This document provides information about an entrepreneurship development course, including course objectives, units of study, instructions for examiners, and sample short notes from previous years' exam papers. The course aims to acquaint students with challenges of starting new ventures and developing an entrepreneurial mindset. Key topics covered include entrepreneurship concepts, generating business ideas, developing functional plans, sources of financing, and legal issues for entrepreneurs. Sample short notes provide definitions and explanations of entrepreneurship terms to help students prepare for exams.
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2. ENTREPRENEURSHIP DEVELOPMENT
Total Marks: 50 Course
Code: 16IMSF1
External Marks:40
Internal Marks: 10
Course Objective: This course aims to acquaint the students with challenges of
startingnew ventures and enablethem to investigate, understand and internalize the
process of setting up a business
Unit-I Entrepreneurship: Concept, knowledge and skills requirement;
characteristics of successful entrepreneurs; role of entrepreneurship in economic
development; entrepreneurship process; factors impacting emergence of
entrepreneurship
Unit-II Startingtheventure:generating business idea– sources ofnewideas, methods
of generating ideas, opportunityrecognition;environmentalscanning, competitorand
industryanalysis;feasibility study – marketfeasibility, technical/operationalfeasibility,
financial feasibility: drawing business plan
Unit -III Functional plans: marketing plan – marketing research for the new
venture, steps in preparing marketing plan, contingency planning;
organizational plan – form of ownership, designing organization structure;
financial plan – cash budget, working capital
Unit -IV Sources of finance: debt or equity financing, commercial banks,
venture capital; financial institutions supporting entrepreneurs; legal issues –
intellectual property rights patents, trademarks, copyrights, trade secrets,
licensing
Suggested Readings:
1. Hisrich, Robert D., Michael Peters and Dean Shephered, Entrepreneurship,
Tata McGraw Hill, New Delhi
2. Barringer, Brace R., and R. Duane Ireland, Entrepreneurship, Pearson
Prentice Hall, New Jersy (USA)
3. Lall, Madhurima, and Shikha Sahai, Entrepreneurship, Excel Books, New
Delhi
Instructions for External Examiner: The question paper shall be divided in two
sections. Section ‘A’ shall comprise of eight short answer type questions from
whole of the syllabus carrying one mark each, which shall be compulsory.
Answer to each question should not exceed 50 words normally. Section ‘B’
shall comprise 8 questions (2 questions from each unit). The students willbe
required to attempt four questions selecting one question from each unit. All
questions will carry equal marks
4. 7. Highlight the challenges faced by entrepreneurs which knowledge and
skills are required for meeting the challenge successfully
8. Entrepreneurship is neither science or art explain. Discuss the steps in
entrepreneurship process indetail.
9. Discuss the role of entrepreneur in economic development of a country.
What are the factors which causes emergence ofentrepreneurship.
10. How entrepreneurs help in solving the problem of population
unemployment and poverty in India.
11. Why entrepreneurs arecalled agents ofprogress for innovationwhat arethe
role they play indevelopment of acountry.
Notes unit 1
Entrepreneurship
“Entrepreneurship is the act of being an entrepreneur, which can be defined as
“one who undertakes innovations, finance and business acumen in an effort to
transform innovations into economic goods.”
Entrepreneurship can create new organizations or develop a strategy to
revitalize mature organizations in response to a perceived opportunity. The most
obvious form of entrepreneurship isthat of starting a new business also called
As “startup Company”. Morerecently, thetermhas evolved to include othertypes
of entrepreneurship suchas:
• Social entrepreneurship that applies the “entrepreneurial principles to
organize, create and manage a venture to achieve social change” and
• Political entrepreneurship or “starting a new political project, group, or
political party.” No society can exist without entrepreneurship. Every society
depends onentrepreneurs.
Definition of 'Entrepreneur'
An individual who, ratherthanworkingas an employee, runs a small business and
assumes all theriskand reward ofa given business venture, idea,orgood or service
offered for sale. The entrepreneur is commonly seen as a business leader and
innovator of new ideas and businessprocesses.
Who is an entrepreneur? What characteristics define an entrepreneur?
Dan Sullivan Says that: “An entrepreneur is someone who does not expect
5. compensation until he has created value for someone else.”
Jean-Baptist Say, Says that: “Entrepreneur is someone who takes resources
from a lower level of productivity and raise them to a higher level.”
Characteristics of an Entrepreneur:
The characteristics of entrepreneurs are numerous? a successful entrepreneur
possesses a combination of traits that show both innovation and leadership
qualities. Scholars from around the world have worked tirelessly to discover just
what characteristics make a good entrepreneur; what exactly makes up a business
founder's x-factor? While a lot of the findings are still pretty much open to debate,
there's no questioning that great entrepreneurs have the following traits:
Ambition
A good entrepreneur is driven to make something of himself. He knows what he
wants, and he sets a course to get it. His motivation to achieve something can
sometimes be overwhelming, and the urge to establish himself can be quite
consuming. An entrepreneur's ambition is often the key ingredient that gets him
off of his chair and puts himinto action, turning his daydreams into reality.
Enthusiasm
Often coming hand-in-hand with ambition, enthusiasm plays a great role in the
entrepreneur's motivation. While ambition may be the key to the entrepreneur's
ignition, enthusiasm is the gas. Every successful entrepreneur has a positive
outlook giving him the energy to pursue his endeavors. Without enthusiasm, an
entrepreneurial project will slowly wither into inactivity and failure.
Creativity
When problems do arise, you can count on creativity to bail you out. Creativity
is probably what led you to envision your company in the first place, and it'll be
creativitythatwill help you realize thepossible solutions to any hitches that might
come your way. Successful entrepreneurs find inspiration throughout the entire
process, and often discover ways to turn roadblocks into opportunities.
Decision-making
Entrepreneurs call all the necessary shots. While their creativity makes them
menof ideas, it's theirability to makedecisions thatwillmakethemmen of action.
The decisions that entrepreneurs make will determine the fate of the company,
and it's only through decision making that things will actually happen. An
entrepreneurwith poor decision-making skills will have his company caught in
a state of inactivity and degradation; good decision-making skills, on the other
hand, will ensurethat the bestpossible measures in puttingup the business will
be enforced.
6. Perseverance
Perhaps the most important of all the characteristics of entrepreneurs is the
ability to withstand the troubles that come with starting a business. Beginning a
new enterprise is an immensely difficult task, and as an entrepreneur, you'll
have to stick through the storms and stress if you want your venture to be a
success. It sometimes takes years for a good idea to start making you money,
but when itdoes, you'll be glad you stood strong inthe face ofadversity.
Passionate
Strong and barelycontrollableemotion Youneed to bedriven bya clear senseof
purpose and passion. Typically, thatpassion comes from one of two sources: the
topic of the business, or the game of business-building itself. Why do you need
passion? Simply because you’re likely to be working too hard, for too long, for
too little pay with no guaranteethatit’ll workout… so you need to be motivated by
something intrinsic and not money-related.
Resilient
If you’re goingto build a startup, you’llneed a spiritof determinationcoupled with
a high paintolerance. You’llneed to be willing and able to learn from your mistakes
– to getknocked downrepeatedly, get up, dust yourselfoff, and moveforward with
renewed motivation. People will constantly tell you your baby’s ugly, that your
business won’twork. Now, you should listencarefully and beopento constructive
criticism. Butafter a while, having the door slammed in your face repeatedlycan
be withering, and the bestentrepreneurs learn to feed offthenegativity and actually
gain strength from it.
Self-Possessed
You need a strong senseof self. You can’t be threatened bybeingsurrounded by
talented, driven people. To truly succeed, you’ll need the self-confidence to
surround yourself with people “who don’t look like you”… that is, people with
skills, background and domainknowledgethatcomplementyourown. And check
your ego at the door: you shouldn’t be too proud to make coffee for the team,
empty the waste baskets, or do the bankruns.
Decisive
You’ll need to develop a comfort-level with uncertainly and ambiguity.
Entrepreneurs gather as muchinformationas theycanin a shortperiod of time, and
then MOVE, MOVE, MOVE!! The attitude is that it’s not going to be perfect…
We only have 9% or so of the data from which to base our decision… but if we
wait to have all the information, we’ll never get moving… and be mired in
indecision. (Big organizations are really good at this – the mired thing
– saying, We don’t have enough information, so let’s continue to study… form
a committee or a task force)
Fearless
On the sliding scale from “risk-averse” to “risk-seeking,” it shouldn't surprise
anyone that entrepreneurs tend to be closer to the latter. But you don’t need to
7. be a nut-case, thesort who bungee-jumpswithouta helmet. Smartentrepreneurs
develop anintuitive ability to sniffout and mitigate startup business risk. Butyou
know you’re going to falldown, and feel comfortable
with that fact and thatyou’re goingto learn from yourfailures and adjustas you go.
Financially Prepared
You’llneed the right personal financial profileto make the leap. This doesn’t mean
that only the rich can be entrepreneurs. But unless and until you’ve got the
personalfinancial ‘runway’ (ability to go withouta steadypay check and subsidized
benefits)of at least 18 to 24 months (ideallylonger), you might hold off on quitting
your day job. Consider launching the startup as a side-business if that’s possible,
while continuingto work the 8-to-5 shift to cover the bills. Or approach your boss
about goingpart-time. Then, onceyour business generating cash flow, you can dial
back on your hours, or submit your resignation and go full-timewithyour startup.
Flexible
It’s a challenge to find an entrepreneur running a start up four or more years old
where that business doesn’t differ dramatically from the vision sketched out in
their original business plan. The point is that the folks who stay on their feet are
the ones who stay flexible and adjust to new information and changing
circumstances.
Able to Sell
Whether you’re a born extrovert or introvert, as a founder/CEO, you’ll find
yourself always selling. You’ll be selling your vision to prospective partners
and funding sources. You’llbe selling prospective recruits on why they should
quit their day jobs and join this startup they’ve never heard of. You’ll be selling
your products and services (yes, you’ll probably be personallyclosing at least
the first few sales). You’ll be selling your employees on why they should
remain calm and stay with the ship when the seas inevitably getrough.
Entrepreneur vs. manager:
The terms Entrepreneur and Manager are considered one and the same. But the
two terms have different meanings.
The following are some of thedifferences betweenamanagerand anentrepreneur.·
The main reason for an entrepreneur to start a business enterprise is because he
comprehends the venturefor his individual satisfactionand has personal stake in it
whereas a managerprovides his services in an enterprise established bysomeone.
· An entrepreneurand a manager differ intheir standing, anentrepreneuris theowner
of the organization and he bears all the risk and uncertainties involved in running an
organization where as a manager is an employee and does not accept any risk.
· An entrepreneur and a manager differ in their objectives. Entrepreneur’s
objective is to innovate and create and he acts as a change agent where as a
manager’s objective is to supervise and create routines. He implements the
8. entrepreneur’s plans and ideas.
· An entrepreneur is faced with more income uncertainties as his income is
contingenton the performanceof the firm where as a manager’s compensationis
less dependent on the performance of the organization.
Intrapreneur vs. Entrepreneurs
Meaning of Intrapreneur:
“A personwithin a large corporation who takes direct responsibility for turning
an idea into a profitable finished product through assertive risk-taking and
innovation”
• Entrepreneurs provide the spark. Intrapreneur keep the flame going.
• Entrepreneurs are found anywhere their vision takes them. Intrapreneur work
within the confines of an organization.
• Entrepreneurs facemanyhurdles, and aresometimes ridiculed and riddled with
setbacks. Intrapreneurs may sometimes have to deal with conflict within the
organization.
• Entrepreneurs may find it difficult to get resources. Intrapreneurs have their
resources readily available to them.
• Entrepreneurs may lose everything when they fail. Intrapreneurs still have a
paycheck to look forward to (at least for now) iftheyfail.
• Entrepreneurs know the business on a macro scale. Intrapreneurs are highly
skilled and specialized.
Role of Entrepreneurship in economic development
The entrepreneurwho is a business leaderlooks for ideas and puts them into effect
in fostering economic growth and development. Entrepreneurship is one of the
most important input in the economic development of a country. The entrepreneur
acts as a trigger head to give spark to economic activities by his entrepreneurial
decisions. He plays a pivotalrole not only in the development ofindustrialsectorof
a country but also in the development of farm and service sector. The major roles
played by an entrepreneur in the economic development of an economy are
discussed ina systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilizing the idle savings of
public.They employ their own as well as borrowed resources for setting up their
enterprises. Such types of entrepreneurial activities lead to value addition and
creation of wealth, which is very essential for the industrial and economic
9. development of the country.
(2) Creates Large-Scale EmploymentOpportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed
which is a chronic problem of underdeveloped nations. With the setting up.of
moreand moreunits by entrepreneurs, bothonsmalland large-scalenumerousjob
opportunities are created for others. As time passes, these enterprises grow,
providingdirectand indirectemployment opportunities to manymore. In this way,
entrepreneurs play an effective role in reducing the problem of unemployment in
the country which in turn clears the path towards economic development of the
nation.
(3) Promotes BalancedRegional Development:
Entrepreneurs help to remove regional disparities through setting up of
industries in less developed and backward areas. The growth of industries and
business in these areas lead to a large number of public benefits like road
transport, health, education, entertainment, etc. Setting up of more industries
lead to more development of backward regions and thereby promotes balanced
regional development.
(4) Reduces Concentrationof Economic Power:
Economic power is the natural outcome of industrial and business activity.
Industrialdevelopments normally lead to concentration of economic power in
the hands of a few individuals which results in the growth of monopolies. In
order to redress this problem a large number of entrepreneurs need to be
developed, which will help reduce the concentration of economic power
amongst the population.
(5) Wealth Creationand Distribution:
It stimulates equitableredistributionof wealth and income in the interestof the
country to more people and geographic areas, thus giving benefit to larger
sections of the society. Entrepreneurialactivities also generate more activities
and give a multiplier effect inthe economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and
exploit opportunities,, encourage effective resource mobilization of capital and
skill, bring in new products and services and develops markets for growth of the
economy. In this way, they help increasing gross national product as well as per
capita income of the people in a country. Increase in gross national product and
per capita income of the people ina country, is a sign of economic growth.
(7) Innovation- It is the hub of innovation that provides new product ventures,
market, technology, and quality of goods, etc., and increase the standard of living
of the people. Supports research and development- New products and services
need to be researched and tested before launching in the market. Therefore, an
entrepreneur also dispenses finance for research and development with research
10. institutions and universities. This promotes research, general construction, and
development inthe economy
(8) Society and Community Development- A society becomes greater if the
employmentbaseis large and diversified. Itchanges societyand promotes facilities
like higher expenditure on education, better sanitation, fewer slums, a higher level
of homeownership. Therefore, entrepreneurship assists the organisation ina more
stable and high quality of community life.
(9)Increase Standardof Living- Entrepreneurship helps to improve thestandard
of living of a person by increasing the income. The standard of living means,
increase in the number of consumption of various goods and services by a
household for a particular period.
KNOWLEDGE AND SKILLS REQUIRED FOR AN ENTREPRENEUR
Knowledge of the product / field in which you plan to make your niche is a
must. So is the understanding of the market, and the underlying currents of the
market. An inherent desire to succeed, and a positive attitude always helps.
Certain seed funding to help you get up to your feet.
11. Ten skills you need to have as an entrepreneur:
1. Curiosity. Great entrepreneurs are tasked to discover new problems, reveal
potential niche opportunities, refactor their original business process, and
innovate. This iscontingent on being passionate about different fields of studyand
business cases outside of one’s comfortzone.
2. Time management. Careful priority planning, defining milestones, execution,
and iteration are all important. None of that would lead toward progress without
the right project management and time allocation methodology that gets the work
done.
3. Strategic thinking. Learning to decompose a problem to its core and reveal
opportunities for growth. Figuring out creative solutions and identifying the low-
hanging fruits. Defining the scope for an MVP and testing concepts within limited
time and with a low budget.
4. Efficiency. You need high performance when it comes to solving a problem.
Applyingthe 80/20 rule and other techniques foryielding higher results in less time.
Switching between different chores and progressing effectively day-to- day.
5. Resilience. Handling rejections, stress,burnouts, lackoffocus, slow progress.
Determination and eagerness to fight the same dragon every morning are
instrumental when itcomes to building a business from scratch.
6. Communication. Crisp and concise communication is paramount for each
and every interaction withclients, partners, peers, clients, prospects.
7. Networking. Growing a network facilitates business opportunities,
partnership deals, finding subcontractors or future employees. It expands the
horizons of PR and conveying the rightmessage on allfronts.
8. Finance. Finance management will make or break a business. Handling
resources properly and carefully assessing investments compared to ROI is a
solid requirement for entrepreneurs.
9. Branding. Building a consistent personal and business brand tailored to the
right audience. Igniting brand awareness innewverticals.
10. Sales. Being comfortable doing outreach and creating new business
opportunities. Finding the right sales channels that convert better and investing
heavily in developing them. Building sales funnels and predictable revenue
opportunities for growth.
12. Factors affecting Entrepreneurship Development
Entrepreneurship is influenced by four distinct factors: economic development,
culture, technologicaldevelopmentand education. Inareas where thesefactors are
present, you can expect to see strong and consistent entrepreneurial growth.
These conditions may have both positive and negative influences on the
emergence of entrepreneurship. Positive influences constitute facilitative and
conducive conditions for the emergence of entrepreneurship, whereas negative
influences create inhibiting milieu to the emergence of entrepreneurship.
Let us look at each one of them in details.
Economic Factors
Economic environment exercises the most direct and immediate influence on
entrepreneurship. This is likely because people become entrepreneurs due to
necessity when there are no other jobs or because of opportunity.
The economic factors that affect the growth of entrepreneurship are the
following:
1. Capital
Capital is one of the most important factors of production for the establishment
of anenterprise. Increasein capitalinvestmentinviable projects results inincrease
in profits which help in accelerating the process of capital formation.
Entrepreneurship activity too gets a boost with the easy availability of funds for
investment.
13. Availability of capital facilitates for the entrepreneur to bring together the land
of one, machine of another and raw material of yet anotherto combine them to
produce goods. Capital is therefore, regarded as lubricant to the process of
production.
France and Russia exemplify how the lack of capital for industrial pursuits
impeded the process of entrepreneurship and an adequate supply of capital
promoted it.
2. Labor
Easy availability of right type of workers also effect entrepreneurship. The
quality rather than quantity of labor influences the emergence and growth of
entrepreneurship.The problem of labor immobility can be solved by providing
infrastructural facilities including efficient transportation.
The quality ratherquantityoflaboris anotherfactorwhichinfluences theemergence
of entrepreneurship. Mostless developed countries arelabor rich nations owingto
a dense and even increasing population. But entrepreneurship is encouraged if
there is a mobileand flexible labor force. And, the potentialadvantages oflow-cost
labor are regulated by the deleterious effects of labor immobility. The
considerations of economic and emotional security inhibit labor mobility.
Entrepreneurs, therefore, often find difficulty to secure sufficient labor.
3. Raw Materials
The necessity of raw materials hardly needs any emphasis for establishing any
industrial activity and its influence in the emergence of entrepreneurship. In the
absence of raw materials, neither any enterprise can be established nor can an
entrepreneur be emerged
It is one of the basic ingredients required for production. Shortage of raw
material can adversely affect entrepreneurial environment. Without adequate
supply of raw materials no industry can function properly and emergence of
entrepreneurship to is adversely affected.
In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending uponotheropportunityconditions. The more favorablethese
conditions are, the more likely is the raw material to have its influence of
entrepreneurial emergence.
14. 4. Market
The role and importance of market and marketing is very important for the
growth of entrepreneurship. In modern competitive world no entrepreneur can
think of surviving in the absence of latest knowledge about market and various
marketing techniques.
The fact remains that the potential of the market constitutes the major
determinant of probable rewards from entrepreneurial function. Frankly
speaking, if the proof of puddinglies in eating, the proof of all production lies
in consumption, i.e., marketing.
The size and composition of market both influence entrepreneurship in theirown
ways. Practically, monopoly in a particular product in a market becomes more
influential for entrepreneurship than a competitive market. However, the
disadvantage of a competitive market can be cancelled to some extent by
improvementintransportationsystemfacilitating themovementofraw material and
finished goods, and increasing the demand for producer goods.
5. Infrastructure
Expansion of entrepreneurship presupposes properly developed communication
and transportation facilities. It not only helps to enlarge the market, but expand
the horizons of business too. Take for instance, the establishment of post and
telegraph system and construction of roads and highways in India. It helped
considerable entrepreneurial activities which took place inthe 1850s.
Apart from the above factors, institutions like trade/ business associations,
business schools, libraries, etc. also make valuable contribution towards
promotingand sustainingentrepreneurship’ inthe economy. You can gather all
the information you want from these bodies. They also act as a forum for
communication and jointaction.
Social Factors
Social factors can go a long way in encouraging entrepreneurship. In fact it was
the highly helpful society that made the industrial revolution a glorious success
in Europe. Strongly affect the entrepreneurial behavior, which contribute to
entrepreneurialgrowth. Thesocial setting in which the people grow, shapes their
basic beliefs, values and norms.
15. The main components of social environment are as follows:
1. Caste Factor
There are certaincultural practices and values inevery society which influence the’
actions of individuals. These practices and value have evolved over hundred of
years. Forinstance, considerthecastesystem(thevarnasystem)amongtheHindus
in India. It has divided the population on the basis of caste into four division. It
has also defined limits to the social mobility ofindividuals.
By social mobility’ we mean the freedomto move from one casteto another. The
caste system does not permit an individual who is born a Shridra to move to a
higher caste. Thus, commercial activities were the monopoly of theVaishyas.
Members of the three other Hindu Varnas did not become interested in trade
and commence, evenwhen India had extensivecommercial inter-relations with
many foreign countries. Dominance of certain ethnical groups in
entrepreneurship is a globalphenomenon
2. Family Background
This factor includes size of family, type of family and economic status of
family. In a study by Hadimani, it has been revealed that Zamindar family
helped to gain access to political power and exhibit higher level of
entrepreneurship.
Background of a family in manufacturing provided a source of industrial
entrepreneurship. Occupational and social status of the family influenced
mobility. There are certain circumstances where very few people would have to
be venturesome. For example in a society where the joint family system is in
vogue, thosemembers ofjoint family who gain wealth by their hard workdenied
the opportunity to enjoy the fruits of their labor because they have to share their
wealth with the other members of the family.
16. 3. Education
Education enables one to understand the outside world and equips him with the
basic knowledge and skills to deal with day-to-day problems. In any society, the
system of education has a significant role to play in inculcating entrepreneurial
values.
In India, thesystem of educationprior to the 20th century was based on religion.
In this rigid system, critical and questioning attitudes towards society were
discouraged. The caste system and the resultant occupational structure were
reinforced by such education. It promoted the idea that business is not a
respectable occupation. Later, when the British came to our country, they
introduced an education system, just to produce clerks and accountants for the
EastIndia Company, Thebaseof such a system, as you can well see, is veryanti-
entrepreneurial.
Our educational methods have not changed much even today. The emphasis is
till on preparing students for standard jobs, rather than marking them capable
enough to stand on their feet.
4. Attitude of the Society
A related aspect to these is the attitude of the society towards entrepreneurship.
Certain societies encourage innovations and novelties, and thus approve
entrepreneurs’ actions and rewards like profits. Certain others do not tolerate
changes and in such circumstances, entrepreneurship cannot take root and grow.
Similarly, somesocieties have an inherent dislike forany money-makingactivity.
It is said, that in Russia, in the nineteenth century, the upper classes did not like
entrepreneurs. Forthem, cultivating the land meant a good life. They believed that
rand belongs to God and the produce of the land was nothingbut god’s blessing.
Russianfolk-tales, proverbs and songs duringthis period carried themessagethat
making wealth through business was not right.
17. 5. Cultural Value
Motives impel men to action. Entrepreneurialgrowth requires proper motives
like profit-making, acquisition of prestige and attainmentof socialstatus.
Ambitious and talented men would take risks and innovate if these motives are
strong. The strength of these motives depends upon the culture of the society. If
the culture is economically or monetarily oriented, entrepreneurship would be
applauded and praised;wealth accumulationas awayoflife would beappreciated.
In the less developed countries, peopleare not economicallymotivated. Monetary
incentives have relatively less attraction. People have ample opportunities of
attaining social distinction by non-economic pursuits.
Menwith organizationalabilities are, therefore, notdragged into business. Theyuse
their talents for non-economic end.
Psychological Factors
Many entrepreneurial theorists have propounded theories of entrepreneurship
that concentrate especially upon psychological factors. These are as follows :
1. NeedAchievement
The most important psychological theories of entrepreneurship was put forward
in the early) 960s by David McClelland. According to McClelland ‘need
achievement’ is social motive to excel that tends to characterise successful
entrepreneurs, especially when reinforced by cultural factors. He found that
certain kinds of people, especially those who became entrepreneurs, had this
characteristic. Moreover, some societies tend to reproduce a larger percentage
of peoplewith high ‘need achievement’than othersocieties. McClelland attributed
this to sociological factors. Differences among societies and individuals
accounted for ‘need achievement’ being greater in some societies and less in
certain others.
The theorystates thatpeople with high need-achievement aredistinctive inseveral
ways. They like to take risks and these risks stimulate them to greater effort. The
theory identifies the factors that produce such people. Initially McClelland
attributed theroleofparents, speciallythe mother, inmustering hersonor daughter
to be masterful and self-reliant. Later he put less emphasis on the parent-child
relationship and gavemoreimportanceto socialand culturalfactors. Heconcluded
that the ‘need achievement’ is conditioned more bysocial
18. and cultural reinforcement rather than by parental influence and such related
factors.
2. Withdrawal of Status Respect
There are several other researchers who have tried to understand the
psychological roots of entrepreneurship. One such individual is Everett Hagen
who stresses the-psychological consequences of social change. Hagen says, at
some point many social groups experience a radical loss of status. Hagen
attributed the withdrawal of status respect of a group to the genesis of
entrepreneurship.
Hagebelieves that theinitial conditionleading to eventual entrepreneurialbehavior
is the loss of status by a group. He postulates that four types of events can
produce statuswithdrawal:
i. The group may be displaced by force;
ii. It may have its valued symbols denigrated;
iii. It may drift into a situation of status inconsistency; and
iv. It may not be accepted the expected status on migration in a new
society.
3. Motives
Other psychological theories of entrepreneurship stress the motives or goals of
the entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek
power, prestige, security and service to society. Stepanek points particularly to
non-monetary aspects such as independence, persons’ self-esteem, power and
regard of the society.
On the same subject, Evans distinguishes motive by three kinds of
entrepreneurs
19. Managing entrepreneurs whose chief motive is security.
Innovating entrepreneurs, who are interested only inexcitement.
Controlling entrepreneurs, who above all otter motives, want power and
authority.
Finally, Rostow has examined inter gradational changes in the families of
entrepreneurs. He believes that the first generation seeks wealth, the second
prestige and the third art and beauty.
4 Political Factors:
A football player might possess exceptional talent. But, his contribution to the
nation and the world of sports would remain negligible, if his performance is
restricted to thecourtyardofhis own house. He needs afootball ground to practice
on and resources to buy the accessories. He also requires encouragement and
support from those in authorityso that he could freely play with others and prove
his talent. Inthe sameway, anentrepreneur, however creativehe/shemaybe, cannot
function without the supportive actions of the Government. It is for the
government/society to ensure the availability of required resources for the
entrepreneurs and also the accessibility to them. This is because the successful
entrepreneur contributes to the well being of the society. Policies relating to
various-economic aspects like prices, availability of capital, labour and other
inputs, demand structure, taxation, income distribution, etc. affect growth of
entrepreneurship to alarge extent. Primitive governmentactivities such as incentives
and subsidies contribute substantially to entrepreneurialperformance. At thesame
time, Government policies like licenses, regulations, favouritism, government
monopolies, etc. are undesirable for the growth of business enterprises. Above
all, a Government that is politically stable and united can affect entrepreneurial
activities in a significant manner. Is there a business entrepreneur in your
neighbourhoods? Try to gather information on his/her views on various
governmentpolicies, forexample, ontaxation,finance,labouretc. Also ask him/her
about the opportunities and growthprospectsofa business unit. Write down your
observations.
India, all the above mentioned environmental forces have turned in favor of
enterprising men and women. There is a visible change for the better in the
20. highly inactive entrepreneurial field in the country. Thetight grip of religious and
traditional, ideas and practices have begun to loosen. Dogmas (settled opinions)
and superstitions have lost the hold they earlier had. It is encouraging the ‘non-
commercial’ classes to considereconomic opportunities moresympathetically. As
a result, occupational divisionbased on caste system has undergonetremendous
traditional activities, social approval etc. have become less important. More
importantnow, are the economic factors suchas access to capitaland possession
of entrepreneurial attitudes and business I knowledge.
Development of infrastructure, changes in government policies in favor of
business and industry and of course, rise in demand for products manufactured
are some of the other factors that have led the Indian entrepreneurs to look for
new business opportunities.
5. Others
Thomas Begley and David P. Boyd studied in detail the psychological roots of
entrepreneurship in the mid-1980s. They came to the conclusion that
entrepreneurial attitudes based on psychological considerations have five
dimensions:
First came ‘need-achievement’ as described by McClelland. In all studies of
successful entrepreneurs a high achievement orientation is invariably present.
The second dimension that Begley and Boyd call ‘locus of control’ This means
that the entrepreneur follows the idea that he can control his own life and is not
influenced by factors like luck, fateand so on. Need-achievement logically implies
thatpeople can control their own lives and are not influenced by external forces.
The third dimension is the willingness to take risks. These two researchers have
come to the conclusion that entrepreneurs who take moderate risks earn higher
returns on their assets than those who take no risks at all or who take
extravagant risks.
21. BARRIERS TO ENTREPRENEURSHIP
1 Finances
We are all bustlingwith ideas thatare uniqueand canmake for an amazing business
start-up. But no matterhow good youridea is, you will always need stablefinances
and funding from the investors to begin the process and take the first step towards
your journey ofentrepreneurship.
And getting a sound financial investmentor funding can be one of the biggest
Barriers to Entrepreneurship as many of banks, private investors, angel
investors, and organizations find it quite difficultto believe in the start-up ideas
owing to the risk of failure and losing their money.
2 Fear ofnot to be a success
We all go throughthefear of failure. And if thefear is associated with the risks and
stakes taken in the stream of business and entrepreneurship, the level of fear
elevates.
There is a fear if we are on the right track, is the idea worthwhile, will there be
profit, will I find investors, and various such fears and tensions act as the
Barriers to Entrepreneurship.
3 No strategic plan inplace
Tolerance is the next dimension of this study. Very few decisions are made with
complete information. So all business executives must, have a certain amount of
tolerance for ambiguity.
Finally, here is whatpsychologists call‘Type A’ behavior. This is nothing but
“a chronic, incessant struggleto achievemore and more in less and less of time”
Entrepreneurs arecharacterizeby the presence of ‘TypeA’ behaviorin all their
endeavors
22. Lack of proper planning and strategy in place is one of the most common
Barriers to Entrepreneurship. Many ofus think to build a business out ofa hobby
without having any sort of long term and short term vision and plan in mind.
Running a fully-fledged business or being an entrepreneur requires a huge
amount of skill set, passion for excelling, strategic vision, the mission to
accomplish the goals, market research, and a lot more.
Right from the target market, finances, human resources, to a proper strategic
plan is required to build a successfulbusiness or a brand in the market.
4 Human resource issues
Entrepreneurs cannot handle and run a business alone by themselves. We
require the support of human resource to carve a niche in the market.
Employees with the required knowledge, expertise, and experience are needed
for the efficiency of the business processes and highlevels of productivity.
First of all, it is quite difficult to find the employees that share the same vision
and wavelength of the business. Plus paying a hefty annual or even a monthly
retainer income is a problem of the start up’s as the finances at hand are always
limited, and the overheads and expenses are also to be taken care of.
And secondly, it is also difficult to manage human resources as each of us work
with a differentmindsetand perspective. Hence, human resources and employees
can be as one of the Barriers to Entrepreneurship.
5 Stringent rules and regulations of themarket
It is not very easy for entrepreneurs to enter the new market as there are quite many
rules and regulations imposed by the government authorities.
Plus there are various laws and compliances to be adhered to such as taxation,
environmentalregulations, licenses, property rights, and much more than act as
the Barriers to Entrepreneurship.
Some of the countries have many corrupt officials that act as a hindrance for the
new entrepreneurs and start-upbrands to startor expand their business in the new
market. And if the brand is planning to expand its business operationsin any of
the foreign countries, itgets even more difficult.
23. 6 Feweropportunities
Even though there is a lot of talent pool in the market with the aspiring
entrepreneurs buzzing with the ideas, but the opportunities presented to them
are quite less and fewer.
Reasons such as nepotism and corruption act as the Barriers to Entrepreneurship
with not many vital and lucrative opportunities.
7 Lack ofcapacity
Evenif thereare opportunities presentedto theaspiringentrepreneurs,thereisa lack
of capacity in some them to embrace the opportunities with open arms. The
reasons can vary from lack of knowledge, lack of education, lack of willingness,
lack of strategic knowledge,and culturalhindrances amongstothers;but the factor
of motivation and zeal gets missing.
To start a new business venture amidst all the risks and market-related issues, it
requires a lot of hard work, passion, and high capacity to handle all of it.
8 Less market experience
The experts always mentionthat one should never rush in setting up a business.
It is quite necessary to gain a relative amount of work experience by working in
the industry domain or sector of choice and as per the education levels. It also
helps to sharpen the required expertise and find the ground inthe career graph.
Once the person is ready to take risks and have a relative amount of market
exposure, he is ready to take the entrepreneurial plunge.
9 Lack of risk-takingcapacity
It is always said thatentrepreneurs neversailin safe waters and areneverconfined
to their comfortzones. Lack of risk-takingcapacity is the psychological mindset
and perspective towards the business and acts as one of the major Barriers to
Entrepreneurship.
24. The budding entrepreneur has to have a structured and organized approach
towards the various business elements and should risks rather than averting
them.
10 Corrupt business situations
As mentioned earlier, if the business situations and the environment are not very
supportive and corrupt for the young and aspiring entrepreneurs, it acts as one
of the top Barriers to Entrepreneurship.
Bribing, rampant corruption, unfriendly ties of government with other nations,
inconsistent laws, stringent compliances, and enforcing regulations that are
unhealthy and negative in their approachhamper the growth of businesses in the
country.
Russia is one of the examples of having an unhealthy and unsupportive business
environment.
11 Inadequate training
With no proper education, development, training, entrepreneurial skills, and
technical know-how acts as the Barriers to Entrepreneurship.
12 Lack of practicalknowledge
Having a strong educational background is just not enough to pursue business as
it requires practical knowledge as wellto stay relevant amidst the various
market cycles. And many entrepreneurs lack practical knowledge.
The process ofpursuinganew ventureis embodied intheentrepreneurialprocess,
whichinvolves morethanjust problem solving in a typicalmanagement position.
An entrepreneur must find, evaluate, and develop an opportunity by overcoming
the forces that resist the creation of something new.
Entrepreneurial process can be defined as the process through which a new
venture is created by an entrepreneur. This process involves finding, evaluating,
and developing an opportunity by overcoming the strong forces that resist the
creation of something new.
25. Steps in entrepreneurial process:
1. Identification and evaluation of the opportunity,
2. Development of the business plan,
3. Determination of the required resources,and
4. Management of the resulting enterprise.
Although these phases proceed progressively, no one stage is dealt with in
isolation or is totally completed before work on other phases occurs. For
example, to successfully identify and evaluate an opportunity (phase 1), an
entrepreneur must have in mind the type of business desired (phase 4).
1. Identify and evaluate opportunity:
Opportunity identification is the process by which an entrepreneur comes up
with the opportunity for a new venture. Opportunity identification and
evaluation is a very difficult task. Most good business opportunities do not
suddenly appear, but rather result from an entrepreneur’s alertness to
possibilities or, in some cases, the establishment of mechanisms that identify
potential opportunities.
2. Develop Business Plan:
A business plan is the written description of the future directionof the business.
It helps entrepreneur inPutting Ideas together and Preparing B-Plan Draft.
A good business plan must be developed in order to exploit the defined
opportunity. This is a very time-consuming phase of the entrepreneurialprocess.
An entrepreneurusually has notprepared abusiness planbeforeand does not have
the resources available to do a good job. A good business plan is essential to
developingtheopportunityand determining the resources required, obtainingthose
resources, and successfully managingthe resulting venture.
26. 3. Determine the Resources Required:
Assessing the resources needed starts with an appraisal of the entrepreneur’s
present resources. Any resources that are critical must be distinguished from
those that are just helpful. Care must be taken not to underestimate the amount
and variety of resources needed. The entrepreneur should also assess the
downside risks associated with insufficient or inappropriate resources.
The next step in the entrepreneurial process is acquiring the needed resources in
a timely mannerwhile giving up as little controlas possible. An entrepreneurshould
strive to maintain as large an ownership position as possible, particularly in the
start-up stage. As the business develops, more funds will probably be needed to
financethegrowthof theventure, requiring moreownership to berelinquished. The
entrepreneuralso needs to identify alternative sup-pliers of these resources along
with their needs and desires. By understanding resource supplier needs, the
entrepreneur can structure a deal that enables the resources to be acquired at the
lowest possible cost and withthe least loss of control.
4. Manage the Enterprise.
After resources are acquired, the entrepreneur must use them to implement the
business plan. The operational problems of the growing enterprise must also be
examined. This involves implementing a management style and structure,as well
as determining the key variables for success. A control system must be
established, so that any problem areas can be quickly identified and resolved.
Some entrepreneurs have difficulty managing and growing the venture they
created.
27. Unit 2 previous years questions
1)What do you mean by opportunity recognition what are its advantages explain the people driven
and market driven opportunities?
2)What is business plan what are its major components explain the process of presenting business
plan to investors.
3) Explain the process of environmental scanning how does it help in entrepreneurship
development.
4) Describe the benefits of new business plan how is your plan prepared
5) Explain the source of new business ideas how can the process of new idea generation can be
stimulated
5) What is financial feasibility what purpose does it serve which are the elements of financial
feasibility?
6) What are benefit of environment scanning how industry analysis is done?
7) Write a detailed notes on preparing a business plan?
8) Discuss the need of environment scanning for an for an entrepreneur?
9) What is business plan how it is prepared write down the various types of business plans?
10) What is competitor and industry analysis how it has to be done what are its limitation?
11) Discuss the importance of sensing business opportunities and identifying products for and
entrepreneurship? What is an opportunity recognition how it is important for business and how it
is carried out?
12) write down the process of scanning business market how does it help in taking decision about
market and product?
13 What are major components of project report what are its main component how it should be
taken to investors?
14)Taking suitable examples explain how business opportunities identified. What are major
parameters for its evaluation
15)what major issues are considered in technical feasibility and financial feasibility. How it is?
What are major source of idea generation how idea generation process can be stimulated?
Which major factors are considered in market feasibility. What are critical factors in preparing a
business plan?
28. IDEA GENERATION TECHNIQUES
1. SCAMPER : SCAMPER is an idea generation technique that utilizes action verbs as
stimuli. Itis a well-knownkind ofchecklistdevelopedbyBobEberie thatassiststhe personincoming
up with ideas either for modifications that can be made on an existing product or for making a new
product. SCAMPER is an acronym with each letter standing for an action verb which in turn stands
for a prompt for creative ideas.
S – Substitute
C – Combine
A – Adapt
M – Modify
P – Put to another use
E – Eliminate
R – Reverse
2. Brainstorming
This process involves engendering a huge number of solutions for a specific problem (idea) with
emphasis being on the number of ideas. In the course of brainstorming, there is no assessment of
ideas. So, people can speak out their ideas freely without fear of criticism. Even bizarre/strange
ideas are accepted with open hands. In fact, the crazier the idea, the better. Taming down is easier
than thinking up.
Frequently, ideas are blended to create one good idea as indicated by the slogan
“1+1=3.” Brainstorming can be done both individually and in groups. The typical brainstorming
group comprises six to ten people.
3. Mind mapping
Mind mapping is a graphical technique for imagining connections between various pieces of
information or ideas. Each fact or idea is written down and then connected by curves or lines to
its minor or major (previous or following) fact or idea, thus building a web of relationships. It was
Tony Buzan, a UK researcher, who developed the technique “mind mapping” discussed in his
book ‘Use your Head’ (1972).
Mind mapping is utilized in brainstorming, project planning, problem solving and note taking. As is the
case with other mapping methods, the intention behind brain mapping too is to capture attention and to
gain and frame information to enable sharing of concepts and ideas.
To get started with mindmapping, the participant just has to write a key phrase or word in the
middle of the page. Then, he must write anything else that comes to his mind on the very same
page. After that, he must try to make connections as mentioned in the previous paragraph.
29. 4. Synectic
Synectic is a creative idea generation and problem solving technique that arouses thought
processes that the subject may not be aware of. It is a manner of approaching problem-solving and
creativity in a rational manner. The credit for coming up with the technique which had its
beginning in the Arthur D. Little Invention Design Unit, goes to William J.J. Gordon and George
M. Prince.
The Synectic study endeavored to investigate the creative process while it is in
progress. According to J.J Gordon, three key assumptions are associated with Synectics research.
It is possible to describe and teach the creative process
Invention processes in sciences and the arts are analogous and triggered by the very same “psychic”
processes
Group and individual creativity are analogous
5. Storyboarding
Storyboarding has to do with developing a visual story to explain or explore. Storyboards can help
creative people represent information they gained during research.Pictures, quotes from the user,
and other pertinent information are fixed on cork board, or any comparable surface, to stand for a
scenario and to assist with comprehending the relationships between various ideas.
6. Role playing
In the role playing technique, each participant can take on a personality or role different from his
own. As the technique is fun, it can help people reduce their inhibitions and come out with
unexpected ideas.
7. Attribute listing
Attribute listing is an analytical approach to recognize new forms of a system or product by
identifying/recognizing areas of improvement. To figure out how to enhance a particular product,
it is broken into parts, physical features of each component are noted, and all functions of each
component are explained and studied to see whether any change or recombination would damage
or improve the product.
8. Visualization and visual prompts
Visualization is about thinking of challenges visually so as to better comprehend the issue.It is a
process of incubation and illumination where the participant takes a break from the problem at
hand and concentrates on something wholly different while his mind subconsciously continues to
work on the idea. This grows into a phase of illumination where the participant suddenly gets a
diversity of solutions and he rapidly writes them down, thereby creating fresh parallel lines of
thought.
Picture prompts help a lot when it comes to enabling one’s brain to establish connections.These
prompts can help to surface emotions, feelings and intuitions. This makes them particularly useful
30. for brainstorming solutions to innovative challenges involving people, and issues with a deep
psychological or emotional root cause.
To get started with using picture prompts, the facilitator distributes a set of pre-selected images –
each participant gets one. He also asks the participants to write down whatever ideas come to their
mind when they look at the image in their possession.
According to Bryan Mattimore (presently co-founder of The Growth Engine Company), the images should
be visually interesting, portraying a multiplicity of subject matter and must depict people in lots of varied
kinds of relationships and interactions with other people.
After this, participants pair off and use additional time, sharing and talking about the ideas they
have come up with and brainstorming more solutions to the existing problem/challenge. Lastly,
the various pairs present their ideas to the rest of the group.
Mattimore suggests tailoring the visuals to the character of the challenge the participants have to
solve. So, if the challenge pertains to the manufacturing industry, you could consider having
images of an industrial nature. However, you should definitely include some irrelevant or random
images as well because it may be these kinds of images that trigger the most innovative solutions.
9. Morphological analysis
Morphological analysis has to do with recognizing the structural aspects of a problem and studying
the relationships among them. For example: Imagine the problem is transporting an object from
one place to another by way of a powered vehicle.The significant dimensions are: the kind of
vehicle (cart, sling, bed, chair); the power source (internal-combustion engine, pressed air, electric
motor); and the medium (air, hard surface, rails, rollers, oil, water). Thus, a cart-kind of vehicle
moving over rough services with an internal-combustion engine to power it is the automobile. The
expectation is that it would be possible to determine some novel combinations.
10. Forced relationships
It is an easy technique involving the joining of totally different ideas to come up with a fresh idea.
Though the solution may not be strictly unique, it frequently results in an assortment of combinations that
are often useful. A lot of products we see today are the output of forced relationships (such as a digital
watch that also has a calculator, musical birthday cards and Swiss army knife). Most of these ideas may
not be revolutionary discoveries but they are still advantageous products and usually have a prospective
market in society.Robert Olson provided an example for forced analogy in his book ‘The Art of Creative
Thinking.’ He compares different aspects of a corporate organization structure to the structure of a
matchbox.
11. Daydreaming
Though mostly not met with approval, daydreaming is truly one of the most fundamental ways to
trigger great ideas. The word “daydream” itself involuntarily triggers an uninhibited and playful
thought process, incorporating the participant’s creativity and resourcefulness to play around with
the present problem. It enables a person to establish an emotional connection with the problem,
which is beneficial in terms of coming up with a wonderful idea. The focus of productive
daydreaming is a particular goal irrespective of whether it seems to be an impractical task. Plenty
of famous inventors have engaged in daydreaming in the past, thereby setting off ideas that
31. contributed to life altering inventions. The airplane is the most notable example for this. If the
Wright brothers had not let their imagination run wild thinking about flight, we would probably
still be traveling by ferry.
12. Reverse thinking
As the term ‘reverse thinking’ itself suggests, instead of adopting the logical, normal manner of
looking at a challenge, you reverse it and think about opposite ideas.
For example: ‘how can I double my fan base?’ can change into ‘how do I make sure I have no fans at
all?’ You may notice that the majority of participants would find it easier to produce ideas for the ‘negative
challenge’ simply because it is much more fun. However,don’t spend too much time on the reverse idea-
generation – about 10 to 15 wrong ideas is fine. After one session is over, you can either continue in the
reverse idea atmosphere with a new challenge or else do the reversal once more to make it stronger. An
example for the latter is “I am never going to update any of my social networks” changing into “I am going
to always update all of my social networks.”
13. Questioning assumptions
The majority of industries have an orthodoxy – unspoken but deeply-held beliefs that everyone
stands by for getting things done.Sadly, they fail to realize that by questioning assumptions at
every step of service or product development, they can actually enable the birth of fresh
possibilities and ideas.
Here’s how Mattimore suggests one go about questioning assumptions: The participants should
start by settling on the framework for the creative challenge. After this, they should produce 20 to
30 assumptions (irrespective of whether they are true or false). The next step is to select several
assumptions from the many generated, and utilize them as idea triggers and thought starters to
engender fresh ideas.
14. Accidental genius
Accidental genius is a relatively new technique that utilizes writing to trigger the best ideas,
content and insight.
15. Brainwriting
Brainwriting is easy. Instead of asking the participants to shout out ideas, they are told to pen
down their ideas pertaining to a specific problem or question on sheets of paper, for a small number
of minutes. After that, each participant can pass their ideas over to someone else. This someone
else reads the ideas on the paper and adds some new ones. Following another few minutes, the
individual participants are again made to pass their papers to someone else and so the process
continues. After about 15 minutes, you or someone else can collect the sheets from them and post
them for instant discussion.
32. 16. Wishing
This technique can be begun by asking for the unattainable and then brainstorming ideas to make
it or at least an approximation of it, a reality. Start by making the wishes tangible.There should be
collaboration among the members of the team to produce 20 to 30 wishes pertaining to your
business.Everyone’s imagination should be encouraged to run wild – the more bizarre the idea,
the better. There should be no restrictions on thinking.
The next step is concentrating on a number of these unattainable wishes and utilizing them as
creative stimuli to trigger ideas that are new but more practical. Mattimore suggests getting the
team to challenge the problem from diverse perspectives (imagine how a person from another
planet or from another industry or profession would view it) or reflect on it. This type of role
playing assists with moving away from conventional thinking patterns to see fresh possibilities.
17. Socializing
If employees only hang around with colleagues and friends, they could find themselves in a
thinking rut. Let them utilize all those LinkedIn connections to begin some fantastic
conversations. Refreshing perspectives will assist with bringing out new thinking and probably,
one or two lightning bolts. Socializing in the context of ideation can also be about talking to others
on topics that have nothing whatsoever to do with the present problem.
18. Collaboration
As the term indicates, collaboration is about two or more people joining hands in working for a
common goal. Designers frequently work in groups and engage in collaborative creation in the
course of the whole creative process.
The entrepreneurs throughout the world use the following sources to tap to identify good ideas:
1. Customers
Prospective customers know best what they want and the habits/tastes which are going to be
popular shortly.
New product or service ideas may come from customers’ reactions to the present product and the
expected product idea.
Contacts with prospective consumers can also reveal the features that should be built into a product
or service.
The attention to the customers can take the form of informally monitoring potential ideas and
needs or formally arranging surveys among prospective customers.
Care needs to be taken to ensure that the idea or need represents a large enough market to support
a new venture.
2. Existing organization
33. Competing products and services of existing organization and evaluation thereof is a successful
source of new ideas.
Frequently, this analysis uncovers ways to improve on these offerings, resulting in a new product
that has more market appeal.
The analysis of profitability and break-even level of various industries or organizations indicate
promising investment opportunities which are profitable and relatively risk-free.
An examination of the capacity utilization of various industries provides information about the
potential for further investment.
3. Distribution channels
Member of the distribution channels; middlemen, transient customer preference and possible
expectations which may be a good business idea.
Not only do channel members frequently have suggestions for completely new products; they can
also help in marketing the entrepreneur’s newly developed products.
4. Government
The government can be a source of new product ideas in many ways.
First, the files of the Patent Office contain numerous new product possibilities. They can suggest
other more marketable new product ideas.
Secondly, new product ideas can come in response to government regulations, industrial policy,
investment guidelines, annual plan, Five-year plan, etc.
Thirdly, several government agencies nowadays assist entrepreneurs in discovering evaluating
business ideas.
Fourthly, government publications on trade and industry can also help setnew venture ideas.
5. Financial institutions and Development Agencies
These organizations also provide ready projects and offer suggestions to potential entrepreneurs
which help identify promising projects.
Community Development Financial Institutions Fund, Small Business
Administration, Office of Advocacy, United States Chamber of Commerce, Economic
Development Administration, Small Business and Entrepreneurship Council and many
others bodies in the USA are working to improve entrepreneurship and small businesses.
6. Research and Development
34. The entrepreneur’s own “research and development” is the largest source of new ideas. It may be
a more formal endeavor connected with one’s current employment or an informal laboratory in
the private premise.
Formal institutional, research and development are often better equipped, enabling the
entrepreneur to conceptualize and develop successful new product ideas.
But many amazing product ideas have come from informal research endeavors at the private level.
7. Trade Shows, Fairs aid Exhibitions
These sources display new products and innovations in processes and services.
An innovative entrepreneur can get product ideas from here which they can adapt or modify and
produce with indigenous materials and technology.
8. Focus Groups
Focus groups are good sources of product ideas.
A moderator leads a group of people through an open, in-depth discussion rather than simply
asking questions to solicit participant response; for a new product area, the moderator focuses the
discussion of the group is either a directive or a nondirective manner.
The group of 8 to 14 participants is stimulated by comments from other group members in
creaturely conceptualizing and developing a new product idea to fulfill market needs.
This is an excellent method for initially screening ideas and concepts too.
9. Brainstorming
The brainstorming method for generating new product ideas is based on the fact that people can
be stimulated to greater creativity by meeting with others and participating in organized group
experiences.
This method would be effective if the effort focuses on a specific product or market area. The
following four rules should be followed when using this method:
1. No criticism is allowed by anyone in the group – no negative comments.
35. 2. Freewheeling is encouraged- the wilder the idea the better.
3. Quantity of ideas is desired- the greater the number of ideas, the greater the likelihood of useful ideas
emerging.
4. Combinations and improvements of ideas are encouraged – ideas of others can be used to produce still
another new idea.
The brainstorming session should be fun, with no one dominating or instituting the discussion.
10. Collective Notebook Method
In the collective notebook method, a small notebook that easily it’s in a pocket, containing a
statement of the problem, blank pages, and any pertinent background data, is distributed.
Participants consider the problem and its possible solutions, recording ideas at least once but
preferably three times a day.
At the end of the month, a list of the best ideas is developed, along with any suggestions.
11.Heuristics Method
Heuristics relies on the entrepreneur’s ability to discover through a progression of thoughts,
insights, and learning.
The technique is probably used more than imagined because entrepreneurs frequently must settle
for an estimated outcome of a decision rather than a certainty.
One specific heuristic approach is called the heuristic ideation technique (HTT).
The technique involves locating all relevant concerts – that could be associated with a given
product area and generating a set of all possible combinations of ideas.
Value analysis Method: The value analysis technique develops methods for maximizing value to
the entrepreneur and the new venture. It is a method for developing a new idea by evaluating the
worth of aspects of ideas.
Under this technique, regularly scheduled times are established to develop, evaluate, and refine
ideas.
12.Checklist Method
A new idea is developed through a lot of related issues or suggestions.
The entrepreneur can use the list of questions or statements to guide the direction of developing
entirely new ideas or concentrating on specific “idea” areas. The checklist may take any form and
be of any length.
36. One general checklist is :
Put to other’ uses? New ways to use as is? Other uses if modified?
Adapt? What else is like this? What other ideas does this ‘ suggest? Does the past offer parallel? What
could I copy? Whom could I emulate?
Modify? New twist? Change meaning, sour, motion, odor, form, shape? Other changes?
Magnify? What lo add? More time? Greater frequency? Stronger? Larger? Thicker? Extra value? Plus
ingredient? Duplicate? Multiply? Exaggerate?
Minify? What substitute? Smaller? Condensed? Miniature? Lower? Shorter? Lighter? Omit? Streamline?
Split up? Understated?
Substitute? Who else instead? What else instead? Another ingredient? Other material? Another process?
Other power? Other places? Other approaches? Other tones of voice?
Rearrange? Interchange components? Other Pattern? Other layouts’.’ Other sequences? Transpose cause
and effect? Change pact? Change schedule?
Reverse? Transpose positive and negative? How about opposites? Turn it backward? Turn it upside-down?
Reverse roles? Change shoes? Turntables? Turn other cheeks?
Combine? How about a bend, an alloy, an assortment, an ensemble? Combine units? Combine purposes?
Combine /appeals? Combine ideas?
13.Synectics Method
Synectic is a creative process that forced individuals to solve problems through one of four analogy
mechanisms: ‘ personal, direct, symbolic, and fantasy. A group works through a two-step process.
The first step is to make the strange familiar.
Thus involves, through generalizations or models, consciously reversing the order of things and
putting the problem into a readily acceptable or familiar perspective, thereby eliminating the
strangeness.
Once the strangeness is eliminated, participants engage in the second step, making the familiar
strange through personal, direct, or. symbolic analogy, which ideally results in a unique solution
being developed.
14.Dream Approach
The big dream approach to coming up with a new idea requires that the entrepreneur dreams about
the problem and. its solution- thinking big.
Every possibility should be recorded and investigated without regard to all the negatives involved
or the resources required.
In other words, ideas should be conceptualized without any constraints until an idea is developed
into a workable form.
37. 15.Market Gap Analysis
Market gap analysis is a powerful method used to uncover areas in the market in which the needs
and wants far exceed the supply.
This method has a hopper or gathering effect of converting everyday information into bunches of
lucrative product and service gaps that few have thought of before.
16.Life-style analysis Method
Entrepreneurs can use life-style analysis effusively for product-service ideas. Lifestyle is a
person’s pattern of living as expressed in his or her psychographics (Kotler and Armstrong.
181:2001).
It involves measuring consumers’ major activities (work, hobbies, shopping, sports, social events),
interests (food, fashion, family, recreation), and opinions (about themselves, social issues,
business, products).
The lifestyle analysis will help entrepreneurs understand new needs-and wants under the changed
conditions. It will also reflect the changing consumer values that may be a good source of product-
service ideas.
Environmental Scanning
Every organization has an internal and external environment. In order for the
organization to be successful, it is important that it scans its environment regularly to
assess its developments and understand factors that can contribute to its success.
Environmental scanning is a process used by organizations to monitor their external and
internal environments.
The purpose of the scan is the identification of opportunities and threats affecting the
business for making strategic business decisions. As a part of the environmental
scanning process, the organization collects information regarding its environment and
analyzes it to forecast the impact of changes in the environment. This eventually helps
the management team to make informed decisions.
38. Environment scanning
For macro environment scanning we use pestle analysis
PESTEL Analysis
Now, we know that a business firm in an economy is affected by both micro and macro
factors in its external environment. Obviously, these factors are not in control of the firm
themselves. But, PESTEL analysis is a tool that helps in analysing these factors. And
this is what firms use to understand and monitor the macro environmental factors. Let
us see how this is done. Features and of Indian Economy EnvironmentSWOT Analysis
PESTLE Analysis
Let us start with what PESTEL or PESTLE stands for. It is a mnemonic which expands
to Political, Economic, Social, Technological, Legal and Environmental and elements
of a business.
So it essentially helps the companies have a ten thousand foot view of the macro
environmentit is operating in. Also helps to keep a track of all the changes happening in
the environment.
This framework has undergone many changes and also has many variations. Previously
it was only PEST analysis. And the legal environment was then included later. Another
debate is going on about including Ethics in the framework.
PESTLE is a more comprehensive and inclusive framework than its previous
counterparts. It is relatively easy to understand and implement.
It aids management in the decision-making process and urges proactive actions. So the
firm is not only reacting to the changes in the environment but is converting
opportunities into results.
39. (Source: Business-to-you)
Factors of PESTEL Analysis
1] Political
This includes factors that determine the extent and the impact of the government on the
economy of a country. The laws, taxation policies, monetary policies, etc are all a part
of the political environment. And some factors to consider are as follows:
Political stability in the country
Political ideologies of the government
Taxation policies
Regulatory practices and governing bodies
Term of the government and any expected changes in the future
Influential political leaders and their ideas
2] Economic
These factors have a huge influence on the firm and its success. And some of the factors
to consider when monitoring the economic environment are as follows:
Economic situation
Current phase of the Trade Cycle (Expansion, Depression, etc)
Inflation rates
Unemployment Rates
40. Current Interest Rates prevailing in the economy
Important factors of the specific industry
Consumer Spending potential
3] Social
Everything that goes on in a society greatly affects the business. Therefore, it is
important to analyse these factors while studying the social environment too. These are
as follows:
Demographics of the market
Consumer Buying Patterns
Religious and Cultural factors
State and influence of the media
Lifestyle trends in place at the time
4] Technological
The changes in the technological environment can be either an opportunity or a threat
to the firm. Hence, some factors to look for are:
New production technology
Manufacturing technology (increase in output, lowering of production cost, etc.)
New innovations
Intellectual Property, Patents, etc.
Maturity of technology
5] Legal
This refers to the laws made by the government that the company has to follow in order
to continue their operations:
Business Laws
Environment Laws and guides
Health and safety guidelines
International Trade Agreements and Treaties
Regional/Local Laws and Circulars
41. 6] Environmental
These factors affect industries and their ability to function smoothly. So, some such
factors are:
Environmental Issues
Energy/Power Consumption
Insurance Policies
Safe Waste Disposal
Dealing with hazardous material
Elements of Micro Environment
Let’s take a quick look at all elements of a micro environment:
42. Customers and Consumers
Customers are people who buy an organization’s products/services. In simple words, an
organization cannot survive without customers. A consumer, on the other hand, is the
ultimate user of the product/service.
For example, a husband might purchase a product for his wife. In this case, the husband
is the customer and the wife is the consumer.
A successful business keeps a close watch on both customers and consumers of its
products/services. It must monitor and track any changes in tastes and preferences of the
consumer along with changes in the buying habits of the customer.
Competitors
Every business has competition. Competitors are other organizations that compete with
each other for both resources and markets. Hence, it is important that an organization is
aware of its competitors and in a position to analyze threats from its competition. A
business must be aware of its competitors, their strengths and weaknesses, and the most
aggressive and powerful competitors at all times.
Further, an organization can have direct or indirect competitors. When organizations are
involved in the same business activity, they compete for both resources and markets.
This is Direct Competition.
43. For example, Pantene and Sunsilk shampoo companies are direct competitors. On the
other hand, a five-star holiday resort and a luxury car company are Indirect competitors
since they offer different products but vie for the same market.
Organization
One of the most important aspects of the micro environment of an organization is the
self-analysis of the organization itself. It must understand its own strengths and
weaknesses, objectives and goals of the business, and resource availability. The
following non-specific elements of an organization can affect its performance:
Owners – People who have a major shareholding in the organization and have
vested interests in the well-being of the company.
Board of Directors – The board of directors is elected by the shareholders for
overseeing the general management of the business and ensuring that the
shareholder’s interests are met.
Employees – People who work in the organization are major contributors to its
success. It is important that all employees embrace the organization’s goals and
objectives.
Market
The market is much more than the sum of all the customers. The organization must study
the market in terms of its actual size, the potential for growth, and its attractiveness.
Some important issues are:
The cost structure of the market
Price Sensitivity of the market
Technological structure of the market
The existing distribution system of the market
The maturity of the market
Suppliers
Suppliers are another important component of the micro environment. Organizations
depend on many suppliers for equipment, raw material, etc. to maintain their production.
Suppliers can influence the cost structure of the industry and are hence a major force.
Intermediaries
Intermediaries are also a major determining force in business. Most customers are
unaware of the manufacturer of the products they buy since they approach retailers,
departmental store, chain stores or online stores for their purchases.
44. For micro environment we uses SWOT analysis
SWOT Analysis
In order to analyze and understand the external and internal business environments,
organizations turn to SWOT analysis – an acronym for strengths, weaknesses,
opportunities, and threats. The idea is simple, the strengths and weaknesses of an
organization are matched with the threats and opportunities of the environment to
formulate an effective strategy. In this article, we will look at SWOT analysis along with
some examples.
In order to create an effective strategy, it is important that the organization capitalizes
on the opportunities by using its strengths. Also, it must avoid the threats by reducing
the impact of the weaknesses.
Elements of SWOT Analysis
Strengths – are the aspects of an organization that make it better than its
competitors. For example, the strength of a company can be having one of the best
technological tools in the market. A thorough analysis can help the company use it
to improve its business.
Weaknesses – areas where the organization needs to improve to remain competitive
in the industry. Some examples of weaknesses are high debts, lack of capital,
inadequate supply chain, etc.
45. Opportunities – are external factors that can help an organization in gaining
competitive advantage. For example, if a country changes its import laws, then a car
exporter can increase his sales by taking advantage of this opportunity.
Threats – are factors which have the potential to cause harm to an organization. For
example, a drought is a threat to a crop-producing company as it can destroy the
crop.
A SWOT Analysis helps an organization identify its core strengths and weaknesses as
well as opportunities and threats and create a strategy to achieve success. It can be used
for specific segments like production, marketing, and sales.
Executing a SWOT Analysis
Before an organization starts a SWOT analysis, it is important to create a company
profile. This is primarily a description of what the business does and who its customers
are.
In the case of large organizations, creating a profile for each segment is equally
important. Also, outline the perceived strengths, weaknesses, opportunities, and threats.
Once the basics are in place, a management team can get together and start populating
the four elements as specified above. As the list gets populated, the team can brainstorm
and find ways to increase the opportunities and improve on its strengths.
In a nutshell, a SWOT analysis gives you a bird’s eye view of the current situation of an
organization. The most important factor in a SWOT analysis is the quality of data.
Hence, it is important to capture the strengths, weaknesses, opportunities, and threats
accurately. Remember, the analysis is merely the beginning of change and improvement.
For industry analysis we use Porter five force model
Porter's Five Forces
Understanding Porter's Five Forces
Porter's Five Forces is a business analysis model that helps to explain why various
industries are able to sustain different levels of profitability. The model was published in
Michael E. Porter'sbook, "Competitive Strategy: Techniques for Analyzing Industries and
46. Competitors" in 1980. The Five Forces model is widely used to analyze the industry
structure of a company as well as its corporate strategy. Porter identified five undeniable
forces that play a part in shaping every market and industry in the world, with some
caveats. The five forces are frequently used to measure competition intensity,
attractiveness, and profitability of an industry or market.
Porter's five forces are:
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products
Competition in the Industry
The first of the five forces refers to the number of competitors and their ability to undercut
a company. The larger the number of competitors, along with the number of equivalent
products and services they offer, the lesser the power of a company. Suppliers and buyers
seek out a company's competitionif they are able to offer a better deal or lower prices.
Conversely, when competitive rivalry is low, a company has greater power to charge
higher prices and set the terms of deals to achieve higher sales and profits.
Potential of New Entrants Into an Industry
A company's power is also affected by the force of new entrants into its market. The less
time and money it costs for a competitor to enter a company's market and be an effective
competitor, the more an established company's position could be significantly weakened.
An industry with strongbarriers to entryis ideal for existing companies within that industry
since the company would be able to charge higher prices and negotiate better terms.
Power of Suppliers
The next factor in the five forces model addresses how easily suppliers can drive up the
cost of inputs. It is affected by the number of suppliers of key inputs of a good or service,
how unique these inputs are, and how much it would cost a company to switch to another
supplier. The fewer suppliers to an industry, the more a company would depend on a
supplier. As a result, the supplier has more power and can drive up input costs and push
for other advantages in trade. On the other hand, when there are many suppliers or low
switching costs between rival suppliers, a company can keep its input costs lower and
enhance its profits.
Power of Customers
The ability that customers have to drive prices lower or their level of power is one of the
five forces. It is affectedby how many buyers or customers a company has, how significant
each customer is, and how much it would cost a company to find new customersor markets
for its output. A smaller and more powerful client base means that each customer has more
47. power to negotiate for lower prices and better deals. A company that has many, smaller,
independent customers will have an easier time charging higher prices to increase
profitability.
The Five Forces model can help businesses boost profits, but they must continuously
monitor any changes in the five forces and adjust their business strategy.
Threat of Substitutes
The last of the five forces focuses on substitutes. Substitute goods or services that can be
used in place of a company's products or services pose a threat. Companies that produce
goods or services for which there are no closesubstitutes will have more power to increase
prices and lock in favorable terms. When close substitutes are available, customers will
have the option to forgo buying a company's product, and a company's power can be
weakened.
Understanding Porter's Five Forces and how they apply to an industry, can enable a
company to adjust its business strategy to better use its resources to generate higher
earnings for its investors.
1. FEASIBILITY ANALYSIS
1. Feasibility analysis is the process of determining whether a business idea is viable. It is a
preliminary evaluation of a business idea, conducted for the purpose of determining whether the
idea is worth pursuing. The proper time to conduct a feasibility analysis is early in thinking through
the prospects for a new business idea. It follows opportunity recognition but comes before the
development of a business model and a business plan.
2. A product/service feasibility analysis is an assessment of the overall appeal of the product or
service being proposed. The two components of product/service feasibility analysis are product
desirability and product demand. A concept statement, which is a preliminary description of a
48. product idea, is developed during this particular aspect of the feasibility analysis process to see if
the proposed product or service makes sense to potential customers and if it has any fatal flaws
that require immediate attention. Using online tools such as Google AdWords and Landing Pages
and conducing library, Internet, and gumshoe research are techniques entrepreneurs use to assess
the likely demand for a product or service.
3. An industry/market feasibility analysis is an assessment of the overall appeal of the market for
the product or service being proposed. For feasibility analysis, there are two primary issues that a
business should consider in this area: industry attractiveness and target market attractiveness. A
target market is a place within a larger market segment that represents a narrower group of
customers with similar needs. Most start-ups simply don’t have the resources needed to participate
in a broad market, at least initially. Instead, by focusing on a smaller target market, a firm can
usually avoid head-tohead competition with industry leaders and can focus on serving a
specialized market very well. An attractive industry has several desirable characteristics for a new
venture, including those of being (a) “young” rather than old or very well established, (b) in the
early rather than the late stage of the product life cycle, and (c) fragmented (where a large number
of firms are competing but no single firm has a dominate market position) rather than highly
concentrated (where a few large firms dominate competition).
4. An organizational feasibility analysis is conducted to determine whether a proposed business
has sufficient management expertise, organizational competence, and resources to successfully
launch its business. There are two primary issues to consider in this area: management prowess
and resource sufficiency. With respect to management prowess, the intention is to determine the
ability of the proposed venture’s initial management team. In terms of analysis, resource
sufficiency is concerned with determining if the proposed venture would have the resources
required to compete successfully.
5. A financial feasibility analysis is a preliminary financial analysis of whether a business idea is
worth pursuing. The most important areas to consider are the total start-up cash needed, financial
performance of similar businesses, and the overall financial attractiveness of the proposed
business.
Technical feasibility
In technical feasibility the following issues are taken into consideration.
Whether the required technology is available or not
Whether the required resources are available -
- Manpower- programmers, testers & debuggers
- Software and hardware
Once the technicalfeasibility is established,it is important to considerthe monetary factors also.Since it might happen
that developing a particular systemmay be technically possible but it may require huge investments and benefits may
be less. For evaluating this, economic feasibility of the proposed systemis carried out.
What Is a Business Plan?
A business plan is a written document that describes in detail how a business—usually a
new one—is going to achieve its goals. A business plan lays out a written plan from
a marketing, financial and operational viewpoint.
Business plans are important to allow a company to lay out its goals and attract investment.
They are also a way for companies to keep themselves on track going forward.
Although they're especially useful for new companies, every company should have a
business plan. Ideally, a company would revisit the plan periodically to see if goals have
been met or have changed and evolved. Sometimes, a new business plan is prepared for an
established business that is moving in a new direction.
49. While it's a good idea to give as much detail as possible, it's also important to be sure the
plan is concise so the reader will want to get to the end.
Understanding Business Plans
A business plan is a fundamental tool any startup business needs to have in place prior to
beginning its operations. Usually, banks and venture capital firms make a viable business
plan a prerequisite to the investment of funds in a business.
Even though it may work, operating without a business plan is not a good idea. In fact,
very few companies are able to last without one. There are definitely more benefits to
creating and sticking to a business plan including being able to think through ideas without
putting too much money into them—and, ultimately, losing in the end.
A good business plan should outline all the costs and the downfalls of each decision a
company makes. Business plans, even among competitors in the same industry, are rarely
identical. But they all tend to have the same elements, including an executive summary of
the business and a detailed description of the business, its services and/or products. It also
states how the business intends to achieve its goals.
The plan should include at least an overview of the industry of which the business will be
a part, and how it will distinguish itself from its potential competitors.
Business Plan Definition
Elements of a Business Plan
As mentioned above, no two business plans are the same. But they all have the same
elements. Below are some of the common and most important parts of a business plan.
Executive summary: This section outlines the company and includes the mission
statementalong with any information about the company's leadership, employees,
operations, and location.
Products and services: Here, the company can outline the products and services it will
offer, and may also include pricing, product lifespan, and benefits to the consumer. Other
factors that may go into this section include production and manufacturing processes,
any patents the company may have, as well as proprietary technology. Any information
about research and development (R&D) can also be included here.
Market analysis: A firm needs a good handle of the industry as well as its target market.
It will outline the competition and how it factors in the industry, along with its strengths
and weaknesses.
Marketing strategy: This area describes how the company will attract and keep its
customer base and how it intends to reach the consumer. This means a clear distribution
50. channel must be outlined.
Financial planning: In order to attract the party reading the business plan, the company
should include any financial planning and/or projections. Financial statements, balance
sheets, and other financial information may be included foralready-established businesses.
New businesses may include targets for the firstfew years of the business and any potential
investors.
Budget: Any good company needs to have a budget in place. This includes costs related
to staffing, development, manufacturing, marketing, and any other expenses related to the
business.
Types of Business Plans
Business plans help companies identify their objectives and remain ontrack. They can help
companies start and manage themselves, and to help grow after they're up and running.
They also act as a means to get people to work with and invest in the business.
Although there are no right or wrong business plans, they can fall into two different
categories—traditional or lean startup. According to the Small Business Administration,
the traditional business plan is the most common. They are standard, with much more detail
in each section. These tend to be much longer and require a lot more work.
Lean startup business plans, on the other hand, use a standard structure even though they
aren't as common in the business world. These business plans are short—as short as one
page—and have very little detail. If a company uses this kind of plan, they should expect
to provide more detail if an investor or lender requests it.
Special Considerations
A complete business plan must include a set of financial projectionsfor the business. These
forward-looking projected financial statements are often called pro-forma financial
statements or simply the "pro-formas." They include the overall budget, current and
projected financing, a market analysis, and its marketing strategy approach.
In a business plan, a business owner projects revenues and expenses for a certain period of
time and describes the operational activity and costs related to the business.
The idea behind putting together a business plan is to enable owners to have a more defined
picture of potential costs and drawbacks to certain business decisions and to help them
modify their structures accordingly before implementing these ideas. It also allows owners
to project what type of financing is required to get their businesses up and running.
The length of the business plan varies greatly from business-to-business. All of the
information should fit into a 15- to 20-page document. If there are crucial elements of the
business plan that take up a lot of space—such as applications for patents—they should be
referenced in the main plan and included as appendices.
If there are any especially interesting aspects of the business, they should be highlighted
and used to attract financing. For example, Tesla Motors.'s electriccar business essentially
began only as a business plan.
A business plan is not meant to be a static document. As the business grows and evolves,
so too should the business plan. An annual review of the plan allows an entrepreneur to
update it when taking markets into consideration. It also provides an opportunity to look
back and see what has been achieved and what has not. Think of it as a living document
that grows and evolves with your business.
51. Unit 3 previous years paper
1)what is organisation plan describe its types
2)what is the role of manpower planning in designing organisational structure do you agree that
the form of ownership of business contribute in designing organisational structure why?
3)Explain the meaning and benefit of functional plans which are the major consideration in
preparing them?
4)discuss the meaning and process of marketing plan also describe the importance of cash budget?
Very important
5) Write a note on the need for type of and determination of working capital?(Most important)
6)What are the objective and benefit of marketing research how is it conducted? Very imp
7) Write a detailed note on ratio analysis how does it help in addressing the financial viability of
new business?
Market Research
Definition: The process of gathering, analyzing and interpreting information about a market, about a
product or service to be offered forsale in that market,and about the past, present and potential customers
for the product or service;research into the characteristics, spending habits, location and needsof your
business's target market, the industry as a whole, and the particular competitors you face
Accurate and thorough information is the foundation of all successful businessventures because it
provides a wealth of information about prospective and existing customers, the competition, and
the industry in general. It allows business owners to determine the feasibility of a business before
committing substantial resources to the venture.
Market research provides relevant data to help solve marketing challenges that a business will
most likely face--an integral part of the business planning process. In fact, strategies such as
market segmentation (identifying specific groups within a market) and product differentiation
