Entrepreneurship and Ethics.pptx

Entrepreneurship
and Ethics
MBA,2nd Semester, Bangalore
University
Compiled by:
Dr.Narendra K

Definition and introduction
The concept of entrepreneurship has a wide range of
meanings. On the one extreme an entrepreneur is a
person of very high aptitude who pioneers change, on the
other extreme of definitions, anyone who wants to work
for himself or herself is considered to be an entrepreneur.
The word entrepreneur originates from the French word,
entreprendre, which means "to undertake."
In a business context, it means to start a business. The
MerriamWebster Dictionary presents the definition of an
entrepreneur as one who organizes, manages, and
assumes the risks of a business or enterprise.

Schumpeter’s View of
Entrepreneurship
Austrian economist Joseph Schumpeter’s definition of
entrepreneurship placed an emphasis on innovation, such as:
• New products
• New production methods
• New markets
• New forms of organization
Wealth is created when such innovation results in new demand. From
this viewpoint, one can define the function of the entrepreneur as one
of combining various input factors in an innovative manner to generate
value to the customer with the hope that this value will exceed the
cost of the input factors, thus generating superior returns that result in
the creation of wealth. Entrepreneurship vs. Small Business

• Many people use the terms "entrepreneur"
and "small business owner" synonymously.
While they may have much in common, there
are significant differences between the
entrepreneurial venture and the small
business. Entrepreneurial ventures differ from
small businesses in these ways:

• Amount of wealth creation -rather than simply generating an income
stream that replaces traditional employment, a successful entrepreneurial
venture creates substantial wealth, typically in excess of several million
dollars of profit.
• Speed of wealth creation - while a successful small business can generate
several million dollars of profit over a lifetime, entrepreneurial wealth
creation often is rapid; for example, within 5 years.
• Risk - the risk of an entrepreneurial venture must be high; otherwise, with
the incentive of sure profits many entrepreneurs would be pursuing the
idea and the opportunity no longer would exist.
• Innovation - entrepreneurship often involves substantial innovation
beyond what a small business might exhibit. This innovation gives the
venture the competitive advantage that results in wealth creation. The
innovation may be in the product or service itself, or in the business
processes used to deliver it.

• Entrepreneur A person who is able to identify
business opportunities and implement actions
to maximize on the opportunities. An
entrepreneur initiates enterprise creation,
undertakes risks, and manages resources to
establish and operate a business enterprise
that is capable of self-sustainance.

Definition of Entrepreneur:
• According to a French economist, J. B. Say, an
entrepreneur is a person who shifts economic
resources out of an area of lower productivity
into an area of higher productivity and greater
yield.

Definition of Intrapreneur:
• This is an employed staff e.g. manager who
innovates for the company and takes risks only on
behalf of the employer. He is therefore an intra
company entrepreneur for whom the term
intrapreneur is coined. Intrapraneurs are,
therefore, the main entrepreneurs in large
companies who innovate and take risks on behalf
of their employer. These are creative people
usually working together as teams, who function
as entrepreneurs within corporations.

Characteristics of Entrepreneur

Characteristics of an Entrepreneur
• The main characteristics of the entrepreneur are due to their sociological
and psychological factors. Some of those characteristics are mentioned
below:
• Entrepreneurs are vision-oriented people
• Entrepreneurs have a high need in achievement
• Entrepreneurs do not rely on fate or luck, however they try to control their
own lives
• Entrepreneurs undertake moderate risks, which is why they look for high
earning on their investments
• Entrepreneurs have the abilities to deal with several ambiguous situations
in their ventures. They face these ambiguous situations and circumstances
regularly because they do certain jobs and tasks which are entirely new by
nature.
• Entrepreneurs have the tendency to be productive and efficient with in a
given period of time. However, at times, they might be seen as inflexible
individuals in team-work.

Description of Entrepreneurship
• Entrepreneurship is an “act of establishing a new venture”
Christensen et al, (2000, p.4)
• Entrepreneurship can also be considered as the function
through which growth and development can be achieved
without commencing a new business venture. It offers a
process by which people either inside the companies or on
their own, look for prospects without regard to the
resources they presently control (Stevenson et al, 1989;
Stevenson & Jarillo, 1990).
• However, “an entrepreneurial organisation is that which
pursues opportunity, regardless of resources currently
controlled” Stevenson & Jarillo (1990, p.23).

Definition of Entrepreneurship
• “Entrepreneurship is the creation of
organisations. What differentiates entrepreneurs
from non-entrepreneurs is that entrepreneurs
create organisation, while non-entrepreneurs do
not. In behavioural approaches to the study of
entrepreneurship, an entrepreneur is seen as a
set of activities involved in organisation creation,
while in trait approaches an entrepreneur is a set
of personality traits and characteristics” Gartner
(1988, p.11)

Types of Entrepreneurship
• There are generally four entrepreneurial
types:
Achievement
entrepreneur
Salesman
entrepreneur
Technology
entrepreneur
Manager

Achievement entrepreneur
Primarily associated with the desire to achieve.
These types of individuals are usually having an enormous amount of energy
and capabilities to take charge.
They take initiatives and do not wait for things to happen.
They often possess the leadership qualities and have a great sense of
commitment and responsibility in their ventures.
These types of individuals are good in several in several business related
aspects and they try to accomplish their objectives, whilst heading their
missions. (Carsrud & Brannback, 2007).

Salesman entrepreneur:
 These individuals possess skills to interact with people and have very good
soft side of the management aspects.
 These people are typified for having the feelings of the consumers’ needs
and wants.
 They usually use the soft sales approach whilst pursuing the growth of
their ventures.
 They have enormous talent for connecting with people and spend most of
their time in marketing their products/services and permit other people to
manage their businesses.
 These individuals therefore devote their time to understand who and how
are the consumers in the market.
 They develop a proper vision for marketing and sales practices to reach
wider consumer groups. (Carsrud & Brannback, 2007).

Technology entrepreneur:
 Individuals belong to this category, are generally idea developers.
 These individuals often possess great ideas
 They have the capabilities to develop innovative processes and
invent novel products or services for niche markets.
 As these individuals possess qualities to create several ideas they
have a good analytical intelligence and take calculated risks in their
ventures
 Although these individuals possess good analytical intelligence to
make way through several situations, however, at times their
missions can become a bit idealistic. (Carsrud & Brannback, 2007).

Manager:
 These types of individuals possess the qualities of taking charge of the
missions.
 Individuals belonging to this type of entrepreneurship are very
competitive by nature but not as co-operative as one would expect in a
team work.
 They are usually found to take positions of high authority, such as external
investors or sometimes act as board of directors.
 They prefer to work in larger organisations than small entrepreneurial
businesses.
 They seek comfort in making effective marketing strategies, but not
necessary selling products or services.
 Their ways to sell are different, they employ logic and carefully thought
persuasions, as mechanisms to sell their ideas.
 They have rich experiences, strong management skills and possess
strength in managing existing businesses (Carsrud & Brannback, 2007).

Characteristics of Entrepreneur
• 1. An eye for opportunity: Many entrepreneurs start by
finding a need and quickly satisfying it. They are always
alert to opportunities. They are very much quick to see and
grab opportunities. They plan intellectually and anticipate
carefully how to achieve their goals in realizing an
opportunity.
• 2. Independence: Even though most entrepreneurs know
how to work within the framework for the sake of profits,
they enjoy being their own boss. They like doing things
their own way. The characteristics of independence and the
sense of determination are the drives that make an
entrepreneur start their own business. In a way, their own
business fulfills their need for independence.

• 3. An appetite for hardwork: Most entrepreneurs start out working
long, hard, hours with little play. Entrepreneurs are always at work
even when other people have stopped. They are persistent and
strongly believe that working hard will help them attain their goals.
They hence focus on the end result.
• 4. Self-confidence: Entrepreneurs must demonstrate extreme self
confidence in order to cope with all the risks of operating their own
business. Most successful entrepreneurs are confident of achieving
realistic and challenging goals. They get into business or industry
with a high level of self-confidence. This, couples with a sense of
effectiveness ultimately contribute to the success of the venture.
• 5. Discipline: Successful entrepreneurs resist the temptation to do
what is unimportant or the easiest but have the ability to think
through what is the most essential. Entrepreneurs are economically
efficient, do not like to waste time and they like to see work
completed. They use discipline as a guide to their destination.

• 6. Judgment: Successful entrepreneurs have the ability to think quickly and make a
wise decision. This is possible because they have a plan, they have an economic
goal, they know what they want and they know what they can do. Entrepreneurs
are unaffected by personal likes and dislikes. They stand beyond these types of
prejudices as they are realistic in their approach. At the time of their need they
select experts rather than friends and relatives to assist them. They usually avoid
emotional and sensitive attitude towards their business or problem.
• 7. Ability to accept change: Change occurs frequently when you own your own
business, the entrepreneur thrives on changes and their business grow. An
entrepreneur may need to change his/her plans in order to help the business
grow. Entrepreneurs look at many solutions to their problems. They realize that
other people may know how to do something better. Entrepreneurs can choose
the best way to do something, even if it is different from how they want to do it.
• 8. Make stress work for them: On the roller coaster to business success, the
entrepreneur often copes by focusing on the end result and not the process of
getting there. Entrepreneurs are capable of working for long hours and solving
different complexities at the same time. As the captain of an industry or an
enterprise, an entrepreneur faces a number of problems and in right moment he
takes right decisions which may involve physical as well as mental stress.

• 9. Need to achieve: Although they keep an “eye” on profit, this is
often secondary to the drive toward personal success.
Entrepreneurs have strong desire to achieve higher goals. Their
inner self motivates their behaviour towards high achievement. To
an entrepreneur, winning is achievement.
• 10. Focus on profits: Successful entrepreneurs always have the
profit margin in sight and know that their business success is
measured by profits.
• 11. Risk-bearing: Entrepreneurs are the persons who take decisions
under uncertainty and thus they are willing to take risk, but they
never gamble with the results. They choose moderate risk rather
than play wild gamble. They, therefore, undertake calculated risk
which is high enough to be exciting, but with a fairly reasonable
chance to win.

• 12. Locus of control: Closely consistent with McClelland‟s theory of need for
achievement, is the belief in internal locus of control. According to Rotter‟s locus
of control theory, an individual perceives the outcome of an event as being either
within or beyond his personal control. Entrepreneurs believe in their own ability to
control the consequences of their endeavour by influencing their socio-economic
environment rather than leave everything to luck. They strongly believe that they
can govern and shape their own destiny.
• 13. Creative and Innovators: Successful entrepreneurs are innovators. They
constantly put their efforts in introducing new products, new method of
production, opening new markets and reorganizing the enterprise. They always try
not to be satisfied with conventional and routine way of doing things, but always
think of how they can do them in a better way.
• 14. Leadership: Entrepreneurs should possess the quality of leadership. Leadership
is the ability to exert interpersonal influence by means of communication towards
the achievement of goals. Entrepreneurs as leaders should provide the necessary
spark of motivation by guiding, inspiring, assisting and directing the members of
the group for achievement of unity of action, efforts and purpose.

• 15. Ability to mobilize resources:
Entrepreneurs must have the ability to
marshal all the inputs to obtain the end
product. They have to mobilize 6Ms, i.e. Man,
Money, Material, Machinery, Market and
Method effectively to realize the final product
as entrepreneurship is a function of gap filling
and input completing.

The Risks of Entrepreneurship
•
Most entrepreneurs are risk-takers by nature, or at
minimum calculated visionaries with a clear plan of action
to launch a new product or service to fill a gap in the
industry. On a personal level, many entrepreneurs take big
risks to leave stable jobs to throw their efforts (and
sometimes their own money) into launching a business.
• For entrepreneurs, there is no guaranteed monthly income,
no guarantee of success, and spending time with family and
friends can be a challenge in the early days of launching a
company. Here are some of the most common risks that
every entrepreneur and investor should evaluate and
minimize before starting a business.

• KEY TAKEAWAYS
• Entrepreneurs face multiple risks such as bankruptcy,
financial risk, competitive risks, environmental
risks, reputational risks, and political and economic risks.
• Entrepreneurs must plan wisely in terms of budgeting and
show investors that they are considering risks by creating a
realistic business plan.
• Entrepreneurs should also consider technology changes as
a risk factor.
• Market demand is unpredictable as consumer trends can
change rapidly, creating problems for entrepreneurs.

• Financial Risk
• An entrepreneur will need funds to launch a business
either in the form of loans from investors, their own
savings, or funds from family. The founder will have to
put their own "skin in the game." Any new business
should have a financial plan within the overall business
plan showing income projections, how much cash will
be required to break even, and the expected return for
investors in the first five-year timeframe. Failure to
accurately plan could mean that the entrepreneur risks
bankruptcy, and investors get nothing.

• Strategic Risk
• An impressive business plan will appeal
to investors. However, we live in a dynamic and
fast-paced world where strategies can become
outdated quickly. Changes in the market or the
business environment can mean that a chosen
strategy is the wrong one, and a company might
struggle to reach its benchmarks and key
performance indicators (KPIs).

• Technology Risk
• New technologies are constantly emerging,
particularly in the era of the Fourth Industrial
Revolution. Some of these changes are
characterized as "paradigm shifts" or
"disruptive" technologies. To be competitive, a
new company may have to invest heavily in
new systems and processes, which could
drastically affect the bottom line.

• Market Risk
• Many factors can affect the market for a product or
service. The ups and downs of the economy and new
market trends pose a risk to new businesses, and a
certain product might be popular one year but not the
next. For example, if the economy slumps, people are
less inclined to buy luxury products or nonessentials. If
a competitor launches a similar product at a lower
price, the competitor might steal market share.
Entrepreneurs should perform a market analysis that
assesses market factors, the demand for a product or
service, and customer behavior.

• Competitive Risk
• An entrepreneur should always be aware of its
competitors. If there are no competitors at all,
this could indicate that there is no demand for a
product. If there are a few larger competitors, the
market might be saturated, or, the company
might struggle to compete. Additionally,
entrepreneurs with new ideas and innovations
should protect intellectual property by seeking
patents to protect themselves from competitors.

• Reputational Risk
• A business's reputation is everything, and this can be
particularly so when a new business is launched and
customers have preconceived expectations. If a new
company disappoints consumers in the initial stages, it
may never gain traction. Social media plays a huge role
in business reputation and word-of-mouth marketing.
One tweet or negative post from a disgruntled
customer can lead to huge losses in revenue.
Reputational risk can be managed with a strategy that
communicates product information and builds
relationships with consumers and other stakeholders.

• Environmental, Political, and Economic Risk
• Some things cannot be controlled by a good business plan or the
right insurance. Earthquakes, tornadoes, hurricanes, wars, and
recessions are all risks that companies and new entrepreneurs may
face. There may be a strong market for a product in an under-
developed country, but these countries can be unstable and unsafe,
or logistics, tax rates, or tariffs might make trade difficult depending
on the political climate at any point in time.
• Also, some business sectors have historically high failure rates, and
entrepreneurs in these sectors may find it difficult to find investors.
These sectors include food service, retail, and consulting.
https://www.investopedia.com/ask/answers/040615/what-risks-does-entrepreneur-face.asp

Benefits of being Entrepreneurs
• Flexibility in Schedule
• They are their own bosses, unlike offices and organizations which require work to be done from a
specific time and place. Entrepreneurs have the free will to work in a flexible schedule from any
location as preferred. They tailor their work depending upon their lifestyle and other commitments.
• Fulfilling and Boosts Self-Esteem
• Entrepreneurship requires a lot of managerial skills such as decision making and being able to do so
confidently boost their self-esteem. Entrepreneurs are those who inspire people to do business on
their own and confidently pursue their passion in a certain way. They are people with good
leadership qualities and a vision. The ability to be able to create a product and fulfill a certain
customer need with the use of individual ideas, talent, and resources creates a huge sense of
satisfaction and is very fulfilling.
• Getting to Learn New Things
• One of the biggest benefits of being an entrepreneur is you get to wear various hats and get to
learn many things. These learnings are not just limited to your own industry but about marketing,
managing money, handling people, dealing with risks, getting the work done in the most effective
way, etc. It enables one to explore and figure out how to do things even if they don’t know much
about it.

• Creating Wealth for Self and Associated Businesses
• Despite taking on all the risk, entrepreneurs more often than not stand a high chance of
profitability as such upon fulfilling customers’ needs. Entrepreneurs reap good profits and create
wealth for themselves and also related businesses. Establishing a new business involves arranging
resources from the existing market. This allows other existing entrepreneurs to earn profits.
• Improves the Standard of Living
• One of the driving factors of entrepreneurship is the increased needs of customers for variety and
luxury in goods and services. This motivates the entrepreneurs to introduce unique need-based
products. It could be electronics, clothing, automobiles, or other products. Increasing the use of
such new products in return improves the standard of living of the consumer.
• Creates Businesses and Job Opportunities for People
• When like-minded entrepreneurs get together to coordinate physical, human, and financial
resources and direct them towards the achievement of objectives through managerial skills,
businesses are developed. Although entrepreneurship is a business run by one person or the
innovator, it involves a lot of factors and the use of resources which results in the creation of
organizations. Further, these organizations are built from the scratch with a number of skilled
people working together. This creates a lot of job opportunities.

• Developing the Economy
• Entrepreneurship enables new markets to develop in the form of goods, services, and technology. It
paves ways of generating wealth; these higher earnings contribute to increased national income
and tax revenues. It promotes innovation, self-reliance and generates employment opportunities.
• Creating Social Impact
• The new products and services innovated by the entrepreneurs encourage consumers to adapt to
new trends and technology. It breaks away from the dependency upon traditional ways of using
products/services. They help the consumers in having an open mind which results in better morale,
the standard of living, and quality of life. It increases the foreign exchange revenue with large-scale
exports of the produced goods and services.
•
• Getting to Be the Innovator of Your Industry
• Being the first one to introduce something new into the market in the form of good service or
technology allows the entrepreneurs to create demand and trust in the market. This results in
becoming the one being looked up to in the industry as an innovator. Be it any industry, as long as
the entrepreneur wishes, he can continue to innovate and introduce new products in the market
just by continuously looking for opportunities and capitalizing on them.

Myths of Entrepreneurship
• Entrepreneurs Are Born, Not Made
• Starting a Business Generates Income Fast
• Businesses either succeed or fail
• Entrepreneurs do not have a private life.
• Entrepreneurs are risk-takers.
• Starting a new business provides freedom and less work
hours
• Starting your own business requires tech expertise
• Entrepreneurs use venture capital to fund their businesses
• An MBA is required to lead a business.
• It’s not ok to give up

Factors Affecting Entrepreneurship
Growth in India
• Hereditary Jobs
• Lack of Basic Infrastructure
• Lack of Entrepreneurial Spirit
• Lack of Education Training Facilities
• Lake of Favourable Environment
• Deficiency of Capital
• Competition with Big Industrial Houses
• Residence Against Innovations and Changes
• Lack of Technostructure
• Centralization of Economic Power
• Low Expenditure on Research and Development
• Insufficient Government Facilities and Incentives
• Bureaucracy and Redtapism

Role of Entrepreneurship in Economic
Development
Some of the roles of entrepreneurs are:-
• 1. Capital Formation
• 2. Improvement in Per Capita Income
• 3. Generation of Employment
• 4. Balanced Regional Development
• 5. Improvement in Living Standards
• 6. Economic Independence
• 7. Backward and Forward Linkages

• 8. Inspire Others towards Entrepreneurship
• 9. Create Knowledge Spillovers
• 10. Augment the Number of Enterprises
• 11. Provide Diversity in Firms
• 12. Organising of Society’s Productive Resources
• 13. Production of New Articles
• 14. Development of New Production Technique
and a Few Others.

Competency
requirement for
entrepreneurs

Awareness of self-competency and its
development.
• Awareness of self-competency, also known as self-awareness in the context of
personal development, is crucial for both personal and professional growth. Here's
how it works and how one can develop self-competency awareness:
1. Understanding Self-Competency:
• Self-competency is the understanding of your own abilities, skills, strengths, and
weaknesses. It involves recognizing what you are good at, what you need to
improve, and how you can apply your skills effectively in various situations.
2. Importance of Self-Competency Awareness:
• Improved Decision Making: Understanding your competencies helps in making
informed decisions related to career choices, personal relationships, and life goals.
• Effective Communication: Being aware of your communication skills allows you to
express yourself clearly and understand others better.
• Conflict Resolution: Recognizing your emotional competencies enables you to
handle conflicts and interpersonal challenges more effectively.
• Career Advancement: Knowing your strengths allows you to focus on areas where
you excel, potentially leading to career advancements and personal fulfillment.
• Emotional Intelligence: Self-awareness is a cornerstone of emotional intelligence,
which is vital for personal and professional success.

• Developing Self-Competency:
a. Self-Reflection: Regularly assess your skills, knowledge, and experiences. Reflect on
your achievements and areas where you need improvement.
b. Set Clear Goals: Define specific, measurable, achievable, relevant, and time-bound
(SMART) goals that align with your competencies.
c. Continuous Learning: Stay updated with industry trends and continuously improve
your skills through courses, workshops, and self-study.
d. Seek Feedback: Request feedback from peers, mentors, or supervisors to gain
insights into your strengths and areas for growth.
e. Practice Self-Compassion: Be kind to yourself. Acknowledge that everyone has
strengths and weaknesses, and it's okay to have areas where you need improvement.
f. Embrace Challenges: Step out of your comfort zone and take on challenges.
Overcoming challenges enhances your self-belief and competency.
g. Mindfulness and Emotional Intelligence: Develop mindfulness practices and
emotional intelligence to manage stress, emotions, and interpersonal relationships
effectively.
4. Life-Long Process:
• Self-competency development is a life-long process. As you evolve personally and
professionally, your competencies can also change. Embrace change, be open to
learning, and regularly reassess your skills and knowledge to stay self-aware and
confident in your abilities.

Opportunity Assessment:
Opportunity assessment refers to the process of evaluating a business idea or a potential business
opportunity to determine its viability and potential for success in the market.
Steps in Opportunity Assessment:
a. Market Research: Understand the target market, customer needs, and preferences.
b. Competitive Analysis: Evaluate competitors and identify your unique selling points.
c. Feasibility Study: Assess the technical, financial, and operational feasibility of the idea.
d. SWOT Analysis: Analyze strengths, weaknesses, opportunities, and threats associated with the
opportunity.
e. Legal and Regulatory Considerations: Understand legal requirements and regulations related to the
business idea.
f. Prototype Development (if applicable): Create a prototype or proof of concept to demonstrate the
idea's viability.
Outcome: The outcome of opportunity assessment is a clear understanding of the potential business
opportunity, its risks, and rewards. It helps entrepreneurs make informed decisions about pursuing or
abandoning the idea.

Entrepreneurial Finance
Entrepreneurial finance involves the management of financial resources in the entrepreneurial venture.
It includes financial planning, funding, and financial decision-making to ensure the business's growth
and sustainability.
Key Aspects of Entrepreneurial Finance:
a. Financial Planning: Develop a detailed financial plan, including revenue projections, cost estimates,
and cash flow forecasts.
b. Funding Sources: Explore various funding options such as bootstrapping, angel investors, venture
capital, crowdfunding, or bank loans.
c. Valuation: Determine the company's worth, which is crucial for attracting investors and negotiating
equity stakes.
d. Risk Management: Identify financial risks and implement strategies to mitigate them.
e. Financial Decision Making: Make strategic financial decisions related to investments, expenses,
pricing, and capital structure.
Outcome:
• Effective entrepreneurial finance ensures the business has enough capital to operate, expand, and
innovate. It also involves managing finances prudently to minimize risks and maximize returns for
stakeholders.

Opportunity Identification and
Selection
1. Opportunity Identification:
Opportunity identification is the creative process of generating business ideas. This can come from
personal experiences, market research, industry trends, or recognizing a gap in the market.
2. Opportunity Selection:
Opportunity selection involves evaluating identified opportunities and choosing the most viable and
promising ones for further development. This selection process often involves criteria such as market
demand, competitive advantage, feasibility, and alignment with the entrepreneur's skills and interests.
3. Importance:
Effective opportunity identification and selection are fundamental to entrepreneurial success.
Entrepreneurs need to recognize viable opportunities and focus their resources on those with the
highest potential for success.
• In summary, entrepreneurs need to assess opportunities rigorously, manage their finances wisely,
and carefully identify and select the most promising opportunities to build a successful and
sustainable business.

Entrepreneurship: Navigating the
Business Landscape
1. Environmental Dynamics and Changes:
• In the ever-evolving business world, staying ahead requires a keen understanding of environmental
dynamics. Technological advancements, socio-cultural shifts, and regulatory changes impact
businesses. Entrepreneurs must continuously scan the environment, adapt strategies, and innovate
to align with emerging trends.
2. Business Opportunities in Emerging Environments:
• Emerging environments are fertile grounds for entrepreneurial growth. Identifying gaps in the
market, leveraging technological advancements, and addressing evolving consumer needs are
pathways to success. Entrepreneurs should explore uncharted territories, conduct market research,
and innovate to capitalize on these opportunities.
3. Challenges of New Venture Start-ups:
• New ventures face multifaceted challenges. Limited funding, market uncertainty, competition, and
talent acquisition hurdles are common. Success demands meticulous planning, resilience, and a
customer-centric approach. Entrepreneurs should embrace challenges as opportunities for growth,
seeking innovative solutions to overcome them.
4. Pitfalls in Selecting New Ventures:
• Entrepreneurs often fall into traps such as inadequate market research, ignoring customer
feedback, and poor financial planning. Overestimating market demand and neglecting scalability
are pitfalls to avoid. Diligence, research, and mentorship can help entrepreneurs make informed
decisions, steering clear of these pitfalls.

5. Critical Factors for New Venture Development:
• Successful ventures are built on strong foundations. A well-researched idea, a unique value proposition, effective
leadership, financial prudence, and adaptability are critical. Fostering a positive company culture, focusing on
customer satisfaction, and nurturing a talented team are equally essential. Entrepreneurs should cultivate these
factors for sustainable growth.
6. Why New Ventures Fail:
• Understanding the reasons behind failure is pivotal. Lack of market demand, financial mismanagement,
inadequate planning, and failure to pivot with market needs are common causes. Internal factors like team
conflicts and leadership issues also contribute. Entrepreneurs must conduct post-mortems, learning from failures
to enhance future ventures.
7. Sources of Finance for New Venture:
• Funding options are diverse, from personal savings to venture capital and government grants. Each source has its
pros and cons. Entrepreneurs should evaluate their needs, assess the cost of capital, and align funding sources
with their venture's stage. Crafting a compelling business plan is key to attracting investors and lenders.
8. Institutional Support for Enterprises in India:
• In India, robust support exists for small and medium-scale enterprises (SMEs). Government initiatives like the
PMEGP and MSME schemes offer financial assistance and training. Understanding these policies, accessing
subsidized loans, and leveraging government-backed programs empower entrepreneurs to fuel their ventures'
growth.
• Entrepreneurship is a dynamic journey marked by challenges and opportunities. Armed with knowledge,
resilience, and adaptability, entrepreneurs can navigate these complexities, transforming innovative ideas into
thriving ventures.

Feasibility Analysis and Business Plan
Feasibility Analysis of Industry
1. Introduction to Industry Feasibility Analysis:
• Feasibility analysis is a critical step in assessing the viability of a
business idea within a specific industry. It involves evaluating
various factors to determine if the industry is conducive for the
planned venture. The analysis provides insights into potential
challenges, market demand, competition, and overall sustainability.
2. Market Demand Assessment:
• Target Audience: Identify the specific demographic and
psychographic characteristics of the target customer base within
the industry.
• Market Size: Analyze the current and future market size to
understand the growth potential of the industry.
• Trends and Patterns: Study market trends and consumer behavior
patterns to anticipate future demands.

3. Competitive Analysis:
• Competitor Identification: Identify key competitors within the industry, including
their strengths, weaknesses, market share, and strategies.
• Unique Selling Proposition (USP): Determine the unique features or services that
can differentiate the proposed venture from competitors.
• Barriers to Entry: Assess the barriers new entrants might face in the industry, such
as regulatory requirements or high initial investment.
4. Regulatory and Legal Considerations:
• Industry Regulations: Understand the regulations specific to the industry,
including licenses, certifications, and quality standards.
• Compliance: Evaluate the feasibility of complying with existing regulations and
anticipate changes that might impact the business.
5. Resource Availability and Supply Chain Analysis:
• Raw Materials: Assess the availability, cost, and quality of raw materials essential
for the industry.
• Supply Chain: Analyze the efficiency of the supply chain, including suppliers,
distributors, and logistics, to ensure smooth operations.

6. Technological Feasibility:
• Adoption of Technology: Evaluate the industry's technological advancements and assess the
feasibility of adopting relevant technologies.
• Automation and Innovation: Determine if automation and innovation can provide a competitive
edge and enhance operational efficiency.
7. Financial Feasibility:
• Cost Structure: Calculate the initial setup costs, operational expenses, and overheads associated
with the industry.
• Revenue Projections: Develop realistic revenue projections based on market demand, pricing
strategies, and sales forecasts.
• Break-even Analysis: Conduct a break-even analysis to determine the point at which the business
covers all its expenses.
8. Risk Analysis:
• Identification: Identify potential risks such as market fluctuations, regulatory changes, or
technological disruptions.
• Mitigation Strategies: Develop strategies to mitigate identified risks, including diversification,
insurance, or contingency planning.

Product or Service and Finance
Product or Service Assessment:
• Product/Service Description: Provide a detailed description
of your product or service, including its features, benefits,
and unique selling points.
• Market Fit: Explain how your product or service addresses
a specific market need or solves a problem for your target
audience.
• Competitive Analysis: Analyze your product/service in
relation to competitors, highlighting what sets it apart and
its competitive advantages.
• Prototype or Demo: If applicable, showcase a prototype or
demo to illustrate your product/service's functionality.

Financial Feasibility:
• Startup Costs: Calculate the initial investment required to launch
your business, including equipment, licenses, marketing, and
personnel.
• Revenue Projections: Develop a revenue forecast, outlining sales
projections based on market research and pricing strategies.
• Expense Projections: Estimate operating expenses, including rent,
utilities, salaries, and marketing costs.
• Cash Flow Analysis: Create a cash flow statement to track how
money flows in and out of your business over time.
• Profitability Analysis: Assess when your business is projected to
become profitable and how much profit you expect to generate.

Business Plan: Meaning and Significance
• Meaning: A business plan is a comprehensive
document that outlines your business goals,
strategies, and financial projections. It serves as a
roadmap for your venture.
• Significance: A well-prepared business plan is
crucial for securing funding, guiding daily
operations, and attracting partners or investors. It
helps entrepreneurs clarify their vision and align
their efforts towards success.

Contents of a Business Plan:
• Executive Summary: A concise overview of the entire plan.
• Company Description: Information about your company's history, mission, vision,
and legal structure.
• Market Analysis: Detailed research on your target market, industry trends, and
competitive landscape.
• Product/Service Description: In-depth information about what you offer.
• Marketing and Sales Strategy: How you plan to promote and sell your product or
service.
• Organizational Structure: Details about your team, management structure, and
roles.
• Financial Plan: Projections, budgets, and financial statements.
• Funding Request: If seeking investment, specify how much you need and how it
will be used.
• Appendices: Supporting documents, such as resumes, market research data, and
legal agreements.

Formulation of a Business Plan:
• Research: Gather data on market trends, competitors,
and financial projections.
• Outline: Create a structured outline for your plan,
organizing content logically.
• Writing: Craft each section of the plan, ensuring clarity
and consistency.
• Financial Projections: Use financial data to create
realistic projections.
• Review and Refinement: Review the plan for accuracy,
clarity, and completeness. Revise as needed.

Presentation of a Business Plan:
• Visual Appeal: Design a professional, visually
appealing document.
• Pitch: Prepare a compelling verbal
presentation to accompany the written plan.
• Engagement: Engage your audience by
addressing questions, concerns, and
objections effectively.

Preparing a Model Project Report for
Starting a New Venture
1. Executive Summary:
• Business Idea: Describe your business idea
succinctly.
• Market Opportunity: Highlight the market
need your venture addresses.
• Financial Projections: Provide a summary of
key financial forecasts.
• Funding Requirement: Specify the amount of
funding required.

2. Business Description:
• Vision and Mission: Outline your venture's
long-term vision and mission statement.
• Legal Structure: Specify your business's legal
structure (e.g., LLC, Corporation).
• Location: Describe the location and its
relevance to your business.

3. Market Analysis:
• Target Market: Define your ideal customer
demographics and psychographics.
• Market Trends: Analyze current market trends
and potential shifts.
• Competitive Analysis: Evaluate competitors,
highlighting strengths and weaknesses.

4. Product or Service Description:
• Features: List the features of your product or
service.
• Benefits: Explain how these features translate
into customer benefits.
• Uniqueness: Describe what sets your
product/service apart from competitors.

5. Marketing and Sales Strategy:
• Marketing Plan: Detail your online and offline
marketing strategies.
• Sales Approach: Outline your sales process,
including channels and techniques.
• Customer Retention: Describe plans for
customer retention and loyalty programs.

6. Operations Plan:
• Production/Service Process: Explain how your
product/service will be produced or delivered.
• Suppliers: Identify key suppliers and backup
options.
• Team: Introduce key team members and their
roles.

7. Financial Plan:
• Startup Costs: Itemize initial expenses,
including equipment, licenses, and marketing.
• Revenue Projections: Provide detailed sales
forecasts for at least the first three years.
• Break-even Analysis: Determine when the
business will become profitable.
• Cash Flow Projections: Present monthly cash
flow forecasts for the first year.

8. Funding Requirements:
• Investment: Specify the amount of funding
needed and how it will be utilized.
• Return on Investment (ROI): Explain the
potential ROI for investors.
• Exit Strategy: Outline how investors will be
repaid, e.g., through an acquisition or IPO.

9. Feasibility Study:
• Technical Feasibility: Assess the technical aspects
of your product/service.
• Economic Feasibility: Analyze the project's
economic viability and profitability.
• Legal Feasibility: Evaluate regulatory and legal
aspects affecting your business.
• Operational Feasibility: Consider how your
business will function in the proposed
environment.

Common Errors in Business Plan
Formulation:
• Lack of Research: Inadequate market research leads to inaccurate assumptions about the market
demand, competition, and trends.
• Over-Optimistic Projections: Unrealistic revenue and growth projections can erode investor trust.
Projections should be grounded in market research.
• Ignoring Competition: Failing to address competitors' strengths and weaknesses can be a major
oversight.
• Vague Marketing Strategies: Ambiguity in marketing plans leaves investors questioning how the
business will acquire customers.
• Neglecting Operational Details: Incomplete or vague operational plans can lead to inefficiencies and
increased costs.
• Ignoring Risk Analysis: Not identifying and addressing potential risks shows lack of preparedness.
• Poor Financial Management: Inaccurate financial data or lack of financial planning undermines the
entire business plan.
• Weak Executive Summary: A weak executive summary fails to captivate the reader's interest, making
them less likely to explore the rest of the plan.
• Grammar and Formatting Errors: A business plan riddled with language errors appears
unprofessional and can be off-putting to potential investors.
• Ignoring Feedback: Failing to seek feedback from mentors or industry experts can result in missing
valuable insights.

Legal forms of Entrepreneurial
Organizations
Entrepreneurs have several legal forms of
organizational structures to choose from when
starting a business. Each legal structure offers
different levels of liability protection, tax
implications, and management flexibility. Here
are the common legal forms of entrepreneurial
organizations:

1. Sole Proprietorship:
• Owner: One individual owns and operates the business.
• Liability: The owner has unlimited personal liability for business debts
and obligations.
• Taxation: Business income is reported on the owner's personal tax return
(pass-through taxation).
• Control: Complete control and decision-making power rest with the
owner.
• Ease of Formation: Simple and cost-effective to establish.
2. Partnership:
• Owners: Two or more individuals or entities (partners) share ownership
and responsibilities.
• Liability: Partners have unlimited personal liability for business debts.
• Taxation: Profits and losses pass through to partners' personal tax returns
(pass-through taxation).
• Control: Partners share decision-making power based on the partnership
agreement.
• Ease of Formation: Relatively easy to establish, but a partnership
agreement is crucial to outline roles and responsibilities.

3. Limited Partnership (LP):
• Owners: At least one general partner (with unlimited liability) and one or
more limited partners (with limited liability).
• Liability: Limited partners have liability limited to their investment;
general partners have unlimited personal liability.
• Taxation: Pass-through taxation for both general and limited partners.
• Control: General partners manage the business, and limited partners
have no direct management responsibilities.
• Ease of Formation: More complex than a general partnership due to legal
formalities.
4. Limited Liability Partnership (LLP):
• Owners: Partners have limited liability, protecting personal assets from
business debts.
• Liability: Limited liability for all partners, similar to shareholders in a
corporation.
• Taxation: Pass-through taxation, similar to a partnership.
• Control: Partners have management flexibility; some partners can be
passive investors.
• Ease of Formation: Requires filing a formal partnership agreement with
the state.

5. Limited Liability Company (LLC):
• Owners: Owners are called members and have limited liability, combining
features of partnerships and corporations.
• Liability: Limited liability for members, protecting personal assets.
• Taxation: Can choose to be taxed as a sole proprietorship, partnership, S
corporation, or C corporation.
• Control: Flexible management structure, can be member-managed or
manager-managed.
• Ease of Formation: More paperwork than a sole proprietorship or
partnership but less complex than a corporation.
6. Corporation (C Corporation):
• Owners: Shareholders own the corporation through shares of stock.
• Liability: Shareholders have limited liability; personal assets are protected.
• Taxation: Corporate profits are taxed, and dividends distributed to
shareholders are taxed again (double taxation).
• Control: Managed by a board of directors elected by shareholders.
• Ease of Formation: More complex due to extensive legal and regulatory
requirements.

7. S Corporation:
• Owners: Shareholders enjoy limited liability and pass-through
taxation benefits.
• Liability: Limited liability for shareholders.
• Taxation: Business profits and losses are passed through to
shareholders' personal tax returns (avoiding double taxation).
• Control: Managed by a board of directors, similar to a C
corporation.
• Ease of Formation: Requires meeting specific IRS criteria, including
having no more than 100 shareholders.
Choosing the appropriate legal structure depends on factors such as
liability protection, taxation, management preferences, and the nature
of the business. Entrepreneurs often seek legal and financial advice to
select the most suitable form for their venture.

8. Companies:
• Definition: A company is a legal entity formed by a group of individuals to engage
in business activities. It has a distinct legal identity separate from its owners
(shareholders).
• Types: Companies can be public (offering shares to the public) or private
(restricted shares, not publicly traded). Public companies often have more
regulatory requirements.
• Ownership: Owned by shareholders who have limited liability, meaning their
personal assets are protected.
• Management: Managed by a board of directors elected by shareholders. Day-to-
day operations are overseen by executives and managers.
9. Companies under Section 25:
• Definition: These are non-profit organizations (NPOs) registered under Section 25
of the Companies Act, 1956 (in India), now known as Section 8 under the
Companies Act, 2013.
• Purpose: Formed for promoting commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of the environment, or any
other similar object.
• Profits: Any profits earned are reinvested in the organization's objectives; no
dividends are distributed to members.
• Regulation: Subject to the regulatory framework of the Companies Act applicable
to other companies, with some exemptions.

10. Franchising:
• Definition: Franchising is a business strategy where an individual (franchisee) buys
the right to operate a business under the established brand, systems, and support
of the franchisor.
• Franchisee: Benefits from established brand recognition, training, and ongoing
support from the franchisor.
• Franchisor: Expands the business without the capital investment required for new
locations and earns revenue through franchise fees and royalties.
• Contracts: Involves detailed legal contracts outlining terms, fees, responsibilities,
and duration of the franchise agreement.
11.Legal Environment – Patents, Copyrights, Trademarks:
• Patents: Provide inventors exclusive rights to their inventions, preventing others
from making, using, or selling the invention without permission for a certain period
(typically 20 years). Patents encourage innovation and protect inventors' rights.
• Copyrights: Protect original literary, artistic, and musical works. Copyright holders
have the exclusive right to reproduce, distribute, and adapt their works. Copyright
protection encourages creativity and ensures creators are rewarded.
• Trademarks: Protect symbols, names, and slogans used to identify and distinguish
goods or services. Trademarks provide brand recognition, prevent confusion among
consumers, and ensure the reputation and quality associated with the brand are
maintained.

Social Entrepreneurship:
Transforming Society through
Innovation and Impact
Introduction:
• Social entrepreneurship represents a paradigm shift in the business
world, emphasizing the fusion of entrepreneurial skills with a deep
social conscience. Unlike traditional entrepreneurship focused
solely on profit, social entrepreneurship aims to address pressing
societal challenges using innovative, sustainable, and scalable
solutions.
Meaning:
• Social entrepreneurship involves the application of entrepreneurial
principles to create and manage innovative projects, organizations,
or initiatives that generate social, cultural, or environmental
change. These ventures prioritize the betterment of communities
and the planet over mere financial gain.

Perspective of Social Entrepreneurship:
• Impact-Driven: Social entrepreneurs are guided by a vision to make
a positive impact on society, focusing on long-term sustainable
change rather than immediate profit.
• Innovation: They leverage creativity and innovation to devise novel
solutions to social problems, challenging existing norms and
systems.
• Empowerment: Social entrepreneurship empowers communities,
providing them with tools and resources to create change from
within.
• Collaboration: Collaboration with various stakeholders, including
governments, NGOs, and local communities, is a cornerstone,
ensuring a collective effort toward social progress.

Social Entrepreneurship in Practice:
• Education Initiatives: Social entrepreneurs create
innovative educational programs and platforms, especially
in underserved areas, to enhance learning opportunities.
• Clean Energy Projects: Ventures focusing on renewable
energy sources and energy efficiency, catering to both
environmental sustainability and economic development.
• Healthcare Access: Initiatives to improve healthcare
accessibility and affordability, employing technology to
reach remote regions with medical services.
• Sustainable Agriculture: Projects promoting sustainable
agricultural practices, empowering local farmers, and
ensuring food security.

Boundaries of Social Entrepreneurship:
• Sustainability: Balancing social impact with financial sustainability poses a challenge. Achieving
both requires creative revenue models.
• Scalability: Expanding social impact often necessitates scaling the venture, which can be
constrained by limited resources.
• Policy and Regulation: Navigating complex legal and regulatory landscapes, especially in different
countries, can be a barrier to implementation.
• Growth of Entrepreneur Communities:
• Social entrepreneurship has given rise to vibrant communities of entrepreneurs, both online and
offline, fostering collaboration and knowledge sharing. Platforms, accelerators, and social
entrepreneurship-focused events have become catalysts for change, uniting individuals with shared
goals.
Few Experiments in Social Entrepreneurship:
• Grameen Bank (Bangladesh): Founded by Muhammad Yunus, it provides microfinance to empower
impoverished individuals, particularly women, to start small businesses.
• Kiva (Global): An online platform connecting lenders with borrowers in underserved communities
worldwide, facilitating microloans for various entrepreneurial ventures.
• Solar Sister (Africa): A social enterprise empowering women by providing them with solar products
to sell in their communities, addressing both energy poverty and women's economic
empowerment.
• Social entrepreneurship continues to redefine the boundaries of business, demonstrating that
profitable enterprises can coexist with meaningful societal impact. As these ventures grow, they
inspire a new generation of entrepreneurs to innovate, collaborate, and create positive change
globally.

Corporate Ethics:
Meaning and Need for Business Ethics:
• Business Ethics refers to the principles and standards that guide
behavior in the business world. It involves making moral judgments
and decisions, taking into consideration the impact on all
stakeholders, including customers, employees, suppliers, the
community, and the environment.
Need for Business Ethics:
• Trust: Ethical behavior builds trust, fostering positive relationships
with stakeholders.
• Reputation: Ethical companies have a strong, positive reputation,
attracting customers and investors.
• Legal Compliance: Adhering to ethical standards ensures legal
compliance, averting legal issues.
• Long-term Sustainability: Ethical practices contribute to long-term
business sustainability and growth.

Arguments for and Against Business
Ethics:
For Business Ethics:
• Social Responsibility: Businesses have a responsibility toward society and
must contribute positively.
• Sustainable Development: Ethical practices promote sustainable
development, ensuring a better future.
• Enhanced Reputation: Ethical companies garner trust and credibility,
leading to enhanced reputation.
Against Business Ethics:
• Profit Maximization: Some argue that the primary goal of business is
profit, not social responsibility.
• Competitive Disadvantage: Adhering strictly to ethics might put a
company at a competitive disadvantage against less ethical competitors.
• Subjectivity: Ethical standards can be subjective, leading to varied
interpretations.

Business Ethics in an Evolving Environment:
• As business environments evolve due to
technological advancements and
globalization, ethical challenges also
transform. Ethical considerations regarding
data privacy, artificial intelligence, and
international business practices are becoming
increasingly prominent.

Entrepreneurship and Start-Up
Culture:
Ethical Issues in Start-Ups:
• Investor Transparency: Ethical start-ups should be transparent with
investors regarding risks and potential challenges.
• Fair Employment: Ensuring fair treatment of employees, avoiding
exploitation, and providing adequate benefits.
• Innovation and Responsibility: Balancing innovation with ethical
responsibility, especially in fields like AI and biotechnology.
Ethics and Laws:
• While laws set legal boundaries, ethics define moral boundaries.
Companies must adhere to both to maintain integrity and social
responsibility. Ethical conduct often goes beyond legal
requirements.

Establishing Strategy for Ethical
Responsibility:
• Code of Conduct: Develop a comprehensive code of conduct
outlining ethical standards and expectations.
• Training and Awareness: Educate employees about ethical
guidelines and provide regular training sessions.
• Whistleblowing Mechanism: Establish a confidential system for
employees to report unethical behavior without fear of retaliation.
Approaches to Managerial Ethics:
• Utilitarian Approach: Focuses on the greatest good for the greatest
number of people.
• Deontological Approach: Emphasizes adhering to moral rules
regardless of the consequences.
• Virtue Ethics: Concentrates on the moral character of individuals
and emphasizes virtues like honesty and integrity.

Ethics and Business Decisions: Framework for
Ethical Decision-Making:
• Identify the Problem: Clearly define the ethical issue.
• Gather Information: Collect relevant information about the
situation.
• Identify Stakeholders: Determine the stakeholders affected
by the decision.
• Evaluate Options: Consider various ethical options and
their consequences.
• Make a Decision: Choose the most ethical course of action.
• Implement Decision: Put the decision into practice and
monitor the outcomes.
• Reflect: Reflect on the decision's effectiveness and learn
from the experience.

Why Ethics Still Matter:
• Trust and Credibility: Ethical companies build trust with
customers and stakeholders.
• Legal Compliance: Ethical practices ensure compliance with
laws and regulations.
• Long-Term Success: Ethical behavior contributes to long-
term business success and sustainability.
Becoming an Ethical Professional: Making a Difference in the
Business World:
• Personal Integrity: Uphold personal values and integrity
even in challenging situations.
• Continuous Learning: Stay informed about evolving ethical
issues and best practices.
• Social Responsibility: Engage in social causes and
contribute positively to society.

Corporate Social Responsibility (CSR) and
Environmental Awareness:
• CSR: Businesses have a responsibility to contribute
positively to society through initiatives related to
education, environment, and community development.
• Environmental Awareness: Companies should adopt eco-
friendly practices, reduce carbon footprint, and support
environmental conservation efforts.
Ethical Leadership by Entrepreneurs: Corporate Citizenship:
• Ethical Leadership: Entrepreneurs should lead by example,
demonstrating integrity and ethical decision-making.
• Corporate Citizenship: Businesses have a responsibility to
be good corporate citizens, contributing positively to the
communities in which they operate.

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