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  1. 1. ENVIRONMENTAL SUITABILITY FOR DEVELOPING ENTREPRENEURSHIP WITH THE APPLICATION OF PEST ANALYSIS IN BANGLADESH
  2. 2. A RESEARCH PROPOSAL ON Environmental Suitability for Developing Entrepreneurship with the application of PEST Analysis in Bangladesh Submitted To: Md. Reaz Uddin Assistant Professor Submitted By: Fatema Khatun : 090349 Business Administration Discipline BBA program Khulna University Course Name: Course: Sessional of Business Research Methodology
  3. 3. Course Code: BA-4202 30 May, 2013
  4. 4. Abstract Bangladesh became independent in the year 1971 after bloody war against Pakistanis. When the country was independent, entrepreneurship among the local people was limited only two percent of the total population. It was irony that the at that time non-Bangles largely controlled entrepreneurship. But Bangladesh has a magnificent model of entrepreneurial activities from ancient time period to till seventeenth century. At that time it had small and cottage industries, shipping industries, gold and silver smithy, milk products, making of combs and buttons from animal bones, treatment of raw hides, papermaking, sugar, salt industries etc. After seventeen century this entrepreneurial activities turned to become darkness of shadow. Local people of the country were inclined to work as entrepreneurial activities due to political and historical reason. In Bangladesh lack of political commitments and absence of creation of healthy environment required for entrepreneurial growth are the limiting factors in the process of adequate supply of reasonable number of entrepreneurs. Small and Medium enterprises are the lifeblood of any economy and are at the forefront of Govt. efforts to promote entrepreneurial activities, innovation and increased productivity. The SMEs in Bangladesh face significant problems in access to finance for their business activities. This relates to getting the right amount of fund at the right time at reasonable rates with suitable repayment. The garments sector and micro-credit scheme transformed the face of economy in the country especially for women. Over the several years, the mobility of women, especially in urban sectors, has improved. As women became more involved in business, they also changed the standard of living of their families. Women have successfully played dual roles in both professional and personal lives. Women entrepreneurs understand the way of doing business and have even diversified their business into different sectors. In terms of MDGs, although Bangladesh has so far made considerable progress in social issues, its achievement in economic issues is relatively not bad. (Ali, 2011) Keywords: Political and historical reason, MDG, Mobility of women, Small and Medium enterprises
  5. 5. Introduction It is widely said that some society/culture is more favorable to entrepreneurship than others. Entrepreneurs are creations of the environment. If favorable environment prevails entrepreneurship will emerge and vice versa. The non emergence of entrepreneurship in Bangladesh at a desired level might be attributed to the unfavorable environmental factors. However, the study of environment for entrepreneurship faces the perpetual question of what constitutes the environment. In fact, there is no consent among the researchers in this regard. A number of researchers have approached this topic by identifying a set of elements to be the constituents of the business environment of entrepreneurship development. It is included political, economical, legal, and socio-cultural aspects as well as the role of state as the major elements of entrepreneurial environment. Capital, labor, raw materials, technology, market size and composition are considered as the opportunity conditions for the entrepreneurs. It is assumed that the economic opportunity condition in Bangladesh is reasonably favorable. But entrepreneurship has not treaded forward to take advantage of such favorable conditions. In this aspect he recognized the adverse non-economic factors, like political, economical, legal and socio-cultural factors that hinder the growth of entrepreneurship in the country. A business student should also look it as a great opportunity. (Azim, 2009) Scope of the study Scope means the area of action. The scope has been clearly specified. The target is to find out political, economical, social and technological problems and opportunities for developing entrepreneurship in Bangladesh. So to make a good research proposal survey will be to entrepreneurs, bankers, economists, University teachers and policy makers. 2.0 Literature Review Entrepreneurship can be defined as the process of using private initiative to transform a business concept into a new venture or to grow and diversify an existing venture or enterprise with high growth potential. Entrepreneurs identify an innovation to seize an opportunity, mobilize money and management skills, and take calculated risks to open markets for new products, processes
  6. 6. and services. For the development of our country in Economic sector, the importance and necessary of the entrepreneurship development is a must. But the sorrowful matter is that a very few research work is done on over it. So the growth the process of the development in the sector is very sluggish. Researcher both in the sector of Government and the Public both need to provide more attention in this important sector. 2.1 Definition of entrepreneurship Entrepreneurship is more than simply “starting a business.” The definition of entrepreneurship is a process through which individuals recognize opportunities, allot resources, and generate value. This creation of value is often through the recognition of unmet needs or through the identification of opportunities for change. (sirpoils, 1998) So we can say that entrepreneurial success is simply a function of the ability of an entrepreneur to see these opportunities in the marketplace, initiate change and create value through solutions. 2.2 Factors require for developing entrepreneurship The emergence and development of entrepreneurship is not a spontaneous one but a dependent phenomenon of economic, social, political, psychological factors often nomenclature as supporting conditions to entrepreneurship development. For analytical proposes, these conditions are grouped and discussed under tow categories, this areEconomic Factors Form a strictly economic viewpoint, it can be said that there are some factors which promote economic development through emergence of entrepreneurship. Some of these factors are discussed in below• Capital Capital is one of the most important prerequisites to establish an enterprise. Availability of capital facilities the entrepreneur to bring together the land of one, machine of another and raw
  7. 7. material of yet another to combine them to produce goods. Capital is, therefore, regarded as lubricant to the process of production. • Labor The quality rather quality of labor is another factor which influences the emergence of entrepreneurship. It appears that labor problems can be solved more easily than capital can be created. • Raw-material The necessary of raw materials hardly needs any emphasis for establishing any industrial activity and, therefore, its influence in the emergence of entrepreneurship. In absence of raw materials, neither any enterprise cab be established nor an entrepreneur can be emerged. • Market The fact remains that the potential of the market constitutes the major determination of probable rewards form entrepreneurial function. Thus, it appears that weather or not the market is expending and the rate at which it is expanding is the most significant characteristics of the market for entrepreneurial emergence. Non-Economic Factors Sociologists and psychologists advocate that economic factors may be necessary conditions, but they are not sufficient condition for the appearance of entrepreneurship. Some major noneconomic factors alleged to influence the emergence of entrepreneurship can be described below: • Legitimacy of Entrepreneurship The proponents of non-economic factors give emphasis to the relevance of a system of norms and values within a socio-cultural setting for the emergence of entrepreneurship.
  8. 8. • Social Mobility Social mobility involves the degree of mobility, both social and geographical, and the nature of mobility channels within a system. The opinion that the social mobility is crucial for entrepreneurial emergence is not unanimous. • Marginality A group of scholars hold a strong view that social marginality also promotes entrepreneurship. The two preceding factors - the legitimacy of entrepreneurship and social mobility-largely determine the influence of marginality on entrepreneurship. • Security We also regard security to be a significant factor for entrepreneurship development. This is reasonable too because if individuals are fearful of losing their economic assets or of being subjected to various negative sanctions, they will not be inclined to increase their insecurity by behaving entrepreneurially. • Physical Need Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate specifically upon psychological factors. We consider these theories separately for that reason• Need Achievement To the best of our knowledge, the best known of primarily psychological theories is David McClelland’s theory of need achievement. • Withdrawal of Status Respects
  9. 9. Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship. This very fact led them to the technological progress entrepreneurial roles. (Kamruzzaman et al., 2008) 2.3 Social and economic background of Bangladesh The economic development of Bangladesh in the last three decades is the resultant effect of structural change in the economy leading towards considerable growth of the manufacturing and service sectors, various reforms of domestic economic policies, changes in international policies, and in this process the emergence of a group of entrepreneurs. During this period, GDP growth doubled from a mere 3.7% in the 1980s to more than 6% after 2000, with Bangladesh now ranked 33rd out of 191 countries (in terms of GDP). However, because of its huge population (150,448,340), Bangladesh is ranked 8th out of 191 countries (in terms of population), and is consequently regarded as one of the poorer countries (150th out of 191 countries in terms of per capita GDP). (Moazzem, 2008) 2.5 Entrepreneurship in Bangladesh In our country, the term for an entrepreneur is a 'businessman,' which carries with it a set of negative connotations. The assumption is that one goes into business if one cannot be a banker, doctor, engineer, lawyer, professor or a corporate worker. In movies, businessmen are portrayed as crude, immoral people. In day-to-day life, a businessman is only considered successful if he can achieve conspicuous display of wealth. Despite our negative views of 'business', the private sector has a crucial role to play in growing the economy and providing employment opportunities. The private sector is the engine of innovation in all sectors of the economy. Entrepreneurship in Bangladesh currently thrives in two sectors of the economy -- among the poorest of the poor (14 million households) and among the well-off (about 2.5 million households). The reason for this is that both of these sectors have access to institutional financing. The change in mindset can perhaps be attributed to the realization that notwithstanding advances in scientific, social, political and economic systems, the gap between rich and poor is widening.
  10. 10. With many social problems continuing to plague societies and some even worsening, concern regarding the effectiveness and sustainability of governmental and welfare-based approaches to social problems has increased. This in turn has directed greater attention to the work of entrepreneurs. (Shams, 2009) 2.6 Entrepreneurship friendly environment across the globe While the notion of entrepreneurship applies to both those who create new startups and those in larger firms who bring new ideas, innovations, and businesses to market, the challenges are very different. If we look at the world, we can see that most of the successful people in the world are entrepreneurs. Mary Kay Ash, Richard Branson, Michael dell, Bill gates, Henry ford’s all are popular as a successful entrepreneur. Bill Gates ranked as the world richest person from 19952006. (Amabile, 2008). According to GEM report "most entrepreneurial activity is carried out by 25 to 34 years old, regardless of the level of income in their countries (GEM Executive Report, 2004). Empirical research supports links between entrepreneurial activity and economic growth (Van Praag and Verssloot, 2007). Bill Gates was a college drop out. He started the largest computer software company, Microsoft Corporation. Today Microsoft is one of the most popular companies in the world. 2.7 Effectiveness of PEST analysis for evaluating environmental conduction in an economy, PEST analysis is concerned with the key external environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. Identifying PEST influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences. The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
  11. 11. Political / Legal Economic Social Technological Environmental regulation and protection Economic growth (overall; by industry sector) Income distribution Government spending (change in distribution on research of disposable income; Taxation (corporate; consumer) Monetary policy (interest Demographics (age Government and rates) structure of the industry focus on population; gender; technological effort family size and composition; changing nature of occupations) International trade regulation Government spending (overall level; specific spending priorities) Labor / social mobility New discoveries and development Consumer protection Policy towards unemployment (minimum wage, unemployment benefits, grants) Lifestyle changes (e.g. Speed of technology Home working, single transfer households) Employment law Attitudes to work and leisure Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates) Rates of technological obsolescence Government Exchange rates (effects Education organization / attitude on demand by overseas customers; effect on cost of imported components) Energy use and costs Competition regulation Inflation (effect on costs Fashions and fads and selling prices) Changes in material sciences Stage of the business cycle (effect on shortterm business performance) Health & welfare Impact of changes in Information technology Economic "mood" consumer confidence Living conditions (housing, amenities, Internet!
  12. 12. pollution) (Riley, 2012) 2.8 Condition of women entrepreneurs in Bangladesh Ten years ago, a majority of the women workers in Bangladesh worked in the informal sector. They were mostly unpaid and did not contribute directly to formal economic activities. However, the demographic structure of the labor participation in Bangladesh is witnessing a remarkable change. An increasing number of women are working in the formal sector as entrepreneurs and paid workers, a situation that was not seen in the past. This gradual transformation of women’s participation from the informal to the formal sectors has resulted in an upward mobility in the social and economic status of women, especially that of poor women in the country. In order to gain an understanding of the current situation, it becomes important to trace the factors that are contributing towards a progressive transformation in the status of women in the country. Since the early 1990s, the growth of manufacturing industries provided women an opportunity to enter the formal labour market. A large number of rural women migrated to cities at a very young age, thereby reducing women labour in agriculture in rural areas. A new generation of women workers emerged in the country that was financially independent and lived alone in urban areas without male supervision. (Suryanarayanan, 2011). The types of enterprises operated by women are (1) Traditional; (2) Non-tradition; (3) Household or Family Trade; (4) Labor intensive; (5) Export oriented; (6) Industries with modem technology. (Hossain, 2007) 2.9 Entrepreneurship Development Process
  13. 13. Major assistance requirements of the new entrepreneurs are worth mentioning while discussing the entrepreneurial development as a tool of economic growth of a nation. They need multiple assistance which may be offered in a package form. To set up an enterprise and run it successfully an entrepreneur need these types of assistance. These three groups of assistance form an Entrepreneurship Development Cycle. The groups of assistance are- Stimulatory The stimulatory activities comprise entrepreneurial education, provision of entrepreneurial opportunities and guidance in selecting industries are needed to help emergence of entrepreneurship in the Society. This support ensures a good supply of entrepreneurs to start a new venture and develop potentiality to succeed in a venture. Supportive The support activities refer to those which enable the entrepreneurs in setting up and running the enterprises successfully. They help in mobilizing resources and assistance. Sustaining The sustaining activities include efforts which help the entrepreneurs sustain themselves against the challenges of actual operation. (Kamuuzzaman, 2008) 2.10 Earlier researches on using PEST analysis for evaluating environmental condition Earlier research was conducted on using PEST analysis for evaluating environmental condition by the students of faculty of Business Administration and Management of potuakhali science and Technology University. They prospected and suggested that contribution by an entrepreneur can certainly made by the environment that is conducive to his taking and innovation. Proper planning and government intervention is needed to come out from political environment. Bangladesh still needs goods export oriented strategies. Sound fiscal and monetary policies are vital to the sustained growth of the private sector.
  14. 14. For rural entrepreneurship development government should take new decision for agriculture and marketing program and should be operated strongly. An efficient transport and communication network aids production and market expansion. (Khan, 2010) 2.11 Problems associated with entrepreneurship development As against the favorable factors, entrepreneurship development is faced with many problems. By discussing with the entrepreneur of Bangladesh we find some problems which are needed to reduce. The problems are discussed belowThe absence of clear cut policy decisions, particularly for the new entrepreneur. Lack of adequate financial support to set up or proper maintenance o the business, particularly the new one. Lack of short term credit to maintain the business properly as well as fulfill the needs of necessary. Poor judgment about the market condition as well as the demand of the customers. Identification of suitable location is another problem to establishment of a new business. Political problem is another problem for making the business smooth. (Kamruzzaman, 2008) Objectives There are two types of objectives. Main objective:
  15. 15. To find out political, economical, social and technological problems and opportunities for developing entrepreneurship in Bangladesh. Sub objectives: • Entrepreneurship development policy of Bangladesh • Entrepreneurship development process • Factors influencing entrepreneurship development • Importance of training to develop the entrepreneur Research Questions • What types of political activity are to face our entrepreneurs? • Is our economic environment suitable enough for our entrepreneurs? • How can socio economic activity affect to make a good environment? • Are technical facilities available for our entrepreneurs? Methodology It is the heart of the proposal. It includes Research Design The research design will be exploratory. Focus group and personal interview will be used here to collect correct interview.
  16. 16. Sampling Design Convenience sampling will be used here. Because survey can be conducted to any banker, politician, university professor whom can be found very easily. Entrepreneur is a common topic and most of the people know about it. So convenience sampling must be used here. Instrument Development The most important thing of research proposal is questionnaire. There are only four variables and those are simply four components of PEST analysis in the form of Political, legal, sociological and technological environmental factors. The questionnaire has to be prepared which will comprise these four variables and it will be open ended questions in total under those four variables so that they can express their opinion easily. Questionnaire These four variables and the relevant questions have to be asked to entrepreneurs, bankers, economists, University teachers, policy makers. The questions will be asked for getting the data necessary for qualitative analysis. Data collection Collection of data is an important part for preparing any report. This study is also required various data and information that will be collected from two sources. They are stated below:Primary Sources:  Questionnaire survey through focus group  Personal Interview Secondary Sources:
  17. 17.  News papers  Web Site  Brochure  Monthly Magazine Data analysis In terms of exploratory research the sphere of data analysis is limited. Decision has to be taken based on discussion of focus group and personal interview. Rationale of the study Lack of entrepreneurship growth is one of the main reasons for not raising the economy. Entrepreneurship is the main way to develop the country. One -half of the total population is women. But they are yet to get the equal opportunity and social empowerment regardless of for last forty-one years there is some development. So this proposal is being undertaken and it will be useful for study. In this study the problems and opportunities will be found out behind entrepreneurship development. Limitations Generally, limitation includes anything that creates hindrance in investigation and hardly can control. To make the proposal few limitations have to be faced. These limitations are as follows: Unwillingness of the economists to give internal information.  In some cases, many people do not know the right information regarding this topic.  The bankers are too busy with their work and they do not have sufficient time to discuss about my topic.
  18. 18.  Since the policy makers are unwilling to give the right information, it will create problems. Delimitations Every research proposal has some delimitation. In this study the delimitations are In this study data are not being analyzed as it is exploratory study and it possesses open ended questions Population is not mandatory here. Because Sample is not representing population. Resources and Budgeting Much money has to be spent for resources and budgeting. I have to also budget my time, schedule e.t.c. I have to select my schedule where I will go and where I will not go for survey. Conclusions What should be the approach? The potential excellence and open scopes have to be kicked off to investigate for people of all classes across the country. The government also needs to ensure that people of small means should have access to facilities to undertake economic activities at appropriate scales throughout the country. Once the overall framework is in place, mobilization of more resources and more effective utilization of the available resources will be facilitated. If all these factors work together under one umbrella, only then economic progress and development, along with poverty alleviation target, can be achieved.

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