Kalinga University

Faculty of Commerce and Management

Course- B.B.A. Sem-VI

Subject- Entrepreneurship Development
Subject Code: BBA601
Unit – 1

Very Short Questions

1. Who is entrepreneur?
According to F.A. Walker : “Entrepreneur is one who is endowed with more than average
capacities in the task of organizing and coordinating the factors of production, i.e. land, labour
capital and enterprises”.
2. What is Entrepreneurship?
Definition: Entrepreneurship refers to the process of creating and managing a business to
achieve a desired goal. It involves the identification and exploitation of opportunities, as well as
the willingness to take risks.
3. Who is intrapreneur?
Intrapreneurs work within existing organizations, bringing an entrepreneurial mindset to their
roles. They operate as employees but act with an entrepreneurial spirit to drive innovation
within the company
4. What is social entrepreneurship?
Social entrepreneurs are innovators who focus on creating products and services that solve social needs
and problems. But unlike scalable startups their goal is to make the world a better place not to make
market share or to create to wealth for the founders. They may be non-profit, for profit, or hybrid.
5. Define entrepreneur as an innovator.
Joseph A. Schumpeter Peter in 1934 assigned a crucial role of ‘innovation’ to the entrepreneur.
He considered economic development as a dynamic change brought by entrepreneur by
instituting new combinations of factors of production, i.e. innovations. The introduction of new
combination according to him, may occur in any of the following forms. (a) Introduction of
new product in market (b) Use of new method production, which is not yet tested. (c) Opening
of new market. (d) Discovery of new source of raw materials. (e) Bringing out of new form of
organization.

Short type Questions

1. Explain the concept of entrepreneurship.

Entrepreneurship can be defined as the propensity of mind to take calculated risks with
confidence to achieve a pre-determined business or industrial objectives. That points out the
risk taking ability coupled with decision making.
Entrepreneurship can be defined as the propensity of mind to take calculated risks with
confidence to achieve a pre-determined business or industrial objectives. That points out the
risk taking ability coupled with decision making.
The word ‘entrepreneurship’ typically means to undertake. It owes its origin to the western
societies. But even in the west, it has undergone changes from time to time. In the early 16th
century, the term was used to denote army leaders. In the 18th century, it was used to denote a
dealer who buys and sells goods at uncertain prices. Towards 1961, Schumpeter, used the term
innovator, for an entrepreneur. Two centuries before, the concept of entrepreneurship was
shady. It is only in the recent years that entrepreneurship has been recognized widely all over
the world like in USA, Germany, Japan and in the developing countries like ours. Gunnar
Myrdal rightly pointed out that Asian societies lack entrepreneurship not because they lack
money or raw materials but because of their attitudes. Till recently, in the west, the
entrepreneurship is mainly an attribute of an efficient manager. But the success achieved by
entrepreneurs in develoing countries demolishes the contention that entrepreneur is a rare
animal and an elusive character. In India the definition of an entrepreneur being the one who
undertakes to organize, own and run a business has been accepted in a National Seminar on
entrepreneurship organized in Delhi in 1975. Still there has been no consensus on the definition
of entrepreneurship and qualities of entrepreneurship
2. Differentiate between entrepreneur and entrepreneurship
"Entrepreneur" and "entrepreneurship" are related concepts but refer to different aspects of the
business world.
Entrepreneur: An entrepreneur is an individual who takes on the initiative and risk to start and
manage a business with the goal of making a profit. Entrepreneurs are often associated with
creativity, innovation, and the ability to identify and capitalize on business opportunities. They
play a crucial role in the economy by creating new businesses, products, and services, which
can lead to job creation and economic growth. Entrepreneurs can be found in various industries
and sectors, and they may range from small business owners to founders of large corporations.
Entrepreneurship: Entrepreneurship, on the other hand, is the broader concept that
encompasses the activities, processes, and mindset involved in starting and running a business.
It involves the identification of opportunities, the development of innovative ideas, the
organization of resources, and the management of risks to create a successful venture.
Entrepreneurship is not limited to the actions of a single individual; it also involves the broader
ecosystem that supports and influences the entrepreneurial process. This ecosystem includes
educational institutions, government policies, investors, mentors, and various support networks.
In summary, an entrepreneur is an individual who engages in entrepreneurship, which is the
dynamic and multifaceted process of creating and managing a business. Entrepreneurship
involves various activities such as idea generation, resource mobilization, market analysis, and
risk management, while an entrepreneur is the person driving these activities.
3. Explain the types of entrepreneurship.
There are various types of entrepreneurship which are as follows :-
(i) Small business entrepreneurship
Today, the overwhelming number of entrepreneur and startups in the United States are still small
business. There are 5.7 million small business in the U.S. They make up 99.7% of all companies and
employ 50% of all non-governmental workers.
Small businesses are grocery stores, hair dressers, consultants, travel agents, internet commerce store
fronts, carpenters, plumbers, electricians, etc. They are any one who runs his/her own business. They
hire local employees or family. Most are barely profitable. The definition of success is to feed the family
and make a profit not to take over an industry or build a 100 mn business. As they can’t provide the
scale to attract venture capital they fund their business via friends/family or small business loans.
(ii) Scalable startup entrepreneurship
Unlike small business, scalable startups are what silicon valley entrepreneurs and their venture investors
do. These entrepreneurs start a company knowing from day one that their vision could change the world.
They attract investment from equally crazy financial investor – venture capitalists. They hire the best
and the brightest. Their job is to search for a repeatable and scalable business model when they find it,
their focus on scale requires even more venture capital to fuel rapid expansion. Sealable startups in
innovation clusters make up a small percentage of entrepreneurs and startups but because of the outsize
returns, attract almost all the risk capital.
(iii) Large company entrepreneurship
Large companies have finite life cycles. Most grow through sustaining innovation, offering new product
that are variants around their core products, shares in customer tastes, new technologies, legislation, new
competitors, etc. can create pressure for more disruptive innovation – requiring large companies to
create entirely new products sold into new customers in new markets. Existing companies do this by
either acquiring innovative companies or attempting to build a descriptive product inside. Ironically,
large company size and culture make disruptive innovation extremely difficult to execute.
(iv) Social entrepreneurship
Social entrepreneurs are innovators who focus on creating products and services that solve social needs
and problems. But unlike scalable startups their goal is to make the world a better place not to make
market share or to create to wealth for the founders. They may be non-profit, for profit, or hybrid.
4. Write the difference between entreepreneur and intrapreneur

DIFFERENCE BETWWEEN Entrepreneur Intrapreneur

ENTREPRENEURSHIP AND
INTRAPRENEUR Basis of difference
1. Ownership Entrepreneur is owner Intrapreneur is
of the enterprise. dependent on
entrepreneur who
performs the task of
innovation.
2. Status An entrepreneur is The intrapreneur is
independent in his dependent upon
operatons. entrepreneur.
3. Capital formation Entrepreneur himself Intrapreneur does not
forms capital form capital
4. Risk Entrepreneur bears the An intrapreneur does
risk involved in an not fully bear the risk
enterprise involved in an
enterprise.
5. Operation An entrepreneur Intrapreneur operates
operates from outside from within the
organisation.
6. Guarantee of Entrepreneur gives Intrapreneur himself is
investment guarantee to the a manager, so he
investors for their manages from within.
investment Question of guarantee
does not arise.
7. Management Entrepreneur manages Intrapreneur is a
the enterprise from professional manager.
outside.
8. Professional Entrepreneur need not Intrapreneur must
qualification possess professional possess professional
qualification qualification.
5. Explain the theories of entrepreneurship.
Entrepreneurial history is left to be interdisciplinary in approach and, thus, it is difficult to label
entrepreneurship as purely a theory of economics or sociology or psychology or a
anthropology.
The concept of entrepreneurship is as old as civilization while the theories of entrepreneurship
have been evolved from over a period of more than two centuries.
Theories of entrepreneurship can a broadly be classified into four categories :
(i) The economist’s view
(ii) the sociologist’s view
(iii) The psychologist’s view
(iv) The anthropologist’s view
Economic Theory
Economics is the social science that deals most directly with contemporary economic reality.
Economists have done little work on entrepreneurship and therefore, have tended to be in minority.
Economists like Adam Smith and David Richard assigned no significance to entrepreneurial role in
economic development. Richard Cantillon (1755) was the first person to recognize the role of
entrepreneurs in economic theory. He stated that, “the farmer is an entrepreneur who promises to pay
the land owner for his farm or land, a fixed sum of money without assurance for the profit he will derive
from his enterprise”.
He described an entrepreneur as a person bearing risk. He makes profit by buying good at a known price
and by selling at an increased higher price but there is always an element of uncertainty in market.
Hence, entrepreneur is always at a risk of bearing losses if he would be unable to sell the goods at a
higher price.
ii. Sociological Theory
Sociologists suggest that entrepreneurship can be conceptualized as a social movement an entrepreneurs
exist not only in the economy but in other spheres of society as well. S. M. Lipset argues that cultural
values deeply affect entrepreneurship and the level of economic development. Mark Granovetter points
that family ties may create an obstacle for a businessman if he cares for his family too much; but the
same strong family feelings can turn into an advantage once the businessman has emigrated – as long as
the distant family members stay behind. He also discusses the role of trust in entrepreneurial ventures.
According to him, in social groups and societies where people are isolated from each other, it may be
difficult to develop the kind of confidence that is absolutely necessary to start a firm or otherwise
cooperate in economic matters. Thus, Mark Granovetter emphasizes the role played by society and
family-members in growth of entrepreneurship.

iii. Psychological Theory

Psychological theory of entrepreneurship has a fairly high status among social scientists who study
entrepreneurship because it is very difficult to single out one or several psychological traits as typical
for the entrepreneurial personality. However, advocates of this theory assert that entrepreneurship is
most likely to emerge when a society has sufficient psychological characteristics.
Joseph Schumpeter states that the entrepreneur is mainly motivated and driven by three things :
(i) the dream and the will to found a private kingdom;

(ii) the will to conquer;

(iii) the joy of creating;

J. Schumpeter’s formulation can be translated as :
(i) the desire for power and independence;
(ii) the will to succeed;
(iv) the satisfaction of getting things done.
iv. Anthropological Theory
Fredrik Barth made his first attempt to develop an anthropological theory of entrepreneurship.
According to Barth, entrepreneurship has essentially to do with connecting two spheres in the society,
between which there exists a difference in value. Something which is cheap in one sphere, may be
expensive in another sphere. Barth, one of the leading anthropologists of the world, states that
entrepreneurial behaviour means to connect two different spheres in the society, between which there is
a huge discrepancy in value.
Each of the above theories is incomplete and none of them is right or wrong. Theories of
entrepreneurship are inter-disciplinary and are influenced by a multitude of factors. It is the integration
of external environment, achievement motivation, ability and ambition which largely determines
whether an individual become an entrepreneur or not.

Long type questions

1. Explain the growth of entrepreneurship in India.
Entrepreneurial growth in India is as old as Rigveda but there was no manufacturing as such
before 1850. This manufacturing entrepreneurship was too confined to cottage & small scale
industry. But it could not grow further due to various reasons such as lack of political unity,
capital, network of custom barriers, existence of multiple systems of currency.
Emergence of entrepreneurial class is as old as our ancient history itself dating back to the pre-
vedic period when the Harappan culture flourished in India. However, history of
entrepreneurship and emergence of entrepreneurial class in India may be viewed under the
following periods :
1. Period 1 : Entrepreneurship in ancient period
2. Period II : Entrepreneurship in pre-independence era i.e. before 1850.
3. Period III : Entrepreneurship between 1850-1947
4. Period IV : Entrepreneurship after 1947 & onwards i.e. post independence period.

1. Period I : Entrepreneurship in Ancient Period : As per the ancient literature, the ancient
Indians took up a variety of commercial vocations akin to present day entrepreneurial activities.
The arrival of Aryans opened the first phase of entrepreneurship, with their innovative new
crafts and occupations, evolving division of labour for the new handicrafts, breeding of cattle,
& cultivating land which were nearly non-existing before them. The ancient literature like
Manusmriti gives a more clear picture about the entrepreneurial class of people during pre-
vedic period. According to him, vaisyas were the specialized class of people carrying
entrepreneurial activities in agriculture, industry & banking sector. During the Gupta & Post-
Gupta period, agriculture, crafts and handicrafts comprised the basic sources of occupation for
the people.
2. Period II : Entrepreneurship in Pre-independence Era before 1850 AD : During the
preindependence period, agriculture was the main occupation of the people of India. Besides
agriculture, the bania, Parsis, Cherriars & Gujaratis etc., specialized in the manufacturing of
handicrafts, metal works, stone carving & jewellery designing etc. had dominated the industrial
entrepreneurship sector in rural areas. These communities actually laid the foundation of
entrepreneurship by carrying out
trade & commerce activities initially & later by establishing manufacturing centers. British
colonialism in India dealt a severe below to the Indian entrepreneurship & industrial revolution
in Great Britain reduced India to the status of material supplier for consumer market for the
finished products manufacture in Britain. Due to lack of support from the British Government
and its discriminatory policies towards Indian made products, the industrial entrepreneurship
suffered a great deal.
3. Period III : Entrepreneurship during 1850-1947 : The mid nineteenth century opened up
path for rapid industrialization with the introduction of railways in 1853, development of other
infrastructural facilities like roads, ports etc. The eastern part of the country witnessed
entrepreneurship mainly due to Europeans who engaged in export-oriented industries, like jute,
textiles, tea, coal etc. whereas in the western part, entrepreneurship was mostly among the
Indians. It is observed that during the last decades of the 18th century, the Parsis along with
Marwaris & Gujaritis trading castes, took to entrepreneurial behaviour.
The adoption of the concept of swadeshi & boycott in 1905 to counter the discriminatory
policies o the British Government encouraged the Indians to plunge into entrepreneurship.
Jamshedji Tata established his first iron & steel industry with the help of ‘swadeshi
contribution’. Due to the swadeshi movement which emphasized on manufacturing & using
indigenous goods by the Indian’s, indigenous entrepreneurship developed in many types of
activities such as textiles, soap, matches, oil, tanneries, potteries, banking, insurance etc.
As such, indigenous entrepreneurship grew at a rapid pace with emergence of entrepreneur
classes such as Parsis, Marwaris & Gujaratis in the country on the eve of independence of
India.
4. Period IV : Entrepreneurship in 1947 & onwards – Post-Independence period : In the
postindependence period, the Government identified the need for rapid industrialization with
the establishment of heavy & basic industries. The post independence period witnessed the
emergence of Marwaris as big investors and industrialists. Before independence, where the
Marwaris controlled only 6 companies, after independence, they had 618 directorships which
rose to 1/4th of the total in 1951. The Monopolies Inquiry Commission in 1964 has mentioned
in its report that the Marwaris accounted for 10 large industrial houses out of a total of 37
showing the strength of the Marwaris in the growth of entrepreneurship during this period. The
Marwaris community emerged as a giant entrepreneurial class in the post-independence period.
The house of Birla, Singhania, Bajaj & others have created their image in the industrial market
in the field of industrial development in India.
2. Explain the characteristics of successful entrepreneur.
Successful entrepreneurs possess a combination of traits, skills, and characteristics that set them
apart in the business world. While individual entrepreneurs may vary in their specific qualities,
there are some common attributes that many successful entrepreneurs share:
Vision: Successful entrepreneurs have a clear vision of what they want to achieve. They are
able to set long-term goals and develop a roadmap to reach them.
Passion: Passion is a driving force that helps entrepreneurs stay motivated and overcome
challenges. Successful entrepreneurs are often deeply passionate about their work and the
impact it can have.
Resilience: Entrepreneurship comes with its share of failures and setbacks. Resilient
entrepreneurs view failures as learning opportunities and bounce back from challenges with
renewed determination.
Adaptability: The business landscape is dynamic, and successful entrepreneurs are adaptable.
They can adjust their strategies and business models to respond to changing market conditions.
Risk-taking: Entrepreneurship involves taking calculated risks. Successful entrepreneurs are
willing to step out of their comfort zones, make decisions with incomplete information, and
take risks when they see potential rewards.
Decision-making skills: Entrepreneurs face numerous decisions on a daily basis. Successful
ones can make informed decisions quickly and effectively, weighing the pros and cons of each
option.
Leadership: Entrepreneurs often lead teams and guide their organizations. Effective leadership
involves inspiring others, fostering a positive work culture, and making strategic decisions for
the benefit of the company.
Innovativeness: Successful entrepreneurs are often innovators. They seek creative solutions to
problems, embrace new technologies, and strive to stay ahead of the competition through
continuous improvement.
Networking skills: Building and maintaining a strong network is crucial for business success.
Successful entrepreneurs are skilled networkers who can establish valuable connections with
other entrepreneurs, mentors, customers, and industry professionals.
Time management: Time is a precious resource, and successful entrepreneurs are adept at
managing it efficiently. They prioritize tasks, delegate responsibilities, and focus on high-
impact activities.
Financial literacy: Understanding financial aspects of the business is essential. Successful
entrepreneurs have a good grasp of budgeting, financial forecasting, and resource allocation.
Customer focus: Successful entrepreneurs prioritize customer needs and satisfaction. They
listen to feedback, adapt their products or services based on customer preferences, and build
strong, lasting relationships with their customer base.
Continuous learning: The business landscape evolves, and successful entrepreneurs stay
informed about industry trends, market changes, and new technologies. They are committed to
lifelong learning and personal development.
Ethical behavior: Trust is crucial in business, and successful entrepreneurs conduct themselves
with integrity. They build a reputation for honesty, transparency, and ethical business practices.
While possessing these characteristics does not guarantee success, they can contribute
significantly to an entrepreneur's ability to navigate challenges and build a thriving business.

3 Discuss the entrepreneurial traits.

entrepreneurs research institutions and behavioural scientists through their research studies have tried to
resolve the interiorly on what makes a successful entrepreneur. Following is a lot of major competencies
as identified by the Entrepreneurship Development Institute of India (EDI) Ahmedabad.
1. Initiative :- The entrepreneur initiates a business activity i.e. he takes the first step to start an
enterprise. He takes initiative that goes beyond enterprise establishment or the demand of the situation.
For example, he does things before being asked or forced by the situation.
2. Passion :- The entrepreneur should possess passion for his enterprise. He therefore, develop more
than a casual interest in the enterprise so that the could overcome various hurdles and obstacles coming
on the way of starting an enterprise. Available evidence indicate that without passion or consuming
interest, business will not succeed. Such a personal or emotional or consuming commitment to do some
thing by giving full try is an example of ‘passion’.
3. Tenacity despite failure
Because of the hurdles and obstacles that must be overcome, the entrepreneur must be persistent and
must not give up easily. Many successful entrepreneurs succeeded only after they had failed several
times. It has been said that successful entrepreneurs do not have failures. They have learning
experiences.
4. Self-confidence
Entrepreneur is a strong believer in his strength and abilities. He believes that he possesses the ability to
accomplish whatever he sets out to do and achieve. The confidence is not unfounded however. The
entrepreneur who believes that “He can” becomes successful.
5. Sheer grit and strong determination
The life history of successful entrepreneurs reveals that they are characterized by self motivation and
strong determination in their goal. They act out of choice. They are never victim of fate. The
entrepreneur believes that the success or failure depends on his own actions. This quality is known as
“internal locess of control’. A person who believes that fate and other outside factors determine success
has an external locus of control and is not likely to succeed as an entrepreneur.
6. Creativity
One of the reason that entrepreneurs are successful is that they have imagination and can envision
alternative scenarios. They have the ability to recognize opportunities that other people do not see. Here
again let us take the example of Henry Ford.
7. Change Seeker
To the most of people change is often frightening and is something to be avoided. But, successful
entrepreneurs see change as normal and necessary. Therefore, they search for change, respond to it and
exploit it as an opportunity. In fact, this exploitation of change is the basis of innovation. In economics,
change is considered a prerequisite for improvement and development.
8. High need for achievement
Many studies have shown that the successful entrepreneurs have ‘high need for achievement’ than the
general population. David. C. McClelland considers it the most crucial element to become an
entrepreneur. It is the high need for achievement which makes entrepreneurs act on their ideas. The
achievement motive is converted into drive and initiative that results in accomplishment.
9. Team spirit Successful entrepreneurs build team and work with teammates. In simple words, team is
a group of individuals who work in a face-to-face relationship to achieve a common goal. They share
collective accountability for the outcome of the team’s effort. Working in teams creates synergy and
achieves success in its endeavours. While appreciating the role of team spirit in success. Henry Ford’s
view seems worth citing “Bringing people together is beginning, keeping people together is progress
and working with people is success”.
10. Information Seeker. A successful entrepreneur always keep his eyes and ear open and is receptive
to new ideas which can help him in realizing his goals. He is ready to consult expert for getting their
expert advise.
11. Quality Consciousness. Successful entrepreneur always keep his eyes and ear open and is
receiptive to new ideas which can help him in relishing his goals. He is ready to consult expert for
getting their expert advise.
12. Proper Planning. Successful entrepreneurs develop or evolve future course of action keeping in
mind the goals to be realized. They believe in developing relevant and realistic plans and ensure proper
execution of the same in their pursuit of attaining their goals.
13. Problem Solver. Successful entrepreneurs take problem as a challenge and put in their best for
finding out the most appropriate solution for the same. They will first of all understand the problem and
then evolve appropriate strategy for overcoming the problem.
14. Assertive. An assertive person knows what to say, when to say, how to say and whom to say. He
believes in his abilities and ensures that others fall in line with his thinking, aimed at promoting the
interests of the organization.
15. Effective Monitoring. Top performers ensure that everything is carried out in their organizations as
per their wishes. They ensure regular monitoring of the working so that the goals of the organization are
achieved in best possible manner.
16. Employees Welfare. Future of the organisation depends on its employees. If the employees are
dedicated, committed and loyal, the organization is bound to perform well. A successful entrepreneur
tries to promote organization’s interests through promotion of interests of the workers. He takes
personal interest in solving problems confronting workers and generates the feeling that there is
interpendence of the interests for workers and the management.

4 Differentiate between entrepreneur and manager.

Entrepreneur Vs. Manager

Entrepreneurs and managers play distinct roles within an organization, each contributing to its
overall success. Here are some key differences between entrepreneurs and managers:
Role in the Organization:
Entrepreneur: Entrepreneurs are often the founders or co-founders of a business. They are
responsible for creating the vision, setting goals, and taking the risks associated with starting a
new venture.
Manager: Managers are responsible for executing the vision set by the entrepreneur or upper
management. They focus on organizing, planning, and controlling the daily operations of the
business.
Focus on Innovation:
Entrepreneur: Entrepreneurs are typically driven by innovation and the desire to create
something new. They identify opportunities, take calculated risks, and are comfortable with
uncertainty.
Manager: Managers are more concerned with efficiency, optimizing processes, and ensuring
that day-to-day operations run smoothly. They implement the strategies set by the entrepreneur
and work towards achieving established goals.
Risk Tolerance:
Entrepreneur: Entrepreneurs are generally more willing to take risks, as they often need to
invest their own resources or seek external funding to launch and grow their ventures.
Manager: Managers are more risk-averse in comparison. Their focus is on minimizing risks and
ensuring stability in the operations of the business.
Decision-Making Authority:
Entrepreneur: Entrepreneurs have the ultimate decision-making authority in the early stages of
a business. They make critical decisions related to product development, market entry, and
strategic direction.
Manager: Managers implement decisions made by the entrepreneur or upper management.
Their decisions are more focused on the day-to-day aspects of the business.
Long-term vs. Short-term Perspective:
Entrepreneur: Entrepreneurs often have a long-term perspective, focusing on the big picture and
the future growth of the business. They are willing to endure short-term challenges for long-
term success.
Manager: Managers are typically more focused on short-term goals and ensuring that the
organization operates efficiently in the present.
Incentives and Motivations:
Entrepreneur: Entrepreneurs are motivated by the potential rewards of building a successful
business, including financial gains and the satisfaction of creating something new.
Manager: Managers are motivated by factors such as job security, promotions, and bonuses tied
to achieving short-term targets and operational efficiency.
While these differences exist, it's important to note that in smaller businesses or startups,
individuals often wear multiple hats, and the roles of entrepreneurs and managers can overlap.
Additionally, successful organizations often require a balance of entrepreneurial spirit and
effective management to thrive in both the short and long term.

Unit 2

Very Short type question

1. Define Creativity
Creativity is the ability to make or produce new things using skill or imagination
2. What is organisational creativity?
Organizational creativity has been defined as "the creation of a valuable, useful new
product, service, idea, procedure, or process by individuals working together in a
complex social system".
3. What is intrinsic motivation?
To find what truly motivates you from within. Intrinsic motivation, driven by personal
satisfaction and enjoyment, often leads to more sustained effort.
4. Define micromanagement.
Micromanaging or micromanagement is a negative term that refers to management style. It is very well
defined by Gartner: Micromanagement is a pattern of manager behavior marked by excessive supervision
and control of employees' work and processes, as well as a limited delegation of tasks or decisions to staff.
5. Define employee engagement.
Employee engagement describes the level of enthusiasm and dedication a worker feels toward their job.
Employee engagement can be critical to a company's success, given its links to job satisfaction and
employee morale. Engaged employees are more likely to be productive and higher performing.

Short type Questions

1. Explain organisational priorities with its objective.
Organisational priorities can be considered as the most important actions, activities, products or
services delivered by the organisation. In the each sector it is difficult for an organisation, sector or
leadership group to rank priorities in a clear order as a number of them are inter-related and reliant
on each other. At times this can become a ‘chicken or egg’ discussion.

While difficult, it is still important to try to set the priorities for the organisation. The use of a high,
medium and low priority list may be of benefit. For a number of organisations and sectors, this
priority list may already exist through a previous strategic or operational planning process and so a
quick review/re-order may be possible.

For a sector/industry approach, the priority may be to focus on a specific region or to target a
specific demographic, for example, outdoor tourism in the south-west or physical activity for
communities from a low socioeconomic background.
Objectives
Identification of organisational priorities will:

 assist the organisation, leaders and staff to focus on what is most important
 identify what needs the most attention
 assist in the allocation of resources and time to a specific activity or priority
area/demographic
 provide clarity on why some things are being done first.

2. Explain the process of searching new business idea.

Certainly! Generating a business idea can be a creative process that involves identifying
opportunities, understanding market needs, and considering your own skills and interests. Here
are some methods to help you brainstorm and discover potential business ideas:
Identify Problems and Needs:
Look for problems or challenges in your own life or in your community. Businesses often
emerge to solve problems or fulfill unmet needs.
Consider areas where technology could improve efficiency or provide a solution.
Explore Your Interests and Skills:
Think about your own passions, hobbies, and skills. Businesses that align with your interests
can be more fulfilling and enjoyable.
Consider what you are good at and how those skills can be turned into a business.
Industry Trends and Market Research:
Stay informed about current industry trends. Emerging trends may present business
opportunities.
Conduct market research to identify gaps in the market or underserved niches.
Franchise Opportunities:
Explore franchise opportunities if you prefer a proven business model with established brand
recognition.
Social and Environmental Trends:
Consider businesses that align with social or environmental trends. Sustainable and socially
responsible businesses are becoming increasingly popular.
Networking and Collaboration:
Engage with people in your industry or community. Networking can lead to insights and
potential business ideas.
Collaborate with others to brainstorm and refine ideas.
E-commerce and Digital Solutions:
Explore opportunities in the online space. E-commerce, digital services, and technology-based
solutions are continually evolving.
Local Market Analysis:
Analyze your local market to identify gaps or opportunities. Consider what products or services
are lacking in your area.
Subscription Services:
Explore the subscription-based business model. Subscription services have gained popularity
across various industries.
Remember, a successful business idea often combines passion, skills, and a market need. Take
your time to brainstorm, conduct research, and evaluate potential ideas before making a
decision. Additionally, be open to adapting and refining your ideas based on feedback and
changing market conditions.
3. Discuss the sources of idea generation.
Generating ideas can come from various sources, and different approaches work for different
people. Here are some common sources of inspiration for generating ideas:
Observation: Pay attention to the world around you. Observe people, nature, and everyday
situations. Sometimes, the most innovative ideas come from noticing things that others
overlook.
Reading: Books, articles, and other written materials can spark ideas. They expose you to new
perspectives, information, and concepts that may trigger your creativity.
Conversations: Engage in discussions with diverse groups of people. Different perspectives and
experiences can lead to unique insights and ideas. Collaborating with others can also help refine
and expand your initial thoughts.
Travel: Experiencing new cultures, environments, and lifestyles can be a rich source of
inspiration. Traveling exposes you to different ways of thinking and living, which can trigger
creative ideas.
Problem-solving: Identifying and solving problems can lead to innovative solutions. Look for
challenges or gaps in existing processes, products, or services, and brainstorm ways to address
them.
Hobbies and Interests: Pursue activities you are passionate about. Your hobbies and interests
can provide a fertile ground for generating ideas, as you bring your unique perspective and
knowledge to the table.
Mind Mapping: Create mind maps to visually organize your thoughts and associations. This
technique can help you explore connections between concepts and generate new ideas by
branching out from a central theme.
Brainstorming: Conducting brainstorming sessions with a group of people can be an effective
way to generate a variety of ideas. Encourage open and non-judgmental sharing to foster
creativity.
Technology and Trends: Stay informed about the latest advancements in technology, industry
trends, and societal changes. Emerging technologies and shifts in the landscape can inspire new
ideas.
Dreams and Imagination: Sometimes, your dreams or imagination can provide unexpected and
creative ideas. Keep a notebook by your bedside to jot down any ideas that come to you in
dreams.
Random Inputs: Introduce randomness into your thought process. Use tools like random word
generators, dice, or cards with prompts to stimulate your thinking in new directions.
Art and Creativity Exercises: Engage in creative exercises, such as drawing, writing prompts, or
other artistic endeavors. These activities can help unlock your creativity and generate fresh
ideas.
Learning from Failure: Reflect on past failures and setbacks. Sometimes, learning from what
didn't work can lead to insights and ideas for improvement or alternative approaches.
Remember, the key is to stay curious, open-minded, and willing to explore different avenues.
Creativity often thrives when you expose yourself to diverse experiences and perspectives.
4. How the new start-ups could get the finance? Explain.
Financing is a critical aspect of any business or project, and there are various sources and
criteria for obtaining funds. The choice of financing depends on factors such as the nature of
the business, its stage of development, and the risk appetite of the stakeholders. Here are
common sources and criteria for financing:
Sources of Financing:
Equity Financing:
Sources:
Angel Investors: High-net-worth individuals who invest their personal funds in startups.
Venture Capital: Firms that invest in high-potential startups in exchange for equity.
Private Equity: Investment funds that invest in mature companies with growth potential.
Initial Public Offering (IPO): Going public by offering shares to the public through a stock
exchange.
Debt Financing:
Sources:
Banks: Traditional lenders that provide loans with interest.
Bonds: Issuing bonds to investors, promising periodic interest payments and the return of
principal.
Private Debt: Loans from non-bank financial institutions or private lenders.
Convertible Debt: Debt that can be converted into equity under certain conditions.
Government and Grants:
Sources:
Government Grants: Funds provided by government agencies to support specific projects or
industries.
Subsidies: Financial assistance provided by the government to reduce costs for businesses.
Crowdfunding:
Sources:
Reward-based Crowdfunding: Backers receive non-financial rewards.
Equity Crowdfunding: Investors receive equity in the company.
Debt Crowdfunding: Peer-to-peer lending platforms.
Retained Earnings:
Source: Reinvesting profits back into the business.
Trade Credit:
Source: Delaying payment to suppliers, essentially obtaining goods or services on credit.
5. What type of analysis could be done before investing into new idea or start-up? Analyse.
Assessing fixed and working capital is crucial for understanding a company's financial health
and operational efficiency. Both fixed and working capital are key components of a company's
balance sheet, representing different aspects of its financial structure.
Fixed Capital:
Definition: Fixed capital refers to the long-term assets that a company owns and uses in its
operations. These assets are not easily convertible into cash and are expected to provide
benefits over an extended period.
Examples: Land, buildings, machinery, equipment, and vehicles.
Assessment:
Asset Verification: Ensure that the fixed assets listed on the balance sheet actually exist and are
in good condition.
Depreciation Analysis: Review the depreciation methods used and assess if they accurately
reflect the decrease in the value of assets over time.
Utilization: Evaluate how effectively the fixed assets are being utilized in the business
operations.
Working Capital:
Definition: Working capital is the difference between a company's current assets and current
liabilities. It represents the funds available for the day-to-day operations of the business.
Formula: Working Capital = Current Assets - Current Liabilities
Assessment:
Liquidity Analysis: Assess the company's ability to meet short-term obligations by ensuring
that current assets are sufficient to cover current liabilities.
Inventory Management: Evaluate the efficiency of inventory turnover to prevent overstocking
or stockouts.
Debtor and Creditor Days: Analyze the number of days it takes for the company to collect
receivables and pay its creditors, as it impacts cash flow.
Integrated Assessment:
Cash Flow Analysis: Examine the company's cash flow statement to understand how changes in
fixed and working capital impact overall liquidity.
Ratios: Utilize financial ratios like the current ratio (current assets/current liabilities) and quick
ratio (quick assets/current liabilities) to gauge short-term financial health.
Trends and Comparisons: Compare current and historical data, as well as industry benchmarks,
to identify trends and potential areas for improvement.
Risk Factors:
Market and Industry Risks: Consider external factors that may impact fixed and working
capital, such as market trends, economic conditions, and industry-specific challenges.
Operational Risks: Assess the efficiency of the company's operations and identify any
bottlenecks or inefficiencies that may affect working capital.

Long type questions

1. Explain the issues which are being faced in managing creativity in an organisation also provide the strategy
to tackle those issues.
1. Cultural Environment:
Issue: Some organizational cultures may stifle creativity by being too rigid or risk-averse.
2. Leadership Support:
Issue: Lack of support and encouragement from leadership can demotivate employees.
3. Resource Allocation:
Issue: Inadequate resources may hinder the implementation of creative ideas.
4. Communication Barriers:
Issue: Poor communication can hinder the flow of creative ideas.
5. Fear of Failure:
Issue: Fear of failure can inhibit risk-taking and creativity.
6. Lack of Diverse Perspectives:
Issue: Homogeneous teams may limit the range of ideas generated.
7. Undefined Goals:
Issue: Lack of clear objectives can lead to aimless creativity.
8. Monotonous Routine:
Issue: Repetitive routines can stifle creativity.
9. Recognition and Reward System:
Issue: Lack of recognition for creative contributions can demotivate employees.
10. Training and Development:
Issue: Employees may lack the necessary skills or techniques to enhance their creativity.
Strategies -

1. Strategy: Foster a culture that encourages experimentation, values diverse perspectives, and
supports risk-taking.
2. Strategy: Leaders should actively promote and participate in creative initiatives, providing
resources, recognition, and clear goals.
3. Strategy: Allocate time, budget, and personnel for creative projects. Create innovation hubs
or dedicated spaces for brainstorming.
4. Strategy: Establish open communication channels, encourage idea sharing, and ensure that
feedback is constructive rather than discouraging.
5. Strategy: Cultivate a mindset that views failure as an opportunity to learn and grow.
Celebrate both successes and lessons learned from failures.
6. Strategy: Build diverse teams, including individuals with different backgrounds, experiences,
and skills. This diversity can lead to more innovative solutions.
7. Strategy: Clearly define goals and expectations for creative projects. Provide a framework
that guides creativity toward meaningful outcomes.
8. Strategy: Encourage breaks, flexible work hours, and a mix of project types to keep
employees engaged and stimulate creativity.
9. Strategy: Implement a reward system that acknowledges and celebrates creative
achievements. This could include public recognition, financial incentives, or career
advancement opportunities.
10. Strategy: Invest in training programs that teach creative thinking techniques, problem-
solving skills, and innovation methodologies.
Q.2 Discuss the attribute of the creative person.
Creativity is a complex and multifaceted trait, and creative individuals often possess a
combination of various attributes that contribute to their innovative thinking and problem-
solving abilities. While not an exhaustive list, here are some key attributes commonly
associated with creative people:
Imagination:
Creative individuals often have vivid imaginations. They can visualize concepts, ideas, and
scenarios that others may not easily perceive.
Curiosity:
Creative people tend to be curious and open-minded. They have a desire to explore, question,
and understand the world around them, leading to a constant thirst for knowledge.
Originality:
Original thinking is a hallmark of creativity. Creative individuals have the ability to generate
unique ideas and perspectives that set them apart from conventional or mainstream thoughts.
Flexibility:
Creative minds are adaptable and flexible. They can approach problems from different angles,
consider alternative solutions, and embrace change more readily than others.
Risk-Taking:
Creativity often involves taking risks and stepping outside of one's comfort zone. Creative
individuals are willing to experiment, try new things, and take calculated risks to explore
uncharted territories.
Passion:
Passion is a driving force behind creativity. Creative individuals are often deeply passionate
about their work, and this passion fuels their perseverance and dedication.
Observational Skills:
Creative people are keen observers of the world. They pay attention to details, notice patterns,
and are often inspired by their surroundings and experiences.
Open-Mindedness:
Open-minded individuals are more receptive to new ideas and perspectives. Creative people are
often open to unconventional thoughts and are willing to challenge existing norms.
Problem-Solving Abilities:
Creativity is closely tied to problem-solving. Creative individuals excel at finding innovative
solutions to challenges by thinking outside the box.
Communication Skills:
Effectively communicating creative ideas is crucial. Whether through written or verbal means,
creative individuals can express their thoughts and concepts clearly to others.
Resilience:
Creativity often involves facing setbacks and criticism. Resilience is crucial for creative
individuals to bounce back from failures and continue pushing the boundaries of their
creativity.
Collaboration:
Creative people often thrive in collaborative environments. They are open to working with
others, sharing ideas, and building upon each other's creativity.
It's important to note that creativity manifests in various forms, and individuals may express
these attributes to different degrees. Additionally, creativity is not limited to any specific
domain; it can be found in arts, sciences, business, and many other fields.
Q.3 How creativity motivates people in an organisation. Discuss.
Creative thinking and motivation are two interconnected aspects that play crucial roles in
personal and professional development. Let's explore each of them separately and then discuss
how they can complement each other.
intrinsic motivation = high creativity. Extrinsic motivation = low creativity. In an ideal world,
every time you started work on a creative challenge, you’d be exclusively focused on the intrinsic motivations
that will help you create something amazing.
Creative Thinking:
Open-mindedness: Creative thinking begins with an open mind. Be willing to consider
unconventional ideas and explore different perspectives.
Curiosity: Foster a curious mindset. Ask questions, seek knowledge, and continuously strive to
understand the world around you.
Divergent Thinking: Practice divergent thinking, which involves generating a variety of
possible solutions or ideas. Avoid limiting yourself to the most obvious or conventional
choices.
Risk-taking: Creativity often involves taking risks. Don't be afraid to step out of your comfort
zone and try new things. Embrace failure as a learning opportunity.
Flexibility: Be adaptable and open to change. Creative thinkers are often able to shift gears and
adapt their thinking based on new information or feedback.
Combining Ideas: Connect seemingly unrelated ideas to generate innovative solutions. This can
lead to breakthroughs that others might not have considered.
Mindfulness: Practice mindfulness to enhance your awareness of the present moment. This can
help you observe details and make connections that others might overlook.
Motivation:
Intrinsic Motivation: Find what truly motivates you from within. Intrinsic motivation, driven by
personal satisfaction and enjoyment, often leads to more sustained effort.
Goal Setting: Set clear, realistic, and challenging goals. Break them down into smaller,
achievable steps, and celebrate your progress along the way.
Positive Mindset: Cultivate a positive attitude. Focus on solutions rather than problems, and
learn to see challenges as opportunities for growth.
Persistence: Creative endeavors often require persistence. Develop the resilience to overcome
setbacks and keep pushing forward, even when faced with obstacles.
Passion: Connect with your passions. When you're passionate about something, it becomes a
powerful driver of creativity and motivation.
Continuous Learning: Stay hungry for knowledge. Seek opportunities for learning and self-
improvement, as this can fuel your motivation and keep you engaged.
Integration of Creative Thinking and Motivation:
Purposeful Creativity: Align your creative pursuits with your personal or professional goals.
This connection can enhance motivation by giving your creative endeavors a sense of purpose.
Feedback Loop: Use feedback, both positive and constructive, to refine and improve your
creative ideas. Positive feedback can boost motivation, while constructive feedback can guide
your creative thinking in a more focused direction.
Celebrate Achievements: Acknowledge and celebrate your creative achievements, no matter
how small. This positive reinforcement can strengthen your motivation to continue exploring
and expressing your creativity.
Collaboration: Engage in collaborative efforts with others. Sharing ideas and perspectives can
stimulate creative thinking and provide motivation through a sense of shared purpose.
Reflection: Take time to reflect on your creative process and the outcomes. This reflective
practice can help you identify patterns, learn from experiences, and refine your approach in
both creative thinking and motivation.
In summary, creative thinking and motivation are mutually reinforcing. A motivated mindset
can enhance creative thinking, and creative thinking can generate ideas and solutions that
further motivate you. Embrace both aspects in your personal and professional life to foster
continuous growth and innovation.
Q.4 Explain the components of managing creativity in an organisation.
Managing creativity involves creating an environment that nurtures and encourages creative
thinking, innovation, and problem-solving. Here are some strategies for effectively managing
creativity in a team or organization:
Cultivate a Creative Culture:
Foster an open and inclusive culture where diverse ideas are welcomed.
Encourage a mindset that embraces experimentation and learning from failure.
Recognize and celebrate creativity and innovation.
Provide Autonomy:
Allow team members the freedom to explore and experiment with their ideas.
Provide autonomy in decision-making to empower individuals to take ownership of their
creative projects.
Set Clear Objectives:
Clearly communicate the goals and objectives to provide a framework for creative efforts.
Ensure that the team understands the overall vision and how their creative work contributes to
it.
Supportive Leadership:
Leaders should act as role models for creativity and demonstrate a willingness to take risks.
Provide resources, guidance, and support to help teams overcome obstacles.
Encourage Collaboration:
Foster a collaborative environment where team members can share ideas and build upon each
other's creativity.
Promote interdisciplinary collaboration to bring diverse perspectives to the creative process.
Diversity and Inclusion:
Build a diverse team with individuals from different backgrounds, experiences, and skill sets.
Embrace diverse perspectives as they can lead to more innovative solutions.
Time for Reflection:
Allow time for reflection and thinking, as creativity often requires periods of incubation and
contemplation.
Avoid constant time pressure that may stifle creative thinking.
Provide Resources:
Ensure that the team has access to the necessary tools, technology, and training to support their
creative endeavors.
Allocate budget and time for research and development.
Feedback and Iteration:
Encourage a culture of constructive feedback to refine and improve creative ideas.
Support iterative processes that allow for continuous improvement.
Recognition and Rewards:
Recognize and reward creative efforts to reinforce the importance of creativity within the
organization.
Offer incentives or acknowledgment for successful implementation of creative ideas.
Training and Development:
Provide ongoing training and development opportunities to enhance creative skills.
Stay updated on industry trends and advancements to inspire innovative thinking.
Adaptability:
Be open to changing plans and adapting to new ideas as they emerge.
Embrace flexibility and agility in responding to evolving creative processes.
By implementing these strategies, organizations can create an environment that stimulates
creativity and innovation, leading to improved problem-solving and competitive advantage.
Q.5 Explain the factors which enhance or hinder the creativity in an organisation.
Organizations play a crucial role in fostering or hindering creativity among their employees.
Here are some organizational actions that can either enhance or hinder creativity:
Actions that Enhance Creativity:
Encouraging a Culture of Innovation:
Support for Risk-Taking: Encouraging employees to take calculated risks without fear of severe
consequences fosters creativity.
Open-Mindedness: Valuing diverse perspectives and being open to unconventional ideas
promotes a culture of innovation.
Providing Resources and Training:
Training Programs: Offering workshops and training sessions on creative thinking techniques
can enhance employees' creative skills.
Allocating Time and Resources: Providing employees with dedicated time and resources for
creative projects shows a commitment to fostering creativity.
Promoting Collaboration:
Cross-Functional Teams: Encouraging collaboration across different departments and functions
can bring diverse skills and perspectives together.
Open Communication Channels: Creating open channels for communication allows the free
flow of ideas and feedback.
Recognition and Rewards:
Acknowledgment of Creativity: Recognizing and rewarding creative efforts reinforces the
importance of creativity within the organization.
Incentives for Innovation: Providing incentives, such as bonuses or promotions, for innovative
ideas motivates employees to think creatively.
Flexible Work Environment:
Flexible Schedules: Allowing flexible work hours or remote work can provide employees with
the freedom to explore their creative ideas.
Physical Environment: Designing workspaces that encourage collaboration and creativity can
positively impact employees' creative thinking.
Actions that Hinder Creativity:
Micromanagement:
Excessive Control: Micromanaging employees can stifle creativity by limiting their autonomy
and discouraging independent thinking.
Strict Rules and Procedures: Too many rules and rigid procedures can hinder creative thinking
and innovation.
Fear of Failure:
Punitive Culture: A culture that punishes mistakes rather than learning from them can create a
fear of failure, stifling risk-taking and creativity.
Lack of Psychological Safety: When employees feel unsafe expressing unconventional ideas
without judgment, creativity is compromised.
Lack of Resources:
Insufficient Budgets: Inadequate financial support for creative projects can limit the
organization's ability to explore innovative ideas.
Limited Time: Constant pressure and tight deadlines can hinder the development of well-
thought-out and creative solutions.
Isolation and Lack of Collaboration:
Silos and Departmental Barriers: Lack of collaboration across departments or teams can limit
the exchange of ideas and hinder creativity.
Poor Communication Channels: Ineffective communication channels can result in a lack of
information flow, impeding creative collaboration.
Resistance to Change:
Resistance to New Ideas: An organization that resists change and clings to traditional methods
may stifle creativity and hinder innovation.
Hierarchical Structure: A rigid hierarchy can discourage lower-level employees from
contributing ideas and innovations.
Organizations that consciously address these factors and cultivate a culture that values
creativity tend to be more innovative and adaptable in today's rapidly changing business
environment.

Unit – 3

Very Short Questions

1. How does entrepreneur helps in creation of capital formation for economy?

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. What does entrepreneurial culture means?

Entrepreneurial culture can be described as an environment where someone is motivated to

innovate, create and take risks. In a business, an entrepreneurial culture means that employees
are encouraged to brainstorm new ideas or products.

3. Define entrepreneurial mind set.

An entrepreneurial mindset is a set of skills that enable people to identify and make the
most of opportunities, overcome and learn from setbacks, and succeed in a variety of
settings.

4. What is corporate entrepreneurship?

Corporate Entrepreneurship, or Intrapreneurship, is the creation of new businesses, products, or

services from inside an organization to generate new revenue growth through entrepreneurial
action.

5. What is imitation strategy?

An imitative strategy relies on the designs of other companies in creating its designs.
The imitative company also may base its accompanying product marketing strategy on
the strategy of the market leader or pioneer.

Short type Questions

1. Explain imitation strategy and its benefits.

Imitative strategy is the strategy adopted by companies to imitate or copy an existing model of
a company and implement its services, business ideas, revenue model etc. Imitative strategy
helps a company save money on research and development, new product development etc, and
just introduce a similar product with a different brand name, marketing strategy etc. Imitation is
following someone or implementing model of someone else.

1. If company is following innovation strategy a lot of money is spent on research and

development for producing a new product altogether. Innovation strategy has also lot of risk
involved in it as product developed may become a failure in market since its inception leading
to huge loses to company following it. These disadvantages can be eliminated if company is
following imitative strategy.
2. Most of the famous companies today are following imitative strategy as they have excelled in
the existing market of product and initial innovator is far behind in terms of competition and
innovation in imitative strategy. So generally an imitative firm observes an innovator’s product
and its success rate in market. If they see potential in innovators product and have a look at
market leader and competition in the market. Then firm employing imitative strategy makes an
entry into that market thus mitigating the risk of failure.
3. Imitative firm generally follow re-engineering process and employ funds in research and development of
re-engineering of innovative product. Also imitative firm generally employ innovation in that product during re-
engineering process thus creating differentiating factor from existing competitors and gaining market share
from existing customer base. Also sometimes imitative firm follow marketing strategy of market leader and try
to create some differentiation in it.
4. Employing imitative strategy gives fixed goals for research and development team and they don’t have to
think from scratch.
2. Discuss the challenges of adapting a new technology or innovation

Creation of a new organization offers some liabilities of newness.

Learning new tasks is expensive and takes time.
Role responsibility may overlap or have gaps.
The informal structure takes time to establish.
The entrepreneur can also benefit from assets of newness.
Established routines can be a liability when the firm faces change.
Previous practices create momentum, redirection is difficult.

3. Explain the concept of entrepreneurial strategy.

Entrepreneurial strategies are intentional, planned acts used by business owners to accomplish
their goals and acquire a market advantage. These strategies entail a variety of choices and
actions intended to spot opportunities, control risks, and promote economic expansion.
These strategies are used by entrepreneurs to successfully traverse the difficulties and uncertainties of
the business world while increasing their chances of success. They give business owners a guide on how
to utilize resources wisely, choose wisely, and differentiate themselves from rivals. Depending on their
objectives and situation, entrepreneurs can use a variety of entrepreneurial strategies. These
include market segmentation, differentiation, cost leadership, innovation and disruption, strategic
alliances, and diversification.

It’s crucial to remember that there are different entrepreneurial strategies for different situations. They
must be customized to the entrepreneur’s unique objectives, market dynamics, and financial capabilities.
Effective entrepreneurial strategies that propel corporate success must be developed with careful
consideration of the target market, the competitive environment, and the target audience.

4. Explain the features of entrepreneurial resources.

Entrepreneurial Resources: The ability to obtain and then recombine

resources into a bundle that is valuable, rare and inimitable. An
entrepreneur combines the resources into such a different ways as this
bundle of resources provides a firm its capacity to achieve superior
performance. Resources must be:

1. Valuable: enables a firm to pursue opportunities, neutralize threats and

offer valuable products and services to the customers.
2. Rare: possessed by few, (potential) competitors.
3. Inimitable: Replication of this bundle of resources should be difficult or
costly for the potential competitors.

Knowledge Aspect: Knowledge aspect of an entrepreneur will be covered up

with market and advanced technological knowledge.

1. Market knowledge: Possession of Information, technology, know-how, and

skills that provide insight into a market and its customers.
2. Advanced Technological knowledge: Possession of information, technological
innovation, know-how and skills that provide insight into ways to create new
knowledge.

5 How one can assess the attractiveness of new entry opportunity? Explain.

The entrepreneur needs to determine whether the resource is in fact

valuable, rare and inimitable by assessing whether the new product or the
new market are sufficiently attractive to be worth exploiting and
developing. The presented below given aspects will be helpful to assess the
attractiveness of the new entry opportunity.

I. Information and knowledge on new entry: The prior market and

technological knowledge used to create the potential new entry can also be
of benefit in assessing the attractiveness of a particular opportunity.
II. Window of Opportunity: The period of time when the environment is
favourable for entrepreneurs to exploit a particular new entry.
III. Comfort deciding under uncertainty: The trade-off between more
information and the likelihood that the window of opportunity will close
provides a dilemma for entrepreneurs.
IV. Decision to exploit or not exploit the new entry: Assessment of new
entry’s attractiveness determining whether the entrepreneur believes she or
he can make the proposed new entry work. When, an entrepreneur enters as
‘being first’ in competitive market, he gets some of benefits or
advantages and faces few disadvantages: 

Long type questions

1. Explain the role of entrepreneur in developing Indian economy.

Entrepreneurs initiate and sustain the process of economic development in the following 15
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 explore opportunities and exploit them. They convert talent and idle resources
like land, labor, and capital into national income and wealth as goods and services. They help
increase the net national product and per capita income in the country, which are important
indicators for measuring economic growth.

3. Improvement in living standards.

Entrepreneurs set up industries that overcome the scarcity of essential commodities and
introduce new products. The production of goods on a large scale and the manufacture of
handicrafts, etc., help in improving the standard of living of a common man in the small scale
sector. Offer goods at these low costs and increase consumption diversity.

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 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 links.

An entrepreneur initiates change in which there is a chain reaction. There are many backward
and forward linkages in establishing an enterprise. For example, the setting up of a steel plant
creates many ancillary units, and the demand for iron ore, coal, etc. expands. There are
backward relationships. By increasing the supply of steel, the plant facilitates machine
manufacturing, tube making, vessel manufacturing, and the development of other such units.

6. Generation of Employment.

At the beginning of the 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 the 1980s and
structural changes introduced by the Government during the 1990s are likely to give much rise
to capital-intensive rather than labor-intensive industry.

7. The exploitation of locally available resources and entrepreneurship.

India is considered rich in natural resources. Despite nearly five decades of planned
development, a large number of states remain economically backward. Some large-scale
industries started by out-of-state entrepreneurs in economically backward regions can help as a
model of pioneering efforts. But ultimately the real strength of industrialization in backward
areas depends on the involvement of local entrepreneurship. Activities: Increased activities of
local entrepreneurs will also result in construction. Use of abundant available local resources.

8. Balanced Regional Development.

Medium and large-scale industries can only be started with a huge investment that is either
available with well-established industrial houses or needs to be drawn from the exchequer.
Also, promoting such industries does not help reduce inequalities of income and wealth. On the
other hand, an important advantage of small-scale industries is that they can be started with
little financial and 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 are 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, the alternative to a
wage career is the only viable option. the country is required to invert the youth with latent
entrepreneurial traits from wage careers to self-employment careers. Such an alternate path
through entrepreneurship could help the country in defusing social tension and unrest amongst
youth

10. Wealth Creation and Redistribution

Successful entrepreneurs generate wealth not only for themselves but also for their
communities. They invest in various sectors, leading to the redistribution of resources and a
more equitable distribution of wealth.

11. Innovations in Enterprises.

Business enterprises need to be innovative for their survival and better performance. It is
believed that smaller firms have a relatively higher necessity and capability to innovate. The
smaller firms do not face the constraints imposed by a large investment in existing technology.
Thus they are both free and compelled to innovate. The National Science Foundation, an
organization in the USA found that small companies produce four times more innovations per
research dollar than do bigger companies. Entrepreneurship development programs are aimed at
accelerating the pace of the small firm’s growth in India. an increased number of small firms is
expected to result in more innovations and make the Indian industry compete in the
international market.

12. Foreign Direct Investment (FDI) Attraction

Countries with thriving entrepreneurial ecosystems often attract foreign direct investment.
Entrepreneurs provide insights into local markets and establish connections that can make a
nation more attractive to international investors.

13. Education and Skill Development

Entrepreneurs often collaborate with educational institutions to bridge the gap between
academic knowledge and practical skills. This synergy contributes to a more skilled and
adaptable workforce.

14. Nurturing Small and Medium Enterprises (SMEs)

Entrepreneurs provide a foundation for the growth of small and medium enterprises, which are
vital contributors to economies worldwide. These enterprises drive local economies and create
a resilient business environment.

15. Government Revenues and Taxation

Entrepreneurs contribute to government revenues through taxes, which can then be invested in
public services and infrastructure. A vibrant entrepreneurial ecosystem can boost a nation’s
financial resources.

Q.2 Explain the types of errors usually committed by entrepreneurs and also explain the
advantages and disadvantage of being ‘First Mover’.

Here, entrepreneurs usually commit two types of errors:

1. Error of Commission occurs from the decision to pursue this new entry
opportunity, only to find out later that the entrepreneur had overestimated
his or her ability to create customer demand and to protect the technology
from imitation by competitors. The cost of the entrepreneurs was derived
from acting on the perceived opportunity.
2. Error of Omission occurs from the decision not to act on the new entry
opportunity only to find out later that the entrepreneur had underestimated
his or her ability to create customer and protect the technology from
imitation by competitors. In this case, the entrepreneur must live with the
knowledge that he let an attractive opportunity slip through his fingers.

When, an entrepreneur enters as ‘being first’ in competitive market, he

gets some of benefits or advantages and faces few disadvantages: 

Advantages of ‘being first’:

1. First mover develops a cost advantage.

2. First mover faces less competitive rivalry.

3. First movers can secure important channels.

4. First movers are better positioned to satisfy customers.
5. First movers gain expertise through participation. 
Disadvantages of ‘Being First’:

1. Demand Uncertainty: Considerable difficulty in accurately estimating the

potential size of the market, how fast it will grow, and the key dimensions
along which it will grow.
2. Technological Uncertainty: Considerable difficult in accurately assessing
whether the technology will perform and alternate technologies will emerge
and leapfrog (game) over current technologies.
3. Uncertainty of Customers: Customers may have considerable difficulty in
accurately assessing whether

3 Explain the features of entrepreneurial culture.

Entrepreneurial culture can be described as an environment where someone is motivated to

innovate, create and take risks. In a business, an entrepreneurial culture means that employees
are encouraged to brainstorm new ideas or products. When work time is dedicated to these
activities, it is called entrepreneurship.

Entrepreneurial Culture characteristics

Shared Values
• Growth through excellence and innovation
• Collective responsibility for experimentation
• Job execution is incomplete without improvement
Skills
• Competence upgraded and nurtured continuously
• Learning to unlearn and learn
• Job rotation for wider perspective and cross-pollination
• Other (in-depth analysis, risk evaluation, etc.)
Staff
• Optimal and Multi-skilled • Ownership and Belonging • Inclusion of Innovation for
performance evaluation, growth and rewards
Style
• Participative and inclusive • Tolerance towards ambiguity • Openness to new ideas • Support
of risk-taking
Strategy
• Long-term focus • Innovative problem solving and performance improvement • Risk taking is
essence of business
Structure
• Limited horizontal layers and vertical differentiation • Cross-functional task teams •
Dedicated team for nurturing creativity
Systems
• Simple, flexible and evolving systems • Result-oriented, rather than process-oriented approach
• Quick approval mechanism for innovative ideas

4. How to develop entrepreneurial mind set in an organisatio? Analyse.

Several strategies can allow you to cultivate an entrepreneurial mindset for your
employees. Here are the ways to foster a more entrepreneurial culture.

The Entrepreneurial mind-set in Organization

1. Hire aspiring entrepreneurs.

Fostering an entrepreneurial culture starts with the individuals you hire. Hiring like-
minded people will help create a productive and inspiring culture. Aspiring entrepreneurs
are motivated, creative and innovative, which will inspire others in your company to
embrace their own entrepreneurial spirit.

2. Make employees feel like partners.

Treating employees like partners with an equal say will empower every worker at every
level to do their best work. Rather than dwelling on the hierarchy of employees or
prioritizing managers above the staff, treat every employee like your business partner, and
they will be invested in your business’s growth and success.

3. Empower and encourage employees.

Empowering and encouraging employees builds their confidence and inspires them to
share their ideas. The more empowered workers you have in your business, the more
opportunities you’ll reap. Your workers should feel comfortable speaking up with both
ideas and concerns, so make them feel heard every time they find their voice.

4. Be open to micro-failures.

When encouraging employees, you must be accepting and open to potential failures. If you
or your workers take risks, micro-failures are bound to occur. This is a sign you’re taking
leaps and not holding yourself back from your potential. Allow your employees (and
yourself) to fail at their pursuits so they can learn from those failures . If you don’t try,
you’ll never know.

5. Give incentives to employees.

Offering incentives to employees will increase productivity and loyalty to your business.
Perks, such as raises, bonuses and paid time off, show your employees you care about them
and their well-being and that they aren’t just “robots” to you. Express your appreciation for
your workers , and they’ll match your energy by performing at their best.

Additionally, when you reward workers with incentives like mental health days or flexible
hours, you allow them time to recharge and come back to work stronger.

6. Lead by example.

In business, it’s more important to be a leader than a boss. If you spend most of your time
micromanaging your workers or telling them what they’re doing wrong, they’ll pick up on
this energy and start to experience resentment, anxiety and even burnout. Approach
management from a leadership standpoint, not a power trip.

7. Give employees a voice.

Allow your employees a chance to share their own ideas, opinions, perspectives and
voices. This will encourage individuality, which can contribute to a more entrepreneurial
environment where employees come together with different ideas.

8. Make it safe to share ideas.

Beyond allowing employees to find their voice in the workplace, make sure you are also
receptive to their ideas and don’t shut them down. Really listen to your employees when
they speak up, and consider ways to implement their input.

9. Give employees ownership.

Entrepreneurs crave a sense of ownership over their projects. Do not micromanage your
employees so much that they lose autonomy over their work. Rather, trust them with tasks
and assignments, even if that means letting them take risks and fail.

10. Ask them for their recommendations.

Show your employees you trust them and value their input by asking for recommendations.
The more insight and ideas you get, the more opportunities you will find. An
entrepreneurial culture merges and embraces various perspectives.

11. Create a startup culture.

A startup culture, much like an entrepreneurial culture, is hyperfocused on growth and

innovation. For instance, this type of culture encourages managers to share resources and
host weekly meetings about the company’s growth/goals, etc. By implementing a startup
culture, you are automatically fostering an entrepreneurial environment, as the two go
hand-in-hand.

Unit – 4

Very Short Questions

1. Define Family Business.

Barry (1975) “an enterprise which, in practice, is controlled by the members of a single family is termed
as family business.”
Davis & Tagiuri (1985) “business in which two or more extended family members influence the
direction of the business.”
2. What is family capital?
Family capital, the human, social, and financial resources that a family provides its members, is
often the key to successfully launching a new business as well as maintaining healthy family
relationships.
3. What is family business conflict?
Family Business Conflict is a disagreement between individuals or groups in an organisation.
It may be defined as a clash between individuals or groups that arises because of difference in
thought process, opinion, understanding, attitude, interest and approaches.
4. What is nepotism in family business?
Nepotism is one of the marked features of family business enterprises. The blood relationship
determines the entry into the business and holding of key positions.
5. How could management control exercised in family business?
Management control is exercised through a Board of Directors where family members are
represented. The family members as directors determine the corporate objective and major
policies of the firm.

Short type Questions

1. Explain the reasons of family business conflict.
Conflict is a very natural part of a business. Business Conflict is a disagreement between individuals or
groups in an organisation. It may be defined as a clash between individuals or groups that arises because
of difference in thought process, opinion, understanding, attitude, interest and approaches. It arises in
business organisation at some point of time and needs attention and management by the leaders. The
conflict may be managed through the effective leadership in the organisation. In case, it is not managed,
it may be detrimental for the business organisation.
Reasons of Family Business Conflict
Different priority of different members in the family
x Emotional issues in the family
x Identity crises/ ego of members
x Communication Gap between individuals or groups in the family
x Lack of proper succession planning
x Unequal access of resources
x Dominant attitude of family member
x Personal biasness of family member
x Importance of few members

2. Explain the types of family business.

1) Family Owned Business: Family-Owned businesses are for-profit organisations whose majority
voting shares (or other form of ownership) are typically but not necessarily controlled and owned by
members of a single extended family, or by one family member but significantly influenced by other
members.
2) Family Owned and Managed Business: Family-Owned and Managed businesses are for-profit
organisations whose majority voting shares (or other form of ownership) are typically but not
necessarily are controlled and owned by members of a single extended family, or by one family member
but significantly influenced by other members. This controlling authority enables the family to
determine the company's objectives, methods, and strategies for reaching them, as well as policies for
implementing those strategies. In addition, at least one family member has active participation in the top
management of the company, which means one or more members of the family have ultimate control of
the company.
3) Family Owned and Led Business: Family-Owned and Led businesses are for-profit organisations
whose majority voting shares (or other form of ownership), typically but not necessarily are controlled
and owned by members of a single extended family, or by one family member but significantly
influenced by other members. This controlling authority enables the family to determine the company's
objectives, methods, and strategies for reaching them, as well as policies for implementing those
strategies. In addition, at least one family member is an active member of the company's Board of
Directors, so one or more family members have at least a high level of influence over the company's
direction, culture, and strategies.

3. Explain the major characteristics of family business in India.

1) Ownership: Family business enterprise is actively owned and run (managed) by two or more
members of the single extended family.
2) Membership: Family business enterprise ensures effective utilisation of in-house talent in the family.
Family members are employed on key positions in the business enterprise. Relationship amongst the
family members influences their respective positions in the enterprise.
3) Succession Planning: Succession planning is an important decision in the business. The succession of
the family business goes to the next generation thus, it is important to determine who will take over
leadership and/or ownership of the company when the current generation retires or dies.
4) Management and Operations: Generally, in these business enterprises the senior most member of the
family is the head of the business and takes all the crucial decision. All the members have faith in the
founder. This results into uniform mindset of the members which ensures uniformity in operation.
5) Long-term Orientation: The family business is not dissolved by the death of the founder or the owner
as the authority or ownership passes to the next generation. Also, owners of family businesses are not
only concerned with the financial results of the business. They value the past and plan for the future
with the perspective of their next generation. Thus, family businesses generally survive through the
tough and rough times and perform well in long term.
6) Mutual Influence: Policies of the family business enterprise are influenced by the family members in
the mutual interest of family and business.
7) Embedded in Cultural Values: In India, family businesses are predominantly caste-based, and their
roots run deep and are embedded in family values and traditions. As a result, their respective cultures
can be seen in the management, operations, and decision-making process of the business.
8) Concentrated Structure: Ownership and management of family businesses are handled by family
members. Additionally, family members serve on the boards of directors of the business. Due to their
family-controlled nature, these businesses are often fast-moving, with quick decision-making processes
because of the lack of external influences

4. How family business conflict can be managed? Analyse.

An important goal of a family business is to learn how to manage conflicts so that good family decisions
emerge, individuals grow in healthy ways, and relationships flourish. There are some ways to avoid or
manage family business conflicts which are listed below:
1) Hire Wisely: The best idea would be to avoid hiring someone from the family if they have little or no
knowledge about how your business operates. An organization should hire members who work wisely.
Relationships that are sensitive should be kept aside.
2) Development of Good Communication System: Communication is the key to conflict resolution.
Never shove conflicts under carpet. It is imperative for the success of the organization to accept and
handle them. Make sure the organization has a proper communication system. In this regard, family
meetings can be beneficial.
3) Have Family Meetings: Holding family meetings frequently is a good way to diagnose the conflict or
to prevent conflicts from escalating. Family meetings provide an opportunity for everyone to express
their opinions on company issues, share relevant information or updates; and plan for the future.
4) Create a Shared Vision: It is important that the family understands what the business aims to achieve
and how achieving that goal will benefit each family member and the business enterprise as a whole. In
addition, it's crucial that all participants adhere to the same family values and that there's no misconduct
that undermines the business goals.
5) Structured Approach to Problem-solving: Conflict is inevitable in any business. Many companies
have adopted conflict resolution processes that may include the formation of a grievance committee.
Using a forum such as this can facilitate a safe, organized method of resolving issues through dialogue.
6) Seek the Help of Mediators: Sometimes a family conflict may not be resolved among members of
family easily, so expert mediators may be a better option to help resolve it through a formal mediation
process. Expert mediators may provide an objective view of the issue and lead the family members
through initial discussions until they reach an agreement.
7) Deciding Upon Probable Disputable Issues in Advance: To avoid issues and disagreements, it is
preferable to identify problems ahead of time and devise solutions that will lead to the members
adopting a unified course of action.

5 Explain the ways of governing family business.

In the case of proprietorship and partnership, family control is exercised by the direct participation of
family members in ownership and management of the firm. In the corporate sector, forms and means of
control are variedly applied by families. Three types of control are possible. In the corporate sector,
these are: ownership, operation and management. Ownership control is normally held by holding a
sizeable block of equity. This form of control represents the voting power of family members. This,
form of control is a necessary condition-to exercise the other two forms of control, i.e. operational
control and management.
Operational control is said to have taken place when all key positions at different levels are manned by
family members. Under this control family members have decisive power and if professional's are hired,
they merely give advice to family members.
Management control is exercised through a Board of Directors where family members are represented.
The family members as directors determine the corporate objective and major policies of the firm. A
firm may be subject to one or all the three types of control.
To determine whether a family has control over the corporate firm or not, Dutt Committee on Industrial
Licensing used effective equity as the basis of control Effective equity was computed as total equity less
all categories of passive shares. A family's maximum share out of the effective equity indicated the
power to control.
In some cases, power of control is gained on the basis of family reputation. The shareholders entrust the
power of control to a particular family, mostly known as business house or industrial house. In such a
case, the family or business need not hold a majority of shares.
Different means are used to gain control over existing business such as interlocking of Board of
Directors or inter-corporate investment or purchasing the controlling block of share holding in open
market.

Long type questions

1. Discuss the components of family capital.

Family Capital
Family capital, the human, social, and financial resources that a family provides its members, is
often the key to successfully launching a new business as well as maintaining healthy family
relationships.
Family Capital is the strongest intangible asset of family businesses. Having a good
understanding of the 4 Components of Family Capital allows family businesses to build a
strong culture.
Family Capital is a true differentiator between family-owned businesses and companies with a
fragmented shareholder base. Family Capital expresses itself as the organization’s culture,
ethos, and network. While hard measures liking it to performance are elusive, Family Capital
clearly conveys powerful advantages.
Tribe. The Tribe is the sense of connectedness, shared culture, and support in the social fabric of a family
business. It is expressed through a sense of closeness that nonfamily employees feel toward the owners. In fact, it
goes beyond the immediate clan or owning family.
Family Identity. The Family Identity is the degree to which members of families that own businesses identify
with them can vary widely. It extends to how consciously families decide to express their image through the
company brand and how much a sense of family promotes the family legacy and visibility in the market.
Trust. Family Capital’s trust element refers basically to the owners’ reliability. It is the degree of trust the
organization’s members have in the ability of family leaders to improve the company’s performance. It is the
ability of family leaders to keep their promises to stakeholders and do what they say they will do generally.
Stewardship. Stewardship denotes the strength of family values. It is the idea that family leaders put the
organization’s interest above their own. It is the degree to which family leader take a long-term perspective.

2. Explain the types of family conflict.

Types of Family Business Conflicts

Type of Conflicts Description
Conflict of Interest Conflict of interest results from people making
decisions which are driven by self-interest. These
conflicts can arise between an owner/founder and the
company's managers since principals and agents have
different interests. Majority and minority family
shareholders may also have conflicts of interests
when they place different emphasis on growth and
dividends.
Work Family Conflict When family members are involved in the family
business they have overlapping roles in work and in
family life. These overlaps increase the risk of
incongruent role expectations and incongruent work-
family conflicts. For example, A parent interact with
a next generation member not only as a parent but
also as a boss and business partner, which can makes
it challenging to know how to treat one’s relative in
any circumstance.
Relationship conflict A relationship conflict occurs when personal
 animosities and incompatibilities cause negative
emotions like annoyance and frustration.
Relationship conflict can take place between people
at many different levels, but it is more likely to
appear among family members due to their
emotional bonds.
Task Conflict In general, Task conflicts arise from disagreements
about the content and purpose of the tasks being
undertaken. For example, disagreements about a task
(e.g. "that's not my job").
Process Conflict Process conflicts exist when there is disagreement
over a method of completing a task. For example,
members might disagree whether a decision should
be made by group consensus or a single individual.

3. Explain the positive and negative sides of family business.

Positive Side Family, which is considered obstructive to the business performance is also considered, a
major source of strength and support in many respect. Some of the advantages of family business are
discussed here.
The basic premise on which family business rests is its stability and continuity which are linked from
one generation to another. The long term interest of family members in the business often provides the
sentiments of family solidarity and natural loyalty. Family members work with each other with greater
team spirit to attain a common goal. They make personal sacrifices by taking minimum dividends from
the firm and bringing in personal financial resources in the time of financial crises, Many time, business
gets greater priorities under their personal needs, Loyalty and dedication of family members have been
responsible for continued operation during the period of hardship, 31 Managing Family Enterprises
The image and social reputation .of family becomes the goodwill of the firm. It helps in establishing
trust and credibility in the market. Bankers and suppliers feel comfortable in dealing with such family
owned enterprises because of their good image and reputation.
Since stock holders and managers of the firm works unitedly, managers are less sensitive to the criticism
based on short term performance. They enjoy a great amount of freedom and flexibility in concentrating
on long-term objectives of the firm. This is possible only in family business as both stockholders and
managers have mutual understanding and trust.
There are other conditions in which the choice of the family form of enterprise becomes almost
essential. Entrepreneurs who have worked very hard throughout their life to build the business empire
very often desire that the fruits of their hardwork must go to their families. At the same time, they have
many obligations towards the family as they derived the initial capital and emotional support from the
family. Therefore new enterprises adopt the family business form to satisfy family needs.
During the transition period, the founder needs trustworthy people to take care of sensitive operations as
he finds it difficult to manage the business alone. He looks for family members and relatives as a source
of strength to fill the transitional gap. Small firms cannot afford to hire professionals and therefore they
start taking family members and relatives to provide support in the growing business. The legislative
environment has also been indirectly a binding force on the founder to adopt family business to enjoy
certain benefits.
Negative Side The intervention of family in the management of the firm is often considered unhealthy
and unprofessional. This affects the organisational efficiency and performance in many respects. Some
of the commonly occurring negative effects are discussed here.
Nepotism is one of the marked features of family business enterprises. The blood relationship
determines the entry into the business and holding of key positions. Merit becomes secondary and even
an insignificant criterion for promotion. This affects the loyalty and commitment of hired professionals.
The inefficiency of relative-employee is often covered up by the efficient performance of non-relative
employees. This ultimately make the total functioning of organisation inefficient.
Overlap between business and family goals is another feature of family business. Logically, the goal of
the enterprise is oriented to fulfil the interest and achievement of the family
This, many a time contradicts the survival and growth goals of the firm. Family members very often
pursue their personal goals at the cost of sacrificing growth opportunities of the firm. This threatens the
long term survival of the firm.
Family rigidity is the third feature which imposes poor profit discipline.-Family members very often
prioritize certain aspects of firm's functioning on the basis of family value or family decision. For
example, family value is to create a good social image which requires giving to employment to needy
people may affect the profit of the firm. Many times, family members unduely support their pet projects,
no matter how profitable they are.
Succession is the fourth feature of family. The continuity of family is achieved by way of handing over
the charge of the firm to the next generation. Very often the. successors are selected using blood relation
as only criterion. They may not be and may not have any experience of running a well established
business firm. In the want of proper succession a good number of family businesses get into trouble and
sometime are led to closure of business enterprises.

4. Explain the strategies to overcome the issues of family business.

To realise the natural resources of family business like commitment, loyalty, initiative,
entrepreneurship, financial resources, family image, etc. more effectively it is essential that family
business develop certain key advantages and overcome certain inherent weaknesses. Based on some of
the successful family businesses, the following coping strategies are suggested:
Linking Family and Business Goals Successful family businesses are the ones which have been able to
establish the close link between family and business by clarifying that the goal of the family can be
achieved only if the enterprise achieves its long term goals. This further asserts that participation of the
family members would be allowed as long as it contributes to the enterprise's long term strengths. Such
a stand should be made clearly at the time of enterprise initiation or when the involvement of family
begins. Strategically, eliminating some amount of family participation strengthens the leadership of the
family members who are in the business which ultimately result in better performance.
Recruitment of Relatives The best managed family businesses have adopted the policies of not
recruiting relative employees at all. The needy relatives are helped by the founders to find jobs
elsewhere. This may be considered a too rigid policy as there .may be a professionally competent person
in his family or relation who would not be selected purely on the ground that he happened to be a
relative of the founder. Instead of having such a rigid policy, one may have a recruitment policy stating
that relatives may be considered for employment provided they stand up to the company's standards.
This policy would also ensure better cooperation of family and relatives. At the same time, business
norms are not sacrificed in the interests of the family.
Avoidance of Nepotism In family business, family members as employees get several undue benefits.
In order to avoid this, the successful businesses adopt firm personnel policies applicable to both
relatives and non-relative employees. It may be clearly stated in the personnel policies that one may be
given an opportunity to work in the business because of the relationship factor but his growth, within the
firm would depend solely on his competence and merit. Relative employees, like non-relative
employees, are subject to performance evaluation which would be carried out by independent people.
This would greatly help the family business to avoid nepotism and favouritism within the organisation
Task Structuring It will be unrealistic to imagine a family business, however successful it is, to remain
away from certain inherent issues pertaining to the family. It is also possible that despite all possible
efforts to avoid, a number of family issues in business, may continue to remain unresolved. In such a
case, to save the business from possible consequences, the primary task structure of the organisation
may be designed in a manner to minimise the negative effects on its performance

i) The founder must try to identify those critical operational activities which need ' to be
adequately supported to ensure at least the survival of the firm. He maystructure them in
such a manner that all important operations continue to take place without any disturbance
despite pertaining conflict amongst the family owners-relatives.
ii) The firm must create reserves to meet any contingencies occurring owing noncooperation or
indigating of family members. They could be extra staff to compensate the possible loss of
work because of incompetency of family members to carry out a given task.
iii) While carrying out the structuring of the task system, those areas should be identified where
conflicts among family members is likely to arise. In these areas more professionals may be
employed. At the same time, family members may be entrusted with those areas where the
 chances of conflict are less.
iv) The founder should take extra care to keep morale and motivation of the employees so high
that they continue to remain committed and loyal to the firth. They are likely to be the only
individuals who can be entrusted with high level of responsibility in times of conflict for
ensuring smooth functioning of the organisation.
v) Very often, the founder refuses to accept certain lapses in the organisation which are results
of family issues. This leads to a state of confusion in the organisation resulting in family
members blaming each other for poor performance.The founder should accept certain given
problems and issues as weaknesses because of family based management system. This
would help avoid unnecessary anxiety and politics in the organisation.
vi) The task-system should be loosely structured so that enough flexibility is built in. The
bureaucratic structure is very much vulnerable during a period conflict. In the case of
conflicts or blocks being created to routine functions, a middle course should be adopted.

5. What are the challenges of family business in India.

In India, many businesses that are now public companies were once family businesses. These
family businesses have grown tremendously with the passage of time. However, things are
always not rosy. While family business gets many advantages, they face certain challenges also.
Let us discuss these challenges below:
1) Innovation for a competitive advantage: The business environment today is very
competitive. To survive and grow in this competitive environment it becomes very important to
innovate and give unique value proposition to the customers. To innovate, the business goals
have to be broadened and new strategies are to be formulated. This may mean that businesses
may have to leave the age-old style of functioning. But family businesses may remain confined
to their age-old practices and not invest in research and development.
2) Limited Talent: In family business owners and managers are by and large the family
members. Members of the family may not necessarily be talented and capable of taking the
company’s legacy forward. Attracting right talent from outside the family is crucial and
retaining them is even more important.
3) Lack of Succession Planning: There is lack of efficient succession planning, mentoring and
developing the next generation of successors and leaders. Family businesses have to give
proper attention to this issue.
4) Technology Needs: With the changing environment and rapid technological developments,
the business need to adapt to the new technological advancements or bring in new, if need be.
This may mean that they may have to part with the older business models which have been
passed on to the present generation.
5) Sibling Rivalry: Sibling Rivalry is something that needs no explanations. All the heirs of the
family get share in the business. Some may do well and flourish further, some may not. This
often creates rivalry and pulling down each other is started even at the cost of organisational
resources. This rivalry, if remains unsolved, may lead to split in the family business.
6) Internal Conflict: Interest of the family members of family business is varied. This may
disturb business harmony. Handling this internal conflict is very difficult. If it is not handled
properly, this may lead to failure of the business.
7) Biased Decision-Making: There is always a possibility that decisions in the family business
may be biased for non-family members and employees of the business. The family members
may try to impress upon their own ideas on the other members.
8) Too Much Emotional Attachment with Business: It is always said that one should always
be passionate about the business but not be emotional as it may interfere with the tough
decisions which might have to be taken for the growth of business
9) Unclear Roles and Responsibilities: There is often a lack of proper documentation which
defines the roles and responsibilities of the members of the family in family business
organisation. This may lead to chaos and mismanagement.
10) Lack of Professionalism: Professional business cultures are the result of formal processes,
which include setting clear goals and enforcing rules, as well as hiring and promoting
employees based on their potential to contribute. However, in many family businesses, the
informal structure and culture may cause confusion among roles, lead to lack of talent, and
make it impossible for values, ethics, and philosophies to be defined.
11) Limited Finance: Family businesses have limited financing options since they cannot raise
large amounts of capital on their own, and external financing options may not be attractive to
them as outside debt may lead to significant influence over the company. For family businesses,
determining where and how to get the capital and resources needed to grow can be a challenge

Unit – 5

Very Short Questions

1. What is succession planning?

Succession planning is the process of identifying the critical positions within your organization and developing
action plans for individuals to assume those positions.

2. Define talent management.

To establish a strong succession plan, an organization needs a solid talent management system.
As part of your standard talent development process, you should be identifying the different
skills and strengths people bring to your workforce. This information helps you pinpoint people
with the highest leadership potential for your organization.

3. Define knowledge management in succession planning.

Knowledge management is an essential component of an effective succession plan.

A company must develop processes for transferring knowledge between existing and future
leaders.

4. What is Estate planning.

The term estate planning refers to the preparation of tasks that serve to manage an individual's
financial situation in the event of their incapacitation or death. The planning includes the
bequest of assets to heirs and the settlement of estate taxes and debts, along with other
considerations like the guardianship of minors and pets.

5. What is career planning and development?

Career planning and development are concepts which include all those events either
happening to or initiated by individuals which affect a person's progress or . promotion,
higher widening and/or changing employment possibilities and acquiring a different and
normally higher status, better conditions of service or increased satisfaction with the job.

Short Types Questions

1. Explain the steps of career planning and development

Recruitment Recruitment to positions in government is done from the open market to fill in the
jobs in the organisation. It is undertaken, after doing a good preparatory assessment of current
needs and anticipated manpower requirements on the basis of an analysis of estimated growth
of the organisation, its diversification of functions and necessary skills required. This means
there is an attempt at perfect matching of people and job.

Promotions There is no doubt that 'promotion' basically must be related to the 'tomorr~ws' of
the organisation. It is important to note that current competence of individuals cannot alone be
the basis for elevation but certain relevant traits are required like growth-potentiality, capacity
to take on higher responsibilities, risk-bearing dynamism, a vision and a perception for total
organisational progress.

Retention Apart from the promotion system, the employees' retention programmes policy must
cover all other compensation packages, including salary, bonus, wages etc., which are financial
in nature. Non-financial compensation covers the satisfaction that a person receives by
performing meaningful job tasks or from the physical and psychological environments in which
the job is performed. Needless to say, all this builds up an image of the organisation and exert
influences against migration of employees from it.

2. Explain the objectives of career planning and development.

a) To secure the right person at the right time, in the right place. It assures the adequate
availability of qualified personnel in the organisation for future openings. This has two
facets: positively, to make succession-planning timely and smooth; negatively, to avoid
a "square peg-in-a round-hole" in the organisation.
b) To ensure that the road to the top is open for all.
c) To facilitate effective development of available talent.
d) To impart to the employee maximum satisfaction, consistent with their qualifications,
experience, competence, performance as well as individualistic needs and expectations,
leading to a harmonious balance between personal and organisational objectives.
Individuals who see that their personal development needs are met tend to be more
satisfied with their jobs and the organisation.
e) To strengthen the organisation's manpower retention programmes based on adequacy of
career compensation, motivation management. It seeks to improve the organisation's
ability to attract and retain high talent personnel, since outstanding employees always
are scarce and they usually find considerable degree of competition to secure their
services.
3. Explain the concept of career planning and development.

Broadly, the term career is used to refer to an individual's entire work Life. It can be defined in
a narrow sense, to be the succession of jobs and/or ranks held by a person in a particular
organisation. An individual's career begins with placement in a job and ends with departure
from the organisation which may be through retirement, resignation or death. In between, the
career progression consists of changing tasks, tenure in various jobs, temporary or permanent
promotions, transfers etc.
i) Career planning and development are concepts which include all those events either
happening to or initiated by individuals which affect a person's progress or .
promotion, higher widening and/or changing employment possibilities and acquiring
a different and normally higher status, better conditions of service or increased
 satisfaction with the job.
ii) Career development is the process which enables an organisation to meet its current
and projected manpower requirement, through provision of career opportunities for
its employees. It aims at optimising the effectiveness of human resources of the
organisation, through planned development and their knowledge, skills and
potentialities.
iii) Career planning refers to planned and systemised progression of events and
development in the field of work or vocation of individuals during the employable
periods of their life.
4. Explain the important components of writing a will.

A will is a legal document that provides instructions on how an individual’s property and
custody of minor children (if any) should be handled after death. The individual expresses
their wishes and names a trustee or executor that they trust to fulfill their stated intentions.

The will also indicates whether a trust should be created after death. Depending on the estate
owner’s intentions, a trust can go into effect during their lifetime through a living trust or with
a testamentary trust after their death.

The authenticity of a will is determined through a legal process known as probate. Probate is
the first step taken in administering the estate of a deceased person and distributing assets to
the beneficiaries. When an individual dies, the custodian of the will must take the will to the
probate court or to the executor named in the will within 30 days of the death of the testator.

The probate process is a court-supervised procedure in which the authenticity of the will left
behind is proved to be valid and accepted as the true last testament of the deceased. The court
officially appoints the executor named in the will, which, in turn, gives the executor the legal
power to act on behalf of the deceased.

5. Discuss the steps for effective successive planning.

Identify potential successors

The first step to succession planning is identifying who has the potential to take over leadership
roles in the future. There are many methods to help you determine future leaders, including
skills assessments, performance reviews, and 360-degree feedback.
Start by assessing current leaders to identify the specific qualities you need in a successful
leader. You might have historical data to guide you, but don’t solely rely on the past. We live
and work in a dynamic environment, and what you needed from leaders yesterday might be
significantly different from what you need tomorrow.
Next, examine your overall bench strength, which can also be described as your workforce’s
capability for leadership. From there, identify specific people with the highest leadership
qualities and match them to potential roles within the organization.
Develop and train potential successors
Once you have a list of potential successors, create a customized development plan for each
one. Make sure you’ve identified the strengths and weaknesses of each potential successor,
with plans to address weaknesses and build on strengths. The plan should be challenging but
realistic, achievable, and time-bound.

Set clear goals and expectations

It’s also important to build clear goals and expectations into each potential successor’s
performance plans. One of their objectives and key results (OKRs) could include a stretch goal
to master one of the leadership skills you’ve identified. This type of OKR helps potential
successors gain a better understanding of how they’ll need to prepare for the role.
Hold leadership candidates accountable for meeting their goals and expectations. Their direct
manager is responsible for having ongoing, regular performance enablement conversations.
Successor candidates can also benefit from a mentor’s guidance or interactions with people
currently in the role.
Track the progress of each potential successor, and make adjustments to the plan as needed.

Long type questions

1. How to prepare the next generation for leadership in business.

Build a shadowing program.

Even young children can be exposed to the excitement of the business environment. You can
start with something as limited as a “Bring Your Children to Work” day as a way to get the
tradition of involvement going for all employees without placing undue emphasis on the
children of owners. Combine it with a picnic to encourage the children and grandchildren of
owners to get comfortable with meeting employees and their families.

Create progressive developmental experiences.

Moving family members through the organization gives them the opportunity to learn all
aspects of the business. As they gain technical competence in various areas, they can also have
multiple chances to manage different work groups.

Offer context for business goals and operations.

Gear explanations about the importance and value of building the business, its financing, and its
mode of operations to the ages and acumen of each generation. Dinnertime conversation can
start with the goods and services the business delivers and include future-oriented conversation
about the company’s mission, as well as what it means to be responsible for the livelihoods of
employees and therefore other people’s families.

Insist on integrity.

Every family has some dysfunction, and individual family members can develop bad habits. If a
child fudges the truth at home, they may eventually do the same in the business. If one kid
always trounces their sibling in obvious rivalry during play, they will likely bring this
competition into the business. It’s crucial for parents not to look away from these “childish”
tendencies and to address them early, because these negative inclinations will create damage in
the business, and should not be tolerated, even — or especially — in loved ones.

Make a plan for the future.

Know your long-term intentions for the business so you can plan appropriate career
development for the next generation. If your purpose is to grow the entity specifically to sell it,
rather than to build a financial engine that will keep the business in the family in perpetuity,
then, as one of my clients did, teach the kids to learn about how to manage their own portfolios.
This will allow them to manage their money post-sale and expose them to functional roles that
will equip them to work elsewhere.

Educate the entire family.

Not every child will choose to work in the business. And yet all family members who may
become shareholders and whose lives may be affected by the business will benefit from
understanding how the business fits into their present and future lives. A Family Council can be
an effective venue for keeping the family connected both to the business and to each other.

2. Explain the important task of estate planning.

The following table serves as a checklist when it comes to planning your estate:

Task Considerations
1. Make a list of all Be sure to include any physical assets like real estate and precious
your assets. metals along with any bank accounts, insurance policies, and annuities.
2. Make a list of all This list should include everything you owe, including any loans.
your debts.
3. Make copies of If you have multiple beneficiaries, it helps to make multiple copies for
your lists. each one to have at their disposal.
4. Review your This is important, especially for accounts that have beneficiaries
retirement accounts. attached to them. Remember, any accounts with a beneficiary pass
directly to them so it doesn't matter what your will states.
5. Review your Make sure your beneficiary information is up-to-date and all of your
insurance and other information is accurate.
annuities.
6. Set up joint Joint accounts, especially checking and savings accounts, do not have to
accounts or transfer of go through the probate process as long as there is a right of survivorship.
death designations. This means the account moves directly from the deceased to the
surviving owner. Similarly, a transfer of death designation allows you to
name an individual who can take over the account after you die without
probate.
7. Choose your estate This individual is responsible for taking care of your financial matters
administrator. after you die. Choose someone you trust. Your spouse may not be the
right person as they may not be in the right emotional space to take over
your finances.
8. Write your will. Wills don't just unravel any financial uncertainty, they can also lay out
plans for your minor children and pets, and you can also instruct your
family/estate to make charitable donations with the money you leave
behind.
9. Review your Make sure you look over everything every couple of years and make
documents. changes whenever and wherever you see fit.
10. Send a copy of This ensures there is no second-guessing that a will exists or that it gets
your will to your lost. Send one to the person who will assume responsibility for your
administrator. affairs after you die and keep another copy somewhere safe.
11. See a financial This individual may be an estate planner or a financial planner. This
professional. person can help you review your accounts and help you make decisions
to optimize your earnings.
12. Consolidate your Some people have accounts in different places. But as time goes on, it's
accounts. always a good idea to move as much as you can into one place. Doing
so helps clear up any confusion in the future for you and for your heirs.
13. Complete other You may need other legal and financial documents as you get older.
financial documents. Consider a power of attorney (POA) for health and finances, living
wills, and letters of instruction that provide direction for your funeral or
what to do with other assets like a digital wallet.
14. Consider other There are some tax-saving investment vehicles you can take advantage
savings vehicles. of to help you and others, such as 529 college savings plans for your
grandchildren.

3. Explain the challenges of developing future generation for leadership.

Coaches, educators, and managers of all kinds face the same set of challenges, including:

1. Navigating imposter syndrome: A modern trend where managers enter their role feeling like
they aren’t up to par. A lack of confidence in the position can bog down a leader’s ability to
inspire others.

2. Handling different perspectives: When presented with a problem among their team, a good
leader needs to hear all sides of the story. They need to create a productive discussion to solve
the problem.

3. Leading change: People tend to avoid big changes out of fear. An effective leader needs to
demonstrate that change can become a powerful tool.

4. Inspiring others: Successful leaders find ways to motivate their team to do great work.

5. Helping others develop skills: Team members count on their leader to help them develop
confidence through technical and soft skills.

6. Managing a team: Joining a brand-new team or going from an associate to a leader can be a
tough shift. It can take a while to find the right leadership dynamic when anyone takes on a new
role.