Internal Assignment for September 2023 Examination

Subject: Entrepreneurship and Venture Capital Management

(Q. 1) Answer:
Introduction-
The Business Model Canvas:
The purpose of business model preparation is to the canvas as a tool for strategic
management and entrepreneurship. It gives the ability to describe, design, test, invent, and
pivot the business model. The visual chart of the business canvas model includes 9 building
blocks which are key activities, key resources, key partners, value propositions, customer
segment, channel, customer relationships, and cost structure and revenue stream. BMC is
currently a standard that is used by both start-ups and large corporations. The BMC is
concerned with the external customer as well as the internal operations. The business model,
which argues that the interaction between the organization and customer is critical, brings
together both external and internal factors. As a result, it will help to take the business to the
next level of success.
If everyone wants their organization to reach its aims and objectives, there must gather data
and develop a strong business strategy. With the help of the BMC, can develop a
comprehensive view of the business value proposition, operations, customers, and finances.
Furthermore, the Business Model Canvas aims to save time by allowing us to send messages
in the canvas template with just a single word. The BMC is used to determine target market
segments and how to reach them. This is quite useful in determining where we should focus
our time and effort in order to create and build our business. Furthermore, the business model
canvas is built in such a way that the entire team, as well as investors, can know it. The
business model canvas was also utilized to get any bank loan, including capital loans and
other sorts of loans. In a nutshell, the Business Model Canvas is another design that aids a
company is focusing on and communicating its goals. Lastly, used BMC also helps to
understand better our goal which should be along with our business activities.

Business Canvas Model to start Restaurant/Café by Vignesh.

Vignesh should follow the nine steps which comes under Business canvas model as follows.
1. Customer Segments:
Defines the different groups of people or organizations an enterprise aims to reach and serve.
Customers comprise the heart of any business model. Without (profitable) customers, no
company can survive for long. In order to better satisfy customers, a company may group
them into distinct segments with common needs, common behaviours, or other attributes. A
business model may define one or several large or small Customer Segments. An
organization must make a conscious decision about which segments to serve and which
segments to ignore. Once this decision is made, a business model can be carefully designed
around a strong understanding of specific customer needs.
Customer groups represent separate segments if:
• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitability
• They are willing to pay for different aspects of the offer
2. Value Propositions:
Describes the bundle of products and services that create value for a specific Customer
Segment. The Value Proposition is the reason why customers turn to one company over
another. It solves a customer problem or satisfies a customer need. Each Value Proposition
consists of a selected bundle of products and/or services that caters to the requirements of a
specific Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle,
of benefits that a company offers customers. Some Value Propositions may be innovative and
represent a new or disruptive offer. Others may be similar to existing market offers, but with
added features and attributes.
3. Channels:
Describes how a company communicates with and reaches its Customer Segments to deliver
a Value Proposition. Communication, distribution, and sales Channels comprise a company's
interface with customers. Channels are customer touch points that play an important role in
the customer experience.
Channels serve several functions, including:
• Raising awareness among customers about a company’s
• products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support
4. Customer Relationships:
Describes the types of relationships a company establishes with specific Customer Segments.
A company should clarify the type of relationship it wants to establish with each Customer
Segment. Relationships can range from personal to automated.
Customer relationships may be driven by the following motivations:
• Customer acquisition
• Customer retention
Boosting sales (upselling)
5. Revenue Streams:
Represents the cash a company generates from each Customer Segment (costs must be
subtracted from revenues to create earnings). If customers comprise the heart of a business
model, Revenue Streams are its arteries. A company must ask itself, for what value is each
Customer Segment truly willing to pay? Successfully answering that question allows the firm
to generate one or more Revenue Streams from each Customer Segment. Each Revenue
Stream may have different pricing mechanisms, such as fixed list prices, bargaining,
auctioning, market dependent, volume dependent, or yield management.
A business model can involve two different types of Revenue Streams:
• Transaction revenues resulting from one-time customer payments.
• Recurring revenues resulting from ongoing payments to either deliver a Value Proposition
to customers or provide post- purchase customer support.
6. Key Resources:
Model work.
Every business model requires Key Resources. These resources allow an enterprise to create
and offer a Value Proposition, reach markets, maintain relationships with Customer
segments, and earn revenues.
Different Key Resources are needed depending on the type of business model. A microchip
manufacturer requires capital-intensive production facilities, whereas a microchip designer
focuses more on human resources. Key resources can be physical, financial, intellectual, or
human. Key resources can be owned or leased by the company or acquired from key partners.
7. Key Activities:

Describes the most important things a company must do to make its business model work.
Every business model calls for a number of Key Activities. These are the most important
actions a company must take to operate successfully. Like Key Resources, they are required
to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and
earn revenues. And like Key Resources, Key Activities differ depending on business model
type.
8. Key Partnerships:
Describes the network of suppliers and partners that make the business model work.
Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone
of many business models. Companies create alliances to optimize their business models,
reduce risk, or acquire resources.
We can distinguish between four different types of partnerships:
• Strategic alliances between non-competitors
• Competition: strategic partnerships between competitors
• Joint ventures to develop new businesses
9. Cost Structure:
Describes all costs incurred to operate a business model.
This building block describes the most important costs incurred while operating under a
particular business model. Creating and delivering value, maintaining Customer
Relationships, and generating revenue all incur costs. Such costs can be calculated relatively
easily after defining Key Resources, Key Activities, and Key Partnerships. Some business
models, though, are more cost-driven than others. So-called “no frills” airlines, for instance,
have built business models entirely around low Cost Structures.
Conclusion:
In conclusion, I hope that Vignesh’s restaurant has a bright future ahead of it, full of
opportunities and agreat version sight. The business model canvas (BMC), one of the tools
that canhelp to achieve goals by presenting with a plan for the business want to create. The
business model canvas consists of nine building blocks that include key partners, key
activities, key resources, customer segment, value propositions, customer relationships,
channels, and cost structure and revenue streams.

(Q. 2) Answer:
Introduction-
Private Limited Company:

A minimum of two members must establish a private limited company. A Pvt Ltd company is
a privately held business which can have a maximum of 200 members. There is no minimum
capital requirement, and only two directors are required to establish the company. The
members have limited liability at the time of loss or closure of the company. They are limited
to the extent of shares held by them. It is suitable for businesses that have a significant
turnover and need external funding.

Limited Liability Partnership (LLP):

A minimum of two partners establish a Limited Liability Partnership (LLP) through an

agreement. There is no minimum capital requirement to establish an LLP. The liability of the
members/partners is limited to the extent of their contributions to the LLP. Each partner is
responsible for their own acts, and they are not responsible for the acts of other partners. The
partners manage the business. LLP is suitable for start-ups, traders, and small to medium-
sized businesses that do not require much external funding.

If Aayush and Lakshmi are planning to start their own tutorials. Then I will suggest for
Limited Liability Partnership (LLP) business structure for their business set up.
I will be suggesting for LLP business structure since as follows.

 An LLP is easier to start and manage as it has fewer formalities.

 It has a lesser cost of registration compared to company registration costs.
 It is a corporate body having a separate legal existence from its partners.
 The death of a partner does not affect the existence of the LLP. It has perpetual
succession.
 It can be started with a minimal amount of capital.
 The partners have limited liability.

Starting a new business can be a rewarding experience for anyone. But setting up a business
can incur countless challenges. Selecting the right business structure is one of the biggest
roadblocks in a business journey. At present, new businesses have access to a slew of
business structures that are legally stable and adhere to plenty of benefits. That is where is
confusion can occur especially for start-ups that lack clarity on the same. In the recent past,
the structure like LLP has gained a lot of popularity in the business landscape owing to its
increased adoption. New businesses, in particular, are more inclined toward this business
structure considering the host of benefits it offers to the business owner.

New businesses do not usually have ample capital to initiate their business journey. Under
tight budgets, they probe every possibility to keep the irrelevant expenses out of the equation,
be it a matter of registering a company or partnering with vendors for raw materials.

LLP is a business structure that renders the pros of Limited Liability Company and flexibility
of a partnership firm. The existence of this business structure remains unaffected by changes
in partners. It allows the partners to draw a contrast with third-party firms and hold property
under its name. LLP for Start-ups seems more profitable, unlike other business structures, as
far as the magnitude of compliances is concerned.

It is one of that business structures that enable the business owner to keep stringent norms at
the bay. The cost of maintaining this business model is incredibly lower than the
counterparts like private and public limited companies. Where private limited companies
have to put in more effort and resources to maintain their compliances, LLP negates this
severe downside. LLP for start-ups is as good as other business structures when it comes to
legal stability.

Incur fewer expenses in terms of registration

LLP has an upper hand when it comes to the registration cost. One can get the private limited
company registered at Rs 15000. But once addressed such an expense, there need to pay an
additional 15000 bucks per year to ensure conformity with MCA’s norms, some of which
initiate as soon as you registered. Furthermore, you also need to confront audit expenses that
will cost you around Rs 15000. This implies that this business structure seeks Rs 45000 per
year.

An LLP, on the other hand, is way more affordable. It costs around Rs 11,000 to incorporate
and Rs 4000 to comply with MCA norms. Furthermore, only need to cater to audit requisites
once the business surpasses the minimum threshold of annual turnover and paid-up capital,
which is presently being capped at Rs. 40 lakh and Rs. 25 lakh respectively.
Conclusion

LLP is a perfect business structure for starts up a tutorial business by Aayush and
Lakshmi as far as the level of compliances and risks are concerned. It puts start-ups in a
commendable position by averting tedious legal requirements and let them stay isolated from
ever-changing compliances. Furthermore, it saves the partners from the risk of losing
personal assets under fiscal crisis. All in all, LLP seems to be a suitable business structure for
start-ups that are low in capital and are incapable to address compliances. Choosing a
business structure like LLP for start-ups is certainly a wise decision since it lures low set-up
costs and fosters improved transparency.

(Q. 3a) Answer:

Introduction-
Royal Textiles is the family business owned by Nair family since 1960’s. They are basically
into sales of small cloths, sarees, hand towels, etc. which is sold at a reasonable rate. It is
basically run by second generation and will move to third generation very soon.
Royal Textiles should expansion its business by use of innovation. Textiles and fashion is a
dilemma as it is one of the most consumed aspects of human lifestyle, but equally infamous
for polluting and endangering the well-being of only habitable planet in our solar system.
This makes the case for fashion innovation even more compelling and ethically pressing.
Then it comes to textiles and fashion, the innovative ideas.

The textile industry has undergone many changes in the last decade or so. Evolving fashion
choices, market trends, and user appeal are a few factors that have contributed to the overhaul
of the textile industry in India. It has gone from being a product-centric industry to being a
customer-centric one. For those might not be familiar with the textile industry, it involves the
design and production of yarn and clothing. Textiles are made from animal, plant, mineral,
and synthetic materials. They also include anything that is made from yarns, fabrics, or fibres.

The textile industry has always been a crucial part of the business sector. Using all resources,
which include, technology, textile, digital media, and experience, can certainly help in
transforming a traditional textile business into becoming a brand. Creating a brand out of a
business not only helps in creating a special and unique identity but also develops customers’
satisfaction and loyalty.

With the ever-changing fashion landscape, it’s become important for traditional textiles
brands to keep up with the latest fashion and design in order to stay relevant in today’s time
and age.

Even going forward the textile industry will be characterized by innovation and creativity,
with innovation not just being limited to adding new features to the garment, but also about
developing new ways to make garments more sustainable and affordable. Therefore, it is of
prime importance that companies spend time and effort on innovation today as it’ll help them
to stay competitive and also get ahead of their competitors in the near future. It will further
enable them to explore new markets, develop new products, and improve quality.
Royal textiles, first need to decide which aspect of business looking to transform, whether it
is brand-specific innovation that interested in or a customer-driven one. Then there are also
core innovations and industry trends to consider. Brand-specific innovations are ones that fall
within the confines the brand and can include anything that differentiates own business from
the competitors. Customer-driven innovations, on the other hand, take into account what
customers want and need. The goal here is to provide them with products that will meet their
needs better than any other company on the market.

Brand transformation also depends on innovating the core fundamentals of the business that
make it unique or different from other companies in the same industry. And while traveling
down the road of innovation, brands must also keep note of industry trends as these are
changes in the market that may not be specific to the company but can still give an added
advantage if is able to understand and use them effectively. Understanding the business
requirements up first and approaching innovation in a systematic manner can help reach the
goals more effectively and efficiently.

Moving on let’s highlight some of the key steps that will help to create a smart textile
strategy roadmap for Royal textiles brand. The first step is to identify the current competitive
landscape. Analysing factors like – What competitors are doing? How are they succeeding?
Who are the top brands in the industry and what do they offer? What is their value
proposition? – will help in understanding the current business environment and enable to
make effective strategies.

The second step is to create a vision for how want to position the brand in the future. What
does success look like for Royal textiles? And how do want people to perceive the brand and
its products or services? The third and final step is to define what it means for to be disruptive
and then develop a plan of action accordingly.

Brands in the textile industry should also look at incorporating digital technologies like
artificial intelligence for creating innovative solutions. Contrary to what might think AI can
be applied in many different ways in the textile sector. One of these is to help companies with
their design and production process. It can do this by providing data-driven insights,
generating new ideas, and streamlining the manufacturing process. Combined with machine
learning, AI can be increasingly leveraged in the textile manufacturing space to make the
entire process faster and more efficient. The use of AI and ML in conjunction with mobile
robots and cobots can help textile manufacturers in improving ergonomics and reduce
production costs.

Once Royal textiles business implements these steps into its working process, the road to
becoming a brand that can last for a long time, becomes clear and accessible to a great extent.
In short, preparing proper and detailed plans while including the market and fashion trends is
an important step to create a brand that can be recognized by people. A brand that is built to
last, is a brand that has loyal customers. In order to achieve this, any textile business should
never comprise its values, mission, quantity, and the promise of delivering the best luxurious
quality to its customer.
(Q. 3b) Answer:

Introduction-

Challenges of Family Business:

All businesses face challenges, whether it is dealing with the changing economy, finding and
hiring the right employees, or increased competition in the market. Family-owned businesses
are not immune to these challenges.

There is also a unique set of challenges that family-owned businesses have to face as a result
of the nature of their business structure. It is important to understand what these hurdles are
so that if you find yourself facing these issues, you can not only identify them, but you can
proactively develop ways to overcome them.

1. Family Problems:

Physical, emotional and financial problems among family members can greatly impact the
day-to-day operation of the business.

2. Information Culture and Structure:

For many businesses, having a laid-back culture is a positive. However, the informal structure
and culture found in many family businesses can equate to a lack of documentation, policies,
and defined strategy and goals.

3. Pressure to Hire Family Members:

It can be difficult to resist the pressure that comes along with requests from family members
who want to join the business. This becomes especially complicated if they lack the basic
skills and experience needed for the position.

4. Lack of Training:

The informal culture found in many family businesses can result in a lax approach to training
new employees, whether they are family members or not.

5. High Turnover of Non-Family Employees:

Non-family employees may feel that greater opportunities exist within the business for those
who are a part of the family and may grow tired of the culture.

6. Sources of Growth:

A huge challenge for family businesses can be determining where and how to get the capital
and resources needed to grow the business.

7. Lack of an External View:

While family members may not always have the same opinions, they often have similar
upbringing and life experiences which may lead to a uniform view of the business.
Businesses need to have external views of their company and their competition in order to
thrive.

8. Misunderstanding the Value of the Business and How It Is to Be Divided:

Owners of family businesses may have varying opinions on the value of their business, or
even worse, they may have no knowledge about the value of the business and what things
contribute to or detract from that value. Further complicating this matter is determining how
to split the profits of the business or owners’ stakes.

9. Accountability of business:

It is important for family businesses to plan ahead for business succession. Many family-
owned businesses do not have a plan in place and this can be a source of heated debate and
intense family politics when the time arises to select new leadership.

10. No Exit Plan

Family businesses often lack a defined strategy for what will happen if an owner wants to
retire, sell the business, or transfer responsibility. This goes hand in hand with succession
plan issues. All businesses need a plan for the future.

Advantages and disadvantages of family run business:

Advantages:

Stability- The leadership of a family business is normally determined by the position of each
individual in the family. As a result, there is generally longevity in leadership, which ensures
overall stability within a family-run business.

Commitment- Family firms tend to have a greater sense of commitment and accountability
at their heart than non-family firms, as it is not just the needs of the business at stake, but the
needs of the family too. This desire for both the family and business to stay strong fosters
additional benefits, including a greater understanding of the industry, the organisation and the
job; stronger customer relationships; and more effective sales and marketing.

Flexibility- Working in a family-run firm requires a lot of flexibility. While non-family

businesses tend to have very clearly delineated responsibilities for every role, family
members will sometimes be required to wear several different hats, taking on tasks outside of
their formal remit where needed.

Long-term outlook- Non-family firms draw up their goals for the next quarter. Family firms,
however, think years - or even decades - ahead. A longer-term perspective is a good way to
foster a culture of clear strategy and decision-making throughout the business.
Decreased cost- Economic downturns and other challenging times can be a struggle for
many businesses, where the board of directors needs to work out how to keep the business
afloat while still paying staff. In family firms, however, it will often be the case that family
members are willing to contribute financially to keeping the business afloat during times like
these.

Disadvantages:

A lack of family interest- In a family business, there can be a great deal of pressure on
future generations to keep the business going, even if they have no real interest in doing so.
This can result in a workforce - or worse, a management - consisting of family members who
are apathetic, unenthusiastic and disengaged.

Conflict between family members- The dynamic between different family members, family
(and business) history and a blurred boundary between family life and work life can all cause
conflict within any family-run business. And the family connections can often make such
issues difficult to resolve.

A lack of structure- Family business relies firmly on trust - but trust alone may not be the
best way. It is still vital to take rules seriously - both internal rules, and external corporate
law.

Nepotism- Some family businesses can fall into the trap of promoting family members to
senior management roles, even when it may be clear that the individuals within these roles do
not have enough education, experience or skills to fully embrace their responsibilities. In
these situations, it would be far more sensible to place more qualified non-family members in
these positions - but is this possible without causing friction within the family?

Succession planning- Research reveals that 62% of employees say they would be
significantly more engaged with their role if they knew their employer had a clearly defined
succession plan in place. However, many family business owners fail to create succession
plans, be this whether they feel that it is not needed until further down the line, or because
they refuse to admit that the time will come when someone else will need to take the reins.