage the role of the entrepreneur?
Peter Drucker describes the entrepreneur in a befitting manner as one who is involved in gathering and using
resources to opportunities to produce results.
According to him, the following should be the qualities of an entrepreneur.
1.
Searches for a change
2.
Respond to change
3.
Exploits the change as anopportunity.
Peter Drucker argues that the innovation is a specific instrument of an entrepreneur. Hence an effective entrepreneur
converts a source into a resource.
14. Entrepreneurship is essential for the economic growth of a country Identify any three reasons to
support the above statement?
Entrepreneurship is essential for the economic growth of a country.
1.
The increase in the number of entrepreneurs is indicative of the increassing sensitivity of the nation to be
productive and generative. This will slowly increase the Gross National Product of the country through
increased productivity and pursuit of excellence and cost effectiveness.
2.
The prosperity of the nation is driven by a remarcable increase in the foreign exchange of the country due
to increase in the number of entrepreneurs in the field of Information technology and other sectors.
3.
Employment opportunities are increased and the standard of living of the citizens of a country is raised.
This catalyses the regional development of a country.
These factors are indicative of the fact that the Entrepreneurship is essential for the growth of a country.
15. In entrepreneurship totally consumer driven? Critically analyse the statement and project your views.
Entrepreneurs manufacture the products that will satisfy the needs and wants of the consumer. The modifications or
developments or new inventions always aim at meeting the changing needs of consumers. So, we can say that
entrepreneurship is consumer oriented. But there are some cases like invention of electric bulb, a personal computer,
an i-pod etc which are not out of consumer wants. These are technological developments. But again these inventions
helped to increase the standard of living of the society so they are accepted by consumers. Hence, we cannot say that
entrepreneurship is totally consumer driven.
Entrepreneurial performance and Rewards
Entrepreneurial performance may refer to measure (s) of business success and the rewards may refer to the
recompense- financial or psychic accruing to the entrepreneur. The convergence is attained when and where the
success of the venture itself is perceived as a personal reward.
ENTREPRENEURIAL PERFORMANCE
The various measures of business performance include, longevity of survival or more popularly age of the
enterprise, sales growth, growth in market share, growth in market scope (local, national or international), growth in
investment (in the same unit), additional units created via acquisition & diversification growth in number of
employees, profits and so on. Most of these are physical growth and financial growth parameters and have been the
traditional measures of entrepreneurial performance. Of late, other measures of performance such as customers
satisfaction, employee satisfaction, image, credit rating, etc. are also becoming increasingly relevant. These
measures are typically referred to as stakeholder-based parameters. As the small firms grow into acquiring
corporate identities, market based parameters such as stock price, EPS etc. may also be the relevant measures of
entrepreneurial performance. Figure 3.1 provides a look into the classification of the measures of entrepreneurial
performance.
Measures of Entrepreneurial Performance
Measures of Entrepreneurial Performance may relates to the following1.
Market Based
2.
Physical
3.
Financial
4.
Stakeholders based
Linking the entrepreneurial performance to entrepreneurial behavior and the rewards, one may posit that because the
entrepreneur is interested in feedback on the performance, one is always trying to compare how one is doing in
relation to others. Of course, if there is no one to compete, the entrepreneur seeks to improve upon his previous
record! It is in this context that the entrepreneurial performance becomes a source of personal reward.
ENTREPRENEURIAL REWARDS
The personal rewards of entrepreneurship extend beyond business performance. Do the rewards inhere in the
outcomes of the activity or the activity itself? Often one draws a distinction between extrinsic rewards and intrinsic
rewards.
Intrinsic Rewards: As the names would suggest, intrinsic rewards vest in the activity itself- ask a musician the
joy of making music, the craftsman or the artist the joy of creative work or a cricketer the joy of playing the game!
Likewise, the entrepreneur enjoys the creativity and innovativeness that he brings to his venture. This aspect of
entrepreneurship may be so dear to the entrepreneur, that he may happily forgo other commonly perceived physical
and financial parameters of performance. Many entrepreneurs, even as they welcome the prosperity and flourish of
business miss those momentous days of bringing their dream project alive. Such rewards inhere also in the
pleasure that one is creating an organization/institution that would outlive ones lifespan. Every business is a source
of livelihood to many employees and their families. Thus, the entrepreneurs derive immense satisfaction in their
ability to touch others lives. This they can do also by introducing products and services that bring about
improvement in others lives, be it a pharmaceutical formulation, daycare, home entertainment, leisure and so on.
Even the entire business concept may be based on the intrinsic aspects of personal satisfaction. For example, there
are many entrepreneurs who are operating, in their own words, laboratories where they design and develop
solutions! There is an entrepreneur in cast cutlery that mobilized wandering iron smiths (Gypsies) into
manufacturing the products that grace almost every world-class hotel/ restaurant. There are businesses that
encourage woman employment. There is, of late, talk of all Dalit business.
Extrinsic Rewards: One reason an individual may desire to be on ones own could be that one is looking for the
profit pie rather than mere a share in it! The logic is simple-the payoff to the employer is greater than the salary to
the highest paid employee! Apart from income and wealth that business ownership may bring forth, it may also be
source of career continuity for family members. Small entrepreneurs may have regretted the hike in executive
compensation in the post liberalization India and the squeeze on the margins owing to increasing competition; yet
extrinsic awards are far from a pass, never before we celebrated wealth so much. The euphoria surrounding the
billionaires is a testimony to our increasing acceptance of entrepreneurship and prosperity. Even you would aspire
to become another Narayanamurthy, Aziz Premji, Aditya Birla, Sunil Mittal, Kiron Mozumdar Shaw, Shehnaz
Hussian, Vijay Mallaya, wont you?
What we have provided is a brief recount of various intrinsic and extrinsic rewards perceived by the entrepreneurs.
They say that the taste of the pudding lies in its eating. So venture out. The road may not be easy. It is when the
going becomes tough that the tough get going!
Entrepreneurial Skills and Competency Requirement
You are already aware of the roles and functions that the entrepreneurs play in relation to the process of economic
development and in relation to the enterprise.
Every role has a skill and competency requirement. For a teacher or a performing artist, for example, it is the skill to
communicate that plays a decisive role in their effectiveness besides, of course, their knowledge. For a craftsman or
an artist, it is the creativity and skill in the chosen craft. Talking about entrepreneurship, you need to have a knack
for spotting business opportunities and creativity and innovation in developing and delivering a product or service.
It is hoped that after reading this chapter you will actually see the potential of a career in entrepreneurship, and
experience a desire to start a venture of your own .At the same time there might be certain inhibitions in your mind
whether such a task is feasible, practical and sustainable. For every task one needs certain competencies. In this Blog
post, we would be talking about the entrepreneurial competencies. Whereas competencies reinforce a persons
perception of feasibility of a career option, there also has to be the will and urge, a perception of the desirability. Is
it not paradoxical that entrepreneurship has a key role to play in economic development, yet there are very few who
ever think of it as a career option? And, it is not that they may be lacking in skills. What one often finds is the lack
of motivation!
Competencies equip you with the knowledge of how to do (know-how) of entrepreneurial behavior and motivation
provides answers to why to do (know-why) of entrepreneurial behavior. You would also be learning about why
people opt for entrepreneurship. The question of why entrepreneurship is also linked to reward expectations, be
these financial, social status or psychological satisfaction. In case of entrepreneurship, successful performance of the
venture itself becomes a reward for the entrepreneur.
As noted in above, every career draws on the competencies of an individual. Some of these competencies may be
general and some peculiar to the chosen career. You may understand competencies to mean abilities and skills.
However, we would desist from calling these as personality traits as such a conceptualization only reinforces the
mistaken belief that entrepreneurs are born rather than made. We believe that recognition of these competencies as
abilities and skills makes entrepreneurship as a teachable and learnable behavior. In this blog post we would discuss
about a set of entrepreneurial competencies developed by the Entrepreneurship Development Institute of India (EDI)
Ahmadabad. These competencies were identified by a thorough research procedure based on critical analysis of the
case studies of the successful entrepreneurs. We also annex a questionnaire that you can use to evaluate your score
on each of these competencies. We would also suggest how you might improve on your scores.
ENTREPRENEURIAL COMPETENCIES IDENTIFIED BY THE EDI
Initiative- acting out of choice rather than compulsion, taking the lead rather than waiting for others to start.
Sees and Acts on Opportunities- A mindset where one is trained to look for business opportunities from everyday
experiences. Recall oranges example.
Persistence- A never say die attitude, not giving up easily, striving Information seeking continuously until success
is achieved.
Knowing- Knowing who knows, consulting experts, reading relevant material and an overall openness to ideas and
information.
Concern for High Quality of Work- Attention to details and observance of established standards and norms.
Commitment to Work Contract- Taking personal pains to complete a task as scheduled.
Efficiency Orientation- Concern for conservation of time, money and effort.
Systematic Planning- Breaking up the complex whole into parts, close examination of the parts and inferring about
the whole; e.g. simultaneously attending to production, marketing and financial aspects (parts) of the overall
business strategy (the whole).
Problem solving-Observing the symptoms, diagnosing and curing.
Self-confidence- Not being afraid of the risks associated with business and relying on ones capabilities to
successfully manage these.
Assertiveness- Conveying emphatically ones vision and convincing others of its value.
Persuasion- Eliciting support of others in the venture.
Use of Influence Strategies- Providing leadership.
Monitoring- Ensuring the progress of the venture as planned.
Concern for Employee Welfare- Believing in employee well being as the key to competitiveness and success and
initiating programmes of employee welfare.
The self-administered questionnaire in the annexure to this chapter would help you measure where you stand on
these competencies. Given that these competencies matter in entrepreneurial success. EDI estimates that
development of these competencies can substantially (as much as 33%) bring down incidence of business
failures/industrial sickness.
DEVELOPING COMPETENCIES
Awareness, they say, is the first step towards improvement and success. Now that you are aware of the critical
competencies for entrepreneurial success and also have a measure of your scores on these, it is appropriate that you
also think in terms of how to improve your scores. Suppose, you find yourself lacking in the competencyopportunity spotting, you may start practicing to think like an entrepreneur (See Box entitled Thinking like an
Entrepreneur). With just a little change in perspective, the world changes for you. Similarly you may work on the
other competencies as well.
The role of Prior Work Experience
Project work, summer training as well as prior work experience hone the entrepreneurial competencies. Whichever
area you might decide upon to start a venture be it a school, restaurant, garments, courier service, interior decoration
etc. along with the educational qualifications, if any, you need to acquire practical experience in that field. For it is
while you get on the job training/experience that you familiarize your self with all aspects of the venture. You can
learn as to how to handle customers, suppliers, and government officials, financiers. You will also be able to
acquaint yourself with the nitty-grittys of the production process, bottlenecks like power disruptions, delay or nonavailability of raw materials and a host of other things. Day to day dealings of the various facets of business will
equip you to handle your own venture deftly, with confidence and with minimal of costly mistakes.
Functions of an Entrepreneur
An entrepreneur frequently has to wear many hats. He has to perceive opportunity, plan, organize resources, and
oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk. The
main functions of an entrepreneur are as follows:
1. Innovation: Innovation is one of the most important functions of an entrepreneur according to Schumpeter. An
entrepreneur uses information, knowledge and intuition to come up with new products, new methods of reducing
costs of a product, improvement in design or function of a product, discovering new markets or new ways of
organization of industry. Through innovation, an entrepreneur converts a material into a resource or combines
existing resources into new and more productive configurations. It is the creativity of an entrepreneur that results in
invention [creation of new knowledge] and innovation [application of knowledge to create new products, services or
processes.]
Systematic innovation means monitoring the following for innovative opportunity:
i. The unexpected success or failure or any unexpected outside event, (e.g. when the IT bubble burst the ITES sector
started growing.)
ii. Innovation based on process need [e.g. plate based cameras, film based cameras, digital cameras]
iii. Changes in industry and market structure [e.g. video cassette VCD, DVD, Blue ray disc]
iv. Demographics changes (e.g. increasing number of working women and nuclear families in most metropolitan
cities)
v. New knowledge (e.g. Pentium chip)
2. Risk and uncertainty bearing: According to Hoze list an entrepreneur performs the function of risk and
uncertainty bearing. Every decision pertaining to development of new products, adapting new technologies, opening
up new markets involves risk. Decision-making in an environment of uncertainty requires anticipation of risk. Profit
is said to be the reward for anticipating and taking such risks. However it is pertinent to mention that the
entrepreneur is not a gambler, he only takes calculated risks. An entrepreneur develops the art of decision-making
under conditions of uncertainty as a matter of survival.
3. Organization building: An entrepreneur has to organize men, material and other resources. He has to perform
the functions of planning, co-ordination and control. He has to use his leadership qualities to build a team, generate
resources and solve problems. With his organizational skills an entrepreneur builds an enterprise from scratch,
nurtures it and makes it grow. His vision sows the seeds for a sound and vibrant organization and synergies are built
in the enterprise.
According to Kilby in a developing country even the imitator entrepreneurs are very important and the
entrepreneurial role encompasses the following:
i. Perception of market opportunities
ii. Gaining command over scarce resources

iii. Purchasing inputs
iv. Marketing the products
v. Dealing with bureaucrats
vi. Managing human relations within the firm
vii. Managing customer and supplier relations
viii. Managing finance
ix. Managing production
x. Acquiring and overseeing assembly of the factory
xi. Industrial engineering
xii. Upgrading process and product
xiii. Introducing new production techniques and products
Entrepreneurship and Education
Towards the end of the sixties, two significant contributions were made in the field of entrepreneurship .One was
that there is a positive linkage between entrepreneurship and economic development and the other was regarding the
emergence of a strong hypothesis that entrepreneurship can be developed through planned efforts. Consequently
planners realized that absence of a strong entrepreneurial base acts as a serious handicap in the industrial
development of a region. The identification and development of first generation entrepreneurs through
Entrepreneurial Development Programmes is an important strategy.
There is a growing realization that presence of resources and favorable government policies cannot automatically
manufacture economic development. It is the entrepreneurial spirit of the people, which can transform the economy
of that region. Both the quantity and quality of entrepreneurs are of utmost significance for achieving the goal of
economic development. The myth that entrepreneurs are born with some innate traits is fortunately no longer held.
You will learn more about this in the lesson on motivation. Many research studies have brought out that
entrepreneurship can be taught and learned. Entrepreneurship is a discipline and like all disciplines it has models,
processes and case studies, which can help an individual to study this subject. The necessary competencies required
of a successful entrepreneur can be acquired through training and development.
Numerous courses in entrepreneurship are being taught all over the world in schools and colleges, seminars and
conferences are being organized and EDPs are being conducted. The thinking today is why just create managers why
not create people who can absorb managers. One can acquire the traits and learn the skills for becoming an
entrepreneur e.g. a person can learn to be achievement oriented, self- confident, perseverant etc. which are all part of
the characteristics of a successful entrepreneur.
Usually the model used for entrepreneurial education has three phases:
Stimulatory Phase- This phase involves planned publicity for opportunities, motivation training and help and
guidance in selection of product or service.
Support Phase- This provides help in registration of units, arrangement of finance as well as land, sheds, power,
water, common facility centers etc. Help is also provided in marketing of products.
Sustenance Phase- Once the enterprise is set up then help is provided for modernization, diversification, additional
finance etc.
What It Takes To Start a Business - Starting a New Business
-->
Many people may enjoy the notion of starting their own business because of the lure of generating immediate profits
for their innovative inventions and ideas. However, it takes more than just having an idea of a establishing a startup
that will lead to a companys success. There is a considerable amount of planning that needs to take place prior to
the launch of a company in addition to personal and financial dedication. Despite the fact that the majority of
startups will eventually fail in their first year, many of these failures can be prevented if entrepreneurs simply took
the needed time to properly assess if they have what it takes to run their own company.
Industry experience
One question forthcoming enterprise founders should ask themselves is whether or not they are fully capable of
starting their own business. The idea of a startup may seem like an alluring prospect, but without familiarity and
understanding of the industry, entrepreneurs may experience a difficult time in sustaining their companys success.
The imperative qualification of industry experience should not be overlooked because it may mean potential failure
in the end. Lack of experience does not necessarily mean that entrepreneurs should not start a business; however,
they should wait until they have developed considerable knowledge in the field. They can accomplish this by talking
to other business owners within the same industry who can give practical advice about startup costs, revenue
projections, expertise in running a company, and other additional company expenses. A prospective entrepreneur
should also conduct independent research regarding competitors as well as find out which sorts of businesses are
needed within their community.
Risky business
Many entrepreneurs will agree that starting a small business is a risky endeavor. Not only should ample time and
energy be invested during a companys preliminary stages but company founders should also be aware that their
reputation may be jeopardized if their business fails. In addition, if a company is not successful as anticipated, there
may be a strong possibility that business owners may have to resort to closing or bankruptcy and lose much of their
invested wealth. The first few years of a company is considered to be a very crucial time for entrepreneurs since
their startups fate is unexpected. It is important that an individual evaluate the different risks involved when
considering entrepreneurship. If they do not feel comfortable with taking these risks, then perhaps they may need to
reconsider whether starting a small enterprise is suitable for them.
For more information about the Pros and Cons of Angel Investing, please refer to our related articles section of
Angel Investing.
Be ready to be the boss
Many first-time entrepreneurs will agree that the reality of running a small business is very different than what they
had initially expected. Some business owners may have the misconception that once they launch their businesses,
they will be able to finally have more available free time and can live a comfortable, stress-free lifestyle; however,
this is not completely true. A significant part of owning a company and becoming your own boss includes an
undeniable amount of sacrifice, where much arduous effort and comprehensive hours of labor is required. Many
business owners may not be prepared for these daily challenges and may lack the necessary personal drive and
motivation to manage their employees, deal with customers, or even run a whole company. Forthcoming
entrepreneurs are encouraged to actively solicit the opinions of others to find out if they are completely capable of
being their own boss and running a company. The pooled opinions may vary, and at times, be painful to accept;
however, it is always a good practice to obtain constructive criticism from others before making the crucial decision
to start a business.
Family support
Starting a small enterprise and managing family life are considered to be both demanding, full-time responsibilities.
Both commitments encompass the sacrifice of time, effort, and finances to properly sustain. These can be quite
difficult tasks for the entrepreneur to properly balance and for their family members to fully accept. Family
members of business owners should be prepared for all the daunting challenges associated with a startup, including
the demanding schedule of their loved one. It is a proven fact that entrepreneurship can be mentally, physically, and
financially draining. Family members should offer their loved ones understanding and emotional support, especially
during the preliminary years of the company launch.
Genuine enthusiasm and creativity
Many people become inclined to start a business simply for the financial return. On the other hand, there are
entrepreneurs who have the tendency to see beyond this monetary gain, are clearly very enthusiastic about
entrepreneurship, and confident that their products and services are what people want. In addition, this latter group
of entrepreneurs tends to have a relentless inherent sentiment that once their unique ideas are marketed, these
innovations can clearly improve ones quality of life. This unwavering optimism and passion for their company is
the driving force behind their solid success.
For more information about Winning Entrepreneur Characteristics, please refer to our related articles section.
Once an entrepreneur has evaluated they have what it takes to start a company, they can now follow a few steps to
launch a successful business.
1.
Visualization and research of product, service, and market
The initial step to a successful business involves the company owners work in preparing and improving the
products and services that will be offered to paid customers. Prospective entrepreneurs must first decide on the type
of business they are interested in starting. They must then use those ideas along with their personal and professional
experiences into envisioning and creating goods that will greatly attract a consumer base. The design and innovation
of such products often entails extensive research of competitors and prospective consumers in the targeted markets.
Once the products/services are determined, a product prospectus should be written, documenting how each of the
products/services are prepared, used, and its competitive edge.
2.
Preparation of a marketing strategy and well-written business plan
Once entrepreneurs establish enough knowledge about their target markets and have implemented their active
concepts into reality, they are now ready to market their goods and ideas. This often entails devising a marketing
strategy which is successfully accomplished by paid professional assistance and/or experimental presentations to
attract a consumer base. A detailed business plan is also needed for any business, regardless of the size of the
company, which documents the companys objectives, their goods/services offered, startup costs, and the targeted
market and customers. Every business plan varies, and the Small Business Administration (along with other private
companies) may be able to offer paid technical and practical advice in creating a business plan tailored to a
companys needs.
3.
Seeking professional assistance
Government agencies can offer company owners much needed expert and friendly advice on starting a business. In
addition, lawyers and accountants can provide entrepreneurs with valuable information concerning government
rules, regulations, zoning, and other legal issues. Many of these professionals can also critique proposed business
plans and assist in determining which legal form is most suitable for their company (i.e. partnership, proprietorship,
corporation, etc.).
4.
Sources of capital
The final step in starting a business entails obtaining the necessary funding to sustain a companys survival. Some
sources include the use of personal savings, angel, (for more information about angel investors, please refer to our
related articles section) and venture capitalist financing, borrowed money from business associates, private loans,
and family and friends. The process of obtaining funding may be time consuming and frustrating; however, it is
important to stay motivated until the desired capital is raised.
While many people can envision the idea of owning their own business, some do not have what it takes to start and
successfully sustain a company. Most small enterprise failures can easily be avoided if business owners would
simply be aware of the challenges that lie ahead and evaluate within themselves if they are fully prepared to start
their own business. Once they are able to determine that they are capable, they can then take the necessary steps
needed for startup success.
The emergence of Indian entrepreneurs - Entrepreneurism in India
Today, many more Indian entrepreneurs are emerging in the business world. Astonishingly enough, they are quite
different from when they first appeared over twenty years ago. In the 1980s, the Indian economy was greatly bogged
down by an atrocious socialistic ideology, whereby a rigid license raj and corrupt bureaucratic control was how
businesses were conducted.
It began when Jawaharlal Nehru, India's first Prime Minister, wanted to tailor the Indian economy after the Soviet
Union's socialistic economic structure. In his mind, he strongly believed that the state should control every aspect of
the Indian economy, and thus, a planned economic growth could be achieved. His idea revolved around issuing
licenses to a worthy few who were selected based on their credentials and the existing market economies of
operation. Although Nehru had good intentions, the way he executed his plan proved to be counterproductive.
Nehru strongly believed that entrepreneurs should focus their efforts on nation building rather than selling products
or competing with each other, because he felt that it did not directly contribute to this cause. To ensure that the
concept of nation building was properly enforced by all business owners, Nehru made sure that every entrepreneur
received a "certified nation building" license from the relevant license officer. He also put forth a rule stating that
only two to three companies could be granted a license within the same industry, greatly limiting the possibility of
establishing competition.
In addition, Nehru wanted industries to be located all over India, rather than be positioned at select industrial hubs, a
strategy which he theorized would ensure a balanced industrial growth. Therefore, he passed laws requiring
entrepreneurs to obtain a location permit (license) prior to the start of their company. In order to avoid capitalistic
monopolies, Nehru stated that companies should obtain licenses to expand their production capacity. To prevent
money laundering within companies, another major issue, Nehru made it mandatory for the excise and licensing
officials to visit and audit every company each year in order to ensure quality assurance. All of these strict
regulations had their problems as well. Not only did every entrepreneur need to obtain multiple licenses but the
government officers who were in charge of overseeing all licensing aspects were underpaid and eventually resorted
to bribery and corruption. This led to entrepreneurs paying bribes in order to acquire the necessary licenses.
Situations got so precarious that even business owners had to obtain a government license just to meet with foreign
business delegates in other countries. During those times, entrepreneurs flocked around ideas that mostly involved
cornering manufacturing or importing licenses. This sort of business environment offered absolutely no incentive to
invest time in technical innovation to reduce manufacturing costs or even offer better quality products and services
since one could get far higher results by influencing the customs or excise officer to classify a product under a
category that attracted a lower rate of duty.
During this license raj, most highly qualified young Indian graduates had no family connections nor were interested
in influencing excise officers. Therefore, many of them immigrated to the United States to avoid such red tape and
to gain economic freedom. Realizing that the existing economy was in dire crisis, Indian business practices began
changing for the better in 1991 after extensive economic reforms. By ridding the old socialistic license raj system,
Indian entrepreneurs no longer needed to worry about excise officers in order to achieve their business goals. This
encouraged them to start focusing on expanding their markets and acquiring more customers
Rapid economic growth has resulted since the removal of the license raj. For instance, the Indian economy has
sustained an average growth rate of over 6% annually, with the gross domestic product or GDP being around 9.2 %
between 2006 and 2007. In the past decade, India's GDP has also arisen from 21 % to 33 %, and India's foreign
exchange reserves have reached over $200 billion. Domestic markets have also grown substantially to support
innovation. Worldwide, India's vast economic success is recognized by many national and international corporations
who have not only taken advantage of its pool of high-quality scientific talent but have also established many
research and development facilities (R&D) throughout India.
Today's promising market conditions have been very encouraging to many young engineering graduates who
strongly believe that they have the technical knowledge and skills to attract new customers. These young Indian
entrepreneurs are not the typical and conventional business entrepreneur. They are the children of many business
professionals. As elite graduates of IITs, National Institutes of Technology, Indian Institute of Science, and the IIMs,
this new young breed of worthy entrepreneurs have targeted their efforts on innovative ways to technologically
address the genuine needs of millions of people.
In the past few years, entrepreneurship in India has slowly taken off. Indian engineers who migrated to the United
States in the eighties have found the U.S. to be a haven for entrepreneurial pursuits and have become highly
successful in their respective fields. They initially started high technology product companies in Silicon Valley that
primarily focused on solving critical market problems. Most of these Indian entrepreneurs, after making fortunes by
excelling in their respective market segments, started helping entrepreneurs in India with start up companies.
The rapid success of Indian American entrepreneurs has led to vast angel investments in India. Organizing
themselves into angel confederacies after the Band of Angels in the Silicon Valley, each member diligently
researches and pools their own capital for each prospective investment. Being known for founding and establishing
well-known companies such as Symantec, Logitech, National Semiconductor, Sun Microsystems, Hewlett Packard,
and Intuit, etc., these angel investors like to invest their time and money into new, cutting edge, start-up companies.
This trend has boasted the pace at which new startups are being established in India.
India offers a unique incubation environment for most entrepreneurs, greatly distinguishing it from other western
democracies. A country where almost 50% of the Indian population is below 35 years old, it is apparent that India
has a large working class. Ineffective political regimes have been enforcing their outdated ideologies on this
dynamic young population. In addition, these young Indians have become acclimated to non security related civic
amenities such as laying roads, clean drinking water, and appropriate health services from the government. Most of
the civic amenities are in shambles. In fact, situations in India have become so slow that the Indian government
needs 6 months to execute the very same civic infrastructure project that the Chinese government executes within a
couple of days.
Because of such ineffective government implementation, the entire society of India has become chaotic. For
example, traffic conditions in India are considered to be horrendous. Since there are no existing highways and a
basic auto infrastructure, it takes the average commuter about an hour to travel approximately 10 miles. In addition,
shipping in Indian ports is in shambles. A typical entrepreneur has to wait in a queue at the sea port to get his/her
products exported to a foreign country. Although this may sound quite daunting, it is this very chaotic environment
that train Indians how to make sure that things get done in time irrespective of the hurdles.
Although the roads are terrible and the ports have waitlists, most Indian businesses try out creative strategies to
make sure their services or products reach overseas customers on time. It is this struggle to stick to the promised
schedule that really differentiates an Indian entrepreneur from his/her western counterparts. Indians grow up in a
chaotic environment and learn how to manage their lives in such bleak environments. Indian entrepreneurs are
groomed to get things done, no matter what the odds are.
Entrepreneurship and Challenges to India's Growth
The Joint Family Structure, a peculiarly Indian phenomenon, has powered the success of many Indian businesses.
But that success has, in turn, been enabled by the broad sweep of economic liberalization in India. That success will
continue only if the reforms continue and if the risks that could derail the growth terrorism, political
corruption/stalemate, stalled reforms and growth that focuses only on the urban rich are contained. Readers will
learn what needs to be done to maintain business as usual.
The Indian state makes Indians entrepreneurial, as to overcome basic constraints and succeed with what we have we
have to innovate and improvise. This article will describe how the Indian Family Business and its entrepreneurial
spirit play an important role in Indias growth. In the first part of the article, I discuss its characteristics and
survivability in the global environment. In the second section, I discuss the challenges corruption, terrorism, and
unfinished economic reforms that India faces and their impact on foreign businesses that want to invest in the
country.
Indian entrepreneurship
Before 1991, Indian business success was a function of ambition, licenses, government contacts, and an
understanding of the bureaucratic system. Decisions were based on connections, rather than the market or
competition. Business goals reflected a continuation of the Swadeshi movement, which promoted import
substitution to attain economic freedom from the West. Pre-1991 policies were inward looking and geared towards
the attainment of self-reliance. During this era, entrepreneurship was subdued, capital was limited and India had
very few success stories. As well, society was risk averse and the individual looked primarily for employment
stability.
In 1991, the Indian government liberalized the economy, thus changing the competitive landscape. Family
businesses, which dominated Indian markets, now faced competition from multinationals that had superior
technology, financial strength and deeper managerial resources. Thus, Indian businesses had to change their focus
and re-orient their outlook outward. A few existing Indian business families adapted to the new economic policy
while others struggled. Importantly, a new breed of business was born, one that focused on ICT (Information and
Communication Technology) and created wealth for owners and employees.
For the old business houses, success had come from the close-knit joint family structure that fosters family values,
teamwork, tenacity and continuity. Under this structure, generations lived and worked together under one roof,
reaffirming the Weberian values and trust that have built successful businesses. Wealth from the businesses
supported the joint family by providing a social safety net for members. In the structure, businesses and families
were intertwined though they were also distinct entities with separate rules. Hence, survival of the family became
synonymous with the survival of the business.
Liberalization, however, changed the very nature of the joint family. If large Indian businesses were to succeed, the
family would have to re-orient itself to compete in a global, competitive environment.
Post liberalization, IT businesses succeeded because they were customer focused and professionally managed. The
old, family-managed businesses, which formed the backbone of the economy, needed to evolve and become more
institutional, if they were to extend their life cycle. Below, using the Indian mythology trinity of creation,
preservation and destruction, I explain the changes that family businesses would have to make below.
Brahma: Creation Cycle
After liberalization, business opportunities in India were manifold. A good number of entrepreneurs seized them and
grew from small-scale contractors to large real estate developers, and from distributors to manufacturers. Success
became the result of efficient capital allocation, strong execution and a customer orientation.
Today, businesses have access to venture and growth capital, provided that their stories and business models are
reasonable. In the pre-1991 License Raj era, abilities such as manufacture and deliver products to the market were
the Key Success Factors, without regard for the customer and other efficiencies. Liberalization also brought in the
age of Saraswati [Goddess of Learning in Indian mythology]; businesses would now grow because they had
knowledge, , not because of whom they knew.
One example is N.R. Narayana Murthy, who co-founded Infosys Ltd. in 1981, with an initial capital of INR 10,000
(CDN$ 250.00). At Infosys, he and his team designed the Global Delivery Model, which also laid the foundation for
the knowledge industry. Narayan Murthys vision gave a fillip to the IT services industry, creating and encouraging
the entry of several new IT businesses.
Vishnu: Preservation Cycle
To maintain business growth, Indian entrepreneurs need to segregate operating control of the business from
beneficial ownership, mitigating business and family succession risks. But, in a male-centric culture, people are
reluctant to relinquish operating control and institutionalize processes. Consequently, there are few large, structured
and professionally managed institutions in India.
Indian businesses need to move from an entrepreneurial-driven, unstructured culture to one dominated by
professional managers. Management control should rest with professionals, as they are able to perform more
efficiently; beneficial ownership can continue to rest with the owners, who can still provide the vision and
connections, and enjoy the fruits [increase in firm valuation] of efficient management.
If a younger generation wishes to take over the business, then clear criteria can be defined to determine their
eligibility to succeed their elders. These criteria could include requirements to work in middle management, work
across divisions, work in audit, and have a first-class education. Succession must also take into account the changing
role of women and their desire to be involved in the business. If a proper succession plan is not developed and
implemented, nepotism and stagnation will result.
Essentially, corporate governance with a lucid ownership structure that blends effectively with the professional
decision makers [e.g. CEO] can reap benefits for all stakeholders. This will allow entrepreneurs to build larger
institutions.
Sunil Mittal, a first generation entrepreneur, indentified an opportunity in mobile telecom. In 1994, Mr. Mittal
successfully bid for a telecom license , and services were launched under the brand name AirTel. The business
model was innovative IT management services and hardware (telecom towers) were outsourced to vendors. Fixed
costs were converted to variable costs. Mr. Mittal was able to professionalize the organization early, something that
helped him build a larger institution. As a result, India now has one of the lowest-priced telecom services in the
world.
The Burman Family, which owns Dabur Ltd. (consumer goods company), has is a good example of a family
company that segregated management from ownership. It has a separate Family Committee that provides the vision
and direction, but the day-to-day management rests with the professionals. The family has a formal structure for
communicating with management.
As Indian businesses became professional, opportunities to acquire global businesses increased. In 2006, Corus, an
Anglo-Dutch steelmaker accepted an US$7.6B bid by Tata Steel, the Indian steel company. This allowed Tata Steel
to become a global leader in the steel business instead of continuing to remain a large domestic steel manufacturer.
Once an acquisition target, Tata Steel has itself grown into an acquirer. .
Shiva: Destruction (Exit) Cycle
Owners should exit their business if it is not efficiently managed or if it receives exceptional valuations. A controland-hold behavior will simply not enable success. We have seen that a few owners, Malvinder & Shivinder Singh,
and Ajay Piramal, for example, both in the pharmaceutical industry, have successfully sold their businesses.
As businesses grow, entropy will only increase. The discontinuity will be difficult to manage if a formal family
structure is not in place to meet the needs of the next generation. However, if roles and responsibilities of the next
generation are defined, and professional management (wherever necessary) takes over, closure of the business can
be avoided. As it is said, a lack of liquidity can bankrupt a firm; similarly, the lack of an appropriate family structure
can force a business to close after the first generation exits. Thus, Indian owners have to make the transition from
being owners to shareholders.
As shareholder value increases, the free cash flow can be invested in new initiatives that enable the new generations
to apply their skills. We need not throw away the characteristics of the joint-family business work ethic, ability to
deal with diversity, customer focus but to blend what has been learned about customer focus and diversity, for
example, into a performance-driven structure. Only then can the investment cycle of creation, preservation and
destruction continue.
Risks to Indias growth: Real but overstated
The Indian entrepreneurial spirit can only develop and grow if the Indian economy continues to grow on a
sustainable basis. The risks to Indias continued growth are terrorism, political corruption/stalemate, non-inclusive
growth that focuses only on the urban rich, and stalled reforms. What then is Indias risk premium?
As the investment cycle strengthens, foreign businesses can invest in India independently or through partnerships.
The businesses factor the political, economic and family risks in their analysis. From an academics perspective, the
businesses can either decrease the expected cash flows or increase the discount rate to reflect risk premium, though
the adjustments are complex. However, I view investments in India as a strategic decision. Below I discuss the risks
and my understanding of them.
Terrorism: India is a stronger state because of its culture
As per Wikipedia, Terrorism in India is primarily attributable to religious communities and Naxalite [militant
Communist Group] radical movements. I am not going to elaborate on the causes of terrorism but I do want to ask
if India as a country will survive and remain united despite the nefarious activities of the insurgents. It can be stated
unequivocally that terrorism creates uncertainty and delays investments in any country. However, we need to
comprehend a countrys culture, constitution and its past response to terrorism to consider and assess its fate.
Culture is a broad-based word but a powerful concept. Culture is rooted in myths, institutions, television,
globalization, upbringing, religion and history. Foreigners have invaded India, but we have learnt to absorb and
assimilate them into our society. India has the second-largest Muslim population in the world. Buddhism and
Jainism had their roots in India but only traces exist today, as Hinduism absorbed their teachings. The Indian culture
is tolerant and can deal with differences. The difference between Europe and India is that Europe is a continent with
independent countries while India is one country that has united many divergent countries.
The Indian culture is also resilient and able to respond sensibly to any terrorist activities. As evidence, Indians
response to the November 26th 2008 terrorist attack in Mumbai was balanced and restrained. I am confident that,
given Indias history and behavior, we will remain united as a country.
At the same time, Indian businesses have shown the entrepreneurial skills and flexibility to grow despite the
challenges. For instance, an Indian entrepreneur in Afghanistan is assisting the government to develop that countrys
infrastructure. C&C Construction Ltd, incorporated by a group of professionals in 1996, ventured into Afghanistan
in 2002. It has built 700 km of roads, and works closely with USAID, the World Bank and the Asian Development
Bank. C&C Construction will also work closely with the Indian Government to build the Afghan parliament
building.
Political risk: Uncertainty will remain
India is a complex country with myriad castes, religions and languages. The political parties have evolved to address
their needs and give the minority groups a platform and a voice that are heard at the national level. The foreseeable
future will be characterized by coalition politics. It is unlikely that either of the two major political parties BJP or
Congress will win a majority. This is a reality, but India has the experience to manage the political processes and
differences
It is evident that a coalition government slows the reform process. However, it is a positive development, that,
irrespective of the coalition government (lead by either BJP or Congress), we have stayed the path of liberalization.
There are no major differences between Congress and BJP as far as economic policies are concerned, and both favor
economic reforms. And, as Indias middle class grows, the importance of religion and caste will diminish; the focus
will be only on growth. Economic progress will change Indias political landscape for the better and further improve
political stability.
Economic reforms need to continue
Growth needs to continue and India needs another dose of reform, aimed at markets for inputs, from electricity
to labor and land They [1991 reforms] freed markets for products. [The Economist, July 2011]. If we are to
continue to maintain the growth trajectory, the market for inputs needs to be liberalized. These are difficult political
decisions and coalition politics will make the process slower and difficult.
It will be easier for the government to address and repair old infrastructure through public private partnerships. India
is going through a structural not a cyclical change; hence, the process is slow and driven by the political
process. We need investments in power, roads, ports and bridges. An important area of reform is the power sector, as
no industry can achieve a successful transformation without sufficient power. This is why the Indian government
needs to push through the reforms on power generation, transmission and distribution.
Corruption could be viewed as one of the reasons for the slow pace of economic reforms. Overspending on the
Commonwealth Games and the Department of Telecoms under-pricing of 2G spectrums resulted in heavy losses for
the exchequer. Indians frustrations were channeled through the Gandhian leadership of Anna Hazare. The peaceful
protests were successful and the country will get an independent ombudsman, the Lokpal (protector of the people),
who will investigate alleged corrupt practices of politicians and bureaucrats. This demonstrates the fact that we have
the institutions, leadership and most importantly, the grass root activism to effectively mould decision-making at a
national level. This will create a positive environment for further economic reforms.
We also have the positive experience of the past decade, for which both political parties, the BJP and Congress, were
responsible. However, future reforms have to be inclusive and supportive of the economically disadvantaged. The
Left parties do not support economic reforms. Their thoughts are focused inward on how India can continue to grow
economically on its own. As the Left parties are a minority on the Indian political scene and the Congress and BJP
political parties are supportive of the economic reforms, it is unlikely that the reform process will be derailed.
What then is Indias risk premium? I believe that it varies according to ones viewpoint. Politics is an important
factor that impacts the investment cycle. Hence, it is essential that the Indian government address issues of
corruption and continue with the next phase of reforms to accelerate the decision-making process. Reform will
continue but at its own pace. I have observed that companies that have taken risk and stuck to a sound business plan
succeed in India. They have both sold their wares domestically and exported talent and products.
It is difficult to dampen the Indian entrepreneurial spirit. It has grown and competed in the global market despite the
controls of the Indian government. Entrepreneurs have shown their ability to adapt to the changing economic
environment and deal positively with the uncertainties in the market place. Yes, the joint family structure the
spawning ground for entrepreneurs continues to evolve and compete effectively in the world market. But if that
success is to be sustained, the economic reforms will also have to continue.
Risk Management
Knowledge
Areas
Major
Processes
RISK
Its risky to have

an IQ in DC.
Risk
Management
Planning
Deciding how to
approach and
plan risk
management
activities.
Primary Inputs
Tools &
Techniques
Primary Outputs
1. Enterprise
Environmental
Factors
1. Planning
meetings and
analysis
1. Risk management
plan
1.Documentation
reviews
1.Risk Register
2. Organizational
Process Assets
3. Project Scope
Statement
4. Project Management
Plan
Risk
Identification
Determining
which risks are
likely to affect
the project &
documenting
1. Enterprise
Environmental
Factors
2. Organizational
2. Info-gathering
their
characteristics
Process Assets
techniques
3.Risk management plan 3. Checklist analysis

4. Project Scope
Statement
4. Assumptions
analysis
5. Project Management 5. Diagramming

Plan
techniques
Qualitative Risk Assessing the
Analysis
impact and
likelihood of
identified risks.
1. Organizational
Process Assets
2. Risk Register
3. Project Scope
Statement
1. Risk probability 1.Risk Register

& impact
(Updates)
assessment
2. Probability and
impact matrix
3. Risk data quality

4. Project Management assessment
Plan
4. Risk Categorization
5. Risk urgency
assessment
Quantitative
Risk Analysis
A process that
analyzes
numerically the
probability of
each risk and its
consequence on
project objectives
1. Organizational
Process Assets
2. Project Scope
Statement
3. Risk Management
Plan
1. Data Gathering 1. Risk Register

and representation (Updates)
techniques
(Interviewing,
probability
distribution and EJ)
2. Quantitative Risk
4. Risk Register
analysis & modeling
techniques.
5. Project Management (Sensitivity, EMV,
Plan
Decision Tree)
* Project Schedule
Management Plan
* Project Cost
Management Plan
Risk Response
Planning
Developing
1. Risk Management
options &
Plan
determining
2. Risk Register
actions to
enhance
opportunities to
reduce threats to
project objectives
1. Strategies for
negative risk or
threats
2. Strategies for
positive risk or
opportunities
1. Risk Register
(Updates)
Plan (Updates)
3. Risk related
contractual agreements
3. Strategies for both

threats and
opportunities
4. Contingency
response strategy
Risk Monitoring Tracking identified 1. Risk Management
& Control
risk, monitoring Plan
residual risks, and
2. Risk Register
identifying new
risk, ensuring the
execution of risk 3. Approved Change
Requests
plans and
evaluating the
effectiveness in 4. Work Performance
Information
reducing risk.
1. Risk
reassessment
1. Risk Register
(Updates)
2. Risk audits
2. Requested Changes
3. Variance and trend 3. Recommended

analysis
Corrective actions
4. Technical
performance
measurement
5. Performance Reports
5. Reserve analysis
6. Status Meetings
4. Recommended
Preventive actions
5. Organizational process
asset (Update)
Plan (Updates)
Project risk Is an uncertain event or condition that, if it occurs, has a positive or a negative
effect on a project objective.
A risk has a cause and, if it occurs, a consequence. Risk identification is an iterative process.
(Just like core process). Objective is to decrease the probability and impact of negative events
and vice versa.
1. Risk Management Planning: deciding on how to approach, plan and

execute risk mgmt activities for a project.
2. Risk Identification: determining which risk can effect the project and
documenting their characteristics.
3. Qualitative Risk Analysis Prioritizing risks for subsequent further analysis
or action by assessing and combining their probability of occurrence and
impact.
4. Quantitative Risk Analysis Numerically analyzing the effect on overall
project objectives of identified risks.
5. Risk Response Planning: developing options and actions to enhance opps
and reduce threats to project objectives.
6. Risk Monitoring and Control: tracking identified risk, monitoring residual
risks, identifying new risks, executing risk response plans and evaluating their
effectiveness though the project life cycle.
RMP: it is input to cost and time estimating, schedule development and cost budgeting.
I/P: EE factors (attitude towards risk and tolerance, which can be found in policy statement or
revealed in actions), OP assets, Project scope statement, PMP
TT: Planning meetings and analysis: Risk cost element and schedule activities will be developed
for inclusion in the project budget and schedule respectively. Responsibilities will be assigned;
templates will be tailored for use later.
Output:
Risk Management Plan Describes how Risk Management will be structured and performed, it
includes
1. Methodology (Approach, tools and data sources)
2. Roles and responsibilities
3. Budgeting (assign Resources and estimated Cost for inclusion in cost
baseline)
4. Timing (When and how often; includes risk activities in project schedule)
5. Risk Categories (RBS, Good practice is to review risk categories during RMP
prior to Risk Identification Process)
6. Definition of Risk Probability and Impact (Definition of probability and
impact)
1. Probability and Impact Matrix (Look up table, with impact
categorized as Low, Moderate or High)
7. Revised Stakeholders tolerances
8. Reporting Formats (Describes Risk Register Contents and format)
9. Tracking (Auditing and Documentation for current project, future needs and
LL)
Risk Types 1. Business (Gain or Loss) 2. Pure Risk (Only Risk of Loss)
Attitude about Risk Should be made explicit, Communication about risk should be honest and
open. Risk response reflects organizations perceived balance between risk taking and risk
avoidance. Some one who does not want to take risks is said to be Risk Averse.
Tolerance and Threshold Tolerance are areas of risk that are acceptable or unacceptable. A
threshold is the amount of risk that is acceptable. You use this information to help assign levels
of risk on each work package.
Risk Identification
IP: EE Factors, OP assets, project scope statement (assumptions), risk management plan(R&R,
RBS, risk provisions), project management plan
Tools: Documentation reviews, info gathering techniques (Brainstorming, Delphi tech,
interviewing, RCA, SWOT); Check List Analysis based on Historical information of previous
similar projects. The lowest level of RBS is used as Risk Checklist; Assumption analysis;
Diagramming tech: C&E, system/process flow chart, influence diagram,
OP: Risk Register
Delphi tech: is a way to reach a consensus of experts, questionnaire is sent to solicit ideas and
responses are summarized and re-circulated to the experts. Consensus is reached in few rounds.
It helps to reduce bias in the data and keeps any one perform fro having undue influence.
Qualitative Risk Analysis: focuses on prioritizing risks using probability and impact of the risk
as well as time frame and risk tolerance. It also leads to over all risks of the project. It is also
known as Risk assessment.
IP: OP assets, project scope statement, RMP, Risk Register,
TT: Risk probability and impact assessment, Probability and impact matrix, Risk data quality
assessment, Risk Categorization (based on common causes, using RBS/WBS/Phases), Risk
urgency assessment.
OP: risk register (updates)
Quantitative Risk Analysis: it assigns numerical ranking to the prioritized risks primarily uses
Monte Carlo Simulation and Decision Tree Analysis. It should be redone after RRP and RMC to
asses risk reduction.
IP: OP Assets, Scope Statement, RMP, Risk Register, PMP (SMP, CMP).
TT:
1. Expert Judgment
2. Data Gathering and Representation Techniques
o
Interviewing,
Probability Distribution Beta Distribution and Triangular

Distribution can use ordinal or cardinal values. Both uses 3 point
estimates and are continuous distribution. Decision tree uses
representation of discrete distribution. Uniform distribution can be used
when no obvious value in early concept stage of design.
3. Quantitative Risk Analysis and Modeling Techniques

o
Sensitivity Analysis Determine which risks have most potential

impact, Tornado Diagram (compares relative importance of variables
that have a high degree of uncertainty to those more stable)
Expected Monetary Value Opportunity expressed as Positive, Risk

expressed as negative example Decision tree. Modeling and Simulation
is recommended for Cost & Schedule Risk analysis because they are
more powerful and less subject to misuse than EMV analysis.
o
Decision tree analysis Shows available choices and their possibilities

with more complex process than EMV. It assumes mutual exclusivity.
Modeling and Simulation Done using Monte Carlo Technique. In

simulation project model is calculated many time (iterated), with the
input values randomized from a probability distribution function and a
probability distribution is made. Cost Risk Analysis use CBS or WBS.
Schedule Risk analysis use PDM.
OP: Risk Register (updates)
Risk Response planning: it creates owner for each agreed to and funded risk. Risks responses
are developed in risk planning and risk response planning stage
IP: RMP, Risk Register
TT: Strategy for negative risk (avoid, transfer, mitigate), Strategy for positive risk ( exploit,
share, enhance), for both acceptance, contingent response strategy,
OP: Risk Register (Updates), PMP (updates), Risk related contractual agreement.
Risk Management Control

Process of identifying, analyzing and planning for newly arising risks, keeping track of identified
risks and those on the watch list, reanalyzing existing risks, monitoring trigger condition for
contingency plans, monitoring residual risks and reviewing the execution of the risk responses
and their effectiveness.
IP: RMP, Risk Register, App CRs, work performance Info
TT: Risk reassessment, Risk Audits, Variance and trend analysis, Technical performance
measurement, reserve Analysis, Status Meetings (RM is an agenda)
1. Risk Audits: examine and document the effectiveness of risk responses in
dealing with identified risks and their root causes, well as the effectiveness of
the risk management process.
2. Variance and trend analysis: reviewed using performance data, EV anal

and other methods used. Measure overall project performance deviation from
baseline indicating the potential impact of threats or opps.
3. Technical performance measurement: compares technical
accomplishments during project ececution to the PMPs schedule of technical
achievement. Reveals degree of success in achieving projects scope.
4. Reserve Analysis: it monitors contingency reserves remaining to the
amount of risk remaining at any time in the project in order to determine if
the remaining reserve is adequate.
OP: Risk register (updates), CRs, recommended CAs and Pas, OP asset (update), PMP (update)
Risk Register (O/P of Risk Identification)

1. List of Identified Risks (including root causes and assumptions)
2. List of Potential Responses
3. Root causes of Risks
4. Updated Risk Categories (RBS which is developed in RMP is enhanced or
amended)
Updates after Qualitative Risk Analysis

1. Relative Ranking or Priority list of Project Risks
2. Risks grouped by categories
3. List of Risk requiring Response in the near term
4. Watch list of low priority risks
5. Trends in Relative Risk analysis results
Updates after Quantitative Risk Analysis

1. Probabilistic Analysis of the project: this output typically expressed as a
cumulative distribution is used with stakeholder risk tolerances to permit
quantification of the cost and time contingency reserves
2. Probability of Achieving Cost and Time Objective
3. Prioritized List of Quantified Risks

4. Trends in Quantitative Risk Analysis Results
Updates after Risk Response Planning

1. Identified Risks, their descriptions, areas of the project and how they affect
project objectives
2. Risk owners and their responsibilities
3. Agreed upon response strategies
4. Symptoms and warning signs of risks occurrence
5. Budget and Schedule activities required to implement the chosen responses
6. Contingency reserves of Time and Cost and Triggers.
7. Fallback plan
8. Residual and Secondary Risks
Risk Response Planning Techniques

Strategies for Negative Risks or Threats
Avoidance (elimination/abatement) Eliminate the threat posed by an

adverse risk. Can be done by changing the Project Plan or protecting
(isolating) project objectives from its impact. Or relaxing time, cost, scope
and quality or cut scope
Mitigation (reduction) Reduce the Expected Monetary Value by reducing

probability or impact. Float can be use to mitigate potential risks. Reduction
in the probability or impact of an adverse risk. Adoption less complex
processes, conducting more tests, stable supplier.
Transfer Deflect or share (eg. Insurance, warranties). Shifts the negative

impact of a threat to a third party it doesnt eliminate it, insurance,
performance bonds, warranties, guarantees etc,
Strategy for positive Risks or opps
Exploit: assigning better quality resource to reduce time to complete
Share: allocating ownership to third party who has expertise.
Enhance: by facilitating or strengthening the cause of the opportunity,

targeting its trigger.
Strategy for both
Acceptance Accept or retain consequences. 2 types: Active Acceptance

(develop a contingency reserve) or Passive Acceptance (no action).
Residual Risks Risks that are expected to remain after planned responses have been taken, as
well as those have been deliberately accepted.
Secondary Risks Risks that arise as a direct outcome of implementing a risk response.
Recommended Corrective Actions For Risk monitor and Control include Contingency plans
and workaround plans.
Workaround Unplanned response to negative risk events (requires to be impacted by the risk
first).Work around plans are not initially planned but are required to deal with emerging risks that
were previously unidentified or accepted.
Contingency Plan Planned action steps to be taken if an identified residual risk occurs. (e.g.
developing alternative activity sequences). It is for the risks which are accepted.
Contingency Reserve: calculated based on the quantitative analysis of the project and
organization risk thresholds.
Fall Back Plan: It is plan executed when contingency plan is not effective.
Risk database A repository that provides for collection, maintenance, and analysis of data
gathered and used in the risk management processes.
Types of Risk
Business
Pure / Insurable
Normal risks that offer gain and loss

Only loss: property damage, indirect consequential loss, legal liability,
personnel. For risk we can outsource, we have contract. For pure risks,
we obtain insurance.
Statistical
Independence
Occurrence of one event is not related to occurrence of the other
Data Precision
Ranking
Purpose is to test the value of data (input to Qualitative Analysis)
Path Convergence
Tendency of parallel paths of equal duration to delay the completion of

the milestone where they meet. It is characterized by schedule activity
with more than one predecessor activity
Uncertainty
An uncommon state of nature, characterized by the absence of any

information related to a desired outcome.
Expected Monetary
Value
= Probability * Monetary Impact (used in Decision Tree Analysis)
Risk Event
A discrete occurrence that may affect the project for better or worse.
After a risk event, the project managers role is to reassess the risk
ranking. The risk owner is responsible to take action when an identified
risk occurs.
Risk Trigger
A symptom of risk; indirect manifestation of actual risk event; output of

risk identification; example is poor morale
Risk Portfolio
Risk data assembled for the management of the project
Utility Theory
Technique that characterizes an individuals willingness to take risk
Sensitivity Analysis
Places a value on the impact to the project plan by adjusting a single

project variable; simplest form of analysis
Risk Auditor
Role is to investigate the effectiveness of the risk owner (which can cause potential
conflict with risk owner)
Numbers to Know
Cost Estimates:
Order of Magnitude
(ballpark estimate)
-25%
Budget
-10%
+75%
Definitive
-5%
+25%
+10%
1 sigma
68.3%
2 sigma
95.5%
3 sigma
99.7%
6 sigma
99.99%
The range of an estimate with the smallest range is the least risky.
Documentation
Risk Management Plan would most likely be developed during scope planning phase of the
scope management process.
Decision Tree Analysis 1. Takes into account future events in trying to make decision today
2. It calculates EMV in more complex situations 3. Involves mutual exclusivity
Fall back Plan Specific actions that will be taken if the contingency plan is not effective.

New

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

New

Uploaded by

Copyright:

Available Formats

, ,

": , : 100% "

Mumbai, Bangalore among cheapest cities in world

To get such articles in your inbox

Image: Mumbai among world's cheapest cities.

Image: Bangalore 2nd among worlds cheapest cities. Photograph: Reuters

Image: London was sixth in the list. Photograph: Reuters

Image: Singapore was ranked the most expensive city. Photograph:

Idea Launches Language Helpline

Virtual Learning Environment

Saturday, 5 March 2016, 04:16 PM

Meaning and Definition of Advertisement Campaign

4.2 Big idea

4.3 Creative Execution

Advertisement Vs Advertisement Campaign

Advertising Campaign: A Technique for Integrated Marketing Communications

Advertisement Campaign Management

Advertisement Campaign Planning

understand the meaning of ad campaign,

appreciate the need to understand elements of ad campaign,

understand the meaning of marketing communication,

conceptualize the concept of integrated marketing communication,

understand advertising campaign as a technique for integrated marketing communication,

differentiate between advertising and advertising campaign,

explain the management of advertising campaign,

appreciate the importance of process of planning in advertising campaign.

Figure 1: Click on the link below to view an example for Ad Campaign

Value Addition 2: Fevicol campaign

Unique Selling propositions

Value Addition 4: Did You Know?

Tiff between Horlicks and Complan

Ad Campaign of Bharti Airtel

4.3 Creative Execution

Value Addition 8: Did You Know?

Ad campaigns of Vodaphone, Fevicol and Amul

Source: http://economHYPERLINK "http://economictimes.indiatimes.com/et-now/brand-equity/top-threeadvertising-campaigns-of-the-decade/videoshow/5407309.cms"ictimes.indiatimes.com/et-now/brandequity/top-three-advertising-campaigns-of-the-decade/videoshow/5407309.cms

Advertisement Vs Advertisement Campaign

Figure 4: Click on the links below to see the ads

Celebrities/ Celebrity voice

Catch phrases/ Taglines

Idea Musical Ads

Online Polling to choose Best Ad

Advertising Campaign: A Technique for Integrated Marketing Communications

Advertising in magazines, Television, Radio, Newspaper, Billboards

Promotionincludes contest, coupons, discounts, offers

Public relations and publicity

Relation between Advertising Campaign and Integrated Marketing Communication

Advertisement Campaign Planning

9.What are the fundamentals to ad Campaign ? Describe.

In the proprietorship, the owner has full responsibility for operations.

In a partnership, there may be owners with general or with limited ownership.

In the corporation, ownership is reflected by ownership of shares of stock.

The more complex the organization, the more expensive it is to start.

The corporation can be created only by statute.

Filing fees and an organization tax may be incurred.

Legal advice is necessary to meet the statutory requirements.

o A limited partner may be replaced, depending on the partnership agreement.

In a proprietorship, the entrepreneur has the right to sell any assets.

In a corporation shareholders may transfer their shares at any time.

Often an entrepreneur will take a second mortgage as a source of capital.

In the corporation, new capital can be raised by:

Control of day-to-day business is in the hands of management.

Major long-term decisions may require a vote of the major stockholders.