Chapter 3

Entrepreneurship
Environment

Bikrant Kesari
MBA, MARD, MA (Eco), Ph.D.
Asst. Professor
MANIT Bhopal
E:xamine needs, wants, and problems to see how they can improve the way needs and wants are met and
problems overcome.
N: arrow the possible opportunities to one specific “best” opportunity.
T:hink of innovative ideas and narrow them to the “best” idea.
R:esearch the opportunity and idea thoroughly.
E:nlist the best sources of advice and assistance that they can find.
P:lan their ventures and look for possible problems that might arise.
R:ank the risks and the possible rewards.
E:valuate the risks and possible rewards and make their decision to act or not to act.
N:ever hang on to an idea, no matter how much they may love it, if research shows it won’t work.
E:mploy the resources necessary for the venture to succeed.
U:nderstand that they will have to work long and hard to make their venture succeed.
R:ealize a sense of accomplishment from their successful ventures and learn from their failures to help
themachieve success in the future.
Entrepreneurship
environment

• Uncertainty and dynamic

• Create opportunities and
threats
• Limits of planning
• NPD/services
• Competition
Entrepreneurship
environment

• Knowledge about problems and

complexities
• Essential for growth
• Performance factors
• Positive and Negative influences
Entrepreneurial ecosystem

MAJOR OBSTACLES TO GROWTH

• Traditional ideology
• Social system
• Uneconomic culture
• Unproductive investment
External factor affecting the entrepreneurship
 1. Determining Opportunities and Threats: The interaction between
the business and its environment would identify opportunities for and
threats to the business. It helps the business enterprises for meeting
the challenges successfully.
2. Giving Direction for Growth: The interaction with the environment
leads to opening up new frontiers of growth for the business firms. It
Relationship enables the business to identify the areas for growth and expansion of
their activities.
between 3. Continuous Learning: Environmental analysis makes the task of
Entrepreneurship managers easier in dealing with business challenges. The managers
are motivated to continuously update their knowledge, understanding
and Environment and skills to meet the predicted changes in realm of business.
4. Image Building: Environmental understanding helps the business
organisations in improving their image by showing their sensitivity
to the environment within which they are working.
5. Meeting Competition: It helps the firms to analyse the competitors’
strategies and formulate their own strategies accordingly.
6. Identifying Firm’s Strength and Weakness: Business environment
helps to identify the individual strengths and weaknesses in view of
the technological and global developments.
 Importance of 1. New Technologies: This factor is related to the changes in industry structure.
Fundamental changes in nature of technological development have led to
Entrepreneurial diseconomies of scale.
2. Deregulation and Privatization: Now companies have to deal with fewer
Environment licenses and government controls. Many state owned- enterprises have also
been privatized leading to a greater role for the private sector in general and
entrepreneurs in particular.
3. Formation of New Business Communities: Efficiency across markets,
primarily resulting from use of new technologies has led to declining cost of
transactions. Recent advances in the information technology and internet
have made inter-firm coordination relatively cheaper compared to intrafirm
coordination. This promotes setting up of new firms in the new-age business
communities.
4. Increasing Demand for Variety: Increased wealth has led to the increase in
the demand for variety, which in turn is advantageous to the small firms.
5. Service sector growth: Increase in per capita income leads to a greater share
of the services sector in the national economy.
 6. Government Incentives and Subsidies: Government incentives and subsidies encourage
entrepreneurship.
7. increasing flow of Information: Information is the lifeblood of business and it is being
Importance of increasingly democratized. The information technology has revolutionized the way business
is transacted.
Entrepreneurial 8. Easier Access to Resources: It is easier for an entrepreneur to access debt and equity

Environment finance than ever before.

9. Entrepreneurial Education and Education in General: Many universities and
institutions are nowadays offering entrepreneurship education.
10. Return on Innovation: Strengthening of intellectual Property Rights (IPR) has acted as a
major boost to entrepreneurs willing to take a risk on an innovation.
11. Successful Entrepreneurs as Hero: Dhirubhai Ambani and Naryan Murthy have
become heroes to the middle class. Middle class reveres them as super-achiever and try to
emulate them.
12. High Regard for Self-Employment: Self employment is not looked down upon and is
thought of as the best way to achieve a variety of personal goals.
13. Rising Dissatisfaction at Job: Employers are finding it hard to retain talented
employees. People confidence in their abilities, which in turn prompts them to find alternate
employment.
14. Acceptance of Ex-entrepreneurs in the Job Market: Companies are willing to re-
employ people who have been entrepreneurs.
Factors Affecting Entrepreneurial Growth
ECONOMIC FACTOR

Economic Factors:
• Capital:
• Labour: Economic Conditions Economic Policies: Industrial Policy:
• Raw materials:
• Markets:

Foreign Investment Foreign Investment

Fiscal Policy: Monetary Policy
Policy Policy
Non economic Factor

Legitimacy of
Social Conditions Social Mobility Marginality:
Entrepreneurship

Psychological and Need

Security: Political Factors
Individual Factors Achievement
 Companies Act, 1956

· Foreign Exchange Management Act, 1999

· The Factories Act, 1948

· Industrial Disputes Act, 1972

· Payment of Gratuity Act, 1972

Legal · Industries (Development and Regulation) Act, 1951

Environment
· Prevention of Food Adulteration Act, 1954

· Essential Commodities Act, 2002

· The Standards of Weights and Measures Act, 1956

· Monopolies and Restrictive Trade Practices Act, 1969

· Trade Marks Act, 1999

· Bureau of Indian Standards Act, 1986

· Consumer Protection Act, 1986

· Environment Protection Act

· Competition Act, 2002

 Technological

Others Natural Environment :

Demographic
Environment